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2019 (5) TMI 1718 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - whether HI Applicant-TSL attracts disqualification under Section 29A (a) & (j)? HELD THAT:- When a petition under Section 7 or 9 of the Code is admitted then the Adjudicating Authority-NCLT in a summary proceedings record a finding that there is non payment of debt when whole or any part of instalment of the amount of debt has become due and payable which has not been paid by the Corporate Debtor. If such a finding is recorded then the default is supposed to have occurred. The event of default within the meaning of Section 3 (12) of the Code is sufficient to conclude that Corporate Insolvency Resolution is required to be triggered in respect of such a body corporate. It may appear that HI-applicnat-TSL is not eligible to submit the Resolution Plan. However, this impression is belied on a closer analysis. Mere admission of a petition under Section 9 of the Code may not necessarily leads to a safe conclusion that Toya Rolls Limited is an 'undischarged insolvent'. Firstly, there is no final adjudication with regard to the status of Tayo Rolls Ltd., as to whether it is 'undischarged insolvent'. An adjudication in respect of the corporate debtor to conclude that it is 'undischarged insolvent' has to be entrusted to a court of competent jurisdiction. We are unable to persuade ourselves that the adjudicating authority-NCLT has been vested with the jurisdiction to declare a body corporate as 'undischarged insolvent'. Such a findings lead to a very serious prejudice for a body corporate and its 'Directors'. Even in the Companies Act, 2013 there is complete absence of any provision which provide that on admission of a petition under Sections 7, 9 or 10 of the Code, the company would be regarded as 'undischarged insolvent' - it is extremely doubtful whether the Adjudicating Authority-NCLT has jurisdiction to issue such a declaration by adopting a summary procedure. The resolution plan is accepted and all objections are over-ruled. However, the acceptance and approval of the resolution plan shall be subject to the following; a) The amount due to the operational creditor under the resolution plan must be accorded priority in payment over the financial creditor as is laid down in Regulation 38(1) of the Insolvency Resolution Regulations, 2016. b) CA No. 384(PB)/2019 which has been disposed of today involves the claim of the Operational Creditor which submitted on 22.11.2018 by the applicant namely M/S. Redeem Engineering while deciding the aforesaid application, the resolution professional has been asked to consider the claim and if it is found meritorious and in order then the name of the applicant is be included in the list of creditors and is to be paid according to the resolution plan. c) The resolution plan would be binding on the corporate debtor, its creditors, guarantors, members, employees and other stakeholders. The reduction of share capital of the corporate debtor as contemplated by the resolution plan (Annexure -5) would take effect without any further deed or act on the part of the corporate debtor and/or its constitutes. d) We also approve the appointment of Monitoring Agency from the date of this order until the closing date. Accordingly, the COC and the RP would continue as Monitoring Agency. e) The power of the Board of Directors of the Corporate Debtor shall remain suspended until the closing date. f) The reliefs sought under Section 10.2 of the resolution plan cannot be regarded as condition precedent for approval of the resolution plan. Various reliefs are sought from the statutory authorities under the Income Tax Act, 1961, Ministry of Corporate Affairs, Department of Registration and Stamps, Reserve Bank of India and others have been sought. We do not feel persuaded to accept the prayer made in the resolution plan yet the resolution plan applicant may file appropriate applications before the competent authorities which would be considered in accordance with the law because it would not be competent for the Adjudicating Authority-NCLT to enter into any such area and granting relaxation, concession or waiver which is wholly within the domain of competent authorities. g) In respect of the relief claimed under the caption 'Requests' we are again not in a position to grant those requests which pertains to criminal proceedings/ penalties. It may only be observed that the resolution plan applicant may file appropriate application before the competent authorities seized of the criminal proceedings/ penalties which shall be considered in accordance with the applicable law. h) It is needless to clarify that Section 30(2) (f) of the Code mandates that the Resolution plan should not be against any provisions of the existing law. The resolution applicant, therefore, shall adhere to all the applicable laws for the time being in force. The application stands disposed of in the above terms.
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