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In Re : M/s. Gujarat NRE Coke Limited

2018 (2) TMI 985 - NATIONAL COMPANY LAW TRIBUNAL, KOLKATA

Initiating Corporate Insolvency Resolution Process - Held that:- In the case in hand, it is an undisputed fact that Corporate Debtor is a going concern and has about 1178 employees and workmen on its Roll. RP has also admitted that corporate debtor is a going concern. Section 33(7) also provides that order of liquidation shall be deemed to be a notice of discharge to the officers, employees and workers of the Corporate Debtor, except when the business of the Corporate Debtor is continued during .....

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ing concern after publication of notice in newspaper with the reserve price which shall be equal to the total debt amount including interest and maximum period applicable for trying the sale of the Corporate Debtor as a going concern will be only three months from the date of the order, if the process of sale as a going concern is failed during this period, then process of the sale of the assets of the company will be according to the provisions of sale of asset of the Corporate Debtor prescribe .....

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at the Corporate Debtor is in liquidation. - (3) It is also ordered that copy of the order be sent to the Registrar of Companies with which the Corporate Debtor is registered. - It is further declared that subject to provision of section 52, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor. - Provided that a suit or other legal proceedings may be instituted by the Liquidator on behalf of the Corporate Debtor, with the prior approval of the Adju .....

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on Professional has filed the progress report in Insolvency Case No. C.P. 182/2017. In this case, by our order dated 7th April 2017, a petition filed by the Corporate Debtor, Gujrat NRE Coke Limited was admitted under section 10 of the IB. Code, 2016 and an order for initiating Corporate Insolvency Resolution Process was passed. Resolution Professional, Shri Sumit Binani has filed final progress report dated 1st January 2018. It is stated in the report that CIRP period of the company commenced o .....

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he Members of the CoC. After that in the 11th meeting of the CoC held on 26.12.2017, the proposed draft Resolution Plan, put forward by Resolution Applicant was placed before the CoC and discussed. It was then decided to convene another meeting of CoC on 28th December 2017 wherein the Resolution Applicant was invited by the R.P. for negotiation with the CoC members on the Resolution Plan, being proposed to be submitted by them. On 28th December 2017, in its 12th meeting, the Resolution Applicant .....

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rs having a total voting share of 84.03% voted against the Resolution Plan and one member having 1.67% voting shares abstained from voting. On 30th December 2017, he received an e-mail from Shri Pawan Kumar Agarwal, the Chief Commercial Officer of the company purported to be representing all the employees and workers of the company enclosing a Resolution Plan on their behalf. In the said e-mail he mentioned that the employees and the workmen are concerned about the continuation of their employme .....

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e RP to place the Plan before CoC for their acceptance and not to put the company into liquidation. In response to the e-mail mentioned above, he clarified that given the prescribed timelines under IBC, it is unlikely that the Resolution Plan put forward could be put up for approval before the CoC and if approved, be subsequently placed before the Adjudicating Authority for final approval on or before 1st January 2018. Regarding applicable provisions of the IBC, the outcome of the Insolvency Res .....

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report, it is clear that only eight members of the CoC having a voting share of 14.31% has approved the Resolution Plan and fifteen members having a voting share of 84.03% have voted against the Resolution Plan. Only one member having 1.67% voting share abstained from the voting. As per requirement of section 30, sub-clause (4), the Committee of Creditors may approve a Resolution Plan by a vote of not less than 75% of the voting share of the Financial Creditor. Thus it is thus clear that the Res .....

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tor for liquidation unless replaced by the Adjudicating Authority under sub-section (4) of section 34. Shri Sumit Binani, after his appointment under this section as Liquidator, will exercise all the powers of the Board of Directors, key managerial personnel and the partners of the Corporate Debtor, as the case may be, shall cease to affect and shall be vested in the Liquidator. The personnel of the Corporate Debtor shall extend all assistance and cooperation to the Liquidator as may be required .....

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rocess, the Liquidator appointed by us shall be guided by the decision of the Monitoring Committee, which shall consist of the erstwhile members of Committee of Creditors, subject to final approval of the Adjudicating Authority. Ld. Counsel representing the employees and workers of the Gujrat NRE Coke Ltd. has filed an affidavit, wherein it is stated that the Corporate Debtor Company has on its rolls 1178 employees including workers. The said employees had on 30th December 2017 filed a proposal .....

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regular customers for its product. The company has been able to overcome its period of crisis and has made operational profits of ₹ 4.46 crores and ₹ 2.12 crores in October and November 2017 respectively. Such rising trend in the operations of the company is apparent from the snapshot of the company s performance over the last six months, which is annexed and marked as Annexure-C with the Affidavit. The company has moreover, been able to make payments of all dues to all employees, c .....

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10,000 people will also be affected. In the affidavit filed by the employees and workmen, emphasis has been laid down on section 33, sub-clause (7) read with regulation 32 of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulation, 2016 which provides for a slump sale of the assets of the company and clearly permits the sale of the business of the company including all its assets and properties as a going concern. The Ld. Counsel, representing the employees and workers ha .....

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and protecting the livelihood of its employees and workmen, and has done so even in case when the company has been lying closed for a number of years. Ld. Counsel for the employees has relied on the law laid down by the Hon ble Supreme Court in case of Allahabad Bank v. ARC Holding Ltd.[2000] 28 SCL 394. It has been further argued that the Insolvency & Bankruptcy Code, 2016 has been legislated as socially beneficial legislation. We have heard the arguments of the Ld. Counsel appearing on beh .....

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) of section 33 of I.B.C., it is clear that order for liquidation under section 33 shall be deemed to be a notice of discharge to the officers, employees and workers of the corporate debtor. The only exception is provided that when the business of the Corporate Debtor is continued during the liquidation process by the Liquidator. Here, employees and workers have filed the list of employees and workers who are at present on the rolls of the company which shows that 1178 workmen are in the employm .....

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If the order is passed under section 33(7) that the order of liquidation will be deemed to be a notice of discharge to the officers, employees and workers of the Corporate Debtor, then indeed 1178 employees and workers of the Corporate Debtor will be out of employment in one go. It is important to state that section 32, Chapter-VI of the Insolvency & Bankruptcy Board of India, (Liquidation Process) Regulation, 2016 provides the manner of sale during the liquidation process, which is given b .....

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mp sale means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. Explanation 1 for the purpose of above clause provides that undertaking shall have the same meaning as assigned to it in explanation to clause (19)(AA). Clause 19(AA) of section 2 of the Income-tax Act, 1961 provides that all the properties of the undertaking, being transferred by the demerged company, im .....

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ny in liquidation as a going concern as ordered by the Hon ble High Court. Such publication shall indicate that the reserve price, shall be the amount equal to the total decree including interest which has occurred up to 31.12.1999 in favour of the appellant bank and shall also have to pay the balance interest which accrues, till full payment is made. The publication shall indicate that the Purchaser shall also to pay the liabilities of other claimants in the proceedings for the liquidation of t .....

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f the company as a going concern in extraordinary circumstances. In the above case Hon ble Supreme Court has provided ten weeks period for completion of the sale on a going concern basis. A condition is also provided in the order that reserve price of the company will be an amount equal to the total decretal value including interest in favour of the Appellant bank. 28. In the case in hand, it is an undisputed fact that Corporate Debtor is a going concern and has about 1178 employees and workmen .....

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transfer of an undertaking as a whole. In the light of the order of the Hon ble Supreme Court in case of Allahabad Bank (supra), we pass following orders in addition to the orders made above. (1) The Liquidator shall try to dispose off the Corporate Debtor company as a going concern after publication of notice in newspaper with the reserve price which shall be equal to the total debt amount including interest and maximum period applicable for trying the sale of the Corporate Debtor as a going c .....

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