TMI Blog2018 (5) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... proved by the CoC. There is no scope for argument left that shareholder, or parties to joint venture agreement or anyone holding similar document need to accord sanction in view of the provisions of Regulation 39(6) of the CIRP Regulations. The Resolution Applicant-TSL merely sought to purchase the shares which were in the nature of pre-emptory rights. Even that undertaking had lapsed nine years ago as it ceased to operate in March 2009 and has not been acted upon by Standard Chartered Bank. In any case the order of Bankruptcy issued by Supreme Court of Seychelles has been subsequently revoked in 2016. Therefore, it cannot be concluded firstly that Sterling Infotech Private Limited qualifies as a ‘connected person’ or ‘related party’ or ‘associated company’ - there are serious doubt with regard to the locus standi of Bhushan Employees as the application has been filed only by Mr. Rahul Sengupta who has been the Executive Director of the Corporate Debtor since 2005. The application has not been filed by the Bhushan Employees authorizing anybody. The allegation even otherwise on facts is not sustainable. Accordingly, it is held that the objection is frivolous and the same is hereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvs. Gopal Jain, Sahil Monga, V.P. Singh, Ms. Tahira, Ruby Singh, Ms. Pallavi Kumar, Ms. Shweta Kakkad, Angad Baxi, Sumesh Dhawan, Rishi Mongia and Ms. Tanya Baranwal, Advs For The Respondent : Ramji Srinivasan, Tushar Mehta, Ravi Kadam, Mukul Rohatgi, Anand Chibber and Rajeev Mehra, Sr. Advs. Siddharth Sharma, Tushar Bharadwaj, Ms. Ranjana Rai Gawai, Ms. Vasudha Sen, Vivek Kumar, Manmeet Singh, Ms. Anjali, Ms. Geetanjali, Gaurav Malhotra, Rajeev Kumar, Aastha Mehta, Mayank Mishra, Ritunjay Gupta and Ms. Niti Arora JUDGMENT M.M. KUMAR, PRESIDENT 1. This order shall dispose of the following CA s: (i) C.A. No.244(PB)/2018 filed by Resolution Professional (for brevity RP ) under Sections 30 31 of the Insolvency and Bankruptcy Code, 2016 (for brevity the Code ) with a principal prayer of accepting the resolution plan approved by the Committee of Creditors (for brevity CoC ) submitted by HI Resolution Applicant. The resolution plan has been filed by TATA Steel Limited (for brevity TSL ) in the Corporate Insolvency Resolution Process (for brevity (CIR Process ) of the Corporate Debtor. A further relief has also been sought to grant various concessions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Code and uploaded the same on the VDR, for ready reference. There were total seventeen (17) potential resolution applicants who sought access to the VDR, in order to carry out necessary due diligence on the Corporate Debtor. 4. The RP has further disclosed that in obedience to Regulation 35 of the CIR Regulations, he appointed two registered valuers, namely (i) Duff and Phelps India Private Limited, and (ii) PWC, to ascertain the liquidation value of the Corporate Debtor, after reviewing and comparing the quotations received from six valuation agencies. The CoC approved the process and evaluation criteria for evaluating a resolution plan in compliance with the requirements of the Code, in order to ensure a fair and transparent system of evaluation and also to ensure that the best resolution plan for the Corporate Debtor is selected in the most transparent manner. The CoC at its 4th meeting held on 27.11.2017 appointed KPMG India Private Limited ( KPMG ) as the evaluator of the resolution plans ( CoC Evaluator ) and Shardul Amarchand Mangaldas Co. as its legal counsel ( CoC Legal Advisor ). A process document dated 27.12.2017 amended and clarified from time to time for sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution plan of HI Resolution Applicant-TSL along with the voting pattern of financial creditors approving the resolution plan has been placed on record [Annexure-7 (Colly)]. In accordance with the process document, the HI Resolution Applicant was issued a letter of intent subsequently. The aforesaid resolution plan approved by the CoC has now been placed before us for seeking our acceptance and approval in terms of the Code and CIRP Regulations. 7. The RP has also ascertained that in Part 10 of the CoC approved resolution plan the Resolution Applicant has sought certain reliefs and concessions and submission has been made that this Tribunal may approve and direct the grant of the reliefs and concessions envisaged in the CoC approved resolution plan ( Annexure-8) . 8. The RP states that from the date of the approval of the Resolution Plan by this Tribunal, this would be regarded as effective date and until the date on which all the steps for the implementation set out in Annexure 5 would be completed (closing date). The plan envisaged inter alia the following: (a), that the RP, along with certain representatives of Deloitte Touche Tohmatsu India LLP shall be appointed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the objections raised by Bhushan Employees prior to 9th meeting of CoC held on 06.03.2018. Both the Resolution Applicants namely TSL and JSW Living Private Limited responded to the clarifications sought by the RP. The HI Resolution Applicant-TSL has also submitted legal opinions/advice obtained from various Legal Firms from India and Abroad and the opinion of Hon ble Justice Mr. Deepak Verma (Retd.), Mr. Mukul Rohatgi, Senior Advocate and Former Attorney General of India and Mr. Ravi Kadam, Senior Advocate, on the eligibility of HI Resolution Applicant-TSL. Both the Resolution Applicants submitted affidavits specifically declaring and affirming their eligibility under Section 29A of the Code. After considering the objections, the clarifications, legal opinions and the legal advice independently obtained by the RP he has reached the conclusion that HI Resolution Applicant-TSL and JSW Living Private Limited were not ineligible under Section 29A of the Code on the grounds put forward by the Bhushan Employees. It was only after fully satisfying itself, the CoC reached the conclusion that no ground to disqualify the Resolution Applicant were made out in the objections raised by Bhus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor fails to consume the entire output generated, the Corporate Debtor is liable to compensate BEL: a. for the shortfall in units purchased by the Corporate Debtor; b. in the event that BEL sells any such power to a third party, for the unsold units as well as any inferior price realized by BEL pursuant to such sale. The compensation is to be decided on the basis of the amount that ought to have been received realized by BEL had there been no default on the part of the Corporate Debtor. Furthermore, in case of any shortfall in offtake, the Corporate Debtor is required to provide BEL with the necessary transmission facility to transport power to the grid. iii. In terms of Clause 3(i) of PPA-1, the power is to be supplied to the Corporate Debtor at the cost of generation or INR 2.50 per KwH, whichever is higher. In terms of Clause 3(i) of the PPA-2, the power is to be supplied to the Corporate Debtor at grid rate or INR 3.35 per KwH, whichever is earlier. iv. Clause 3(i) expressly states that the lenders of BEL have agreed to provide funds to BEL for implementation and operation of the CPP on the basis of the PPAs. Further, the Corporate Debtor is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the RP failed to induct BEL as an operational creditor, despite the claim being filed within time as per Regulation 12 of the CIRP Regulations. A copy of Form B submitted on 20.03.2018 has been added as Annexure R-3. The prayer made in the application which the Resolution Applicant of BEL seeks through this Tribunal is the non-enforcement of clauses of the Resolution Plan which adversely affect the claims of BEL and its rights under the PPAs. The RP of the BEL claims that he is saddled with the duty to preserve and protect its assets (Section 20(1) read with Sections 25(1) and 23(2) of the Code). It has been asserted that the power purchase agreements must not be permitted to be terminated being onerous and if at all it is permitted then the same shall take effect from the expiry of three months of the closing date on the completion of CIR Process of BEL. According to further averments such a clause in the resolution plan is illegal and unenforceable. Reference has been to the provisions of Section 30 of the Code and Regulations 37 and 38 of the CIRP Regulations which set out the contours within which a resolution plan may be approved and given effect to. There is no power with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the RP along with the instant application is incomplete as many of the annexures have not been placed before the Adjudicating Authority with the instant application which have vital information and bearing on the resolution plan. Reference has been made to Regulation 38 of the C1RP Regulations to submit that it is mandatory on the part of the RP to provide the details of the resolution applicant and other connected persons and many annexures relating to mandatory information have not been filed. It is prayed that the application must be dismissed on that ground alone. A reference has been invited to Annexure 6 which contains details relating to compliance of Section 29A of the Code which has been withheld from the Tribunal. Despite information given to the RP and its counsel the documents have not been supplied. 18. There are further allegations of misrepresentation of facts and reference has been made to the averments made in para 23 of the application and order dated 19.03.2018 has been deliberately misquoted. Likewise, objection has been raised that there is no compliance of order dated 21.12.2017 and 19.03.2018 passed by this Tribunal. In the order dated 21.12.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f TSL suffered a disability which is covered by the ambit of Section 29-A of the Code on account of conviction of its wholly owned subsidiary company as it been convicted under Section 33(1)(a) of the Health and Safety at Work Act 1974 by Crown Court at Kingston upon Hull, United Kingdon vide the judgment dated 02,02.2018. Equally reference has been made to the declaration given by Hon ble the Supreme Court of Seychelles in August, 2014 declaring Mr. C. Shiva Shankaran as bankrupt which has more than 10% shareholding in the group companies of Corporate Debtor i.e. Tata Teleservices Limited a company connected with and part of the resolution applicant-TSL. The TATA Sons executed an enforceable guarantee in favour of the creditor of the said company. Mr. Shankaran having been declared bankrupt and TSL being a related party would attract disqualification of TSL. In terms of schedule under Regulation 7(2)(g) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, the Resolution Professional must ensure that he maintains contemporaneous records for any decision taken, the reasons for taking the decision, and the information and evidence in support o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d follow ups conducted by the RP. A copy of the minutes of the meeting of the CoC dated 06.03.2018 has been placed on record (Annexure-1). The aforesaid two resolution plans submitted by TSL and JSW were evaluated extensively by the CoC advisor on the evaluation criteria set forth in the process document. The plan submitted by TSL emerged as the highest evaluated plan and after discussion by CoC in accordance with the provisions of the process document and negotiations held with TSL being the highest bidder. The resolution plan submitted by TSL was also amended on various dates which have now been annexed with the application filed by the RP. A copy of the process document and evaluation conducted in respect of two plans in the light of the criteria set up in the process document have been placed on record in a separate sealed cover. All other averments are the repetition of what the RP has stated in the application. Reply of Resolution Applicant-TSL 26. Reply to the objections raised by Bhushan Employees has also been filed Resolution Applicant-TSL. It has been urged that Bhushan Employees have no locus standi to challenge the decision taken by the CoC with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of its dues amounting to ₹ 961,56,79,356 (Rupees nine hundred and sixty one crores fifty six lakhs seventy nine thousand three hundred and fifty six only) owed by the Corporate Debtor for supply and erection of the steel plant. As a consequence of its treatment as secured creditor direction be issued to the RP and CoC to provide payment of full dues to L T in the resolution plan. 30. This application has been contested and reply has been filed by the RP citing various provisions of the Code. The RP has questioned the locus standi of the L T to file such an application and has averred that the provisions of Section 60(5) of the Code are completely misinterpreted and misused which is abundantly clear in its intent. The applicant-L T is trying to seek the relief which it should have sought in arbitration proceedings prior to the commencement of the CIR Process. The status of the L T is clearly that of a supplier of goods and services and it would fall in the category of Operational Creditor of the Corporate Debtor. By no stretch of imagination, it could be regarded as a secured creditor which is patently against the provisions of the Code and invocation of Section 55( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion plan. Thus, the Resolution Plan of Resolution Applicant-TSL has backing of 100% share voting of the members of the CoC. The resolution plan and the e-voting pattern is annexed [Annexure-7 (Colly)]. 33. Mr. Kadam Mr. Mehta have then highlighted salient features of the CoC approved resolution plan. The resolution debt amount based on claims received from various creditors as on 20.03.2018 has been specified. The total outstanding financial debt of the Corporate Debtor received as on 20.03.2018 and admitted has also been specified along with outstanding operational debt of its workmen. The total claims received from other Creditors as on the aforesaid date has also been noted and the liquidation value of the Corporate Debtor is stated to be ₹ 14541,00,00,000/-. 34. The HI Resolution Applicant has offered upfront payment of ₹ 35,200 crores in respect of the Financial Debt owed to the Financial Creditors and admitted by the RP. In addition, the HI Resolution Applicant has also provided for the following equity to the Financial Creditors in respect of the Financial Debt admitted by the RP, as a consequence of which, the Financial Creditors shall hold 12.27% (in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its roles and responsibilities, and have protections, provided in the Code. 36. In the resolution plan reliefs and concessions have been claimed which are listed in Annexure-8. The resolution plan is not made subject to the condition of grant of reliefs and concessions as clarified in Section 8.9 and 10.2 of the CoC approved resolution plan. The RP has annexed his compliance report with the written submissions (Annexure-A). Certain annexures/sub-annexures of the resolution plan of TSL which were inadvertently missed out while filing the resolution plan with C.A. No. 244(PB)/2018 have since been filed in a sealed cover supported by an affidavit. 37. Mr. Kadam Mr. Mehta, learned Senior counsel have also emphasized that the RP has certified in para 13 of C.A. No. 244(PB)/2018 and para 3 of the affidavit filed by Diary No. 1946/2018 and para 3 of the Diary No. 1923/2018 that the contents of the resolution plan meet all the requirements of the Code and the CIRP Regulations. 38. Mr. Kadam Mr. Mehta, learned Senior counsel have then replied the objections raised by Bhushan Employees in their application No. 237(PB)/2018 and also in reply to the RP s application C.A. No. 244( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant is at page 1481 of Diary No. 1923). 40. The Bhushan Employees insisted by email dated 23.02.2018 on the RP that both the aforesaid Resolution Applicants were not eligible. The HI Resolution Applicant-TSL sent its response on 27.02.2017 along with legal opinions/ advice obtained from AZB Partners and also Herbert Smith and Norton Rose, English Solicitor Firms and opinion from Hon ble Justice Shri Deepak Verma, Former Judge of the Hon ble Supreme Court, and Mr. Mukul Rohatgi, Learned Senior Advocate and Former Attorney General of India. Separate opinion was sought from Mr. Ravi Kadam, a Former Advocate General, State of Maharashtra and an English Solicitor Firm, Burges Salmon LLP. Accordingly, both the Resolution Applicants were found eligible without suffering from any disability contemplated by Section 29A of the Code. C.A. No. 217(PB)/2018 was filed by the Bhushan Employees which was disposed of vide order dated 19.03.2018 with direction to the RP to consider the objections of the Bhushan Employees in accordance with the law and the CoC in its 10th meeting held on 20.03.2018 thoroughly deliberated upon the objections on the eligibility of the two resolution applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of Enforcement [2005] 4 SCC 530. 42. It has then been submitted that the expression punishable must be interpreted to mean capable or liable to punishment. In other words, the punishment must be capable of being inflicted by punishing by law and reliance has been placed on the observations made in the case of Sube Singh v State of Haryana 1989(1) SCC 235 to argue that a company is not capable of suffering punishment by imprisonment. Therefore, in the present case also where the sentence of imprisonment could not be imposed and was a legal impossibility and therefore, the offence committed by Tata Steel UK was not capable of being punished by imprisonment at all. Referring to the provisions of Section 29-A(d) of the Code, learned counsel have submitted that it is to be presumed that the legislature was aware of the legal position on the issue of impossibility of awarding of a custodial sentence to a company yet it prescribed only for sentence and had the legislature intended to cover a juristic person like a company within the scope of Section 29-A(d) of the Code in addition to natural persons, it would have expressly specified punishment by imposition of a fine. Having not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued that no fact have been brought on the record to show that Mr. Sivasankaran or Sterling infotech Private Limited would qualify as a related party or associate company or otherwise a connected person of the Resolution Applicant. In that regard reference has been invited to the letter dated 22.02.2018 sent to the RP, employees application and objections. Learned counsel have submitted that even during oral arguments no reference has been made to any material nor there is anything on record. There is no imputation that Mr. Sivasankaran and/or Sterling Infotech Private Limited are acting jointly or in concert with TSL-Resolution Applicant in submitting the resolution plan. The HI Resolution Applicant-TSL specifically clarified that neither Mr. Sivasankaran nor Sterling Infotech Private Limited as a related person or connected person of the Resolution Applicant-TSL. As per Annul Report 2016 for Tata Teleservices Limited only 0.52% shares were held by Sterling Infotech Private Limited at the end of Financial Year 2016-17. It has also been clarified that Sterling Infotech Private Limited had taken a loan from SCB and pledged its shares in Tata Teleservices Limited to SCB. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claims rejected by the RP, Such a redetermination is not envisaged under Sections 30 and 31 of the Code. B. The objections were rejected by the RP in January, 2018 and the present application was filed on 03.04.2018 which suggests that it lacks bona fide and is aimed at extract an advantage by delaying and obstructing the CIR Process of the Corporate Debtor, C. The basis of rejection of claim for ₹ 114.59 crores made on 09.04.2017 was that the basis of the claim amount was a unilateral and retrospective increase of the tariff under the two power purchase agreements entered into with the Corporate Debtor dated 29.03.2007 and 26.10.2010 respectively. The rates were unilateral increase from ₹ 5 per unit to ₹ 6.5 per unit w.e.f. financial year 2015 by way of a debit note dated 01.07.2017. D. No proof was provided showing approval from the Corporate Debtor regarding the revised billing and Debit Note nor any invoices were provided by the objector-BEL for the financial years 2015-2016 or 2016 corresponding to the Debit Note. It also failed to take note of ₹ 90,00,00,000 paid towards security deposit by the Corporate Debtor to BEL during the financial yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing that there is no possibility of altering the status of L T from that of unsecured creditor into a secured creditor. According to the learned counsel a supplier of goods is covered by the meaning assigned to it by Section 5(21) which deals with operational debt and Section 5(20) which defines operational creditor. Therefore, they would fall in the category of operational creditor who are the unsecured creditors. 49. Mr. A.S. Chandhiok has placed reliance on proviso to Section 30(4) of the Code and argued that the CoC should not have approved a resolution plan submitted before the commencement of the IBC (Amendment) Ordinance, 2017 where the Resolution Applicant is ineligible under Section 29-A of the Code and it would require the RP to invite a fresh resolution plan where no other resolution plan is available with it. According to the learned counsel the resolution plan in this case have not been submitted in accordance with the provisions of Ordinance and amended Section 25(2)(h) of the Code. The order passed by this Tribunal in C.A. No. 237(PB)/2018 on 19.03.2018 have also not been complied with as there is not a word in the application with regard to the aforesaid decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved the same in its 10th meeting held on 20.03.2018. Learned counsel has prayed that the same be approved by the Adjudicating Authority as it has backing of 100% vote share of the CoC. 52. In respect of Bhushan Employees it has been argued that they have no locus standi. There are approximately 5,546 employees on the rolls of the Corporate Debtor and the applicant Mr. Rahul Sengupta, a Former Executive Director has failed to provide any list of these employees, much less an authority or approval from such employees to file C.A. No. 237 on their behalf. The argument is that once the employees have been given full protection by the resolution plan then there was hardly any scope for making grievances. It appears that Mr. Sengupta is aggrieved by the fact that he has been working as Executive Director of the Corporate Debtor since 25.07.2005 and on account of loss of office as a director, he has an axe to grind. Accordingly, he suffered disqualification in terms of Section 29-A(c) of the Code. In that regard reliance has also been placed on the observations at page 364 of the judgment rendered in the case of Balco Employees Union (Regd.) v. Union of India, (2002) 2 SCC 333 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations made by the Principal Bench in the ease of Clutch Auto Limited, C.P. (IB) No. 15(PB)/2017 decided on 15.02.2018 learned counsel has argued that the decision of the CoC and RP ought not to be interfered with as the interference is exception and approval is the rule. According to the learned counsel the commercial wisdom of the CoC cannot not be subject matter of judicial review and the Bhushan Employees are absolutely denuded of any right to seek confidentiality material. Tn that regard reliance has been placed on the observations made by Hon ble the Supreme Court in the case of Innoventive Industries Limited (supra) where the report of the Bankruptcy Law Review Committee has been regarded as a basis for interpretation of provisions of the Code. In that regard reference has been made to the UNCITRAL Guide to argue that the commercial decision of the CoC should not be interfered with and law should not permit the Court to review the economic and commercial basis of the decision. According to the learned counsel by virtue of the resolution plan the financial creditors would be able to get back about 67% of their loans and all the employees would continue to work and even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrary the Corporate Debtor has undertaken to buy the entire power generated from BELJs Power Plant and there are clauses which provide for compensation to BEL for any shortfall in consumption of power and the Corporate Debtor has to make minimum payment to BEL towards power supply sufficient to meet expenses, taxes and debt service obligations etc. Therefore, it has been argued that the resolution plan insofar as takes away the right of BEL to terminate the contract be rejected. 57. Having heard the learned counsel for the parties at a considerable length in many sessions we are of the view that it would be first necessary to study the provisions of the Code and CIRP Regulations in order to find out whether the requirements of the statute and subordinate legislation have been fulfilled or not. Sections 30 and 31 of the Code are set out in extenso which read as under:- Section 30 Submission of resolution plan . (1) A resolution applicant may submit a resolution plan to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority. Section 31 Approval of resolution plan . (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of approval under sub-section (1),- (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is that Adjudicatory Authority-NCLT must feel satisfy with a resolution plan that it answers the requirements given in Section 30(2) of the Code. 60. It is pertinent to notice the mandatory requirements of Section 30(2) of the Code for a resolution plan to fulfil. Firstly, the resolution plan approved by the CoC must provide for payment of insolvency resolution process cost in a manner specified by the Board in priority to the repayment of other debts of the corporate debtor, (i) With his application i.e. C.A. No. 244(PB)/2018 the RP has placed on record a copy of the CoC approved resolution plan (Annexure-7) of the highest bidder i.e. HI Resolution Applicant-TSL. Under the subtitle Mandatory Contents of the Plan (para 5) the RP has clarified that in accordance with the provisions of Section 30(2) and Regulation 38 of the CIRP Regulations and as per the requirements of paragraphs 1.11 and 1.11.1 of the process document the resolution plan provides for payment of CIRP cost in priority to the repayment of any other debts of the company and identifies the specific sources of fund that would be used for such payment. In that regard reference has been made to Section 6.4 and 8.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fourth condition stand also satisfied. 63. The fifth condition also requires the RP to confirm that the resolution plan does not contravene any of the provisions of the law for the time being in force. In Annexure-6 of the plan the resolution applicant has confirmed that the resolution plan is not in contravention of the provisions of the law for the time being in force and fully complied with the provisions of the Code and the CTRP Regulations. In that regard the RP has also stated in para 13 of the application (C.A. No. 244(PB)/2018) that the resolution plan of TSL and JSW Living Private Limited were found compliant with the requirements of the Code and the CIRP Regulations and on the recommendation of the CoC resolution applicant-TSL was notified as the HI resolution applicant. An affidavit by RP has also been filed on 10.04.2018 vide Diary No. 1923 of 2018 and para 3 of Annexure-A appended therewith certifies that the contents of the resolution plan meet all requirements of the Code and CIRP Regulations. Likewise, in para 3 of another affidavit filed vide Diary No. 1946 of 2018 same facts have been reiterated. Therefore, we find that the fifth requirement has also been fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found or determined by him:- (a) preferential transactions under section 43; (b) undervalued transactions under section 45; (c) extortionate credit transactions under section 50; and (d) fraudulent transactions under section 66; and the orders, if any, of the adjudicating authority in respect of such transactions. (3) The committee may approve any resolution plan with such modifications as it deems fit, (4) The resolution professional shall submit the resolution plan approved by the committee to the Adjudicating Authority with the certification that: (a) the contents of the resolution plan meet all the requirements of the Code and the Regulations; and (b) the resolution plan has been approved by the committee. (5) The resolution professional shall forthwith send a copy of the order of the Adjudicating Authority approving or rejecting a resolution plan to the participants and the resolution applicant. (6) A provision in a resolution plan which would otherwise require the consent of the members or partners of the corporate debtor, as the case may be, under the terms of the constitutional documents of the corporate debtor, shareholders agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Bhushan Employees. The first objection is based on Section 29-A(a) of the Code. It has been alleged that Mr. C. Sivasankaran is an undischarged insolvent and he must be treated as a connected person within the meaning of Explanation (i) of Section 29A of the Code as he is in control of the resolution applicant. According to the allegation Mr. C. Sivasankaran through his company Sterling Info tech Private Limited had purchased shares in Tata Teleservices Limited (TTL) which constitute 0.52% of the shares. It was alleged that Mr, C. Sivasankaran had taken a loan of ₹ 650 crores from Standard Chartered Bank and the Resolution Applicant-TSL had furnished guarantee. In the reply it has been explained that Sterling Infotech Private Limited has merely pledged its shares in Tata Teleservices Limited to SCB and in order to prevent the shares from being sold to an undesirable third party, the Resolution Applicant-TSL provided an undertaking to Standard Chartered Bank that it would purchase the shares at a pre-determined price in the event of an invocation. It never furnished any guarantee for repayment of loan taken by Sterling Infotech Private Limited from Standard Chartered Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or fine. The provision of Section 29-A(d) of the Code read as under:- Section 29A Persons not eligible to be resolution applicant .- A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person,- (a) .. (b) (c) (d) has been convicted for any offence punishable with imprisonment for two years or more; (e) (f) . (g) (h) (i) (j) . 72. A perusal of the aforesaid clause (d) would show that the expression used is punishable with imprisonment for two years or more, whereas under Section 33(1)(a) of the HSW Act the expression used is imprisonment for a term not exceeding two years or a fine or both . The provisions of Section 29-A(d) of the Code would not be applicable to cover a juristic person and could be applied only to a natural person because it contemplates visiting the convict with imprisonment for two years or more. As there is no provision for imposition of fine and a corporate body like a company cannot be visited with imprisonment/custodial sentence. In that regard we find that reliance has been rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. State of A.P., [2007] CriLJ 2025. The Hon ble High Court held that the expression punishment for a term which may extend to three years is certainly not similar to the expression punishment for three years and upwards . However more plausible argument by the learned counsel of the RP and CoC was the one which is based on the judgment of Hon ble the Supreme Court rendered in the case of Standard Chartered Bank (supra). In that case Hon ble the Supreme Court held that a Corporate Entity might be prosecuted but if the sentence of imprisonment alone is provided then no sentence could be awarded.. In such a case it is to be visited with custodial sentence and we find that a Corporate Entity like a company cannot be visited with custodial sentence and therefore, sentence could be awarded. In that regard we place reliance on the observations made in paras 63 and 64 of the said judgment which read as under:- 63. There appears to be a difference of opinion amongst the learned counsel assailing the correctness of majority view in Valliappa as to whether the task of the Court in the case on hand is one of statutory interpretation. Some counsel have argued that it is open to the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct any disability. In paras 8, 9, 10 11 of the judgment in Sube Singh s case the following observations have been made: 8. In Bouvier s Law Dictionary, the meaning of the word punishable has been given as liable to punishment . In Words and Phrases-Permanent Edition , the following meaning has been given: The word punishable in a statute stating that a crime is punishable by a designated penalty or term of years in the state prison limits the penalty or term of years to the amount or term of years stated in the statute. 9. The word punishable is ordinarily defined as deserving of or capable or liable to punishment, punishable within statute providing that defendant may have ten peremptory challenges if offence charged is punishable with death or by life imprisonment; means deserving of or liable to punishment; capable of being punished by law or right, may be punished, or liable to be punished, and not must be punished. 10. Corpus Juris Secundum, gives the meaning as: Deserving of, or liable to, punishment; capable of being punished by law or right; said of persons of offences. The meaning of the term is not must be punished , but may be punis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a situation the argument of Mr. Rajiv Nayar based on the judgment rendered in the case of Balco Employees Union (Regd.) (supra) would commend to us. Discarding the grievance made by Balco Employees Hon ble the Supreme Court held that if by disinvestment in a public sector company employees of a company are adversely affected then they have to accept it as an incidence of service. It is not permissible to tinker with the resolution plan which protect the rights of all employees and there cannot be any possible grievance. Moreover, it is at the instance of one person alone namely Mr. Rahul Sengupta that a hue and cry has been raised. It appears to us that over 5000 employees appear to be satisfied with the resolution plan as rightly contended by Mr. Nayar and as a matter of right no objection to the resolution plan could be raised which is otherwise binding on all the stakeholders including the employees by virtue of provisions made in Section 31(1) of the Code once it is approved by the Adjudicating Authority-NCLT. 78. The objections raised by BEL would also not be sustainable it has also been made clear by Regulation 39(6) of the CIRP Regulations (supra) that a resolution plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, [any transferee without consideration or any transferee with notice of the non-payment], for the amount of the purchase-money, or any part thereof remaining unpaid, and for interest on such amount or part [from the date on which possession has been delivered). A perusal of the aforesaid provision shows that it applies to Immovable property . The plant and machinery cannot be regarded as immovable property. Moreover, to attract application of sub-section 4 (b) a charge must be shown to be created. It is not disputed that L T has supplied plant and machinery and a feeble attempt has been made to argue that any property which is attached to earth must be regarded as immovable property as has been defined in Section 3(26) of the General Clauses Act. It has been claimed that charge has been created by supply, erection and installation of the plant and machinery on the respondent premises. 80. We are afraid that the claim made on behalf of L T on the face of it appears to be wholly unsustainable. There is no document placed on record showing any creation of charge or security warranting a view that the L T should be regarded as a secured creditor and not as the operational cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with law. We make it clear that we are not expressing any opinion on the claim concerning reliefs and concession nor any part of this order shall be understood in that spirit. (ii) C.A. No. 186(PB)/2018 filed by Larsen Tourbo Limited is dismissed with cost of ₹ 1/- lakh. The cost be deposited in the account of Corporate Debtor. (iii) C.A. No. 217(PB)/2018 filed by Bhushan Employees is also dismissed with cost of ₹ 1/- lakh to be paid by Mr, Rahul Sengupta personally. The cost be deposited in the account of Corporate Debtor. (iv) The objection raised by the BEL are rejected and it is held that the claim made by BEL is wholly frivolous and cannot be sustained. (v) C.A. No. 176(PB)/2018 - The Ex-Management is directed to cooperate in all respects during the implementation of the resolution plan. Liberty is granted to the Monitoring Agency to apply for any further direction against the Ex-Management, its Directors or any other officers, if such a necessity arises. All other applications are also disposed of. 84. The sealed covers which have been furnished during the course of hearing shall be returned after re-sealing by the Bench Officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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