TMI Blog2018 (4) TMI 1594X X X X Extracts X X X X X X X X Extracts X X X X ..... le for imprisonment for 2 years or more as provided under Section 29A (d), the Vedanta Limited who is the Resolution applicant, in this case, is ineligible. Bare in mind the legislative object of introduction of Section 29(A) to the Code and the object of the enactment of the Code and upon the above said reasons in our considered opinion, the resolution applicant Vedanta Limited cannot be said to be ineligible to submit the Resolution Plan. Accordingly we answer the point in negative and hold that Vedanta Limited is eligible resolution applicant. On a perusal of the report what we understood is that the COC accepted the reasoning of the Resolution Professional and the opinion of the advisors of the Resolution Professional and upholding the reasoning of the Resolution Professional and hold that Vedanta Limited is eligible as per section 29A of the Code. However, the Ld.Sr.CounseI for the Vedanta Limited submits that in addition to the reasoning of resolution professional the COC sought opinion from law firms on the point and ultimately decided that Vedanta Limited does not suffer from any disqualification as the resolution applicant in terms of Section 29A (d) of the Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal, Mr. Dhaivat Anjaria for approval of a Resolution Plan of Vedanta Limited under sub-section 6 of Section 30 read with section 31(1) of the Insolvency and Bankruptcy code,2016 (hereafter referred to as Code). 2. The Company Petition CA(IB) No.361/KB/2017 was filed by State Bank of India/Financial Creditor under Section 7 of the Code for initiating Corporate Insolvency Resolution Process (in short CIRP) of Electro steel Limited/Corporate Debtor. 3- Vide Order dated 21-07-2017, the application filed by SBI was admitted and the Resolution Professional, Mr. Dhaivat Anjaria was appointed as the interim Insolvency Resolution Professional(lRP). 4. At the first meeting of the Committee of the Creditors(CoC) held on 21- 08-2017, the COC approved the appointment of IRP and confirmed his appointment as the Resolution Professional. Before the expiry of duration of 180 days of the CIR process the duration was further extended to 17.04.2018 vide order in CA(IB) No. 555/KB/2017. 5. In the meanwhile, the Resolution Professional succeeds in his endeavour in identifying four Resolution Plans submitted to him by four Resolution Applicants and submitted all the four Resolution Plans be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire claim of the applicant. This application was seen filed on 26-03-2018. 11. The Ld. Sr. Counsel for the Resolution Professional submits that all the allegations levelled against the resolution professional are denied and his said submission as requested was recorded. However, as directed the resolution professional filed reply affidavit in CA (IB) No.271/KB/2018 denying the allegations levelled against the Resolution Professional and contends that sufficient opportunity was given to the applicant and admitted part of its claim as per the provisions of the Code and the Regulations. The resolution professional further contends that its claim in part was rejected as per the Audit Report and reconciliation of the debit note with the books and ledgers of the Corporate Debtor and rejected the claim of the Applicant aggregating ₹ 1.79 crores which form part of the total claim submitted by the Applicant and that an additional amount of approximately ₹ 0.73 crore was found to be unsupported and hence rejected. 12, He further would contends that out of the total claim of ₹ 313.51 crores, he admitted the claim of ₹ 0.89 crores in September, 2017 which was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire claim of operational creditor, namely SRG Earth Resources Private Ltd. by the resolution professional as alleged? Point No (i) 16. RSIPL is an unsuccessful bidder By filing the CA (IB) No. 281 of 2018 RSIPL objected the approval of the resolution plan of Vedanta Limited upon two grounds. Firstly it contends that the COC, in disobedience of the directions passed by the Adjudicating Authority in the common order in CA(lB)No. 202/KB/2018 and in CA(IB) No.203/KB/2018 dated 20-03-2018, did not consider the question of eligibility of Vedanta Limited under Section 29A (d) of the Code independently. Secondly it contends that Vedanta Limited being ineligible to submit the Resolution Plan under section 29A (d) approval of the Resolution Plan of Vedanta Limited is in violation of the Code and therefore, is liable to be rejected. 1 7 The second objection referred to above was raised by the RSIPL in CA (IB) No. 203/KB/2018. RSIPL also raised very same objections against Tata steel Ltd and filed CA(IB) No.202/KB/2018 challenging the decision of the Resolution Professional alleging that its objections regarding the eligibility of Vedanta limited and Tata Steel Limited was not conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of eligibility of the Vedanta Limited who is the H-1 Bidder and the reasons of the resolution professional being satisfied by the COC and since there is no new objections raised on the side of the RSIPL and COC sought opinion from some law firms on the point and ultimately declared that Vedanta limited does not suffer from any disqualification as the resolution applicant in terms of section 29A(d) of the Code by its own reasons. He further submits that Vedanta Limited resolution plan being the highest among the remaining three plans, that resolution plan was put to vote and passed with 100% voting share and it is that plan that came up for consideration before this Bench. 22. The findings of COC for the rejection of the objections of RSIPL as per the report are the following: (i) KCM being a corporate entity and not natural person, cannot be convicted of an offence punishable with imprisonment; (ii) The directors, officers or managers of KCM cannot be considered to be convicted of an offence solely based on the conviction of KCM; (iii) Even if directors, officers or managers of KCM are considered liable for the acts of KCM, such persons do not fall under the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Annexure A-7 along with the above refereed application CA(IB). .No.203/KB/2018. So also the applicant produced proof to prove that KCM is a convict under various provisions of Environmental Protection and Pollution Control Act in force in Zambia. The applicant already establishes that KCM is the subsidiary of Vedanta Resources Plc and that Vedanta Ltd. is the subsidiary of Vedanta Resources Plc. Therefore, whether the KCM is the subsidiary of Vedanta Limited with in the meaning of Section 29A (j) doesn't arise again in the case in hand. 28. No doubt, the KCM is a subsidiary Company of Vedanta Resources Plc and that Vedanta Limited is the subsidiary of Vedanta Resources Plc. That being so, if KCM is found convicted for any offence punishable for imprisonment for 2 years or more as provided under Section 29A (d), the Vedanta Limited who is the Resolution applicant, in this case, is ineligible. 29. So, the next question is whether the KCM has been convicted for any offence punishable for imprisonment for two years or more as provided in Section 29A (d) of the Code. 30. According to the Ld.Sr.Counsel for the RSIPL, the KCM was convicted for violating provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us have a look at the definition come under the purview of Code. Under the Code a 'person' is defined under section 3(23). it is good to read section 3(23) of the code. It read as follows:- (23) 'person' includes- (a) an individual; (b) a Hindu IJndivided Family; (c) a company; (d) a trust; (e) a partnership; (f) a limited liability partnership; and (g) any other established under a statute, and includes a person resident outside India;. 34. So no doubt a company is a person as per the provisions of the Code and if the company or its directors or officers were convicted for an offence punishable under the purview of Section 29A(d) of the Code no doubt the Vedanta Limited is ineligible. 35. The Ld. Sr. Counsel appearing for the RSIPL at this juncture stressed his argument on the strength of a judgement of Hon'ble Supreme Court in (2005) 4 Supreme Court case 530 (Standard Chartered Bank Ors. Vs. Director of Enforcement and Ors.) that under Corporate Laws, a Company is liable for fastening criminal liability. 36. By referring to Foreign Exchange Regulation Act, 1973, Section 56(1 the Hon'ble Supreme Court, in the above cited deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, are likely to be a risk to successful resolution of insolvency of a company addition to putting in place restrictions for such persons to participate in the resolution or liquidation process, the amendment also provides such check by specifying that the Committee of Creditors ensure the viability and feasibility of the resolution plan before approving it. The Insolvency and Bankruptcy Board of fndia(lBB!) has also been given additional powers. 41. At this juncture it is also good to read the object of enactment of the Code. It reads as follows: An Act to consolidate and amend he laws relating to re- organisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stake holders including alteration in the order of priority of payment of Government dues and to establish an Insolvency ad Bankruptcy Board of India, and for matters connected therewith or incidental thereto. 42. Bare in mind the legislative object of introduction of Section 29(A) to the Code and the object of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an operational creditor also challenged the plan contending mainly that its claim in full not considered by the resolution professional and upon said contention prays for issuing direction to the Resolution Professional to reconcile the outstanding dues of the applicant and accept and admit the entire claim of ₹ 3.35 crores as alleged by the applicant in CA (IB)No.271/KB/2018.This applicant filed the application on 26_03.2018. It came up for consideration at the fag end of the expiry of the duration of the CIRP challenging that its claim has not been considered properly by the Resolution Professional. The delay in challenging non inclusion of a claim finalised by a resolution professional before he finalise the resolution plan itself is an indication that there is no bonafide in the challenge raised by the applicant. 48. The Ld. Counsel for the Resolution Professional in answering to the objections of the above said operational creditor submits that the entire claim of all the Operational Creditors were taken into consideration by him in appropriate time as per Regulation 7 of Chapter IV of IBBI(lnsoIvency Resolution Process for Corporate persons) Regulations, 2016 and id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in sub-section(2) of section 30 this Adjudicating Authority shall by order approve the resolution plan. 52. The resolution plan meets all the requirements to be complied under the provisions of the code and Regulation. The resolution applicant is Vedanta Limited is a Public Company and is the subsidiary of Vedanta Resources Plc. It claimed that it is the 6th largest diversified natural resources company in the world by EBITDA and the only global player with significant operations, expertise and majority sales in the Indian market. It also experienced in iron ore mining and pig iron manufacturing more than 15 years. The technical and economical viability of the resolution applicant in taking over the company not at all in challenge from any corner. On going through the plan we are also satisfied that the resolution applicant has taken into account the interest of all stakeholders and that the applicant have had necessary infrastructures that will enable the applicant to continue the corporate debtor company as a going concern. So we are satisfied that the corporate debtor is in a safer hand. 53. For the foregoing reasons and discussions recorded herein above, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X
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