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TMI Blog2019 (2) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the 1st Meeting of the Committee of Creditors (in short, CoC), held on 8th June, 2018, the CoC appointed the Interim Resolution Professional, Mr. Bijay Murmuria as the Resolution Professional (in short "RP') of the Corporate Debtor and since then the applicant has been discharging the functions of a Resolution Professional with respect to the corporate debtor. 4. The Resolution Professional Published Invitation for Expression of Interest (EoI) for Submission of Resolution Plan in Amar Asom (Regional language newspaper) at Tinsukia, where the registered office of the Corporate Debtor is situated and in Business Standard (English) - All Editions on 13.07.2018. The last date for submission of resolution plan was slated as 27.07.2018. However, Resolution Professional did not receive any Expression of Interest till 27.07.2018 and therefore, with the approval of Committee of Creditors publication for further extension of date of EoI in Financial Express - all editions on 27.07.2018 whereby time for submission of EoI was extended till 07.08.2018. 5. The Resolution Professional received Expression of Interest from the following entities (hereinafter referred to as "Entities/Pros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revised Resolution Plan dated 10th October, 2018 and the same was circulated to all the members of CoC vide email dated 11th October, 2018 for perusal. 11. The Resolution Professional in the Sixth Meeting of CoC convened as on 20th October, 2018 tabled before the members the Final Resolution Plan for approval. 12. Further in terms of Section 30(4) of the IBC 2016, the CoC approved the said resolution plan by 92.74% votes in favour of the said resolution vide e-voting dated 22.10.2018 after considering its feasibility and viability and other requirements specified by the CIRP Regulations where SREI Infrastructure Finance Limited, State Bank of India, IFCI Limited and Standard Chartered Bank voted in favour of the Resolution Plan. Pertinent to mention here that State Bank of India could not cast its vote on the portal because of some technical glitch but confirmed their Assent over Email and Letter to the Resolution Professional. 13. Furthermore, 7.26% members of the CoC voted against the said Resolution Plan. The members who voted against the said Resolution Plan are IDBI Bank, Canara Bank and Bank of Baroda. 14. That as per the Resolution Plan submitted by SREI Multiple Asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements as may be specified by the Board. Explanation. - For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013(18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). (4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent, of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors. 16. It may be stated here that after the submission of Resolution Plan before this Authority after being approved by RP and CoC, the IDBI Bank Limited come up with an application urging this authority not to approve the Resolution P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a related party to the CD and in that event, such a party, in terms of law, laid down in proviso to section 21(2) of the code could not have any right of representation, participation or voting in a meeting of CoC and in such a scenario, perhaps the fate of various resolutions, adopted in CoC would have been different. 20. To support such a contention that RP has a mandatory duty of doing due diligence to certain the related party status of the members of the CoC, my attention was drawn to the decision of Hon'ble Supreme Court in Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta [Civil Appeal No.9582 of 2018, dated 4-10-2018]. The relevant part thereof is also reproduced below:- "Thus, the importance of the Resolution Professional is to ensure that a resolution is complete in all respects, and to conduct a due diligence In order to report to the Committee of Creditors whether or not it is in order. Even though it is not necessary for the Resolution Professional to give reasons while submitting a resolution plan to the Committee of Creditors, it would be in the fitness of things If he appends the due diligence report carried out by him with respect to each of the resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of such intimation with anyone makes such conclusion inevitable. 25. It has also been pointed out that the information relating KYCs of the promoters was sought for at a stage when the CIRP had almost entered into final phase which is certainly not in the tune of arrangements of things as envisages in the Code where time is the essence since the Code prescribes very specific period for completion of each and every stage of CIRP. In the face of such revelation, contention of the applicant that since one of the members of the CoC was the related party to the CD and since such a member of the CoC was allowed to have representation, participation or voting in a meeting of CoC, the entire CIRP becomes a nullity is nothing more than a bundles of claims without any substance whatsoever. 26. Learned counsel appearing for the applicant had also drawn my attention to the provisions of Section 29A(c) of the Code of 2016 to contend that at the time of submission of resolution plan by the SMAIT, it was hit by the prohibition in aforesaid provisions of law. For ready reference, the provisions of Section 29A(c) is reproduced below:- "Section 29 A [29A, Persons not eligible to be resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date of his release from imprisonment: Provided further that this clause shall not apply in relation to a connected person referred to in clause(iii) of Explanation I]; (e) is disqualified to act as a director under the Companies Act, 2013 (18 of 2013): [Provided that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;] (f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets; (g) has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code: [Provided that this clause shall not apply if a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a resolution plan approved under this Code or pursuant to a scheme or plan approved by a financial sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amely, India Growth Opportunity Fund had invested in the Oddisha Slurry Pipeline Limited (in short "OSPIL") and have around 69% shareholding and management control over the OSPIL, The OSPIL had defaulted in making payment to IDBI Bank Ltd. and the debt due from the OSPIL was declared NPA and the same was, therefore, referred to NCLT but such application was not admitted as yet as informed by the applicant. Such a fact was brought to the notice of the CoC in its 5th meeting by the applicant. Since the applicant has come under the prohibition enunciated in Section 29A (c) of the Code, on this count also, the Resolution Plan submitted by the SMA1T (RA) is required to be rejected. 28. The learned Sr. Counsel, Ms. M. Hazarika, however, submits that the aforesaid contention has no basis at all. It is an admitted position that the RA is an alternative investment fund registered with the Securities & Exchange Board of India. Sub-clause (e) to second Explanation to clause (j) of Section 29A clearly declares that an Alternative Investment Fund, registered with the SEBI, is exempted from the purview of Section 29A (c). 29. In regard to alleged preferential treatment provided to SREI Infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in regard to furnishing of other information vide email dated 29-09-2018 from RP addressed to the applicant. For ready reference, same is reproduced below: 'Dear Yogesh, With reference to the trial mail, we pursued /or KYCs of the promoters namely Vinay Goenka, Usha Goenka, Usha Goenka, Sunita Goneka and Caurav Goenka with KMPs of the Corporate Debtor. However they have shown their inability to arrange for the KYCs of the promoters as requested by your good office. Moreover the KMPs have stated that the given assets are not owned by the corporate debtor but are third party assets of Vinay Goenka, Usha Goenka, Sunita Goenka and Caurav Goenka and the Guarantee Deeds have been executed solely in favour of SRIE Infrastructure Finance limited and to no other Financial Creditor. Moreover the Guarantee is limited to the value of respective holding of Agricultural Land. They have further requested that one should refer Point No.1 in each respective deed of guarantee which reads as under: "To be liable for the secured obligations under the IDM debentures and Arcil debentures respectively provided that the guarantors liability to pay any amount under this deed shall be discharge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP has provided Information Memorandum, Evaluation Matrix, RFFP and other relevant documents to those Prospective Resolution Applicants (PRAs in short) and also obtained from them Confidentiality Undertaking/Non-Disclosure Agreement and the last date for submission of Resolution Plan was fixed on 01.10.2018. 36. However, the RP had received only one resolution plan from SMAIT within the stipulated period meaning thereby that in the event of failure of RA herein too to submit the resolution plan under consideration, there would have been no other option but to allow the CD to go into liquidation. The Hon'ble Supreme Court/Hon'ble NCLAT have held that revival of a sick corporate debtor is a rule, whereas liquidation is an exception. In the face of such observations from the Hon'ble Supreme Court/Hon'ble NCLAT and also in view of the facts, which I have recorded hereinbefore, I am of the opinion that allegation that the constitution of CoC being bad for violation of mandate in Proviso to Section 21(2) of the Code of 2016, sounds pretty unconvincing. 37. As far as the contention that the Resolution Plan, submitted by the SMAIT, cannot be accepted for the RP's viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compared to the Class A Secured Creditor, and who are not having first charge on the fixed assets/current assets of the company. 6.1.10 In the event of liquidation, the Secured Creditor having exclusive charge on the brand value of the corporate debtor and first charge on the fixed asset/current asset block of the corporate debtor if exercises the SARFAESI rights available to them, therein that event, no other creditors either financial or operational, would get any amount through the waterfall arrangement, as provided in Section 53 of the Code. 6.1.11 On this logic, the treatment proposed to be accorded to the different class of secured creditors cannot be seen as arbitrary, illegal or contrary to the provisions of the I&B Code, 2016 and/or the CIRP Regulations. 6.1.12 In SreeMetahks Ltd. v. SREI Equipment Finance Ltd. (07.11.2017-NCH-Kolkata): MANU/NC/1686/2017 the Hon'ble National Company Law Tribunal, Kolkata Bench while dwelling upon similar facts while rejecting the argument of creation of 'a class within a class' has upheld the procedure adopted in the proposed Resolution Plan and had rejected the contention that 'the events that may unfold later at liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 31 of the Code of 2016 also show that a heavy duty is cast on this Authority to satisfy itself before giving a seal of approval to the Resolution Plan, already approved by CoC under Section 30 (4) of the Code of 2016 that the Resolution Plan, so approved, meets the requirement of law as specified in Section 30 (2).Pursuant to the jurisdiction conferred upon this Adjudicating Authority by Section 31 of the IBC 2016, as set out above, I have examined the Final Resolution Plan and I find that the mandatory requirements have been dealt with in the Final Resolution Plan as follows: (a) Clause 8 and Clauses 2 & 3 of Format-VA of the Resolution Plan comprehensively provides for dealing with the interest of all the stakeholders of the corporate debtor including financial creditors and operational creditors of the corporate debtor. (b) The terms and implementation schedule of the Final Resolution Plan are provided under Clause 4 of Format-VA of the Resolution Plan. (c) The Final Resolution Plan provides for the payment of insolvency resolution process costs in priority over other payments under Clause 3.1 of Format-VA of the Resolution Plan. (d) As per the Final Resolution P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause No. xxxi of Glossary of terms in Format-VA of the Resolution Plan provides for the composition of the Supervisory Committee 43. The Resolution Professional has submitted the required Compliance Certificate in Form H of the Schedule certifying that the Final Resolution Plan is in conformity with the provisions of IBC 2016 and the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 including Section 30(2) of the IBC 2016 and Regulations 37(1), 38(1), 38(1A), 38(2), 38(3) and 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 and does not contravene any of the provisions of the law for the time being in force. 44. In Para No.7 of the compliance certificate in Form H, the amounts provided for the stakeholders under the Resolution Plan is as under: (Amount in Rs. lakhs) Sl. No. Category of Stakeholder* Amount Claimed Amount Admitted Amount Provided under the Plan# Amount Provided to the Amount Claimed (%) 1. Dissenting Secured Financial Creditors* NA* NA* NA* NA* 2. Other Secured Financial Creditors 979,33.38 823,64.31 170,51.00 17.41% 3. Dissenting Unsecured Financial Creditors* NA* NA* ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of the benefits listed above apart from others as provided in the Final Resolution Plan it would be in the best interest of the company, its employees in particular, public in general and also in the interests of financial creditors and operational creditors to accept the Final Resolution Plan in question. 50. In light of the above, I hold that the Final Resolution Plan is in conformity with the provisions of Section 30 (2) of the IBC, 2016 and I approve the same plan by the following orders: "(a) The Final Resolution Plan as submitted by SREI Multiple Asset Investment Trust (Vision India Fund) which is approved by the CoC in its Sixth meeting dated 20.10.2018 vide e-voting held on 22.10.2018 with 92.74% votes in terms of Section 31(1) of the IBC is hereby approved; (b) The Approved Final Resolution Plan shall come into force with immediate effect; (c) The moratorium Order passed under Section 14 shall cease to have effect; (d) All relevant parties in relation to the Final Resolution Plan are bound by the terms and conditions mentioned therein in accordance with Section 31(1) of the IBC 2016; (e) All relevant parties are directed to extend full cooperation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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