TMI Blog2019 (3) TMI 1524X X X X Extracts X X X X X X X X Extracts X X X X ..... rm the Adjudicating Authority the steps taken before BIFR Authority so that a due cognizance of resolution plans, earlier submitted, can be/ must be taken into account. It is correct on the part of the Corporate Debtor/Applicant to move separately an application U/s 30 of IBC which is meant for “submission of resolution plan”. This Applicant has made an attempt by filing this Application to place on record the ‘Resolution Plan’ already considered and taken into account by the BIFR Authorities. There should not be any ambiguity that once the proceedings are to be transferred from BIFR authorities to NCLT authorities, it is but natural that those resolution plans must also be treated as transferred and thereupon ought to be treated as “resolution plan” falling within the ambits of S. 30 of the Code. As far as the petition U/s 10 is concerned, it is almost mechanical for the Adjudicating Authority to admit the same because in all such cases there is hardly any objector. Same is the position at present. On admission, Corporate Insolvency Resolution Process shall commence henceforth, and IRP shall be appointed. He shall constitute COC and convene the meeting. For the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (MA 303/2019) on 23.01.2019 seeking Order u/s.30 and Section 31 of Insolvency Code. The main Petition and MA both are decided by this common Order. 3. In the requisite Form No.6, under the Head Particulars of Corporate Applicant the description of the petitioner is stated to be having registered address at Jeevan Udyog Building, 3rd Floor, 278, D.N. Road, Fort, Mumbai-400001. 4. Further under the Head Particulars of Financial/Operational Debt the total amount of Financial Debt is stated as ₹37,611.32 Lacs and Operational Debt stated to be of ₹59,075.35 Lacs are outstanding and in default. 5. The Petitioner filed this application owing to its inability to repay the Debt claimed by various Financial Operational Creditors as hereunder: Sr. No. Name of the Financial Creditor Facility Outstanding Amount (₹ in Lacs) A. Secured Creditors (Banks Financial institutions) 1. HDFC Bank Ltd. Working Capital Demand Loan 4,455.32 2. Edelweiss Asset R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Plan is to be approved in terms of Section 31 of the Insolvency and Bankruptcy Code, 2016. (d) To grant moratorium u/s 14 of the Insolvency and Bankruptcy Code, 2016 till the Resolution Plan is approved. 8. To deal with MA 303/2018, it is necessary to go into the background of this case. The Corporate Applicant filed reference on 02.06.2011 before BIFR as case No. 34/2011. BIFR vide order dated 12.03.2012 declared the Corporate Applicant as sick industrial company and appointed Bank of India to act as Operating Agency ( O.A.) for formulation of the Draft Rehabilitation scheme (DRS). A Modified DRS (MDRS) was submitted to the OA and BIFR on 01.07.2016. Certain Miscellaneous Applications were pending at the time when Sick Industrial Companies Act was repealed on 2.11.2016 vide Notification No. S.O. 3568E. The proceedings before BIFR stood abated after coming into force section 4(b) of the SICA Repeal Act. 9. The case of the Corporate Applicant was that the dues of approximately 95% secured creditors were already settled. The said DRS submitted was already substantially implemented but could not be sanctioned due to vacancy in the bench of BIFR. The remedy offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the Hon'ble BIFR its reference under Section 15(1) of the SICA, 1985 based on statutory relation, which came to be registered as Case No. 34/2011. 12.03.2012 In exercise of powers conferred under S. 17(3) of SICA, vide its order dated 12.03.2012, the Hon'ble BIFR declared the Corporate Applicant to be a Sick Industrial Company 30.06.2012 to 31.10.2012 As per the directions of the Hon'ble BIFR and in furtherance of the DRS of the SICA, the Corporate Applicant submitted its Draft Rehabilitation Scheme to the Hon'ble BIFR, the lenders and concerned parties. Thereafter several changes were incorporated in the Draft Rehabilitation Scheme (DRS) pursuant to the discussions with the Operating Agency (OA) i.e. Bank of India and a revised DRS was submitted to the Hon'ble BIFR and the lenders on 31.10.2012. 31.03.2013 The Hon'ble BIFR pursuant to provisions of Section 16(4) appointed and inducted Mr. Arun Chadha as a Special Director on the Board of the Corporate Applicant with immediate effect. 02.07.2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts eight month hiatus, the Corporate Applicant s DRS could not come up for hearing. October, 2016 The said newly constituted Bench of the Hon'ble BIFR was once again dissolved due to the existence of a vacancy on the Bench on account of absence of a member till 3rd week of October, 2016. 01.11.2016 Section 252 of the IBC, which provides for amendment was to be carried out in the Repeal Act, was notified by the Central Government and therefore, came into force. Accordingly, Section 4(b) of the Repeal Act was amended as provided under the Eighth Schedule of the IBC. Consequently, where once the Repeal Act provided for a reference to Chapter XIX of the Companies Act, 2013, meant specifically for the revival and rehabilitation of such companies, it now provided merely for a reference under the IBC which does not provide for any mechanism for revival and rehabilitation of sick companies. 15.11.2016 The Corporate Applicant had submitted the MDRS dated 30.06.2016, which was not heard for considerable time. Therefore the Corporate Applicant vide letter dated 15.11.2016 requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.11.2017 The Hon'ble High Court has dismissed the writ Petition vide Order dated 01.11.2017 and directed that The Petitioner, if it is so advised may avail of the remedy provided under the Code. As the time period of 180 days has already lapsed, if the Petitioner approaches the NCLT, the request for condonation of delay, if any, be considered if permissible in law. Hence the Corporate Applicant is filing the present Application / Petition under Section 30 31 of the IBC code in CP (FORM 6)NO. of 2016 under section 10 of the IBC Code. 15. This Corporate Debtor had put up his case before the Respected BIFR with the intention that by offering a Resolution Plan the Debt liability of various Banks could be settled under those provisions. In support of the Resolution Plan, the Corporate Debtor has narrated its background that : 1.0 INTRODUCTION BACKGROUND 1.1. M/s. Ashapura Minechem Limited (AML) was originally incorporated on 19.02.1982 as M/s. Ashapura Minechem Private Limited and subsequently converted on 05.01.1993 into M/s. Ashapura Minechem Limited. AML is promoted by Shri Chetan N. Shah and its registered office locate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors, the company has since revised the DRAS on the basis of financial year ended March 31, 2016 keeping in view the payments of the remaining liabilities both for secured unsecured creditors as sell as liabilities under litigation / contingency liabilities. 16. From the side of the Corporate Debtor One Time Settlement was proposed as under:- Details of One Time Settlement arrived at with the Secured and Unsecured Creditors are as under:- Sr. No. Bank Name Liability/Claim (Principal) Settlement Amt. Amount paid as onMar 31, 2018 1 Bank of India 174.79 125.00 125.00 2 Asset Care Reconstruction Enterprise Ltd (Assigned by Axis Bank Ltd, DBS Bank Ltd Federal Bank) 96.31 38.00 38.0 3 HSBC BANK 13.23 7.20 7.20 4 Union Bank of India 38.10 19.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the existing quasi-judicial mechanism in dealing with the aforesaid problem was a cause of grave concern and anxiety. This was adversely impacting India s rating on ease of doing business and investments. Need was felt to replace the said enactments with the Code, having improved and practical provisions with strict and fixed time lines. The objective of the Code is to consolidate and amend the laws relating to insolvency resolution of corporate persons, as per preamble of The Code, in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interest of stakeholders including alteration in the order of priority of payment of government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith and incidental thereto. 18. At the cost of repetition, on 2nd June 2011, the Corporate Debtor had made a reference before BIFR and vide Order dated 12.03.2012 declared as Sick Company under Sick Industrial Companies (Special Provisions) Act, 1985. Thereupon a draft Rehabilitation Scheme and Modified DRS were submitted. At that stage vide Notification No. SO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned or are under implementation; And, whereas the Companies Act, 1956 has been repealed and re-enacted as the Companies Act, 2013 (18 of 2013) which, inter alia, provides for scheme of revival and rehabilitation, sanction of scheme, scheme to be binding and for the implementation of scheme under sections 261 to 264 of the Companies Act, 2013; And, whereas, sections 253 to 269 of the Companies Act, 2013 have been omitted by Eleventh Schedule to the Insolvency and Bankruptcy Code, 2016; And, whereas, clause (b) of section 4 of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 has been substituted by the Eighth Schedule to the Code, which provides that any appeal preferred to the Appellate Authority or any reference made or inquiry pending to or before the Board or any proceeding of whatever nature pending before the Appellate Authority or the Board under the Sick Industrial Companies (Special Provisions) Act, 1985 shall stand abated. Further, it was provided that a company in respect of which such appeal or reference or inquiry stands abated under this clause may make a reference to the National Company Law Tribunal under the Code within one hundr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that if deem fit may avail the remedy provided under the Insolvency Code, however, 180 days had lapsed hence could move request for condonation of delay to NCLT. This is one of the prime reasons that the Petitioner is now before NCLT u/s.10 of The Code and simultaneously seeking an Order u/s. 30 of The Code. 21. An interesting litigation cropped up revolving around the question of validity of the said Notification. In the case of M/s. Spartek Ceramics India Ltd., the Hon ble NCLAT in an Order dated 28.05.2018 [Company Appeal (AT) (Insolvency) 160 of 2017] has taken a view that, quote : 42. The time period of 180 days given therein is for making a reference to the National Company Law Tribunal to treat the application under I B Code without payment of fees, only in respect to cases, where appeal or reference stands abated. It does not mean that the Company cannot file application under Section 10 of the I B Code after 180 days. If the Company prefers any application under Section 10 beyond 180 days, it is required to pay the requisite fee. 43. If the legislature thought it fit that no appeal Against the Scheme already framed or any proceeding before the Board or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the High Court of Delhi in writ Petitions. The High Court of Delhi, by judgment dated 22.,02.2018 (as modified by order dated 17.04.2018) and 14.09.2017, respectively ordered the parties to avail of the alternative remedy of filing an appeal before the NCLAT in view of the Notification dated 24.05.2017 which was done by the appellants in these appeals. 4) As the impugned judgment dated 28.05.20018 has set aside this Notification, and which has been upheld by us, the NCLAT, in both these cases, has dismissed the two appeals so filed, following the main judgment of 28.05.2018. This being the case, we revive the two writ petitioners that had been before the High Court of Delhi in both the appeals before us with liberty to the appellants to amend the aforesaid Writ petitions within a period of four weeks from today. 5) We request the High Court of Delhi to take up the writ petitions at the earliest. It is made clear that pleadings may be completed in both the writ petitions expeditiously, and all points available in fact and law to all parties shall be kept open. 23. Therefore, the latest position of law is that the Hon ble Supreme Court in the case of M/s. Spartek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Bankruptcy Code 2016, some of them as noted by us are as under :- (a) Under the SICA it was provided for timely detection of potentially sick Companies and therefore a speedy determination by a Board of Experts to explore remedial or ameliorative measures. Under the IB Code almost on the same lines the intention is to consolidate and formulate a procedure to reorganize the affairs of a Corporate Body to be proposed by Insolvency Resolution Professional in a time-bound manner. Therefore, under the SICA Act, it was to be formulated by a Board. However, under IB Code, restructuring is to be formulated by an IRP. (b) Under SICA Act, Financial Institutions, Banks etc. were termed as Operating Agencies (O.A.), whereas under IB Code, the terminology is Resolution Professional . However, there is a key departure because the IRP is an independent person as against the O.A. Under Section 15 of SICA Act, the matter was required to be referred to a Board whereas under the provisions of The Code, Insolvency Process is commenced by Insolvency Professional. (c) Under SICA Act, vide section 18(2) it is prescribed that as expeditiously as possible and ordinarily within a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g time limit is directory and not mandatory. The rehabilitation scheme binds the industrial company, the promoter, the participants of the company and the creditors and is in the nature of contract. Therefore, the same principle of statutory interpretation would equally apply in interpreting the rehabilitation scheme as well. Thus, under Section 22(1) of SICA, on expiry of seven years time schedule prescribed in the scheme for settlement of dues of all the other creditors, the protection granted to the respondent-company does not in any manner diminish or is taken away. By reason of non obstante clause under Sub-section (1) of Section 22 of SICA, the company petitions cannot be entertained and there cannot be an order for advertisement of the petitions. 5.2 Likewise, on due analysis of a decision of the Hon'ble Supreme Court pronounced in the case of Madura Coats Limited Vs. Modi Rubber Limited (2016) 7 Supreme Court Cases 603), we have noticed that a legal proposition has been laid down that :- 19. One such situation is where winding-up proceedings are pending and a reference is made to BIFR. This situation occurred in Real Value [(1998)5 SCC 554] where winding-u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehabilitation plan which for some reason or the other could not be finalized and any of the Party of the said DRS/MDRS is not satisfied thus moved Insolvency Petition before NCLT, then because of the impugned action of that solitary party should not hamper or thwart the steps taken so far for rehabilitation or rearrangement of the Debts in question. An altogether fresh exercise is not warranted which may lead to undue embarrassment to the new Investors who have proposed for rehabilitation and restructuring of the Company and its Debts. The comparative study as per above paragraphs have also demonstrated that the steps for rehabilitation of a stressed Company are almost identical, therefore, now it is clear that the repetition of those very steps has no logic and shall not going to get a legal sanctity. Up to that stage where certain steps have already been taken and that the Debts have been restructured, now expected to be honoured and recognized by the newly enacted Code. 5.4 The Petitioner has placed on record the consent letter of most of the Creditors affirming therein that although the amount is owed by the Company to them but have no objection if MDRS dated 25.04.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Code, 2016. However, rest of the compliances are to be made as per the provisions of the Code, some of them specified hereinabove. 9. Accordingly, this CP 1054/I BC/NCLT/MAH/2017 stood admitted. The MA 177/2017 is also hereby made absolute only to the extent as directed. 25. The peculiarity and distinctiveness of this case from other routine cases is that on one hand the Corporate Debtor has moved the impugned petition U/s 10 (CP 4508 of 2018) of the Code i.e. commencement of Corporate Insolvency Resolution Process by declaring itself as insolvent. Simultaneously, on the other hand, this applicant has also moved one Miscellaneous Application (M.A. No. 303 of 2018) invoking S. 30 and 31 of the Insolvency Code. Due to this reason both, i.e. Application as well as the Petition are considered conjoint and decided vide this single judgment. 26. Prima-facie it is evident that due to the repeal of SICA Act the proceedings pending stood abated. On abatement, the proceedings pending are required to be transferred to NCLT within 180 days. So, the Petitioner had no option but to take action by filing a petition U/s 10 of the Insolvency Code. As a consequence, filed this pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SIC Act. There is no requirement for inviting Resolution Plans in this case. As far as the applicability of S. 30 is concerned, a resolution plan is to be submitted by a Resolution Applicant on the basis of the Information Memorandum. But the situation in this case is that a Resolution Plan is already in existence. Not only that the said resolution plan is in existence, but it was duly acted upon. The said resolution plan was already considered by the bankers during SARFAESI proceedings. Those very bankers are now going to constitute CoC under Insolvency Code. This very Consortium has already acknowledged and accepted the resolution plan, hence, the right recourse available is to consider that Resolution Plan as if a resolution plan U/s 30 of the Code. If we adopt this line of action obviously the procedure of Corporate Insolvency Resolution Process shall get simplified and certainly get finalised expeditiously. It is worth to supplement at this juncture that the time is the essence for implementation and finalisation of the process of the Insolvency. 29. Last question to be addressed is whether this petition be admitted or not stands answered in view of the fact that the peti ..... 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