TMI Blog2019 (5) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... truction Company Limited, JMFARAC - March, 2018 - Trust and Reliance Industries Limited in respect of the Corporate Debtor - Section 53 of the Code lists the priorities to be given to the beneficiaries, of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have an edge over the others. The preamble of the I B Code aims to promote resolution over liquidation. The purpose of resolution is maximization of value of assets of the 'Corporate Debtor' and thereby for all creditors. It is not maximization of value for a 'stakeholder' or 'assets of a stakeholder' such as creditors and to promote entrepreneurship, availability of credit and balance the interests. The first objective is 'resolution'. The second objective is 'maximization of the value of assets of the 'Corporate Debtor' and third objective is 'promoting entrepreneurship, availability of credit and balancing the interests'. This objective of the I B Code is sacrosanct - The 'I B Code' defines 'Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties : Mihir Thakore, Sr. Advs., Manish Bhatt, Sr. Adv. Sapan Gupta, Ms. Veena Sivaramakrishnan, Ms. Grishma Ahuja, Siddhant Kant, Shalin Jani, Nishant Doshi, Ms. Mrida Lakhmani, Advs., Navin K. Pahwa, Sr. Advs., Prateek Kumar, Ms. Sneha Janakiraman, Ravi Pahwa, Ms. Himani Chhabra, Advs., Saurabh Amin, Adv., Kunal P. Vaishnav, Adv., Raheel Patel, Adv., Dr. Hiten Parikh, PCA, Aditya D. Davda, Adv., Sandeep Singhi, Ms. Trisha Baxi, Nirag Pathak, Adv., Kumaresh K. Trivedi, Suman Khare, Akshat Khare, Advs. and Mohit Gupta, Advocate ORDER Per : Ms. Manorama Kumari, Judicial Member. The instant application (IA) No. 259 of 2018 in CP(IB)No. 48/2017, is filed by the applicant, the Resolution Professional of Corporate Debtor M/s. Alok Industries Limited, under Section 30(6) read with 31(1) of the Insolvency and Bankruptcy Code, 2016 (as amended), read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (as amended), for submission and approval of the Resolution Plan submitted by Respondents No. 1 to 3 in respect of the Corporate Debtor with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pass an order directing that the powers of the suspended board of directors of the Corporate Debtor shall remain suspended till the Resolution Applicants acquire control of the Corporate Debtor (i.e. Closing Date) in the manner set out in the Resolution Plan; and/or (i) Pass such other order/orders as it may deem fit and proper in the facts and circumstances of the case. 2. For the sake of convenience, it is mentioned herein that: 2.1 CP(IB)No. 48/2017 was filed by State Bank of India, the Financial Creditor (Applicant) under section 7 of the Code read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authorities) Rules, 2016 seeking initiation of Corporate Insolvency Resolution Process against Alok Industries Limited (hereinafter referred to as Corporate Debtor having registered office at 17/5/1 521/1, Rakholi/Saily, Silvassa - 396 230 in the Union Territory of Dadra and Nagar Haveli and having its corporate office at 2nd and 3rd Floor, Tower B, Peninsula Business Park, G.K. Marg, Lower Parel, Mumbai - 400 013. 2.2 The said CP(IB) No. 48/2017 was admitted on 18.07.2017 by this Adjudicating Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved by the CoC as the requisite percentage i.e. 75% of the voting share (as per the then required criteria) for approval of the resolution plan as per Section 30(4) of the Code was not received. The Resolution Plan received only 70.28% assenting voting shares of the CoC. The said fact was informed to the Resolution Applicants vide letter dated 12th April, 2018. On receipt of the letter of RP, the Resolution Applicants on the very date i.e. on 12.04.2018 requested RP by way of email, to allow them to submit another resolution plan for the Corporate Debtor. Accordingly, RP, looking to the time constraint as CIRP was due to expire on 14.04.2018, allowed the Resolution Applicants to submit a resolution plan subject to ratification by the CoC. 4.3 It is stated that the Resolution Applicants submitted Resolution Plan dated April 12, 2018, on April 13, 2018. Considering the paucity of time with respect to the CIR process of the Corporate Debtor, the RP requested the members of CoC to consider and waive the requirement of inviting fresh Expressions of Interest and ratify the negotiations concluded by the RP, its advisors and the CoC's advisors with the Resolution Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that in pursuance of the said amendment, the RP received a letter dated June 08, 2018 from the Resolution Applicants, stating inter alia, that since the Resolution Plan was voted in favour by the CoC in its fourteenth meeting in excess of the threshold of sixty six per cent (66%) as stipulated in the Ordinance 2018, the RP should withdraw the Liquidation Application and file an application under Section 30(6) of the Code before this Adjudicating Authority for the approval of the Resolution Plan as the matter is pending for necessary orders on Liquidation Application. As such on the date of hearing, RP apprised this Adjudicating Authority, of the latest position consequent upon which, this Adjudicating Authority vide its order dated 11th June, 2018, held, that Ordinance 2018 will apply to all the cases pending adjudication which includes the matter of Corporate Debtor and directed the RP to convene a meeting of CoC and present the Resolution Plan submitted by the Resolution Applicants before the CoC for its re-look and proper consideration, in light of the Ordinance 2018 on the same parameters as it were earlier considered. This Adjudicating Authority further held that no fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en hereunder: Sl. No. Section/Regulation Requirement of the Code and CIR Regulations Clause of the Resolution Plan 1. Section 29A of the Code The disqualification under Section 29A of the Code should not apply. In terms of Clause 12.1 (v) of the Resolution Plan, the Resolution Applicant has confirmed that they are in compliance with Section 29A of the Code. Further, to confirm the eligibility of the Resolution Applicants under Section 29A of the Code, reference has been placed on the following documents; ( i ) an affidavit from the authorized signatory of JM Financial Asset Reconstruction Company Limited dated March 26, 2018 in the prescribed format, confirming its eligibility under Section 29A; ( ii ) an affidavit from the authorized signatory of Reliance Industries Limited dated March 26, 2018 in the prescribed format, confirming its eligibility under Section 29A; ( iii ) certificates provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) the list of 'related parties' of RIL along with the details of the manner in which a party has been classified as a related party of RIL. ( v ) Annexure 3 of the resolution Plan, wherein JM Financial Asset Reconstruction Company Limited and RIL have confirmed that neither JM Financial Asset Reconstruction Company Limited, RIL nor any of its connected persons have been convicted of any criminal offences during the preceding 5 years. ( vi ) Annexure 3 of the Resolution Plan read with the Affidavits submitted by JM Financial Asset Reconstruction Company Limited and RIL wherein, JM Financial Asset Reconstruction Company Limited and RIL have confirmed that neither JM Financial Asset Reconstruction Company Limited, RIL nor any of its connected persons are disqualified to act as a director under the Companies Act, 2013. ( vii ) Annexure 3 of the Resolution Plan read with the Affidavits submitted by JM Financial Asset Reconstruction Company Limited and RIL wherein, JM Financial Asset Reconstruction Company Limited and RIL have confirmed that neither JM Financial Asset Reconstruction Company Limited, RIL nor any of its connected pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor ( i.e . ₹ 4,433 crores) is insufficient to cover the financial creditors in full, the liquidation value that is due to the operational creditors including the government dues ( OC ), is calculated as NIL . Resultantly, no payments are proposed to be made to the OCs (except for workmen and employees of the Corporate Debtor in accordance with Clause 3.4 of the Resolution Plan and the dues owed by the Corporate Debtor to certain OCs (to each of whom the Corporate Debtor, as on the Insolvency Commencement Date, owes up to ₹ 3,00,000 (Rupees Three Lakhs) and whose details are set out in Annexure 9 of the Resolution Plan), which dues aggregates to ₹ 4,83,47,321 (Rupees Four Crores Eighty-Three Lakhs Forty-Seven Thousand Three Hundred Twenty-One) under the Resolution Plan. Apart from the above, no source of funds has been identified for any payment to such OCs as no other payments are proposed to be made to any other operational creditor. 4. Section 30(2)(c) of the Code (c) provides for the management of the affairs of the Corporate Debtor after approval of the resolution plan. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized and will be sufficient to pay the insolvency resolution process costs and any excess insolvency resolution process costs up to an aggregate amount of ₹ 284,00,00,000 (Rupees Two Hundred Eighty Four Crores) 8. Regulation 38(1)(b) of the CIR Regulations A resolution plan shall identify the specific source of funds that will be used to pay the - (b) liquidation value due to operational creditors and provide for such payment in priority to any financial creditor which shall in any event be made before the expiry of thirty days after the approval of a resolution plan by the Adjudicating Authority. As stated above, as per Clause 3.3.1 of the Resolution Plan, since the liquidation value that is estimated for the Corporate Debtor ( i.e . ₹ 4,433 crores) is insufficient to cover the financial creditors of the Corporate Debtor in full, the liquidation value that is due to the OCs, which includes the government dues is calculated as NIL . Resultantly, no payments are proposed to be made to the OCs (except for workmen and employees of the Corporate debtor in accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provide: ( a ) the term of the plan and its implementation schedule; Clause 6.1 states the term of the resolution Plan and Annexure 2 of the Resolution Plan provides the implementation schedule along with an indicative timeline. 12. Regulation 23(2)(b) of the CIR Regulations (b) the management and control of the business of the corporate debtor during its term; and Reference is made to Point 4 of this table above. 13. Regulation 38(3) of the CIR Regulations (3) A resolution plan shall contain details of the resolution applicant and other connected persons to enable the committee to assess the credibility of such applicant and other connected persons to take a prudent decision while considering the resolution plan for its approval. Explanation : For the purposes of this sub-regulation, - ( i ) 'details' shall include the following in respect of the resolution applicant and other connected person, namely:- (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Closing Date. 15. On filing of the instant application i.e. IA 259 of 2018 for approval of Resolution Plan and during its pendency, following IAs were filed which are as under: IA P-067 of 2018 in IA 135 of 2018 in CP(IB) No. 48 of 2017 IA 282 of 2018 in CP(IB) No. 48 of 2017 IA 326 of 2018 in CP(IB) No. 48 of 2017 IA 425 of 2018 in CP(IB) No. 48 of 2017 IA 20 of 2019 in CP(IB) No. 48 of 2017 IA 41 of 2019 in IA 259 of 2018 IA 87 of 2019 in CP(IB)) No. 48 of 2017 IA 88 of 2019 in CP(IB) No. 48 of 2017 16. Facts of each IA are as under: 16.1 IA No. P-67 of 2018 in IA No. 135 of 2018 The instant application is filed by SICOM Ltd., with prayer to be impleaded as party respondent in IA No. 135 of 2018 by Respondent No. 1 Alok Employees Benefits and Welfare Trust. On perusal of the records, it is found that the applicant is one of the financial institutions/bank (Financial Creditor) who have voted against the Resolution Plan having both major and mino ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Corporate Debtor company by reducing the face value of each issued and outstanding equity share of the Corporate Debtor from ₹ 10/- to ₹ 1/- (Face Value Reduction). The said Resolution Plan is against the public and hence required to be rejected. 16.4 IA 425 of 2018 It is stated that the applicant is a Financial Creditor of the Corporate Debtor. The Corporate Debtor had availed credit facilities from ING Vysya Bank Limited and by an order dated 31.03.2015 of the Reserve Bank of India, ING Vysya Bank Limited was merged with the applicant with effect from 01.04.2015 with the borrowings from other lenders. The claim of the applicant as verified by the RP is about ₹ 117.66 crores. The applicant further states that for due repayment of the credit facilities, the Corporate Debtor created securities over its assets in favour of the applicant. For due repayment of the credit facilities availed by the Corporate Debtor, the existing promoters of the Corporate Debtor, namely (i) Alok Infrastructure Limited, (ii) Surendra B Jiwrajka, (iii) Dilip B. Jiwrajka, (iv) Ashok B. Jiwrajka, and (v) Alok Knit Exports Private Limited ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seller of the gas if the buyer fails to take or receive minimum guaranteed demanded quantity of gas. In other words, in the instant case, the Corporate Debtor has guaranteed a minimum demand of 0.185 MMSCMD approximate average daily volume quantity of gas per day from the applicant under the Article No. 6.1 of the GSA. If the Corporate Debtor fails to consume / receive the said minimum guaranteed demanded Natural Gas then he would be required to pay charges for the said minimum guaranteed gas quantity which he has failed to consume/receive. Therefore, in terms of Article 14 of GSA, the applicant has raised its claim letters/bills towards the TOP charges or claiming the payment of gas which was made available by the applicant as a guaranteed demand to the Corporate Debtor, but the Corporate Debtor has not consumed/received it. The applicant has already raised its claim towards the said unpaid contractual dues by the Corporate Debtor in the year 2014, 2015 and 2016. As the Corporate Debtor has failed to respond to the said demand of the applicant, the applicant has approached the ld. Civil Court of Dadra and Nagar Haveli under Section 9 of the Arbitration 85 Conciliation Act, 1996 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of which they can challenge the terms of a proposed Resolution Plan and Section 61 statutory right of appeal on the applicants. 16.8 IA 88 of 2019 It is stated by the applicants that they are operational creditors of the Corporate Debtor Company and their outstanding dues are ₹ 38,49,915/- It is stated by the applicants that applicants have come to know that in Resolution Plan, the trade creditors i.e. operational creditors have been allotted only 4.83 crores. Further, only trade creditors with outstanding of less than 3 lakhs are being paid 100% of their verified claims while the rest of the trade creditors have been assigned NIL value. In support of their contention, the applicants have stated that Bankruptcy Law Reforms Committee, which conceptualized the Code, used inter alia two design principles, namely (1) the liabilities of all creditors, who are not part of the process, must also be met; and (2) the rights of all creditors shall be respected equally. The Code, accordingly, envisages resolution for maximizing the value of the assets of the firm to promote entrepreneurship, and availability of credit, and balance the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of reclassification of the short-term loan facility extended by the assignor to the Corporate Debtor was duly deliberated upon and considered at two separate meetings of the CoC on 16.08.2017 and 04.10.2017 (annexed as Annexure G and H to the Interlocutory Application). That, the allegation made by the applicant that he has been discriminated against the benefit of other lenders is not tenable, inasmuch as, the same is evident from the email dated 16.06.2018 addressed by the respondent No.1 to the applicant (annexed as Annexure J to the Interlocutory Application). 17.3 Reply of Respondents in IA No. 326 of 2018 The instant application is filed by Shah Rajul Devidas and Another. Learned lawyer appearing on behalf of the RP submitted that the applicants being equity shareholders of Alok Industries Limited (Corporate Debtor) have no locus standi to intervene in the present proceedings either in terms of the Insolvency and Bankruptcy Code, 2016 (Code) or under any other law in force. It is further submitted that the Resolution Applicants have taken care of all the stakeholders, members, creditors, employees, workmen etc as per liquidation value i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CoC has to be given primacy. 17.6 Reply of Respondents in IA No. 41 of 2019 In the instant application, ld. Lawyer appearing on behalf of the RP submitted that the application is filed at extremely belated stage i.e. on 24th January, 2019 whereas the Resolution Plan is of dated April,. 2018 and the same was approved by the CoC in the month of June, 2018. That, allegations with regard to the discrimination of the creditors are not maintainable inasmuch as the CoC or the Resolution Applicants have to follow the Rules and Provisions of IB Code. Further, the Resolution Applicant has taken care of all the member/shareholder/ stakeholder as per the liquidation value and as per section 53 (1) of the Code. In this regard, it is stated that Legislature in his wisdom has categorically elaborated jurisdiction of RP and the Appellate Authority has only to review the compliance of the Resolution Plan per Section 30 (2) of the Code and Regulations. It is further stated by the respondent(s) that above applicant(s) has/have failed to make out any case as to why the present interlocutory application(s) has/have been filed at such belated stage in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he recent decision given by the Hon'ble Supreme Court in K. Sasidhar v. Indian Overseas Bank. It is held that supremacy of CoC and their commercial wisdom cannot be questioned. It is also observed that National Company Law Tribunal has no jurisdiction and authority to analyze or evaluate the commercial decision of the CoC to enquire into the justness of the rejection of the Resolution Plan by the dissenting financial creditors. While giving the decision, the Hon'ble Supreme Court has further observed that .... Non-recording of reasons for approving or rejecting the Resolution Plan by the concerned financial creditor during the voting in the meeting of CoC would not render the final collective decision of CoC nullity per se.... 19. As far as differential treatments to different classes of creditors under the terms of the Resolution Plan are concerned, RP has cited the judgment of the Hon'ble Supreme Court in the matter of Swiss Ribbons (P.) Ltd. v. Union of India Ors. The above said replies put forward by the ld. Lawyer of the RP has not only been supported by the ld. Lawyer of the CoC and the Resolution Applicants, but they have also pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not only delayed one but the conduct of the applicants goes on to show that they want to stall the proceedings for the reasons best known to them. Had there been any bona fide action/claim, they would have approached the Adjudicating Authority on the very threshold of rejection of their claim either by the RP or by CoC. There would have been no reason to sit on the fence such conduct itself shows the lack of bona fide on the part of the applicants (interveners). 20.4 Further, it is specifically provided in the Code under section 30(2) (e) of the Insolvency and Bankruptcy that Resolution Plan should not contravene any of the provisions of law for the time being in force. As per Explanation Clause to section 30(2) of the Insolvency Code (inserted w.e.f. 06.06.2018) which read as under For the purpose 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 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 . Under such circumstances, when the Code has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors'. 20.6 That with regard to IA No. 41 of 2019 filed by the Gail India Limited, their status has already been considered as Operational Creditor in IA 413 of 2018. Thus, in the event, only liquidation value is payable to the operational creditors and such amount shall be paid in priority to the amount payable to the financial creditors. Further, Resolution Applicant has already clarified before the Adjudicating Authority, that there would be no demand for gas from the applicant of IA 41 of 2019 arising out of any prior obligation under Gas Sale Agreement dated 27.05.2013 (GSA) until the closing date. It is further categorically submitted by the Resolution Applicant that no gas has been availed of by the Corporate Debtor under GSA after January, 2014. However, if applicant wishes to continue supply to the Corporate Debtor, it may separately negotiate on the same with the Resolution Applicant and the same does not fall within the ambit of the Resolution Plan. The Resolution Applicant had already clarified the position. 20.7 It is pertinent to mention that as per the total financial outlay, the liquidation value payable/due to the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. But the Applicant's rights in P-67 of 2018 were kept reserved for final hearing. However, a provision has been made in the Total Financial Outlay of the Resolution Plan that in the event there are dissenting financial creditors, then the liquidation value due to the such dissenting financial creditors will be discharged out of the financial creditors settlement amount, in priority to any payments being made to the other financial creditors who voted in favour of the Resolution Plan. On perusal of the entire Resolution Plan, we, hereby notice that though there are/were heavy haircut, however, the Resolution Plan provides for payment of insolvency resolution process costs in the manner specified by the Code, in priority to the repayment of the other debts of the Corporate Debtor and also provided for the payment of debts of operational creditors as per the waterfall mechanism mentioned under section 53 of the Code. 21. The present application i.e. IA No 259 of 2018 has been filed for approval of the Resolution Plan under section 30(6) read with section 31(1) of the Code (as amended) read with Regulation 39(4) of the Insolvency and B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the insolvency commencement date (including the liquidation value to the company's workmen) amounting to ₹ 19,33,00,000/- (Nineteen Crores Thirty-three Lakhs). 21.4 The Resolution Applicants have undertaken insolvency resolution of the Company/Corporate Debtor in the manner as stated in Clause 1.2 at Page No. 5 of the Resolution Plan under the head - Key steps of the Plan which is the part and parcel of the Resolution Plan as well as the application. The said Resolution Plan also includes the distribution of financial outlay in Clause No. 1.3 at Page 14 under the head Distribution of Financial Outlay which gives the details in the order of priority and the payments thereof proposed to be made to the members, shareholders and all stakeholders etc. For the sake of convenience, the same is reproduced herein below: Clause 1.3 Distribution of the Total Financial Outlay: The order of priority of distribution using the Total Financial Outlay, is set out below: Order of Priority Total Financial Outlay Amount (in Rs.) (in Crores) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing Promoter Group shall be paid in accordance with this Plan). Note 2: Please note that payments to and by the Company under any supply and offtake arrangement with RIL will be made to augment and meet the additional working capital requirements of the Company. Note 2: This amount shall stand reduced by an amount determined in accordance with Section 1.2(v)(b)(A) of this Plan towards any Excess CIRP Costs. 441.84 Eighth Capital expenditure of the Company 500 TOTAL FINANCIAL OUTLAY 6,252 Note: In the Resolution Plan, the total financial outlay is written as ₹ 6,252 crores whereas the actual total comes to ₹ 6,247.17 crores. 22. At this juncture, we find it expedient to refer section 53 of the Code i.e. distribution of assets: Section 53(1) Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f recipients, if the proceeds are insufficient to meet the debts in full; and (b) the term workmen's dues shall have the same meaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). 23. Thus, Section 53 of the Code lists the priorities to be given to the beneficiaries, of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have an edge over the others. 24. It would also be pertinent to mention here that Operational Creditors have no locus standi as far as approval of the Resolution Plan by the CoC is concerned. As per Section 24(3)(C), they are not eligible to attend and vote at the meetings of CoC if they are holding less than 10% of the total debt. Section 24(3) of the Code reads as under: Section 24: (3) The Resolution Professional shall give notice of each meeting of the committee of creditors to - (a) member of [Committee of creditors, including the authorized representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The 'I B Code' defines 'Resolution Plan' as a plan for insolvency resolution of the 'Corporate Debtor' as a going concern. It does not spell out the shape, colour and texture of 'Resolution Plan', which is left to imagination of stakeholders. Read with long title of the 'I B Code', functionally, the 'Resolution Plan' must resolve insolvency (rescue a failing, but viable business); should maximize the value of assets of the 'Corporate Debtor', and should promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. Looking to the object of IBC as well as the Legislative intent, it is amply clear that the Resolution is Rule and the Liquidation is an Exception . Liquidation brings the life of a corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only if there is any surplus after satisfying the claims of a prior set of stakeholders fully. 'The IB Code', therefore, does not allow liquidation of a corporate debtor' di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdom of the dissenting financial creditors and that too on the specious ground that is only an opinion of the minority financial creditors. The fact that substantial or majority per cent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f 06.06.2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter-III of the I B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October, 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October, 2017; and now after the amendment w.e.f. 06.06.2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed resolution plan, de jure, entails in its deemed rejection. 35. Whereas, the discretion of the adjudicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it meets the requirement of Section 31 r/w Section 30(2) of the Code. Therefore, the present application IA 259 of 2018 is allowed subject to certain observation with regard to the Clause No. 3.2.3(iii) and clause No. 11 of Resolution Plan and sub-para (n) of paragraph 33 along with the prayers (f) of paragraph 35 of IA 259 of 2018 which cannot be allowed as these are the subject matter of the various Competent Authorities having their own jurisdiction. 27. In this regard, this Adjudicating Authority is of the view that Clause No. 3.2.3(iii) at Page No. 19 of the Resolution Plan viz. all legal proceedings initiated before any forum by or on behalf of the financial creditors to enforce any rights or claims against the Company/Corporate Debtor or enforce or invoke any security, interest and/or guarantee, over the assets of the Company/Corporate Debtor, shall immediately, irrevocably and unconditionally stand withdrawn, abetted, settled and/or extinguished. Provided however any rights or claims of the financial creditors with respect to Existing Promoters Guarantees shall continue against such guarantors . Approval of the Resolution Plan does not mean automatic waive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Resolution Plan, even if, any of the waivers and reliefs sought under this Clause 11 of the Plan are not received or granted, the Resolution Applicant(s) will implement the Plan in accordance with its terms. Hence, Clause No. 9 of the Resolution Plan is also subject matter of the various Competent Authorities to whom Resolution Applicant(s) may approach. 28.2 Thus, not allowing the above said Clause No. 3.2.3 (iii) and Clause No. 11.1, 11.1.1 to 11.1.20 of the Resolution Plan, along with the prayers vide sub-para (f) of Paragraph No. 35 and pleadings made thereon in sub-clause (n) of Paragraph No. 33 of application being IA No. 259 of 2018, is not going to make any hindrance for proper implementation of the Resolution Plan as those are the subject matter of the concerned/appropriate Competent Authorities. The Resolution Applicant(s) has/have liberty to approach Competent authorities for any concession, relief, exemption or dispensation as the case maybe. 28.3 It is further directed that: i. The approved Resolution Plan shall come into force with immediate effect. ii. The Resolution Plan shall be subject to the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X
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