TMI Blog2018 (6) TMI 1617X X X X Extracts X X X X X X X X Extracts X X X X ..... hat all the operational creditors as outstanding in the books of account of WAPL as on the cut-off date shall be paid even though no claims have been received. The payment schedule affirmed That in the resolution plan it is stated that although in one of the Regulation it is provided that only liquidation value is to be considered for payment to operational creditor within 30 days, in priority to financial creditors, but the resolution applicant provides for repayment of dues to the operational creditors more than the liquidated value. Considering the undertaking of the resolution applicant, it is hereby directed that the payment to the operational creditors be made as agreed upon, which may exceed the liquidated value, within the time schedule as described in the resolution plan. The resolution applicant has also explained the means of finance to meet the costs of the resolution plan That through an affidavit the resolution applicant has affirmed that a sum of ₹ 103 lakh has also been paid to BoB towards OTS proposal and affirmed to make the balance payment as per the resolution plan. Subject to the qualifications made hereinabove in the resolution plan and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of treating the said One Time Settlement offer be treated as a resolution plan. A copy of the minutes of the meeting of the CoC meeting held on the 5th of April, 2018 is considered. 5. The resolution professional has also informed that Valuation Reports have been procured depicting average Liquidation Value at ₹ 87.60 lakh. The claim of the financial creditor as per the statement stated to be was of ₹ 1,067.39 lakh. The resolution plan of Mr. Mahendra Wig was placed before the CoC and in the fourth meeting held on 20th April, 2018. In the meeting said resolution plan was approved. 6. While discussing this resolution plan, the learned resolution professional had made it clear that 'expression of interest was invited as per due process of law by publishing in the Newspaper on 4th April, 2018 and in pursuance only Mr. Mahendra Wig had presented the impugned resolution plan, now stood approved by 100 per cent vote of the CoC. 7. Before examining the contents of the resolution plan to record satisfaction of the Bench a legal question is to be answered that in a situation when the resolution applicant Mr. Mahendra Wig is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the corresponding provision of the Act, but this sub-section is silent about the retrospective applicability 7.5 Although the amendment itself is very clear that the provisions of section 29A of the Code had come into force with effect from 23rd November, 2017, but to arrive at a final decision it is expedient to discuss the law laid down relating to applicability of an amendment. Hence a brief description is required. In this regard few case laws are worth mentioning, named as under: (i) Municipal Corporation, Poona v. Bijlee Products (India) Ltd. [1978] 4 SCC 214. (ii) Shyam Sunder v. Ram Kumar [2001] 8 SCC 24. (iii) Zile Singh v. State of Haryana [2004] 8 SCC. (iv) Videocon International Ltd. v. SEBI [2015] 124 CLA 289 (SC)/[2015] 4 SCC 33 (v) Sou Kamal v. Anna, 7.6 On due reading of these judgments it clearly emerges that the settled rule interpretation of the statute is that any amendment to a statute affecting the legal rights of an individual must be presumed to be prospective unless it is made expressly or is impliedly retrospective. It further emerges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended shall not further be extended. Even under section 14 the period of moratorium is effective during the insolvency process, however, shall ceased, to have, effect from the date of approval or resolution plan or pronouncement of liquidation, in simple language the CIRP is a process and can be said to be that the process is nothing but continuous of one proceeding, which commences from the date of 'admission' of an application either under section 7, 9 or 10 and it ends till an Order is passed under section 31, approving the resolution plan or under section 33 by initiating 'liquidation'. Because of this reason in my humble opinion, once in this case or in like nature cases, CIRP had commenced and the resolution professional has invited expression of Interest which resulted into submission of resolution plan by a resolution applicant the same is to be dealt with as per the provisions existed on the date when a petition is 'admitted'. Because of this alternate, reasoning as well, the resolution plan is eligible on account of applicability of the, old provisions of the Code as they existed on the date of 'admission'. The admitted factual position is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odel of the corporate debtor. A methodical scrutiny of financial statement is expected before concurring with approval of the CoC. Per contra, absence of recording of subjective satisfaction may lead to situation that, being sanctioned without judicial analysis, thus, may not be sustainable in the eyes of law. There are no two views, and must not be, that this I B Code provides greater accountability both on the insolvency professional, as also on CoC, mainly comprise of lender Banks. Their approval of a resolution plan ought to be judged with due diligence. Therefore, in our humble interpretation the recording of an analytical 'satisfaction' is a condition precedent before granting of approval. 10. To sum up the above discussion, the important features of the resolution plan as approved by the CoC are to be scrutinised before recording satisfaction or granting sanction. The resolution applicant has narrated the business background of Wig Associates that the Company was incorporated for manufacturing and trading of Plastic Moulded items, such as, plastic food containers, plastic soap cases, plastic articles, plastic bags, etc. The company has also started ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of operational creditors as follows: 13.1 That from the side of resolution applicant a summary of the entire plan is also submitted; Only relevant, portion is reproduced for the sake of completeness, as under- Sl. No. Criteria Provision in resolution plan 1. Provides for the payment of insolvency resolution process costs in priority to the repayment of other debts of the corporate debtor. Paragraph 7 of the resolution plan relates to the payment of insolvency process costs in priority to all other debts. Total insolvency process costs: ₹ 8.85 lakh Corporate Applicant has already paid ₹ 5 lakh. Remaining insolvency Process Costs to be paid in priority to all other debts: ₹ 3.85 lakh See page 31 of MA. 2. Provides for the repayment of the debts of Operational creditors in such manner as may be specified which shall not be less than the amount to be paid to the operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , including from family members and by liquidating some of his personal property. The resolution applicant has already brought in ₹ 103 lakh and has handed over the same to the financial creditors to show his bona fides (see additional affidavit of resolution applicant indicating source of funds). 2. Provides for the payment of insolvency resolution process costs in priority to the repayment of other debts of the corporate debtor. Paragraph 7 of the resolution plan relates to the payment of insolvency process costs in priority to all other debts. Total insolvency process costs: ₹ 8.85 lakh Corporate applicant has already paid ₹ 5 lakh. Remaining insolvency process costs to be paid in priority to all other debts: ₹ 3.85 lakh See page 31 MA. 3. Provides for the payment of liquidation value owed to operational creditors within a period of 30 days of approval of resolution plan. Paragraph 10 of the resolution plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Sales Tax dues resolved with the concerned authorities. Likewise, the; resolution applicant shall be responsible to discharge the Income-tax dues payable earliest possible by fully cooperating with the Tax Authorities in getting the dispute resolved within six months' period for the date of this order. It is hereby specifically observed that the 5 per cent limit to settle the dues of operational creditors is not approved. 15. It is suo motu envisaged by the resolution applicant that all the operational creditors as outstanding in the books of account of WAPL as on the cut-off date shall be paid even though no claims have been received. The payment schedule affirmed as under: Payment schedule of the operational creditors 16. That in the resolution plan it is stated that although in one of the Regulation it is provided that only liquidation value is to be considered for payment to operational creditor within 30 days, in priority to financial creditors, but the resolution applicant provides for repayment of dues to the operational creditors more than the liquidated value. Considering the undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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