9911796707
TMI Blog2019 (5) TMI 1633X X X X Extracts X X X X X X X X Extracts X X X X ..... ey Patnaik, Advocates JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. In Company Appeal (AT) (Insol.) Nos. 128 & 247 of 2019 Two appeals have been preferred one by 'Mr. Padmanabhan Venkatesh'- (Promoter) and another by 'Indian Bank'- ('Financial Creditor') against the order dated 21st January, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, Hyderabad. By the impugned order, the 'Resolution Plan' submitted by the Respondent- 'M/s. Maharashtra Seamless Ltd.'- ('Resolution Applicant') has been approved. 2. Other appeal has been preferred by 'M/s. Maharashtra Seamless Ltd.' ('Resolution Applicant') against the part of the order dated 28th February, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, Hyderabad, whereby the Adjudicating Authority refused to direct the Superintendent of Police and Collector to take over the charge of the 'Corporate Debtor'. 3. The 'Corporate Insolvency Resolution Process' was initiated against 'M/s. United Seamless Tubulaar Private Limited'- ('Corporate Debtor'). In the said 'Resolution Process', out of four Expression of Interest along with the 'Resolution Plan' were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form part of the 'Resolution Plan' and, therefore, cannot be taken into consideration as it does not maximize the value of the assets of the 'Corporate Debtor'. 11. According to the Appellant- Mr. Padmanabhan Venkatesh, 'M/s. Maharashtra Seamless Ltd.' wants to buy an asset of Rs. 597.54 Crores for a sum of Rs. 477 Crores resulting in a windfall. 12. Learned counsel appearing on behalf of the 'Indian Bank'- ('Financial Creditor') submitted that the 'Corporate Debtor' was declared as NPA by the 'Indian Bank'. The total debt of 'United Seamless Tubulaar Private Limited'- ('Corporate Debtor') was Rs. 1897 Crores of which Rs. 1652 Crores was in the form of Term Loans from 'Deutsche Bank, Singapore' and the working capital borrowings of Rs. 245 Crore from the Appellant- 'Indian Bank'. 13. Further, according to learned counsel for the 'Indian Bank', one 'UMW' has provided Corporate Guarantee to 'Deutsche Bank, Singapore' as collateral to the term loans (Rs. 1652 Crore) apart from first charge on the entire fixed assets of the company. The Corporate Guarantee given by 'UMW' to 'Deutsche Bank' is outside India. On the other hand, the 'Indian Bank' has first charge on the current asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of value is entire frivolous. 22. Learned counsel appearing on behalf of 'M/s. Maharashtra Seamless Ltd.'- ('Resolution Applicant') submitted that the liquidation value of the 'Corporate Debtor' is of no relevance whatsoever at the stage of Resolution. According to him, Section 53 of the 'I&B Code' will be applicable only once the 'Corporate Debtor' goes into liquidation. Reliance has been placed on the decision of this Appellate Tribunal in "Central Bank of India vs. Resolution Professional of the Sirpur Paper Mills Ltd. & Ors.─ Company Appeal (AT) (Insolvency) No. 526 of 2018". 23. It was also submitted that the financial exposure in the matter i.e. the 'Committee of Creditors' having already approved the plan with 87.10% voting shares which is much more than the requisite majority 66% required under Section 30(4), has accepted the offer of Rs. 477 Crores of the 'Successful Resolution Applicant' (4th Respondent). 24. It was submitted that actually the total exposure of the 'Successful Resolution Applicant' is around Rs. 657.50 Crores although Rs. 477 Crores is upfront amount. In addition to that Rs. 180.50 Crores which would be infused directly in the 'Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m since, it is in the hands of disgruntled management/miscreants, which may further affect the revival of the company and may result in unforeseen additional cost. 29. It was submitted that the claims received of the 'Operational Creditors' by the Respondent No. 1 were to the tune of Rs. 2,26,70,153/-, whereas the claims verified were of Rs. 2,02,88,948/-. However, it was submitted that the 4th Respondent is willing to pay the verified 'Operational Creditors' at the same percentage as that of the 'Financial Creditors', i.e. 25%, which shall be paid within 30 days of the 'Successful Resolution Applicant' getting clear and unfettered possession of and rights to the 'Corporate Debtor'. 30. Further, according to learned counsel for the 'Successful Resolution Applicant', initially K. Vijay Bhaskar Reddy and P. Madhu were appointed as the valuers to determine the value of the 'Corporate Debtor', who valued it as Rs. 681 Crores and Rs. 513 Crores, respectively. However, Mr. K. Vijay Bhaskar Reddy admitted that he had prepared his valuation Report at the behest of 'Indian Bank', as noted categorically in the Report itself. Further, there being substantial difference in the two valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept by taking average of the three valuation. 33. In the 9th meeting of the 'Committee of Creditors' held on 16th October, 2018, in Agenda A3, the 'Committee of Creditors' noticed and recorded the liquidation value of the 'Corporate Debtor', relevant portion of which reads as follows: "Agenda A3 - To record the views and suggestions expressed by the members of the suspended board, and to reconsider, approve and vote for a Resolution plan amongst the qualified resolution plans (which were already placed before CoC for approval in the Meeting of CoC dated 20th April 2018) in light of the revised liquidation value of the Corporate Debtor, in compliance with the directions of the Hon'ble National Company Law Tribunal, Hyderabad Bench vide order dated 28th September 2018 in IA No. 125 & 282 of 2018 in CP (IB) No. 49/7/HDB/2017. "a) The RP submitted to the CoC that in light of the Order of the Hon'ble NCLT the revised liquidation value of the Corporate Debtor is Rs. 597.54 Crores being the average of the valuation of Mr. K. Vijay Baskar Reddy and Mr. P. Madhu, and was taken on record by the CoC." xxx xxx xxx "d) ..................... The majority of the CoC was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame set of group such as 'Financial Creditors' or 'Operational Creditors' and the 'Operational Creditors' must get roughly the same treatment as 'Financial Creditors', and if they are not, such plans are to be rejected or modified so that the 'Operational Creditor's' rights are safeguarded. 36. The Hon'ble Supreme Court in "Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.─ 2019 SCC OnLine SC 73" upheld the decision and held: "71. The NCLAT has, while looking into viability and feasibility of resolution plans that are approved by the committee of creditors, always gone into whether operational creditors are given roughly the same treatment as financial creditors, and if they are not, such plans are either rejected or modified so that the operational creditors' rights are safeguarded. It may be seen that a resolution plan cannot pass muster under Section 30(2)(b) read with Section 31 unless a minimum payment is made to operational creditors, being not less than liquidation value. Further, on 05.10.2018, Regulation 38 has been amended. Prior to the amendment, Regulation 38 read as follows: "38. Mandatory contents of the resolution plan.- (1) A resolution plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in a time bound manner for maximization of value of assets of such persons and to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the priority of payment of Government dues. 41. A 'Resolution Plan', therefore, must ensure not only maximization of value of assets of the 'Corporate Debtor' as also the value of assets of the 'Financial Creditors' and the 'Operational Creditors', thereby, balancing the interest of all the stakeholders. 42. In the present case, as we noticed that the upfront amount of Rs. 477 Crores is much less than the average liquidation value of Rs. 597.54 Crores, we find that the 'Resolution Applicant' wants to take the assets of the 'Corporate Debtor' at a lessor value than the value which may be received on liquidation. 43. Taking into consideration the aforesaid difficulty, 'M/s. Maharashtra Seamless Ltd.' ('Resolution Applicant') has agreed to infuse Rs. 180.50 Crores directly in the 'Corporate Debtor' and also agreed that a sum of Rs. 57 Crores would be infused towards 25% margin money of working capital expenditure to maximize the value of the assets of the 'Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi, to the 'Resolution Professional' for presenting it to the designated Escrow Agent, appointed in terms of the 'Resolution Plan', subject to giving an undertaking that the said funds would be utilized only after physical possession of the plant of the 'Corporate Debtor'. However, the plant has not been handed over to the Appellant. 49. The 'Resolution Professional' accepted that Rs. 477 Crores have been deposited by the 'Resolution Applicant' in the Escrow Account on 19th February, 2019 as per the approved 'Resolution Plan' and that it initiated the transfers from the Escrow Account as directed by the Adjudicating Authority by order dated 20th February, 2019. By the same order, the terms of the 'Resolution Professional' as implementing Agency was extended till 26th February, 2019. He visited the plant premises along with the current Directors of the 'Corporate Debtor' on 21st February, 2019 but Plant in-charge Mr. G. Narayana Reddy refused entry into the Plant, except for the 'Resolution Professional'. 50. It was submitted by the 'Resolution Professional' that the control of the 'Corporate Debtor' vests with the new Management of 'M/s. Maharashtra Seamless Ltd.' and order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and the appeal is coming up for hearing on 07.03.2019. The implementation of this Plan is subject to the outcome of the Appeal. Therefore, a direction can be given to the concerned to extend cooperation to the Applicant herein in implanting the Resolution Plan of the Corporate Debtor Company and it is only subject to the outcome of the Appeal which is pending before Hon'ble NCLAT. 21. A direction cannot be given to the Superintendent of Police and Collector because by the date of Application, the Applicant has not deposited the bid amount. Therefore, at the first instance direction can be given to all concerned of the Corporate Debtor Company to extend all cooperation to the Applicant. It is always open to the Applicant to approach the Tribunal for suitable direction, if so required." 54. In the present case, we find that the 'Resolution Plan' is against the statement and object of the 'I&B Code' and, therefore, we have directed M/s. Maharashtra Seamless Limited' to modify the plan. Till the plan is modified, as ordered above, 'M/s. Maharashtra Seamless Limited' cannot take over the 'Corporate Debtor' without complying with the direction as given and recorded above. 55. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
