9911796707
TMI Blog2019 (7) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... he malicious initiation of proceedings initiated by the 'Corporate Debtor' under Section 10 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) with malicious intent for any purpose other than for the resolution of insolvency, or liquidation. 2. However, the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata, while approving the so-called 'Resolution Plan' which is against the object of the 'I&B Code', observed: "The Resolution Plan in the case in hand is a unique plan which provides no revival of the corporate debtor but to close it by discharging its debts to all stakeholders inclusive of its staff and workmen." 3. The Appellants have challenged the common impugned order dated 6th March, 2018 passed by the Adjudicating Authority whereby the 'Resolution Plan' submitted by the 'Corporate Applicant'- 'Burn Standard Company Limited'- has been approved which provides for no revival of the 'Corporate Debtor' but closure and retrenchment of all the workmen. 4. Two appeals have been preferred by 'Industrial Services'- ('Operational Creditor') alleging non-consideration of its claim by the 'Resolution Professional'. 5. It is pleaded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Company with rich legacy had the experience of building many important structures in Calcutta like St. Andrews Church in 1818, the 152m high Ochterlony Monument (now known as Shahid Minar) in 1828. Subsequently its Construction business was taken over by Sir Rajen Mukherjee's Company Martin & Co (founded in 1890), which has to its credit of building waterworks at Palta, Ahmedabad, Lucknow and Benares. But its major contribution are architectural -marvels like Esplanade Mansion near Raj Bhavan/Great Eastern Hotel, Standard Chartered Building, South Eastern Railway Headquarters in Garden Reach, Tipu Sultan. Mosque, the Victoria Memorial etc. BurnC6 had a major role for construction of Kolkata prestige such St. Xaviers' College, Oriental Seminary, Belur Math, the headquarters of the Ramakrishna Mission, Darbhanga House - the Calcutta residence of Darbhanga Raj, Assembly House, Grand Hotel Arcade, United Bank Building, New Secretariat Building, Club House at Eden Gardens. 2.0.2 The ever-increasing traffic movement between the twin cities of Calcutta (now Kolkata) & Howrah demanded a wider and stronger bridge in replacement of the then existing pontoon bridge. The authorities ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by BIFR in April 1999 was declared failed in 2001. Efforts to bring in change in management did not fructify. Then a revival plan Was approved by CCEA in August 2010. After revival Of package, Company came under the administrative control of Ministry of Railways (MOR) from Ministry of Heavy Industry & Public Enterprises on15.09.2010. 2.1.2 The reasons for declaring the scheme as failed were as follows : i) Production in the following years did not increase as projected because of dearth of orders of wagons. ii) It was observed that the viability of the scheme could be achieved only by further restructuring of GOI liabilities and support from other agencies. 2.1.3 Accordingly, BIFR the Company to submit modified rehabilitation scheme based on the commitments of GOI for additional relief & concessions. Subsequently GOI explored the possibility of dive of shares of the company. BIFR directed 1131, the operating agency to advertise for change of management but there was no response in this matter. Subsequently BIFR appointed United Bank of India as the operating agency (OA) on 14.11.2006. The company submitted a modified draft rehabilitation scheme which was discussed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holders including its staff and workmen. 16. The 'Committee of Creditors' was happy as they were getting full payment, therefore, they approved the plan without going through the question as to whether the plan in question is in conformity with Section 30(2) (e) of the 'I&B Code' and achieves the Objects of the 'I&B Code'. 17. The plan filed by the 'Corporate Applicant' shows that the Ministry of Railways (Railway Board), Government of India made provision to pay total outstanding dues of Rs. 417.10 Crores which means that the 'Corporate Debtor' on receipt of amount is in a position to pay the total dues of all the creditors, as appears from proposed strategy of 'Resolution Plan', which is as follows: CHAPTER - III RESOLUTION PLAN 0 Main strategy proposed 3.01 Ministry of Railways (Railways Board), Government of India , has communicated vide letter No. No.: 2010/M (W)/300/2 dated 12th Feb 2010 (copy enclosed as annexure - A) that the revival plan submitted by the company, vide their letter No. CMD: MOR: 136 dated 29/09/2016, was examined by the competent authority. The company has been incurring losses in spite of efforts and financial assistance provided to the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as dues of Government of West Bengal) will be paid within the 2nd Qtr of 2018 -19 on receipt of fund from the Government of India (GOI). * Voluntary Retirement Scheme (VRS) is to be Introduced. All the 500 employees on roll of the company will be offered VRS and final settlement will be done within 1st Qtr of 2018- 19 and effort will be made to pay all dues within in the 1st Qtr of 2018-19 on receipt of fund from the Government of India (GOI). Balance payment if any will be paid in the 2nd Qtr of 2018-19 3.1.3 Schedule of payment for the Resolution Plan: Particular Amt. (Rs./Cr.) As provided by Management As considered the in plan Payment schedule * Cost of Insolvency Resolution Process (approved by COC) 0.17 0.00 Fully paid * Pending dues to the employees: * Gratuity & leave encashment & pending salary for one month 13.50 13.50 Effort will be made to pay early after fund is received from GOI and to be paid within 1st Qtr. of 2018-19 * Arear loan (Cash credit account and bank laon 19.34 19.34 -do- * Bank loan (Cash credit account and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effected. In view of the above, Resolution Plan has been prepared for ensuring settlement of dues of the creditors on receipt of fund as proposed in payment Schedule of the Resolution Plan Supervision & implementation of the resolution plan will be done by the Board of Directors of the Company as "going concern". 18. Though during the 'Resolution Process', and thereafter, the 'Resolution Applicant' is required to ensure that the company remains as a going concern but contrary to the provisions of the 'I&B Code', closure of the 'Corporate Debtor' has been proposed and approved by the Adjudicating Authority. 19. That immediately after approval of the 'Resolution Plan', on 17th April, 2018, the 'Corporate Debtor' informed closure of 'Burn Standard Company Limited', which is as follows: BURN STANDARP COMPANY LIMITED HEAD OFFICE Ref:CMD/CIRCULAR/234 GENERAL NOTICE 17th April, 2018 Sub: Closure of Burn Standard Company Limited This is for information of all concerned that Government of India has apporved closure of Burn Standard Company Limited on &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mech. 24. 7777 Sandip Sarkar Mrk./Fitter 25. 8172 Sk. Md. Ayub Fitter 26. 8242 Sudama Yadav H/Man/Ch. 27. 8703 Sanjoy De LL/Man 28. 8715 Braja Gopal Naskar LL/Man 29. 8783 Prosanta Kumar Jana Welder 30. 9396 Kanhaiya Choudhury Engg./Attdn. 31. 9807 Tarun Kamakar Elect. 32. 10022 Dhruba Kumar Roy Carpenter/P.M. 33. 10911 Rejdeo Ram Fitter 34. 10952 Subodh Panja Tool Issuer 35. 10986 Jamil Ahamed Ansari Elect. 36. 14156 Gopal Chandra Das Mkr./Fitter 37. 14181 Pradip Kumar Sarkar Erc./Fitter 38. 15475 Himadri S. Jana Fitter 39. 15478 Gopal Byabortta Silling man 40. 15479 Basu Ch. Dey Fitter (B) STAFF Sl.No. Card No. Name Designation 1. 1206 Amal Bhattacharjee Clerk 2. 1505 Faiyaz Ahamed Tech. Staff 3. 1507 Susanta Roy Tech. Staff 4 1509 Chittaranjan Maity Tech. Staff 5. 1511 Swapan Kr. Manna Tech. Staff 6. 1513 Asit Kumar Naskar Tech. Staff 7. 1514 Tarak Koley Tech. Staff 8. 1540 Bikash Das Tech. Staff 9. 1565 Tapan Kumar Paul Tech. Staff 10. 1567 Prasun Kumar Bose Tech. Staff (C) SUB-STAFF Sl. No. Card No. Name Designation 1. 27 Kamalesh Prasad Saroj Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it -37.39 -43.33 -31.40 -18.56 Profit before Tax -24.66 -28.38 -33.51 -15.28 Net Profit -24.54 -28.38 -33.51 -15.28 Depreciation 3.94 2.52 2.39 1.72 Cash Accruals -20.60 25.85 -31.12 -13.56 Interest 5.43 5.78 10.62 8.04 PBDIT -15.29 -20.08 -20.51 -5.52 PBDIT/Sales -13.07% -17.38% -11.20% -2.21% PBT/Net Sales -21 08% -24.57% -18.30% -6.11% Net Profit /Net Sale -20.97% -24.57% -18.30% -611% Net Profit /Gross Sales -19.70% -24.38% -17.83% -6.11% Total Outside Liabilities 189.38 215.91 270.05 270 44 Paid-up Capital 177.63 184.63 184.63 184.63 Net Worth 382.13 360.75 327.24 311.96 TNW 382.13 360.75 327.24 311.96 TOL/TNW 0.50 0.60 0.83 0.87 Net Profit/Net Worth -6.42% -7.67% 10.24% -4.90% TTL/TNW 0.20 0.22 0.23 0.24 Net DSCR N.A. N.A. N.A. N.A. Current.Assets 78.63 53.21 105.69 94.57 Current Liabilities 111.20 136.92 194.92 195.31 NWC -32.57 -53.70 -86.23 -100.74 Current Ratio 0.71 0.61 0.56 0.48 25. Therefore, the question arises for consideration in these appeals are: (i) Whether the 'Resolution Plan' is against the statement of objects and reasons of the 'I&B Code'? an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution scheme - workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximize their investment. Timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are 39 not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. [See ArcelorMittal (supra) at paragraph 83, footnote 3]. 21. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor's assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through 40 its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends." 29. In view of the aforesaid fact, as the 'Resolution Plan' is against the object of the Code and the application under Section 10 was filed with intent of closure of the 'Corporate Debtor' for a purpose other than for the resolution of insolvency, or liquidation, we hold that the part of the 'Resolution Plan' which relates to closure of the 'Corporate Debtor'/ 'Corporate Applicant' being against the scope and intent of the 'I&B Code' is in violation of Section 30(2)(e) of the 'I&B Code'. 30. With a view to give a quietus to the matter, we set aside the part of the approved 'Resolution Plan' in so far as it relates to closure of the ' ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
