TMI Blog2019 (7) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... ations and that it is compliant to the relevant provisions of the Code and Regulations. It is pertinent to state here that Section 29A of the Code prescribes certain eligibility criteria and disqualifications for persons who submit a resolution plan. Resolution applicants have given adequate declaration and undertaking on their eligibility to submit the Resolution Plan. Resolution Professional has also certified that he has verified that the Resolution Applicant and the persons in management and control of the company and the other Connected Persons are eligible to submit resolution plan and does not fall under any of the category as mentioned in Section 29A as inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2017. All the requirements of Section 30 (2) are fulfilled and no provision of the law for the time being in force has been contravened - the Resolution Plan meets the requirements of Section 30 (2) of the Code and that the resolution plan has provisions for its effective implementation. The resolution plan, as approved by the requisite super majority of members of CoC, is in accordance with the sub-section 2 of Section 30 read with Section 31 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of corporate resolution process against M/s. Tecpro Systems Limited ( Corporate Debtor ). The application was admitted on 7th August, 2017 imposing moratorium under Section 14 of the Code and the applicant, Mr. Venkatesan Sankaranarayanan was appointed as the Interim Resolution Professional. 4. Thereafter, public announcement in Form A as prescribed under Regulation 6 of the Regulations in English and vernacular newspapers was published on August 12 and August 13, 2017 respectively intimating commencement of Corporate Insolvency Resolution Process of the Corporate Debtor and for calling the creditors to submit their claims along with the proof in the prescribed format. 5. The First Meeting of COC was held on 13th September, 2017, wherein the applicant Mr. Venkatesan Sankaranarayanan, the then interim resolution professional was appointed as the Resolution Professional in accordance with the provisions of Section 22(3)(a) of the Code. 6. The applicant Resolution Professional had engaged two registered valuers under Regulation 27 of the Regulation, to determine the Fair value and Liquidation value of the corporate debtor in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted April 30, 2018 approved the resolution plan submitted by KIPL by a majority vote of 88.39%. The Committee of creditors concluded that the resolution plan submitted by KIPL was commercially superior than the resolution plan submitted by EFPL. 12. Post approval of the KIPL s resolution plan by the Committee of Creditors, an application being CA-368(PB)/2018 was filed on 3rd May, 2018 under Section 30(6) of the Code read with Regulation 39 of the CIRP Regulations for seeking approval of the resolution plan. 13. On 26th November, 2018 Resolution Professional filed the compliance certificate in Form H as prescribed under Regulation 39(4) of the CIRP Regulations, which was introduced by the Insolvency and Bankruptcy Board of India vide Notification IBBI/2018-19/GN/Reg 031 dated July 3, 2018 with effect from July 4, 2018. 14. During the course of hearing on February 19, 2019 while considering the resolution plan filed in CA-368(PB)/2018, it was noticed that certain provisions of the resolution plan had become inconsistent with the provisions of the Code on account of subsequent amendments as well as interpretations of certain provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Modified Plan was further revised by KIPL and the Final Resolution Plan was submitted by KIPL on 7th March, 2019. 19. Applicant Resolution Professional verified the Final Resolution Plan submitted by KIPL under Section 30(2) of the Code and presented the same before the Committee of creditors for their consideration. The Committee of Creditors in its 15th meeting dated 8th March, 2019 discussed and deliberated upon the Final Resolution Plan. After discussions and deliberations, the Final Resolution Plan was put to vote for approval and was approved by a majority vote of 89.92 per cent through e-voting conducted from March 10th, 2019 11 am to March 12th, 2019 11 am. 20. The list of financial creditors of the corporate debtor, distribution of voting share amongst them and the result of e-voting concluded on 12th March, 2019 are enumerated as under: Sl. No Name of Creditor Voting Share (%) Voting for Resolution Plan (Voted for/Dissented/Abstained) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor can be decided by the Committee of Creditors based on facts and circumstances of each case. What can be screened by this Bench is that whether the plan approved by CoC meets the requirements as referred to in sub-section (2) of Section 30 of the Code. 24. Hon ble NCLAT in the case of Darshak Enterprise (P.) Ltd. v. Chhaparia Industries (P.) Ltd Ors. passed in Civil Appeal (AT) (Ins) No. 327 of 2017 has held that: In absence of any discrimination or perverse decision, it is not open to the Adjudicating Authority or the Appellate Tribunal to modify the plan. 25. It is also pertinent to note that a Resolution Plan cannot take care of total outstanding dues of all the creditors. Be that as it may the objections raised during the course of hearing in the following Company Applications filed by different stakeholders are duly considered and are taken up case wise separately. i. CA No. 38 (PB)/2019 ii. CA No. 1219 (PB)/2018 iii. CA No. 557 (PB)/2018 iv. CA No. 828 (PB)/2018 v. CA No. 938 (PB)/2018 vi. CA No. 939 (PB)/2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erit of the claims, Resolution Professional has contended that the documents submitted in support of the claims are in the nature of unascertained notional unilateral calculations which cannot be relied upon. 31. Hon ble NCLAT in the case of, Bank of Baroda v. Bijay Mumuria [CA (AT) (Ins.) No. 229 of 2019, dated 11-3-2019], has held that: In fact, the decision of the Resolution Professional does not amount to rejection of the claim, but determination of claim for constitution of the Committee of Creditors , which was constituted on the basis of original claim. Thereafter, the Appellant being member of the Committee of Creditors not raised the issue immediately but after about 250 days. In the circumstances, no relief can be granted. However, we make it clear that the order passed by the Adjudicating Authority or this Appellate Tribunal will not come in the way of the Appellant to move before appropriate forum for appropriate relief. (emphasis given) 32. Similarly, Hon ble NCLAT in the case of, Prasad Gempex v. Star Agro Marine Exports (P.) Ltd. [CA (AT) (Ins.) No. 291 of 2018, dated on 1-2-2019], has held that; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claims in CA No. 828 (PB)/2018 and CA No. 938 (PB)/2018 as well as in CA No. 357 (PB)/2018 are pending adjudication before Hon ble High Court of Delhi such subjudice claims cannot be over-ridden by Resolution Professional. The consequences of such liabilities are subject matter of the jurisdiction of the Court, where the claims are pending adjudication. After the final adjudication order, the claims shall be dealt with in accordance with law. 38. CA No. 939 (PB)/2018 is an Intervention application claiming ₹ 54,13,337/- on account of facility maintenance and management services. It is stated in the affidavit dated 21.01.2019 that claims of applicant CBRE South Asia Private Limited for ₹ 41.57 Lakhs have already been accepted as the same were reflected in the ledger/books of the Corporate Debtor. Resolution Professional has denied that no other pending amounts stands reflected against CBRE in the books of the Corporate Debtor. In that view of the matter it is open to the applicant to move appropriate Forum for adjudication of the disputed left out claim. CA No. 939 (PB)/2018 is disposed of accordingly. 39. CA No. 556 (PB)/2018 has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fessional has contended that the claim is belated one and is barred under Regulation 12(2) of the CIRP Regulations. The claim was also rejected on merit on the ground that the books of the Corporate Debtor shows no dues towards the claim. Additionally, it is stated in the affidavit dated 21.01.2019 that a Money Suit No. 1 of 2006 filed in Kolkata by applicant against Corporate Debtor is pending adjudication. It is accordingly contended that the claim is yet to be adjudicated upon. CA No. 940 (PB)/2018 is disposed of accordingly, with the observation that after the final adjudication by competent Forum, the present claim shall be dealt with in accordance with law. 44. CA No. 603 (PB)/2018 was filed on 14.12.2017 with a claim of ₹ 5,66,84,175/- in respect of outstanding amount for delivery of goods. It is stated in the affidavit dated 21.01.2019 that a Civil Suit in this regard has been filed in Kolkata which is pending adjudication. It is accordingly contended that the claim is yet to be adjudicated upon. CA No. 603 (PB)/2018 is disposed of accordingly, with the observation that after the final adjudication by competent Forum, the present claim shall be dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with 89.92% voting share is as under: (Amount in Rs. Lakhs) Sl. No Category of Shareholder Amount claimed Amount admitted Amount provided under the plan# Amount Provided tothe Amount Claimed (%) 1 Secured Financial Creditor* 8,02,754.68 8,02,754.68 46,500.00 5.79% 2 Unsecured Financial Creditors NA NA NA NA Operation Creditors 3,20,579.62 17,641.14 800.00 0.22% Government 28,130.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. No corresponding provision has been envisaged by the legislature to empower the resolution professional, the adjudicating authority (NCLT) or for that matter the appellate authority (NCLAT), to reverse the commercial decision of the CoC muchless of the dissenting financial creditors for not supporting the proposed resolution plan. Whereas, from the legislative history there is contra indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority. 54. It is thus clear that the judicial scrutiny of the approved resolution plan can only be done under the parameters of Section 30(2) and Section 31(1) of the Code. 55. Section 31 of the Code deals with the approval or rejection of the resolution plan as approved by the CoC, by the Adjudicating Authority. Approval of the resolution Plan is accorded under Section 31(1) of the Code. Section 31 of the Code deals as follows: 31. Approval of Resolution Plan- (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of other debts of the corporate debtor; (b) provides for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under section 53; (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. Explanation.- For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 or any other law for the time being in force for the 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. (3) .. 58. Sub-section 2 of Section 30 casts duty on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under Section 53. In this connection Regulation 38(1) of CIRP Regulations provides for payment to the operational creditor in priority to the financial creditors. 64. In this regard clause 5.4.(b)(ii)(l) of the Resolution Plan provides that the aggregate amount owed to Operational Creditors (including statutory authorities and regulatory authorities and dues towards employees and workmen) as admitted by the Resolution Professional, an amount of ₹ 8 Crores shall be paid in priority to any payment made to Financial Creditors however but not later than 30 days of Closing Date. The distribution of amount provided amongst Operational Creditors will be in a pro rata basis to the number of claims admitted by the Resolution Professional as disclosed in Resolution Professional s documents. Any other additional claims that may be admitted by the competent judicial authority, shall be paid on similar basis as above. The Resolution Professional has confirmed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of capital as contemplated in this Resolution Plan. The Resolution Professional has confirmed in the compliance certificate given in Form H that sections 5 and 6 of the Resolution Plan provides for adequate means for supervising its implementation. 68. The fifth and sixth conditions in terms of clauses (e) (f) of sub-section (2) of Section 30 of the Code provide to ensure that the Resolution Plan does not contravene any of the provisions of the law and conforms to such other requirements as may be specified by the Board. Section 7 of the Resolution Plan covers compliance with various provisions of laws currently in force. The Resolution Applicant agrees to comply with all applicable laws under the proposed Resolution Plan, whether or not specifically provided herein. 69. It is pertinent to state here that Section 29A of the Code prescribes certain eligibility criteria and disqualifications for persons who submit a resolution plan. Resolution applicants have given adequate declaration and undertaking on their eligibility to submit the Resolution Plan. Resolution Professional has also certified that he has verified that the Resolution Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Resolution Plan, making it clear that it shall not be a contravention of law. 75. In respect of reliefs and concession sought for in the Plan which are beyond the jurisdiction of this Tribunal, Monitoring agency along with the Resolution Applicant can make such claim before the authorities which shall be considered in accordance with law. Besides under sub-section (4) of Section 31 the resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (l) or within such period as provided for in such law, whichever is later. 76. In the facts, it is seen that the Resolution Plan meets the requirements of Section 30 (2) of the Code and that the resolution plan has provisions for its effective implementation. 77. In the facts we are satisfied that the requirements as per the Code and regulations have been complied with. Moreover, the Resolution Plan has been approved by the requisite majority of the members of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentation of the plan, if such a necessity arises. 82. It is hereby declared that the Resolution Plan is binding on the corporate debtor, members, employees of the corporate debtor, creditors of the corporate debtor and other stakeholders involved in the Resolution Plan. 83. The resolution applicant shall obtain the necessary approval required under any law for the time being in force within a period of one year from the date of this order or within such period as provided for in such law, whichever is later. 84. The Resolution applicant has to adhere to all the applicable law for the time being in force. 85. Approval of Resolution Plan shall confer change in management and ownership of the corporate debtor and the control of the Corporate Debtor shall vest with the new management. 86. We hereby exclude the period spent under adjudication and it is declared that the moratorium order passed by this Bench under Section 14 of the Code shall cease to have effect from the date of this order. 87. The Resolution Professional shall forward all records relating to the CIR Process and the Resolution Pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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