TMI Blog2020 (4) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this subsection, satisfy that the resolution plan has provisions for its effective implementation - Where the Adjudicating Authority is satisfied that the Resolution Plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the Resolution Plan. Scope and ambit of jurisdiction of Adjudicating Authority and Appellate Tribunal while approving Resolution Plan - Whether a conditional Resolution Plan can be approved? - HELD THAT:- The Adjudicating Authority and Appellate Authority cannot go into the feasibility and viability of the Resolution Plan which requires commercial wisdom of the Committee of Creditors. The Adjudicating Authority and Appellate Authority has to go by the various propositions of law stated above accordingly to which they have to go by the commercial wisdom of committee of creditors while approving the Resolution Plan. The given Resolution Plan is conditional but since according to the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e over any other law in force and therefore, the Adjudicating Authority had rightly initiated The Resolution Plan as approved by the Adjudicating Authority is in accordance with Insolvency and Bankruptcy Code, 2016 and various propositions of law as laid down by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta Ors. [ 2019 (11) TMI 731 - SUPREME COURT ]. The Hon ble Supreme Court has reiterated the issue on commercial wisdom of Committee of Creditors, hence the Adjudicating Authority per se is not to be involved in the commercial wisdom area of the Committee of Creditors, particularly, in the approval of commercial side of Resolution Plan/Modified Resolution Plan - there are no ground to interfere with the impugned order dated 22nd July, 2019 passed by the Adjudicating Authority - order of NCLT upheld. - Company Appeal (AT) (Insolvency) No. 871-872 of 2019, 924 of 2019, 925 of 2019, 863 of 2019, 867 of 2019, 880 -881 of 2019, 892-893 of 2019 - - - Dated:- 24-1-2020 - Justice Jarat Kumar Jain Member (Judicial), Mr. Balvinder Singh Member (Technical) And Dr.AshokKumar Mishra Member (Technical) For the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval of Resolution Plan and the distribution/payment to various stakeholders therein was in accordance with the provisions of I B Code. ii. Scope and ambit of jurisdiction of Adjudicating Authority and Appellate Tribunal while approving Resolution PlanWhether a conditional Resolution Plan can be approved? iii. Whether those claims that are not dealt under the resolution plan can be held to be extinguished under the provisions of the I B Code? iv. Whether the Adjudicating Authority has power to modify its own order? v. Whether the initiation of CIRP was vitiated in view of the pendency of winding up petition before the Hon ble High Court of Bombay, Nagpur Bench? 5. The Resolution Professional ( RP ) has submitted that the present appeal is infructuous and not maintainable in view of the fact the Hon ble High Court of Bombay had granted leave to the Respondents to initiate CIRP vide Order dated 02.11.2018 and put the matter to rest by retrospectively validating the CIRP.However, the RP also submitted that in view of Section 238 of I B Code, overriding effect has been given to the I B Code over any other law in force and therefore the Adjudicating Authority had rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equal proportion to the admitted dues of the secured and unsecured financial creditors of the Corporate Debtor. Modifications/Clarifications Issue Order date 22.07.2019 Order dated 03.07.2019 Approvals from Statutory Authorities Wider approval cannot be granted by this Adjudicating Authority, and the Resolution Applicant has to comply with the directions of Directorate of Geology Government of Maharashtra. The relevant authority to consider the application of the Successful Resolution Applicant/Corporate Debtor, on its own merits within a reasonable time frame. The Successful Resolution Applicant will be required to comply with the applicable laws and directions of such relevant authorities Management of Corporate Debtor The resolution applicant has also proposed that the management and control of the Corporate Debtor will be through Deloitte Touche Tohmatsu India LLP which is not acceptable since this entity cannot exercise the powers of the board of the corporate debtor. Managing Committee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings shall proceed by the law. Any undertaking relating to applicability of law will not be part of the Resolution Plan. The Resolution Applicant has sought extinguishment of all claims along with abatement of any related legal proceeding including criminal proceedings. Such proceedings shall proceed by the law. Any undertaking relating to applicability of law will not be part of the Resolution Plan. 9. Company Appeal (AT) (Ins) No.924 - 925 of 2019 has been preferred by the Operational Creditor to the corporate debtor who filed its claim dated 5th May 2017 ( AS FIRSTCLAIM ) and the following facts are necessary to be pointed out with regard to the present issue: The Appellants here are engaged in the business of Trading and Brokerage of grains and pulses also appellant acts as an commission agent for other industries and enterprises. The corporate debtor approached the appellant to take services and subsequently the corporate debtor issued an authority letter Dated November 21, 2013 which gives authority to the appellant to act as commission agent for the corporate debtor, pursuant to the authority letter the appellant acting as an commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir claims along with requisite documents and evidences as mandated by the I B Code and Regulations framed there under within the stipulated timelines, despite numerous opportunities given. 10. Company Appeal(AT) (Insolvency) No. 863 of 2019 has been filed by Shri Nitin Murlidhar Agarwal and Company Appeal (AT) (Insolvency.) No. 867 of 2019 has been filed by Shri. Murlidhar Sugachand Agarwal under section 32 Read with Section 61(3), IBC. Both the Appellants are unsecured financial creditors. Both the applications seek direction to set aside the Impugned orders dated 03.07.2019 passed by Ld. National Company Law Tribunal, Mumbai bench. The contention on behalf of the counsel for both the Appellants is that Ld. Adjudicating Authority in defiance of the provisions of the code rejected the application for considering claim filed by the Appellants as unsecured financial creditors. It is stated by them that the Ld. Adjudicating Authority further failed to appreciate that that the Resolution Professional kept the Claim filed by the Appellants in abeyance/pending verification in disregard to the documents filed by the Applicant wherein the default on account of corporate debtor i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Authority failed to consider that terms of Regulation 38 of IBC requires source of fund to be mentioned in the Resolution plan which was absent in the resolution plan submitted by resolution applicant as duly observed by the Adjudicating Authority as well. The appellant submits that the Adjudicating Authority vide its order dated 22.07.2019 has approved the Conditional Resolution plan which is in contravention to its own order dated 03.07.2019 on application seeking modification of the latter order. The appellant further submits that the Adjudicating Authority has enabled a Managing Committee to be formed after the expiry of CIRP which comprises of member of COC to run the Corporate Debtor till the Resolution Plan is implemented, which is illegal as COC is empowered to run/operate the Corporate debtor only during the CIRP period. The OTS offer of the Appellant on behalf of suspended board of Directors which was more than what the Resolution Plan offers was not considered by the Coc. 15. In this regard the Appellant has relied on the decision of this Appellate Tribunal in the matter of Dinesh Goyal V. DCB Bank wherein it was held that the Adjudicating Authority has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance of Regulation 27 of the CIRP Regulations who determined the liquidation value of the company. 19. The Respondent No.2 who is the successful resolution applicant submits that the Adjudicating Authority has approved the resolution plan in consonance with section 30(2) of IBC as well as with the object of IBC and further that it is not in contravention with any of the law for the time being in force.It is submitted that revival of the Corporate Debtor pursuant to implementation of the successful Resolution plan would be a more beneficial prospect than liquidation of Corporate Debtor. Arcelormittal India Private Limited Vs. Satish Kumar Gupta Ors is quoted to point out that every attempt should be made to run the Corporate Debtor as a going concern and that liquidation should be avoided at all costs. 20. The Respondent No.2 further submits that it has only filed application for clarification/modification of the order and not review recall , hence the order dated 03.07.2017 was neither reviewed nor recalled by the 22.07.2019 order.. In Schedule 2 of the resolution plan conditions to the implementation of the plan is given below : - Schedule 2 1. Not used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the permission of the adjudicating authority was sought to include condition No.2 and 3 in the resolution plan. The respondent in this regard requested the Adjudicating Authority to modify the order. 21. Company Appeal(AT) (Insolvency) No. 892-893 has been preferred by Ms. Prakriti Nigam, Deputy Commissioner, CGST AND CENTRAL Excise Division, Chandrapur, who is the operational creditor of the corporate debtor and the Respondent is an Insolvency Resolution Professional (IRP) with M/s Deloitte Touche Tohmatsu, India, Indiabulls Finance Centre, Mumbai. The appellant submits that the corporate debtor defaulted in payment of Central Excise duty/Service Tax, and the same were confirmed against them under several Adjudication Orders against them under the erstwhile Central Excise Act,1944 and the Finance Act. Total outstanding dues as per the Appellant is 64,04,86,019. NCLT vide order dated 03.07.2019. The Appellant submits that the rejection of claim was only communicated to them by email and not by Post. It is also submitted that during the material period in the wake of introduction of Goods and Services Tax, the Appellant Department was in transitional phase and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -submission of the document in the relevant format as required under the Insolvency and Bankruptcy Code, 2016 and related Regulations. Hence, the claim has been rejected. 23. It is further observedin respect of Company Appeal(AT) (Insolvency) No. 892-893 of 2019 Company Appeal (AT) (Ins) No.924 - 925 of 2019 that various claims are collected by the Resolution Professional during the CIRP process by inviting the claim from individual, organisations etc. But there are several micro claimant as also large claimants like Government claimants particularly Sales tax department, Income Tax Department etc., who generally are not filing claim, filing claim at a belated stageor filing not in appropriate format as a result of which Government dues are not considered although it may be reflected in the financial statements/books of Accounts of Corporate Debtor and similarly micro claims relating to Individual,MSME, and other small traders are also not considered by the Resolution Professional because of time constraint, belated receipt or non receipt of the claim even though the same may be provisioned for in the books of Accounts of Corporate Debtor hence in order to strengthen the sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to receive the incentives under PSI 2007 for the extended period. 26. As far as CA (AT) (Insolvency) No.871-872of 2019 is concerned, the workers are asking for revival of paper unit solvent extraction units. The Resolution Applicant as per his submission that these two units are going to close down but the Committee of Creditors has accepted the Resolution Plan even on this understanding of closure of said units also aware of the fact that workers are interested in providing a scheme of arrangement that can revive the said unit. The Adjudicating Authority per se will have to go by the Commercial wisdom of Committee of Creditors as has been held in Committee of Creditors of Essar Steel India Limited Through Authorised Signatory Vs. Satish Kumar Gupta Ors. Civil Appeal No. 8766-67 of 2019 and Ors and K.Sashidhar Vs. K. Sashidhar v. Indian Overseas Bank and Ors. Civil Appeal No.10673 OF 2018. However, if workers are interested to revive the said units which is also the purpose of Insolvency and Bankruptcy Code, 2016 and Section 230-232 of the Companies Act, 2013 provides for scheme of arrangement; the workers can always go ahead and discuss with the Resolution Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with proposed modification then the Adjudicating Authority shall proceed with the liquidation. The Adjudicating Authority vide its order dated 22nd July, 2019 has approved the Resolution Plan as follows: 12.Accordingly, the Resolution Plan submitted by the Resolution Professional of the Corporate Debtor for approval of this Tribunal under Section 31 of the Insolvency and Bankruptcy Code, 2016 is approved in terms of this order read with our order dated 03.07.2019 in MA 689/2017 13.The MA 2474/2019 and MA 689/2017 are at this moment allowed and disposed of in terms of this order read with order dated 03.07.2019 in this matter. 14.The Registry is directed to immediately communicate this order to the Resolution Professional and the Resolution Applicant. 30. The issues raised in the present Appeal is accordingly answered below: i. Whether the approval of Resolution Plan and the distribution/payment to various stakeholders therein was in accordance with the provisions of I B Code. When the Adjudicating Authority is satisfied that the Resolution Plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Applicant knows exactly who has to be paid in order that it may then take over and run the business of the Corporate Debtor. Therefore, claims that are not submitted or are not accepted or dealt with by the Resolution Professional and such Resolution Plan submitted by the Resolution Professional is approved then those claims would stand extinguished. iv. Whether the Adjudicating Authority has power to modify its own order? Section 420(2) of the Companies Act, 2013 provides as under: The Tribunal may, at any time within two years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if the mistake is brought to its notice by the parties. Rule 154 of the NCLT Rules, 2016 provides that: (1) Any clerical or arithmetical mistakes in any order of the Tribunal or error therein arising from any accidental slip or omission may, at any time, be corrected by the Tribunal on its own motion or on Application of any party by way of rectification. According, the NCLT does not have power to modify its own order but can only correct mistake apparent from the record. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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