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TMI Blog2020 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Professional (IRP) vide order dated 27-6-2017. 3. It is submitted that the IRP constituted the CoC consisting of State Bank of India being the sole member of the CoC as per the provisions of Section 21 of the Code. 4. It is stated that in the first meeting of the CoC held on 26-7-2017, the IRP was sought to be replaced with Mr. Rajeev Goel who was appointed as RP vide order dated 1-9-2017. 5. The RP made a public announcement for invitation of Expression of Interest (EOI) by publishing the Form G in Economic Times (All India Edition) dated 6-10-2017. The last date for submission of EOI was fixed as 20-10-2017 which was further extended to 6-11-2017 by another advertisement on 23-10-2017. 6. The RP apprised the CoC that EOI was received from 5 prospective resolution applicants. The RP also issued a Process Document dated 12-12-2017 for evaluation of the resolution plans which was amended two times vide Addendums dated 2-1-2018 and 23-1-2018. 7. CA No. 219 of 2017 was filed by the RP under section 12(2) of the IBC, 2016 for extension of the CIRP time period by a further period of 90 days and the same was allowed vide order dated 14-12-2017. 8. It is submitted that the RP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein admitted the claims of the Corporate Guarantee holders (CGH) of the Corporate Debtor i.e. State Bank of India, Andhra Bank, Allahabad Bank, Canara Bank, Bank of Maharashtra, Phoenix ARC Private Limited (Assignor United Bank of India), Punjab & Sind Bank, Punjab National Bank, Bank of India, Bank of Baroda and Axis Bank Limited and reconstituted CoC with induction of the CGHs as the new members. 13. In the 9th meeting the CoC held on 16-8-2018, the earlier approved resolution plan dated 25-1-2018 of M/s. New Ram Traders (the successful resolution applicant) was placed before the reconstituted CoC and after deliberations on resolution plan, the successful resolution applicant was given time to submit the revised plan. It is stated that the revised resolution plan was submitted on 30-8-2018 and after discussion in the CoC, another revised plan was submitted on 24-9-2018. 14. It is also stated that the Resolution Plan dated 25-1-2018 along with addendum dated 9-11-2018 was placed before the CoC in its 14th meeting held on 17-11-2018 wherein SBI rejected the said resolution plan and the Resolution Professional filed CA No. 587/2018 for liquidation of the Corporate Debtor. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A will consider appropriate suo moto action." 19. The Successful Resolution Applicant i.e. M/s. New Ram Traders was directed to submit its final revised resolution plan within 3 days from the date of order and the RP was directed to convene a meeting of the CoC for consideration of the final plan. Further, exclusion of time was also granted as discussed above. 20. By virtue of the aforesaid order, the Successful Resolution Applicant vide email dated 19-9-2019 submitted the final revised resolution plan dated 25-1-2018 along with amendment made on 18-9-2019 (Annexure RP-20). The CoC in its 16th meeting held on 23-9-2019 approved the revised resolution plan dated 25-1-2018 (along with amendment dated 18-9-2019) submitted by New Ram Traders by 100% voting share in favour of it. A copy of the Letter of Intent dated 23-9-2019 stated to be issued to the successful resolution applicant is attached as Annexure RP-22. 21. It has been prayed in the application that the Resolution Plan dated 25-1-2018 and amendment made on 18-9-2019 as submitted by M/s New Ram Traders be approved. 22. Vide order dated 30-1-2020, the learned counsel for the RP was directed to file a descriptive Form H, cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide additional fund over and above Rs. 64,33,31,000/- to make payment of any increase in the CIRP cost from the amount mentioned in the approved plan till the date of approval of such plan by this Tribunal. It is stated that in the initial plan submitted by the Resolution Applicant, the total amount offered was Rs. 59,92,00,000/- and that the amount offered in the successful Resolution Plan is Rs. 64,33,31,000/- and therefore, after considering the increased CIRP cost from 1-4-2019 till the date of approval of the Resolution Plan by this Tribunal, the amount paid under the Resolution Plan shall exceed the liquidation value. 25. The RP has filed compliance certificate in Form H (Annexure -5, Diary No. 1287 dated 17-2-2020). It is certified by the RP in para 4 of Form H that the resolution plan complies with all the provisions of the Code, CIRP Regulations and does not contravene any of the provisions of law for the time being in force and that the resolution plan stands duly approved by the 100% of the voting share of the financial creditors. It is also stated in para 4 (ii) of Form H that the affidavit of the successful resolution applicant regarding its eligibility under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders- admitted by RP in compliance of NCLAT order dated 13-7-2018) 57465 57465 58 0.1 5 Claim of related party without any voting rights and not a part of CoC 2895.18 2895.18 Nil 0 6 Operational Creditors 4978.07 977.16 24.43 2.5 Government/Statutory Dues Will be paid in full, if any amount was due as on 27-6-2017 Employees, Wages & Salaries 29.46 20.88 20.88 100 Total 5253.31 #Amount provided over time under the Resolution Plan and includes estimated value of non-cash components. It is not NPV. 31. The compliance of the resolution plan has been given in para No. 9 of Form H (supra) as follows:- Section of the Code/Regulation No. Requirement with respect to Resolution Plan Clause of Resolution Plan Compliance (Yes/No) Page no. 25(2)(h) Whether the Resolution Applicant meets the criteria approved by the CoC having regard to the complexity and scale of operations of business of the CD? Clause II Yes 164 - 168 Section 29A Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, if any, of the Adjudicating Authority? Yes Yes 239 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 196 (c) adequate means for supervising its implementation? Clause VIII 197 -198 38(3) Whether the resolution plan demonstrates that - Clause Yes 192 (a) it addresses the cause of default? 7.7.1 (b) it is feasible and viable? Annexure I 217 (c) it has provisions for its effective implementation? Clause VIII 197 -198 (d) it has provisions for approvals required and the timeline for the same? No such approvals required clause II 164 (e) the resolution applicant has the capability to implement the resolution plan? 39(2) Whether the RP has filed applications in respect of transactions observed, found or determined by him? No, as there were no such transactions which required reporting. 32. Section 30(2)(b) as substituted by Act No. 26 of 2019 w.e.f.06-8-2019 is as follows:- "[(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The approval of the resolution plan has been sought under section 31(1) of the Code, reading as follows: - If 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 referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the 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 sub-section, satisfy that the resolution plan has provisions for its effective implementation. 35. The conditions provided for in Section 31(1) of the Code for approval of resolution plan are therefore: - (a) The Resolution Plan is approved by the CoC under section 30(4) of the Code; (b) The Resolution Plan so approved meets the requirements as referred to in Section 30(2) of the Code; (c) The Resolution Plan has provisions for its effective implementation. The satisfaction of the conditions is discussed below. 36. It is submitted by the RP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposes to pay 0.1% of Rs. 574.65 crores (the total admitted claim of the Corporate Guarantee) i.e. Rs. 0.58 crore in full and final settlement within 30 days of the approval of the plan. The resolution plan provides payment of Rs. 20.88 lakhs towards 100% of dues of workmen. Section 30(2)(c) & (d):The resolution plan provides complete and detailed plan for management of the affairs of the corporate debtor (page 190 of the application). As per para VII of the resolution plan and upon the AA Approval, the corporate debtor will be managed by the Interim Monitoring Committee (IMC) which will comprise of one person appointed by the financial creditor and one person appointed by RA. The tenure of the IMC will be for a maximum period of 90 days and will be dissolved on completion of payments made towards CIRP cost and towards different class of persons. Further, it is stated in the resolution plan that the RA will retain all the employees of the corporate debtor but the board of directors and Key Managerial Personnel of the corporate debtor will be reconstituted and appointed. As mentioned in para 7.2 of the plan, the Board of Directors of the Resolution Applicant will consist of Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avit pursuant to Section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit the resolution plan and the contents of the said affidavit are in order. The RP has submitted that the resolution plan has been approved by the CoC with 100% voting share in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering the feasibility and viability and other requirements specified by the CIRP Regulations. It has been held in para 42 of K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312 by the Hon'ble Supreme Court inter alia that 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. It was also held that 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. In view of the above discussion, the decision taken by the financial creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X
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