TMI Blog2020 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Resolution Plan. The requirements under section 31(1) of the Code are satisfied in the present case. In para No. 4 of Form H the RP has certified that the resolution plan complies with all the provisions of the Code and Regulations and does not contravene any of the provisions of the law for the time being in force. The RP has also certified that the resolution applicant New Ram traders has submitted affidavit 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 decision taken by the financial creditors falls within the ambit of its commercial and banking wisdom and is therefore, not being interfered with. In view of the provisions of Section 30(4) of the Code, we approve the resolution plan submitted by M/s. New Ram Traders as approved by the CoC. The resolution so approved shall be binding on the corporate debtor and its employees, members, creditors [including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 received resolution plan from 2 prospective resolution applicants namely M/s. New Ram Traders and Donear Industries Limited which were opened and presented to the CoC members in its meeting held on 16-2-2018. The prospective resolution applicants were suggested to modify and submit the revised resolution plan. 9. In the 7th meeting of CoC held on 27-2-2018, both the resolution plans were evaluated in terms of the Resolution Plan Evaluation Criteria formulated under the Process Document dated 12-12-2017 and after evaluation and negotiations, M/s New Ram Traders was declared as 'H1 Resolution Applicant' and the financial bid was revised from ₹ 42 crores to ₹ 45 crores. The resolution plan dated 25-1-2018 submitted by M/s. New Ram Traders was approved by the CoC members after voting in their 8th meeting held on 15-3-2018. 10. The applicant herein filed CA No. 97/2018 under section 30(6) of the Code for approval of the Resolution Plan dated 25-1-2018 submitted by M/s. New Ram Traders. 11. Further, it is submitted that CA No. 191/2017 was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SBI rejected the said resolution plan and the Resolution Professional filed CA No. 587/2018 for liquidation of the Corporate Debtor. 15. It is stated that the successful resolution applicant filed application bearing CA No. 607/2018 seeking extension of CIRP period till 3-1-2019 and for direction to the CoC to consider the resolution plan submitted. 16. It was found that the directions of Hon'ble NCLAT were that only if the resolution plan is not in accordance with Section 30(2) then a valid objection can be raised by Andhra Bank who has been added as a member of CoC otherwise the CoC will approve it having already found it to be viable and workable and that however, SBI did not approve the original resolution plan on the ground that the offer by the resolution applicant in the original resolution plan is much lower than the liquidation value of the corporate debtor. 17. Vide order dated 17-9-2019 in CA No. 607/2018, it was held in para No. 21 and 22 as follows:- 21. In view of these facts, we consider it reasonable to accept the contention of the resolution applicant that the CoC be directed to consider the resolution plan of the resolution applicant. As recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, copy of RFRP and the minutes of the CoC thereto along with copy of the performance guarantee, details regarding fair and liquidation value. The same was filed by way of affidavit dated 13-2-2020 (Diary No. 1287 dated 17-2-2020) stating therein that the liquidation value of the assets of the Corporate Debtor as on 27-6-2017 as computed by the valuers was ₹ 6657.53 lakhs and the tentative liquidation value computed on 15-3-2019 (as per directions of Adjudicating Authority (AA) dated 28-3-2019) was arrived at ₹ 5826.29 lakhs. Details regarding both the liquidation values are stated to be attached as Annexure A-1 and A-2 of the affidavit respectively. It is stated that performance guarantee to the tune of ₹ 1 crore in accordance with the process document issued by the Resolution Professional was submitted. Copy of the Performance Guarantee is stated to be enclosed as Annexure A-4. Detailed descriptive Form H was filed as Annexure A-5. 23. In compliance of the order dated 30-1-2020, affidavits of the CoC (Diary N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly 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 29A of the Code is in order. 26. The learned counsel for the RP submitted that as per Form H (Annexure -5, Diary No. 1287 dated 17-2-2020), all the provisions of the Code and the Regulations were complied with and that the approval of the resolution plan was made by 100% voting share of the financial creditors in the meeting of the CoC held on 23-9-2019 and therefore, the resolution plan submitted by M/s. New Ram Traders may be approved. 27. We have carefully considered the submissions of the learned counsel for the RP and the learned Counsel for the Resolution Applicant and CoC and have also perused the record. 28. The corporate debtor was incorporated on 12-1-2006 and as discussed above, the CIRP proceedings were initiated by order delivered on 27-6-2017. The present application is filed for approval of the resolution plan submitted by M/s. New Ram Traders. The approval has been sought under the provisions of Section 31(1) of the Code. 29. We may first of al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16480.56 5150 31.24 3 Dissenting Unsecured Financial Creditors -N.A.- -N.A.- -N.A.- -N.A.- 4 Other Unsecured Financial Creditors (Corporate Guarantee Holders- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes Yes 258 - 265 (b) has been approved by the CoC with 66% voting share? Section 31(1) Whether the Resolution Plan has provisions for its effective implementation plan, according to the CoC? Yes Yes 197-198 Regulation 35A Where the resolution profesional made a determination if the corporate debtor has been subjected to any transaction of the nature covered under sections 43, 45, 50 or 66, before the one hundred and fifteenth day of the insolvency commencement date, under intimation to the Board? The RP has conducted a Transaction Audit and there were no transactions for reporting. However, The timeline of One Hundred and Fifteenth day is not applicable on this particular case. Regulation 38(1) Whether the Resolution Plan identifies specific sources of funds that will be used to pay the - ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1.-For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.-For the purposes of this clause, it is hereby declared that on and from the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 that the resolution plan has been approved by a vote of 100% of voting share of the financial creditor and therefore, the conditions provided for by Section 30(4) of the Code are satisfied. 37. The provisions of Section 30(2) of the Code are as follows: - The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the repayment of other debts of the corporate debtor; (b) Section 30(2)(b) provisions have been extracted above and may be seen; (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Shirishkumar Ramkrishna Sonavane, Mr. Kunal Sonavane and Mr. Rohit Sonavane. It is also stated in para 7.3 of the plan that Mr. Sanjeev Sinha will be the CEO of the CD. Section 30(2) (e): In Form H (supra) (para No. 4), the RP has certified that the resolution plan complies with the provisions of the Code and Regulations and does not contravene any of the provisions of law for the time being in force. 39. We are now examining the compliance of the proviso to Section 31(1) of the Code that the resolution plan has provisions for its effective implementation. The resolution plan states that upon NCLT Approval Date, an Interim Monitoring Committee will be constituted. The constitution of the Committee is given in para no VIII of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 falls within the ambit of its commercial and banking wisdom and is therefore, not being interfered with. 42. We may add that in the case of Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh [2020] 113 taxmann.com 421, it has been held in para 26 thereof that No provision in the Code or Regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 . 43. In view of the above discussion, the decision taken by the financial creditors falls within the ambit of its comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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