TMI Blog2019 (9) TMI 1368X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2018. The claim of the present applicant that it comes within the definition of financial creditor under Section 5(7) of the Code is based upon the decision dated 13.07.2018 of the Hon ble NCLAT. Extension of CIRP Period - 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. 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 - It is considered 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 in order dated 30.08.2019, SBI has conveyed its no objection for holding a fresh meeting to consider revised resolution plan by the resolution applicant. CIRP process is stayed by a court of law or the Adjudicating Authority or the Appellate Tribunal or the Hon ble Supreme Court. - CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the debt becomes owed when the guarantee is invoked. Reference in this regard has been made to Section 3(11), Section 5(28) and Section 21(3) of the Code. 6. The RP has filed reply vide Diary No.4008 dated 15.10.2018 stating that it is clear and apparent from Section 5(28) of the Code that the financial creditor is entitled to voting rights in proportion to the debt owed, whereas in the present case the debt has not been crystallised as yet and such the voting rights cannot be determined. 7. We have carefully heard and considered the arguments of the learned counsel for the applicant and the RP raised before us and have also examined the record. It is accepted by the applicant that its claim was filed only after the decision of the Hon ble NCLAT in the case of Andhra Bank (supra). The claim has been admitted. However, voting rights were not given by the RP on the ground that the debt has not crystallised and as such the voting rights cannot be determined. We find that the Hon ble NCLAT in the case of Andhra Bank (supra) has held in para No.15 that admittedly, the corporate debtor has counter indemnity obligation in respect of guarantee given by it to Andhra Bank and held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the CoC (SBI) is pending consideration before the Adjudicating Authority. The matter was thereupon remitted by the Hon ble NCLAT with directions to the RP to place the already cleared resolution plan again before the reconstituted CoC of two members i.e. SBI and Andhra Bank. Subsequently as noted at page E of CA No.587 of 2018 (application for liquidation of corporate debtor filed by the RP), in view of the order of the Hon ble NCLAT dated 13.07.2018 (supra), the RP admitted the claims of all the corporate guarantee holders in accordance with the claim filed by the lead banker of consortium i.e. Canara Bank. 9. The resolution plan of M/s New Ram Traders was thereafter considered in the 14th CoC meeting held on 17.11.2018 (Annexure A-17 of CA No.587 of 2018 supra). It is noted at page 13 of the minutes of the meeting that the representative of SBI requested RP to record that the offer by the resolution applicant in the original resolution plan is much lower than the liquidation value of the corporate debtor, thereby there is no chance of accepting the resolution plan by CoC even if the CIRP period is extended by the Adjudicating Authority on clarification being sought by RP. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ER CA No.607/2018 IN CP (IB) No. 30/Chd/Pb/2017 FM Hammerle Textiles Ltd. Versus FM Hammerle Textiles Ltd., Mr. Rajeev Goel, State Bank of India, Jammu Kashmir Bank Ltd. And Ors. JUDGEMENT CA No.607/2018 This application is filed by New Ram Traders (Resolution applicant) for extending the period of Corporate Insolvency Resolution Process (CIRP) of FM Hammerle Textiles Ltd. (Corporate Debtor) till 03.01.2019 or decision of the Committee of Creditors (CoC) on the revised plan of the resolution applicant whichever is earlier and to direct CoC to consider the resolution plan of the resolution applicant and negotiate with the resolution applicant their objections with respect to the said plan. 2. The Corporate Insolvency Resolution Process (CIRP) was initiated in the case of M/s FM Hammerle Textiles Ltd. (Corporate Debtor) vide order dated 27.06.2017. 3. It is submitted that the resolution applicant submitted its resolution plan on 25.01.2018, discussions were held before the CoC, revised plan was submitted on 28.02.2018 and on 17.03.2018, the revised plan was accepted by CoC and letter of intent (LOI) was issued and the plan was filed before the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a resolution plan and that the resolution applicant was given ample opportunity to improve his bid and the CoC engaged in various rounds of negotiations and discussions with the resolution applicant. 10. Vide order dated 28.03.2019, the RP was directed to prepare a tentative value of fixed and current assets as on 15.03.2019 which shall be placed before the CoC and the decision of the CoC in respect of liquidation value shall be communicated to the resolution applicant. It was further stated that the resolution applicant has hereby given an undertaking through the learned counsel that the resolution plan shall further be modified to the extent of the liquidation value as communicated to the CoC. 11. The RP has submitted compliance affidavit vide Diary No.1905 dated 12.04.2019 stating that a note on the tentative value of fixed and current assets as on 15.03.2019 along with justification for arriving at such value was circulated to the members of the CoC vide email dated 11.04.2019. It is also stated that the tentative value of fixed and current assets as on 31.03.2019 along with justification for arriving at the value was placed before the CoC which was considered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) on 21.03.2018 for approval. 17. Vide order dated 13.07.2018 in Andhra Bank Vs. F M Hammerle Textiles Ltd. (Company Appeal (AT)(Insolvency) No.61 of 2018 the Hon ble NCLAT directed the RP to place the resolution plan before the CoC, which was constituted with two members i.e. SBI and Andhra Bank and both the members of CoC were directed to pass order in terms of Section 30(4) of the Code. It was made clear that allowing Andhra Bank to be a member of CoC does not mean that they will raise objections to the resolution plan in question; if they oppose it they will have to give the ground; only if the resolution plan is not in accordance with Section 30(2) then a valid objection can be raised by Andhra Bank otherwise the CoC will approve it having already found to be viable and workable and thereafter, the RP will place the matter before the Adjudicating Authority (AA) for its order under Section 31 of the Code. 18. A copy of the minutes of 13th meeting of CoC dated 30.10.2018 are available at Annexure A-3 of CA No.587/2018 (filed by the RP for initiating liquidation under Section 33 of the Code). The minutes note that after the series of discussions and negotiations by SBI and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.185 of 2018 held that there are following good grounds and unforeseen circumstances, the intervening period which can be excluded for counting of the total period of 270 days of resolution process:- (i) If the corporate insolvency resolution process is stayed by a court of law or the Adjudicating Authority or the Appellate Tribunal or the Hon ble Supreme Court. (ii) If no Resolution Professional is functioning for one or other reason during the corporate insolvency resolution process, such as removal. (iii) The period between the date of order of admission/moratorium is passed and the actual date on which the Resolution Professional takes charge for completing the corporate insolvency resolution process. (iv) On hearing a case, if order is reserved by the Adjudicating Authority or the Appellate Tribunal or the Hon ble Supreme Court and finally pass order enabling the Resolution Professional to complete the corporate insolvency resolution process. (i) If the corporate insolvency resolution process is set aside by the Appellate Tribunal or order of the Appellate Tribunal is reversed by the Hon ble Supreme Court and corporate insolvency resolution process is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a resolution plan is upheld by the Appellate Authority, either by way of allowing or dismissing an appeal before it, the period of time taken in litigation ought to be excluded. This is not to say that the NCLT and NCLAT will be tardy in decision making. This is only to say that in the event of the NCLT, or the NCLAT, or this Court taking time to decide an application beyond the period of 270 days, the time taken in legal proceedings to decide the matter cannot possibly be excluded, as otherwise a good resolution plan may have to be shelved, resulting in corporate death, and the consequent displacement of employees and workers. 26. We are however of the considered view that unlimited time cannot be granted by the Tribunal keeping in view the strict guidelines provided under the Code for completion of the CIR Process. 27. The RP has submitted that the CIRP ended on 13.08.2018. Vide order dated 13.07.2018, the Hon ble NCLAT had directed the AA to exclude the period during which the appeal was pending before the Hon ble NCLAT i.e. from 20.02.2018 till 13.07.2018 for the purpose of computing the period of 270 days. Therefore, a period of one month was available to the RP and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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