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TMI Blog2020 (7) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... CIRP') on 16th January 2017. The Appellant and the Respondent No.1 had jointly submitted the Resolution Plan for taking over the Company. The same was approved unanimously by the Committee of Creditors (in short 'CoC), and after that, the Resolution Plan was further approved by the Adjudicating Authority vide its order dated 11th October 2018. Given the approved Resolution Plan, Appellant QVC Exports Private Limited was to hold 34% of the paid-up equity shares, of and in the Company, the Cosmic Ferro Alloys Limited and the Respondent No.1 was to hold 51% paid-up equity shares and 15% of the paid-up equity shares were to be allotted to a Trust namely Cosmic Ferro Alloys ESOP Trust. The approved Resolution Plan got executed, and the shares were allotted as per the terms of the approved Plan. All money in respect of 34% shares were paid by the Appellant and is the rightful owner of 34% paid-up equity shares of and in the Company. The Board Resolution passed by the Respondent No.1 Company admittedly states that the Respondent No.1 has purchased 51,00,000 equity shares of and in the company, Cosmic Ferro Alloys Limited, by investing Rs. 31,60,00,000/-, whereby the Respondent No.1 has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 11th October 2018 approved the Resolution Plan with regards to the allotment and transfer of shares by the approved plan. The relevant part of the Resolution Plan is as under: "Transfer of Shares from Existing Equity Shareholders - As the value payable to shareholders of the corporate debtor is "NIL", the Equity Shares will be extinguished, and new Shares will be issued to the New Promoters as under: It is the intention of the Resolution Application to own atleast 85% of the shareholding in the Corporate Debtor. The balance shareholding will be held by Cosmic Ferro Alloys Limited Employee Stock Option Trust by way of 15% of Equity to be issued to New Directors, KMPs, employees of the company based on their performance or as joining bonus @ Rs. 0.50 per share within next 4 years and vetted within 1 year of allotment on approval of this Resolution Plan as stated under- On approval of the Resolution Plan and Payment of Upfront amount of Rs. 99.74 Crores, the Shareholding of the Entire Shareholders, i.e. 1,04,08,529 shares of Rs. 10 each will be extinguished, and 1,00,00,000 shares with Face Value of Rs. 10 each shall be issued as stated under- Name of the Shareholder Q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution plan stands corrected in the following manner and the revised chart is reproduced as under: Name of the Shareholder Quantity (Nos) Paid-up Value Premium Paid Issued at Discount Total Value Paid % of Share Holding Remarks United Tradeco FZC 7500000 750 2,410 3160 75% QVC Exports Pvt. Ltd. 1000000 400 240 340 10% Cosmic Ferro Alloys Limited ESOP Trust 1500000 150 (135) 15 15% Stock Options to Employees 100,00,000 1000 2,650 (135) 3,515 100% On perusal of the alleged rectification allowed by the Adjudicating Authority, it appears that the shareholding of M/s United Tradeco FZC has been substantially increased, i.e. from 51,00,000 shares to 75,00,000, and contrary to this the shareholding the Appellant, QVC Exports Private Limited, reduced to 10,00,000 shares from 34,00,000 shares. The portion of equity allotted to Employees of the Cosmic Ferro Alloys Limited remains the same. The Adjudicating Authority has observed that joint shareholding of both the Resolution Plan, was 85% for which the consideration has been paid for by both the parties accordingly. Respondent No 1, M/s United Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight to say that there was a typographical/clerical error in the Resolution Plan. After the acknowledgement by the Board of the respondent No1 company, there was no justification to allege that due to typographical error, 51,00,000 shares is erroneously typed, instead of 75,00,000 shares in the approved Resolution Plan, in the account of Respondent No 1. It is also important to point out that the 4th Monitory Committee Meeting, held when the Appellant was allotted 34,00,00 equity shares of and in the Company Cosmic Ferro Alloys Limited. Copy of the minutes of the Monitory Committee Meeting is annexed with the Appeal which shows that the Monitory Committee in its meeting dated 21st June 2019 resolved that all disputes among parties were deliberated and resolved that the Appellant was to sell its 34% share, of and in the company Cosmic Ferro Alloys for Rs. 6.5 crores plus one crore subject to the valuation. It is also on record that on 31st July 2019 Share Transfer Agreement was executed, but the same was never given effect to, as there were a few preconditions. After the execution of the Share Transfer Agreement, the Respondent No.1 changed the course of action and filed company ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1 whereas the Application for rectification of the Resolution Plan is moved only by Respondent No.1. However, the Adjudicating Authority had no jurisdiction under Section 31 to allow the rectification in the approved Resolution Plan. It is pertinent to mention that Rule 11 National Company Law Tribunal Rules gives inherent power, but powers under this section cannot be used to dehor the statutory provision of law. Hon'ble Supreme Court in case of Sooraj Devi v. Pyare Lal, (1981) 1 SCC 500: 1981 SCC (Cri) 188 at page 502 has held that: "5. The appellant points out that he invoked the inherent power of the High Court saved by Section 482 of the Code and that notwithstanding the prohibition imposed by Section 362 the High Court had power to grant relief. Now it is well settled that the inherent power of the court cannot be exercised for doing that which is specifically prohibited by the Code (Sankatha Singh v. State of U.P. [AIR 1962 SC 1208: 1962 Supp 2 SCR 817: (1962) 2 Cri LJ 288]). It is true that the prohibition in Section 362 against the court altering or reviewing its judgment is subject to what is "otherwise provided by this Court or by any other law for the time being i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. (6) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded. Since rectification of the resolution Plan does not involve the question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code, therefore it is not Code, therefore it is not permitted to modify the Resolution Plan under the guise of inherent powers of the Tribunal. Hon'ble Supreme Court in Bijay Kumar Saraogi v. State of Jhark ..... X X X X Extracts X X X X X X X X Extracts X X X X
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