TMI Blog2020 (10) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly the same is dismissed. Violation of Resolution Plan - HELD THAT:- The decisions of the Committee of Creditors passed with the required majority percentage as per the Code, are binding on all the stake holders, including the dissenting members of Committee of Creditors, if any. No member of the Committee of Creditors, after a resolution plan was approved by the Committee of Creditors with the required majority percentage, on one ground or other, cannot challenge the said decisions of the Committee of Creditors. It is for the Adjudicating Authority to apply its judicious mind whether a particular plan submitted for its approval is in compliance of the provisions of the Code and the Regulations made thereunder - Application dismissed. Approval of Resolution Plan - HELD THAT:- Admittedly, the Applicants have not lent any money to the Corporate Debtor. Therefore, they cannot be treated as the financial creditor of the corporate debtors. Though the claim of the applicant as a secured financial creditor was rejected by the Resolution Professional in 2017, the applicant has not challenged the same. The applicant having given up its right as a financial creditor of the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease deed even prior to the approval of the resolution plan by the Committee of Creditors, we need not go into the issue whether execution of the instant lease deed was a to be understood as a pre-condition for approval of the resolution plan, though the Plan stated otherwise. In this view of this matter, and for the aforesaid reasons and also in view of our observations at Paragraphs Nos.13(a) (i) and 18 of IA No.225/2020, there is no need to discuss the extensive arguments advanced and judgments relied on by both the sides, on the issues that whether the lease deed dated 28.01.2020, is valid or whether this Adjudicating Authority can compel the applicant to act in a particular manner in respect of the ACE Complex Land property on which it is claiming certain mortgage rights or whether granting of prayers in Section 9 of the Resolution Plan, along with Addendum, would prejudice the rights of the Applicant etc. - Application dismissed. - CA No. 293/2018, IA Nos. 7/2020, 62/2020, 222/2020, 225/2020 & 237/2020 In CP (IB) No. 42/Chd/Hry/2017 - - - Dated:- 9-7-2020 - HON BLE MR. AJAY KUMAR VATSAVAYI, MEMBER (JUDICIAL) HON BLE MR. PRADEEP R. SETHI, MEMBER (TECHNICAL) For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed in CP No.42/2017, the Adjudicating Authority appointed Shri Dinkar T. Venkatsubramanian as the Interim Resolution Professional. The public announcement was published on 29.07.2017 and Committee of Creditors (in short Committee of Creditors ) was constituted on 17.08.2017. The first Meeting of the Committee of Creditors was held on 22.08.2017 and Shri Dinkar T. Venkatsubramanian, who is the Interim Resolution Professional, was appointed as the Resolution Professional on 22.08.2017. Two Registered Valuers were appointed on 01.08.2017 and 02.08.2017. Invitation for expression of interest was issued on 30.08.2017. Vide order dated 17.01.2018, passed in CA No.8 of 2018, the period of CIRP was extended by 90 days. The Committee of Creditors in its meeting held on 02.04.2018 approved the Resolution Plan of Liberty Housing Group (in short LHG ). In pursuance thereof, the Resolution Professional filed CA No.114/2018 under Section 30(6) and Section 31(1) of the Code for approval of the Resolution Plan of LHG before this Adjudicating Authority. On 25.07.2018, this Adjudicating Authority by a common order allowed CA No.114/2018 filed by the Resolution Professional seeking approval of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Members of the Committee of Creditors were directed to take a final call within two weeks thereafter. Vide order dated 13.11.2019 passed in IA No.168814 of 2019, the Hon ble Supreme Court while extending time by three weeks for taking decision by the Committee of Creditors, ordered that the consideration be confined to five offers, received within the time specified in advertisement inviting offers. The Hon ble Supreme Court, vide order dated 02.12.2019, recalled its earlier order dated 13.11.2019 and directed the Resolution Professional to invite fresh offers within 30 days of the order after due advertisement in accordance with the procedure and the Committee of Creditors to evaluate the plans within three weeks thereafter. The Committee of Creditors after evaluation of the Resolution Plans of four prospective Resolution Applicants declared DVI as the preferred/H1 bidder as per the evaluation criterion, subject to DVI s satisfactorily addressing the key commercial and legal issues as highlighted by the Committee of Creditors. Vide order dated 20.01.2020, the Hon ble Supreme Court granted additional two weeks time for concluding the voting on the Resolution Plan of DVI and adjo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer, and the said order reads as under:- The application made by the applicant for withdrawal of the offer is hereby rejected and in case he indulges in such kind of practice, it will be treated as contempt of this Court in view of the various orders passed by this Court at his instance. The application is accordingly dismissed. As requested List I.A. No. 146604/2019 in the third week of July, 2020. IV. CA 293/2018 1. Kind Special Steels (India) Private Limited, an Operational Creditor of the Corporate Debtor filed this CA under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (in short the Code ) read with Rule 11 of the National Company Law Tribunal Rules, 2016 (in short the Rules ) on 27.07.2018 seeking the following reliefs:- i.) direct the Resolution Professional to revise and ascertain the liquidation value payable to Kind Special Steels (India) Pvt. Ltd. in accordance with law and facts; ii.) direct the respondent to admit the claim filed by the applicant as submitted on 04.08.2017; iii.) pass any other order(s) as this Hon ble Tribunal may deem fit. 2. The applicant states that out of its total claim of ₹73,82,273/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in Santosh Wasantrao Walokar Versus Vijay Kumar V. Iyer and Another and batch; 2020 SCC OnLine NCLAT 128, by following the decision of the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited (Supra), held as under:- 32. xxx xxx xxx (i) xxx xxx xxx (ii) xxx xxx xxx (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? The Hon'ble Supreme Court in Essar Judgment has vividly dealt with this issue. A successful Resolution Applicant cannot suddenly be faced with undecided claims after the Resolution Plan submitted by him has been accepted as this would amount to an extra amount coming up for payment after the debts have been dealt by the Resolution Applicant and the Resolution Plan has been approved. This would throw into uncertainty amounts payable by a prospective Resolution Applicant who successfully takes over the business of the Corporate Debtor. All claims must be submitted to and decided by the Resolution Professional so that a prospective Resolution Applicant knows exactly who has to be paid in order that it may then take over and run t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the applicant placed reliance, are different and that the same is not applicable in view of the judgements of the Hon ble Supreme Court in the case of Committee of Creditors of Essar Steel India Limited (Supra) and the Hon ble National Company Law Appellate Tribunal in Santosh Wasantrao Walokar (Supra) and also in view of the peculiar facts of the present case. 10. In the circumstances and in view of the above discussion CA No.293 of 2018, is dismissed. V. IA No.7/2020 1. M/s Neha Associates filed the IA No.7/2020 under Section 60(5) of the Code, on 06.01.2020, seeking the following reliefs:- i.) Allow the present application of the Applicant; ii.) Direct the respondent to inform the status of the aforesaid claim of ₹54.57 lakh of the Applicant against the Corporate Debtor and in case the same has yet not been admitted, direct the Respondent to admit the claims of the Applicant after verifying the veracity of the claims; iii.) Condone the delay in filing of the claims of the Applicant; iv.) Pass such other order/directions as this Hon ble Tribunal may deem fit and proper in the facts and circumstances of the case. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and direct the IRP to get the Resolution Plan modified so as to comply with Regulation 42 and 44 of the Liquidation Process Regulations, 2016; and 2. Direct the respondent Resolution Professional to not to deduct the amount of ₹ 34 Crore from the final payment to be made to applicant as per the scheme of distribution of amount under Resolution Plan; and 3. Direct the Respondent Resolution Professional to further include amounts of ₹ 6,22,58,072.64 towards LC payments and ₹ 61,39,000/- towards Bank Guarantee (BG) payments in the total admitted claim of applicant; or 4. To pass such other order or relief be granted as this Hon ble Tribunal deems fit and proper having regard to the facts and circumstances mentioned in the present application. 2. The applicant through this IA is seeking modification of the resolution plan which was admitted by the Committee of Creditors with the required percentage, wherein the applicant was also a member, though it has dissented with the said approval. 3. At the outset, it is relevant to note that the CIRP against the Corporate Debtor was initiated at the instance of the applicant in the instant IA. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stake holders, including the dissenting members of Committee of Creditors, if any. No member of the Committee of Creditors, after a resolution plan was approved by the Committee of Creditors with the required majority percentage, on one ground or other, cannot challenge the said decisions of the Committee of Creditors. It is for the Adjudicating Authority to apply its judicious mind whether a particular plan submitted for its approval is in compliance of the provisions of the Code and the Regulations made thereunder. The applicant even in its rejoinder, to the reply filed by the Resolution Professional, has not denied the fact of deliberations and acceptance of the action of the Resolution Professional for deducting the amount of ₹34 Crores and for distribution of amount payable to the applicant under the Resolution Plan of DVI, by the Committee of Creditors, wherein the applicant is a member. 8. In the circumstances and for the aforesaid reasons, we do not find any merit in the IA and accordingly, the same is dismissed. VII. IA No.62/2020 1. Vistra ITCL (India) Limited (formerly, IL FS Trust Company Ltd.), KKR India Financial Services Private Limited and L T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited and BRASSCO Engineering Limited and the said loan was used by and for the benefit of the Corporate Debtor. The Corporate Debtor, in consideration of the short term loans that were made available, had created a first ranking exclusive pledge, vide Pledge Agreement dated 05.07.2016 in favour of Applicant No.1- IL FS Trust Company Limited (now known as Vistra ITCL (India) Limited), over 16,82,06,100 equity shares of face value of ₹2/- each of JMT Auto Limited, held by the Corporate Debtor. Following a subdivision of the shares of JMT Auto Limited (the record date for which was 22.09.2016), the number of pledged shares was altered to 33,64,12,200 equity shares of face value of ₹1/- each of JMT Auto Limited, held by the Corporate Debtor. 5. Placing reliance on the above referred agreements, Applicant No.1 submits that in its capacity as the secured trustee for and acting on behalf of Applicant No.2 and 3, is a secured financial creditor of the Corporate Debtor and therefore, the applicant No.1 is entitled to be included as a member of the Committee of Creditors and to be allowed to participate in the process of negotiating with the Prospective Resolution Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting and considering the resolution plans, respectively . The latest developments before the Hon ble Supreme Court and further the non-committal response by the Resolution Professional has constrained the applicants to file the instant IA to treat the Applicant No.1 as a secured financial creditor, at this stage. 8. The Resolution Professional submitted that the instant application suffers from delay and laches and cause disruption to the Corporate Insolvency Resolution Process of the Corporate Debtor, which is progressing under the directions and supervision of the Hon ble Supreme Court. He further stated that the claim of the Applicants to treat them as a secured financial creditor of the Corporate Debtor and its request for inclusion as the member of the Committee of Creditors, was admittedly rejected in the year 2017 itself and the applicant having not raised any grievance for all these years, cannot be permitted to challenge the said action or to make the same prayer, once again, belatedly at this stage. The Resolution Professional further submitted that admittedly, the applicants have not lent any money directly to the Corporate Debtor and that the Corporate Debtor has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether with DVI Plan Addendum dated 07.02.2020 of the Successful Resolution Applicant in respect of the corporate debtor under Section 31(1) and declare that the same shall be binding on the corporate debtor and its employees, members, all 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 authorities to whom statutory dues are owned, guarantors and other stakeholders in the CIRP of the Corporate Debtor; b. Pass directions for grant of reliefs as sought under Section 9, Part V by the Successful Resolution Applicant in the Final Resolution Plan dated 17.01.2020 together with DVI Plan Addendum dated 07.02.2020 if deemed appropriate; c. Pass such other order/orders as it may deem fit and proper in the facts and circumstances of the case. 2. Having heard the learned counsels for the Resolution Professional, learned counsel for the Committee of Creditors and the Resolution Applicant, we find that it would be first necessary to ascertain whether the requirements of the Code and Regulations made thereunder, have been complied with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision has been made that after the approval of a resolution plan the moratorium order passed under Section 14 of the Code would cease to have effect and the RP is under obligation to forward the whole record relating to the conduct of the CIRP and the resolution plan to the IBBI to be recorded in its database. The conclusion of the aforesaid discussion is that Adjudicating Authority must be satisfied that the resolution plan conforms to the requirements provided in Section 30(2) of the Code and also has provisions for its effective implementation. 5. Keeping in view the above referred mandatory requirements of Section 30(2) of the Code, and the peculiar facts of this case and the various orders passed by the Hon ble Supreme Court in Civil Appeal No.6707/2019, we examine the resolution plan dated 17.01.2020 along with its addendum dated 07.02.2020 of the DVI and as approved by the Committee of Creditors. 6. The Resolution plan approved by the Committee of Creditors must provide for payment of insolvency resolution process cost in a manner specified by the Board in priority to the payment of other debts of the corporate debtor. With the present application i.e. IA No.225/2020, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffective date and shall stand dissolved upon acquisition of the corporate debtor by the resolution applicants. 9. Section 30(2) (d) of the Code envisages that it must provide for implementation and supervision of the resolution plan. Part 2 Clause 3.5 and 3.7 of the resolution plan provides for a detailed mechanism for effective implementation of the resolution plan. 10. Section 30(2)(e) of the Code requires that the resolution plan does not contravene any of the provisions of the law for the time being in force. In Form H filed as Annexure P-1 to the additional affidavit filed vide Spl. Diary No.181 dated 25.06.2020 submitted by the RP as per the requirement of Regulation 39(4) of the CIRP Regulations, he has certified that the resolution plan did not contravene any of the provision of the law for the time being in force and is in compliance with the provisions of the Code and the CIRP Regulations. 11. The resolution applicants confirmed that they are not disqualified under Section 29A of the Code to submit a resolution plan or under any other law applicable which further shows that the resolution plan conforms to the provisions of the law for the time being in force and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and L T Finance Limited in a form and substance acceptable to the Resolution Applicants; (ii) no right of termination accruing to the lessor as long as lease rentals are paid; and (iii) right of first refusal accruing to the Resolution Applicants, in case of sale of ACE Complex Land. ACE Complex Land -Shall mean 21.11 acres of land located at village Malpura, Industrial Area, Sectyor 9/10, Dharuhera, District Rewari, Haryana. (a) (iii) The Ace Complex Land referred above, which is owned by Gateway Impex Private Limited, was leased to the corporate debtor under 4 unregistered lease deeds, all dated 16.03.2016 and were expired on 31.03.2019 i.e. during the period of CIRP. The resolution plan was submitted by the DVI to the Committee of Creditors on 17.01.2020. Gateway Impex Pvt. Ltd., the owner of the ACE Complex Land executed a registered lease deed on 28.01.2020 in favour of the corporate debtor for a period of 20 years, with effect from 01.04.2019. The resolution applicant issued the addendum to the resolution plan on 07.02.2020. The Committee of Creditors approved the resolution plan dated 17.01.2020 read with addendum dated 07.02.2020 on 07.02.2020. Therefore, thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the application under Section 30(6) was received from the Committee of Creditors and accordingly, he filed the instant IA 225/2020 under Section 30(6) of the Code. (b) (ii) The Resolution Professional vide his affidavit bearing Spl. Diary No.181 dated 25.06.2020, categorically submitted that the payment of full performance Bank Guarantee is not a condition precedent either for filing of an application under Section 30(6) of the Code or for approval of the resolution plan by the Adjudicating Authority under Section 31(1) of the Code. He further submitted that in view of the time limit of 15 days fixed by the Hon ble Supreme Court in its order dated 08.06.2020 and keeping in view the peculiar circumstances of the case, this Adjudicating Authority may not reject/return the plan on the ground of non-issuance of LOI and non-payment of balance performance bank guarantee. (b) (iii) The learned counsel for the Committee of Creditors while drawing our attention to Step VI of RFRP, submits that Committee of Creditors has filed IA No.48906/2020 in Civil Appeal No.6707/2019, before the Hon ble Supreme Court, seeking approval of resolution plan on account of the special process having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an application under Section 30(6) read with Section 31(1) of the Code. (b) (viii) However, in view of the peculiar circumstances under which the Hon ble Supreme Court passed various orders in Civil Appeal No.6707/2019 and in various IAs filed therein, and in view of the very limited time left for filing the instant IA No.225/2020 for approval of the resolution plan, and keeping in view the interest of the corporate debtor and other stake holders and the object of the Code, instead of returning the plan to the Committee of Creditors on the ground of non-issuance of LOI by Committee of Creditors and non-furnishing of the full Performance Bank Guarantee by the Resolution Applicant, we direct the Resolution Applicant not to insist for LOI and to submit the balance Performance Bank Guarantee within 15 days from the date of receipt of a certified copy of this order. 14. With regard to the compliance of the second proviso to Section 31(4) i.e. obtaining the approval of the Competition Commission of India, the Resolution Professional in Form H stated that as the process was being conducted under strict timelines, prescribed by the Hon ble Supreme Court, approval of the Competitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept the resolution plan. 19. As sequel to the above, we pass the following orders:- a. The Resolution Plan, as approved by the Committee of Creditors and submitted by Deccan Value Investors LP and DVI PE Mauritius Limited- Resolution Applicants, is approved and the same is 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 authorities to whom statutory dues are owned, guarantors and the other stakeholders involved in the Resolution Plan. b. The Resolution Applicant shall furnish the balance Performance Bank Guarantee within 15 days from the date of receipt of a certified copy of this order. c. The Resolution Applicant shall submit the application seeking approval of the Competition Commission of India within 15 days from the date of receipt of certified copy of this order and the same shall be considered in accordance with the law. d. The moratorium order passed by the adjudicating authority under Section 14 shall cease to have effect. e. The RP sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Professional has executed a lease deed with respondent No.4- Gateway Impex Private Limited (in short Gateway ) which has resulted in creating a lease in favour of the corporate debtor for a period of 20 years on a property which has been mortgaged to the applicant and thereby, encumbering the assets on the land. It is further stated that the Resolution Professional could not have entered into any such agreement/arrangement over the property in question as the same has been mortgaged to the applicant by the owner of the property i.e. Gateway Impex Private Limited with an undertaking that it will be kept free from all encumbrances. Further a notice under Section 13(2) of the SARFAESI Act, 2002, was issued to Gateway i.e. the mortgagor and the borrowers on 21.01.2020 i.e. before the execution of the lease deed dated 28.01.2020 by Gateway in favour of the corporate debtor. It is also stated that the new lease deed entered by the Resolution Professional is contrary to the applicable laws and lies in the teeth of Section 65A(3) of the Transfer of Property Act, 1882 and hence, a new lease deed which is illegal in its very conception and execution is liable to be set aside and declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approximately admeasuring 21.11 acres, cannot execute the registered lease deed dated 28.01.2020 in favour of the corporate debtor in respect of the said property and hence the said lease deed is illegal and non-est and that the resolution plan of DVI making the said lease deed as part of the plan is against Section 30(2)(e) of the Code and hence, this Adjudicating Authority should reject the plan of DVI. 8. The various clauses of the Resolution Plan read with Addendum, which, the Applicant is objecting, are as under:- Clause 2.5.2 which is part of Indicative Timeline of Events for Implementation of Proposed Resolution Plan , of the Resolution Plan dated 17.01.2020 read with addendum dated 07.02.2020, reads as under:- Changes in 2.5 on Timeline of Events for Implementation of Resolution Plan: Sub-section 2.5.2 shall stand replaced in the clause set out below:- unless waived (where permissible under Applicable Law) by the Resolution Applicants, the consumption and completion (including the Acquisition of the Corporate Debtor by the Resolution Applicants in terms of sub-section 5.1 and disbursement of Upfront Cash Infusion for settlement of dues of the Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Applicants, whichever is later ( Effective Date ), the Resolution Applicants and / or their affiliates including DVI FPI, shall subscribe to equity shares, debt, or quasi debt, and / or convertible instruments of the Corporate Debtor such that they will hold 90% (ninety per cent) of the share capital of the Corporate Debtor and acquire control of the Corporate Debtor ( Acquisition ) as a going concern in accordance with Applicable Law and the Corporate Debtor will make payment of amounts payable to the Creditors as set out in this Resolution Plan. The detailed steps involved in the Acquisition are as follows, which shall occur simultaneously on the Effective Date; Section 9:- Prayer In view of the facts mentioned above, the Resolution Applicants submit that the following prayers shall be included, with or without such modifications as may be considered necessary by the Resolution Applicants in the Resolution Plan. It is clarified that any prayers requested to be granted by the NCLT to the Resolution Applicants shall not be construed as conditionalities to the implementation of this Resolution Plan: xxx xxx xxx xxx xxx (xii) To pass an order for cance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor as a Going Concern (i) The Resolution Applicants and / or their affiliates (including DVI FPI) reserve the right to infuse amounts in the form of equity, debt, quasi equity or debt, or a combination thereof ( Purchase Funds ), into the Corporate Debtor for the purpose of running the Corporate Debtor as a going concern including to purchase ACE Complex Land. (ii) The Resolution Applicants propose to negotiate with Vistra ITCL (India) Limited, KKR India Financial Services Limited and L T Finance Limited for the purchase of ACE Complex Land by the Corporate Debtor, directly or indirectly through its subsidiaries, affiliates or other nominees in accordance with Applicable Law. The Resolution Applicants by themselves or through their affiliates (including DVI FPI), at their discretion, undertake to infuse Purchase Funds, as required, for the purchase of the ACE Complex Land. 9. The learned senior counsel for the applicant while fairly submitting that this adjudicating authority while exercising its jurisdiction under the provisions of the Code cannot decide the validity of the registered lease deed dated 28.01.2020 executed by respondent No.4 Gateway in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Plan and if the instant IA is allowed, the same would result in resolution plan becoming commercially infeasible and unviable. 13. At this stage, it is relevant to note certain dates. Respondent No.3-DVI submitted its resolution plan to the Committee of Creditors on 17.01.2020. Respondent No.4 Gateway executed a registered sale deed on 28.01.2020 in favour of the corporate debtor. The Resolution Applicant issued the addendum to the resolution plan on 07.02.2020. The Committee of Creditors approved the resolution plan dated 17.01.2020 read with addendum dated 07.02.2020 on 07.02.2020. 14. Clause 2.5.2 of the Resolution Plan dated 17.01.2020 read with addendum dated 07.02.2020 clearly shows that the execution of a long term lease (subsisting for 20 years or more) for the ACE Complex land with acceptable terms is not a condition precedent for approval of the plan, but the same is an effective date condition precedent . The requirement of confirmation of the validity and subsistence of the lease arrangement by way of prior written consent of Vistra ITCL (India) Ltd. acting as a security trustee on behalf of KKR India Financial Service Limited and L T Finance Limited in a fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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