TMI Blog2021 (1) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... bmit the resolution plan after making payment of overdues and interest thereon. However, DC is of the opinion that this submission of Mr. Singhania still does not explain the rationale behind accepting the interest post CIRP commencement period as revised claim. Claims can be accepted only as on insolvency commencement date. Allegation of providing amount of ₹ 10.38 crore to PNB as against the revised claim of ₹ 1.27 crore - HELD THAT:- The DC noted that the revised claim was a new claim for the interest amount from 1st June, 2017 to 10th April, 2018. However, Mr. Singhania did not give extra voting rights to PNB on account of new claim. Therefore, DC finds that acceptance of claim in respect of the interest for the period from 1st June, 2017 to 20th September, 2017 is as per Regulation 13 of the CIRP regulations. However, acceptance of any claim for the post CIRP period i.e. 21st September, 2017 to 10th April, 2018 is in violation of Regulation 13 of the CIRP Regulation. Deferment of publication of EoI by Mr. Singhania - HELD THAT:- The DC notes that the provisions of section 208(2), Regulations made under the Code require an IP to follow, at all times, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He acted in the interest of the CD to save it from going into liquidation. The DC notes that the non-cooperation from the KMPs of the CD is evident from the orders of AA in that regard. Hence, DC takes a lenient view. Making public announcement of initiation of CIRP at the place of principal office - HELD THAT:- The DC notes that when a corporate debtor undergoes corporate insolvency resolution process, an IP is vested with the management of its affairs and he manages its operations as a going concern. He complies with the applicable laws on behalf of the corporate debtor. He conducts the entire CIRP. Such responsibilities of an IP require the highest level of professional excellence and integrity. Section 15(2) of the Code provides for the Public announcement of corporate insolvency resolution process to be made in such manner as may be specified - In the present matter, the DC notes that the submission of Mr. Singhania who acted on the information of the Advertisement agency that the Financial express and Dainik Statesman (vernacular daily) were circulated across West Bengal including Siliguri, where the corporate office is located. Mr. Singhania has also produced the report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Mr. Kamlesh Kumar Singhania shall, however, continue to conduct and complete the assignments/processes he has in hand, if any, as on the date of this order. (iv) This order shall come into force on expiry of 30 days from the date of its issue. (v) A copy of this order shall be forwarded to the ICSI institute of Insolvency Professionals where Mr. Kamalesh Kumar Singhania is enrolled as a member. (vi) A copy of this order shall also be forwarded to the Registrar of the Principal Bench of the National Company Law Tribunal, New Delhi, for information. - NO. IBBI/DC/42/2020 - - - Dated:- 13-11-2020 - Dr. Mukulita Vijayawargiya, Whole Time Member ORDER In the matter of Mr. Kamalesh Kumar Singhania, Insolvency Professional (IP) under section 220 of the Insolvency and Bankruptcy Code, 2016 read with regulation 11 of the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016 and regulation 13 of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017. This Order disposes of the Show Cause Notice (SCN) No. IBBI/IP/MON/2019/39 dated 19th May, 2020 issued to Mr. Kamalesh Kumar Singhania R/o - Bajara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal, Advocate. Mr. Singhania reiterated the submissions made in his written reply and also submitted additional documents via email dated 9th September, 2020 in the matter. 2. Alleged Contraventions and Submissions Contraventions alleged in the SCN and Mr. Kamalesh Kumar Singhania's written and oral submissions thereof are summarized as follows. I Contravention 2.1 CIRP of the M/s Mintri Tea Company Private Limited commenced on 20th September, 2017. Its financial creditor (FC), i.e., the PNB filed a claim in Form 'C' dated 3rd October, 2017 for the amount of ₹ 10,37,69,840/- and interest and other charges to be calculated till actual realization. The amount stated was the amount outstanding as on 31st May, 2017. The said claim was admitted by the Mr. Singhania and voting share was given to PNB on the basis of said claim. During CIRP, on 21st April, 2018, PNB filed a revised claim in Form C to the RP. The revision was on account of repayment by guarantors of CD of certain portion of total outstanding amount. PNB submitted the revised claim of ₹ 1,27,74,287.80 (as on 10th April, 2018) which included interest for the period of 20th Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2.1 It was submitted by Mr. Singhania that the said claim of PNB was lower to the extent of interest due from 1st June, 2017 to 20th September, 2017. However, he had to admit the same as per claim amount. For the claim after commencement of CIRP, Mr. Singhania submitted that the revised claim of PNB in respect of interest from 1st June, 2017 to 20th September, 2017 is admissible irrespective of the amount of claim and for further period, he relied upon the proviso to section 29A of the Code and Regulations 12(2), 13(1) and 14 of the CIRP Regulations. During virtual personal hearing, it was submitted by the counsel of Mr. Singhania, Mr. Pranay Agarwal that no extra voting rights were given to the PNB by Mr. Singhania for accepting the revised claim. 2.2.2 After making payment to PNB, the guarantors of CD with their advocates came to attend the 7th adjourned CoC meeting held on 7th May, 2018 and submitted that as per law of contract, they have stepped into the shoes of PNB by way of subrogation. Mr Singhania requested the guarantors to submit an affidavit in support of their claim. The said affidavit was submitted by the guarantor on 9th May, 2018. Original affidavit was sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of IP Regulations, RP must act with objectivity in his professional dealings by ensuring that his decisions are made without the presence of any bias or undue influence of any party. And that the said action for providing an amount of ₹ 10.38 Cr. to PNB as against the claimed amount of ₹ 1,27,74,287/- indicate bias in favour of Mr. Singhania towards one stakeholder. Thus, the IBBI is of the prima facie view that Mr. Singhania have violated section 208(2)(a) of the Code, Regulation 7(2)(a) and (h) of the IP Regulations and clause 1, 2, 3, 10 and 14 of the Code of Conduct under regulation 7(2) thereof. Submission 2.4 With respect to the second issue raised in the SCN, it was submitted by Mr. Singhania that after the receipt of the revised claims, Resolution Applicants (RA) were appraised of the facts of repayment of original claim of PNB during CoC meeting. Information about fresh claims admitted were also provided and on that basis offers were finally revised by the RAs in respect of payment of the secured FCs.The fact is that apart from PNB, there were five other claims received after 7th May, 2018 from the following persons: 1. Federal Bank - ₹ 43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (OTS) was pending with PNB who was the sole CoC member, therefore, CoC considered to defer the publication of EoI. That just by taking a decision to defer the publication of EoI, it cannot be construed that the CIRP was being carried in a manner otherwise than provided in the Code. He submitted that the CIRP was completed within 270 day period as provided in the Code. It was stated that the CIRP was carried on by Mr. Singhania in a time bound manner as per the provisions of the Code and the value of the CD was maximised in the process and the livelihood of more than 1400 staff and workers were saved. 2.6.1 Mr. Singhania submitted that the non-cooperation by the CD and its KMP is an established fact in the case and stated that the directors of the CD failed to cooperate in the CIRP since beginning and did not provide any information as evident from the minutes of CoC meeting held on 9th February, 2018. Despite specific orders by the AA to cooperate with RP, there was no compliance by the key managerial personnel (KMP) of the CD. Direction given by the AA to handover the management to RP, Mr. Singhania within 15 days vide order dated 25th September, 2018 was not complied with. Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similarly, as regards treatment of land in Balance Sheet as at 31st March, 2016, land has been shown as an asset. And that in the previous years since 2000, same treatment was given to land in the balance Sheet of CD pending approval of application for renewal by the appropriate authorities. Valuation of assets were done by independent valuers as per provisions of the Code. 2.8.1 Mr. Singhania submitted that despite the Directors of CD not cooperating in CIRP which is evident from the records, Mr. Singhania tried his best for resolution of the CD which would have otherwise gone into liquidation. Keeping these factors in mind, Mr. Singhania had gone ahead with Resolution by convincing CoC for seeking extension of CIRP period, which finally resulted in successful resolution of the CD. 2.8.2 As regards the dues payable to workers and employees, Mr. Singhania submitted that the figures of worker's dues were taken as per information gathered from various mails of the directors of CD, wherein they always asked to provide funds for payment of various dues. The figures of ₹ 1.72 Cr. as shown in page no. 13 was as per information received from CD. Based on the information ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Newpaper is circulated all over West Bengal. He had also attached Report of audit bureau of circulations for July to December 2017 certifying publication of the Dainik Statesmen in Kolkata and Siliguri. During personal e-hearing, it was submitted by Mr. Pranay Agarwal, Counsel for Mr. Singhania that Public announcement in Form A was in compliance of section 13(2) of the code and Regulation 6 of CIRP regulations of the IBBI. VI Contravention 2.11 Regulation 27 of the CIRP provides for appointment of two registered valuers to determine the fair value and the liquidation value of the CD. Accordingly, Mr. Singhania appointed two valuers, viz., M/s Adroit Tech Services Private Ltd. and Mr. K.K. Kharga for valuation of CD. M/s Adroit Tech Services Private Ltd. reported that in the absence of details pertaining to the Land Building and Plant Machinary we haven't added any such value to the valuation. On the other hand, Mr. K.K. Kharga conducted valuation considering the detailed asset wise information and physical verification of all assets of the CD.As the details of the Land and Building and plant and Machinery was available to Mr. K. K. Kharga, the same should have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectors. Despite the directions of the AA and Mr. Singhania seeking police assistance to get possession of assets, they were not handed over. An application under section 12A of the Code for withdrawal of the CIRP was filed by PNB but the same was dismissed vide order dated 3rd August, 2018. One of the directors of the CD filed an appeal before Hon'ble NCLAT which passed an order dated 16th August, 2018 directing the AA not to pass any order under section 31 of the Code. The AA directed the CD to handover the assets within 15 days failing which Mr. Singhania can take assistance from police. It further directed PNB to consider the request of the RP for the grant of interim fund so as to continue the process till approval or rejection of the plan. NCLAT vide order dated 5th October, 2018, directed the suspended Board of Directors to handover the assets of the CD to the RP as required under the law. Thus, DC also takes on record the fact of non-cooperation. 2.12.3 Mr. Singhania further submitted that an application for withdrawal of the CIRP was filed under section 12A of the Code by the PNB which was dsmissed by the AA. However, an appeal was filed by against this order before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution professional, as the case may be, shall verify every claim, as on the insolvency commencement date, within seven days from the last date of the receipt of the claims, and thereupon maintain a list of creditors containing names of creditors along with the amount claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims, and update it. 3.1.1 In this regard, the Apex Court in the matter of Committee of Creditors of Essar Steel India Limited Through Authorised Signatory Vs. Satish Kumar Gupta Ors. (Civil Appeal No. 8766-67 of 2019) also highlighted the role of RP in the revival of the corporate debtor. The Hon'ble Court observed as under: Thereafter, under Regulation 13, the resolution professional shall verify each claim as on the insolvency commencement date, and thereupon maintain a list of creditors containing the names of creditors along with the amounts claimed by them, the amounts admitted by him, and the security interest, if any, in respect of such claims, and constantly update the aforesaid list. The DC notes the submission of Mr. Singhania that for claim after the commencement of CIRP, he rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lations, 2016 provide as under: 13. An insolvency professional must adhere to the time limits prescribed in the Code and the rules, regulations and guidelines thereunder for insolvency resolution, liquidation or bankruptcy process, as the case may be, and must carefully plan his actions, and promptly communicate with all stakeholders involved for the timely discharge of his duties. 14. An insolvency professional must not act with mala fide or be negligent while performing his functions and duties under the Code. 3.2.1 In the present matter, the DC notes that the submission of Mr. Singhania in his reply that in the 4th CoC meeting dated 9th February, 2018, it was proposed by him that the advertisement inviting EOI be published in the newspapers by 13th February, 2018 and the last date of submission be kept at 28th February, 2018. During this meeting, CD/Mr. Mintri has submitted a proposal to Punjab National Bank to settle and pay outstanding dues of the Bank, Mr. Mintri has requested to defer the date of publication. In the meeting, it was decided that if Mr. Mintri's proposal for OTS is not accepted by the Bank within 20th February, 2018, the advertisement shall be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made up to a date not earlier than fourteen days from the date of the application; (d) a list of creditors containing the names of creditors, the amounts claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims; (e) particulars of a debt due from or to the corporate debtor with respect to related parties; (f) details of guarantees that have been given in relation to the debts of the corporate debtor by other persons, specifying which of the guarantors is a related party; (g) the names and addresses of the members or partners holding at least one per cent stake in the corporate debtor along with the size of stake; (h) details of all material litigation and an ongoing investigation or proceeding initiated by Government and statutory authorities; (i) the number of workers and employees and liabilities of the corporate debtor towards them; ... 3.3.2 It is RP's duty to provide an updated and verified IM to all resolution applicants. In this regard, DC takes on record the submission of Mr. Singhania that he had not suppressed any material information and that the error in the date mentioned in page no. 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the resolution professional shall appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with regulation 35. Regulation 35 of the CIRP regulations provides as under. The two registered valuers appointed under regulation 27 shall submit to the resolution professional an estimate of the fair value and of the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor 3.5.1 In the instant matter, the DC has noted that Mr. Singhania accepted the Report of M/s Adroit Tech Services Pvt. Ltd. with the limitation that in the absence of the details pertaining to the Land and Building and Plant and Machinery we haven't added any such value to the vauation. This shows that Mr. Singhania has not taken care of the observations made by the valuer. However, Mr. Singhania has clarified that the Reports of valuers were based on internationally accepted valuation standards and the promoter directors did not cooperate with him in providing the details of the assets. 3.5.2 DC notes that since ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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