TMI Blog2021 (3) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... t allow liquidation of a corporate debtor directly. It allows liquidation only on failure of corporate insolvency resolution process. It rather facilitates and encourages resolution in several ways - Keeping in view such object behind the enactment of the Code, intention of the Legislature, that the priority is to be given to the resolution than liquidation in the larger interests of the public, workmen, stakeholders and the other employees of the corporate debtors in the interest of justice and in order to achieve the object of the Code and liquidation of a company can be only as a last resort, wherein, all efforts for bringing resolution plan were failed or it cannot be found workable in the larger public interest. The hon'ble Supreme Court in its recent judgment in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS [ 2019 (2) TMI 1043 - SUPREME COURT] comprising of the hon'ble Justice A. M. Khanwilkar and hon'ble Justice Ajay Rastogi observed that the Adjudicating Authority has no jurisdiction to interfere with the commercial wisdom of the CoC. On the backdrop of the decision taken by the hon'ble Supreme Court, it is pertinent to note that commercial wisdom of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, i. e., M/s. Suryadeep Alloys Steel Castings P. Ltd. 2.5 The above stated plan was discussed in the fifth CoC meeting held on July 13, 2020 amongst the CoC, wherein CoC felt that resolution plan needs improvement on a commercial level and requested RP to convey to the resolution applicant to submit a revised plan within one week, i. e., on or before July 20, 2020. 2.6 The resolution applicant submitted the revised resolution plan in the sixth CoC meeting held on July 24, 2020 which was found satisfactory by the CoC. However, the approval of the resolution plan was deferred till the next CoC meeting as legal vetting of the plan was pending. Thereafter, in the seventh CoC meeting held on August 28, 2020 the resolution plan was approved with 100 per cent. voting in favour of the resolution plan. 2.7 The applicant further stated that the resolution applicant is eligible under section 29A of the IB Code. The applicant filed compliance certificate in form H as annexure M of the application. Pursuant to the approval of the resolution plan by the CoC under section 30(4) of the IB Code (as amended up to date) as the successful resolution plan, RP filed the instant application u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by National Company Law Tribunal 1. CIRP cost* (Note 1) 10,00,000 10,00,000 Up front within 90 days 2. Workmen and employees - - - 3. Secured financial creditors 26,13,27,227 3,90,05,000 Up front within 90 days 4. Operational creditors 11,89,723 - - 5. Operational creditor-Government dues 11,70,47,801 - - 6. Creditors other than above - - - Total 37,95,64,751 4,00,05,000 Note 1 : *₹ 10 lakhs is estimated CIRP cost up to date of approval of resolution plan by the National Company Law Tribunal and any excess or shortfall in CIRP cost up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (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 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 purpose of this clause, it is hereby declared that on and from the date of commencement of the Insol vency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority ; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force ; or (iii) where a legal proceeding has been initiated in any cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debtor during its term ; and (c) adequate means for supervising its implementation. 10. Further, from the object of the IBC, it is amply clear that the resolution is rule and the liquidation is an exception . Liquidation brings the life of a corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only, if there is any surplus after satisfying the claims of a prior set of stakeholders fully. The IB Code, therefore, does not allow liquidation of a corporate debtor directly. It allows liquidation only on failure of corporate insolvency resolution process. It rather facilitates and encourages resolution in several ways. The said objective of the resolution plan is affirmed in the decision in the matter of K. Sashidhar v. Indian Overseas Bank [2019] 213 Comp Cas 356 (SC) the Supreme Court has observed that the National Company Law Tribunal has no jurisdiction and authority to analyze or evaluate the commercial decision of the committee of creditors (CoC) to enquire into the justness of the rejection of the resolution plan by the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for proper and effective implementation of the plan. 13. It is needless to mention herein that approval of the resolution plan does not mean automatic waiver or abatement of legal proceedings, if any, which are pending by or against the company/corporate debtor, as those are the subject-matter of the concerned competent authorities having their proper/own jurisdiction to pass any appropriate order as the case may be. The resolution applicant(s) on approval of the plan may approach those competent authorities/courts/legal forums/offices-Government or semi Government/State or Central Government, for appropriate relief(s) sought for in clause 5.4 and 5.5 of the resolution plan. 14. Apart from the above observations and directions, it is further directed/ observed that : (i) The approved resolution plan shall come into force with immediate effect. (ii) The resolution plan shall be subject to the various existing laws in force and shall also confirm to such other requirements specified by the Board and other statutory/competent authorities as the case may be. (iii) The resolution applicant(s) shall pursuant to the resolution plan approved under section 31(1) of the Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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