TMI Blog2021 (5) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013, it is imperative for the Tribunal to grant necessary reliefs. Since the decision to sell the Corporate Debtor as a going concern is taken by the Liquidator in consultation with the creditors/stakeholders and the proceeds from the sale of assets are going to be utilized for distribution to the creditors in the manner specified under Section 53 of the Code, all the creditors of the Corporate Debtor get discharged and the assets are transferred free of any encumbrances. Permission is accorded to Applicant to pay/adjust the sale consideration of ₹ 109,964,559/- by way of investment into the equity shares of the Corporate Debtor and upon payment of consideration, the following shall be deemed to have occurred and become effective and operative in the sequence and order mentioned - Corporate Debtor shall allot 10,996,456 shares at a face value of ₹ 10/- each to the Applicant and its shareholders which shall constitute 100% of the equity of the Corporate Debtor and such allotment to be made in accordance with Applicable laws - Application disposed off. - IA No. 112 of 2021 in CP (IB) 675/7/HDB of 2018 - - - Dated:- 28-4-2021 - Bhaskara Pantula Mohan, Member (J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment into the equity shares of the Corporate Debtor. A direction be issued that upon payment of the Consideration, the Corporate Debtor, without requirement of any further act, deed or thing, shall allot 10,996,456 shares at a face value of INR 10/- each to the Applicant and its shareholders, which shall constitute 100% of the equity of the Corporate Debtor, and such allotment shall be deemed to have been made in accordance with Applicable Laws. On the Transfer Date, pursuant to the Consideration received from the Applicant, the Corporate Debtor shall issue and allot new equity-shares to the persons as prescribed herein below and the same shall be the shareholding pattern of the Corporate Debtor as on the Transfer Date post cancellation of existing share capital of the Corporate Debtor (held by Promoter Group as well as Public shareholders): (2) A direction to all the existing shares (held by Promoter Group as well as Public shareholders) of the Corporate Debtor shall be extinguished without any consideration, and rights and liabilities arising out of the same shall also be extinguished, and there shall be no requirement to add and reduced in the name of the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor to the Applicant (along with its nominees); (iv) the exemption available under Regulation 3(3) of SEBI (Delisting of Equity Shares) Regulations, 2009 from providing exit opportunity to the shareholders in relation to delisting pursuant to a resolution plan approved under the IBC Code shall be available for delisting of shares by the Corporate Debtor. (6) A direction that immediately upon payment of the entire Sale Consideration, the Applicant get all the rights, title and interest in the whole and every part of the Corporate Debtor, including but not limited to contracts, free from security interest, encumbrance, claim, counter claim or any demur, and the Sale Consideration shall be distributed by the Liquidator in terms of the Section 53 of the Code; (7) A direction that on and from the Transfer Date, all the claims or demands made by, or liabilities or obligations owned or payable to any actual or potential creditors Financial Creditors, Operational Creditors, Workmen Employees of the Corporate Debtor including the Government Dues (including but not limited to liabilities, interest and penalties, duties, etc. on account of income-tax, tax deduction at sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , notifications, circulars, guidelines, policies, licenses, approvals, consents or permissions as applicable on the Corporate Debtor including but not limited to any liability arising out of non-compliance under the provisions of Companies Act, 1956 and the Companies Act, 2013, Employees Provident Fund and Miscellaneous Provisions Act, 1952, Securities Exchange Board of India Act, 1992, Foreign Exchange Management Act, 1999 and under various labour legislations, prior to the Transfer Date shall be deemed to be extinguished; (13) A direction that on and from the Transfer Date, the status of the Corporate Debtor in the records of the Registrar of Companies should be reflected as 'active' from the status of 'liquidation'. (14) A direction that from the Transfer Date, the Board of Directors of the Corporate Debtor be re-constituted as per the Companies Act, 2013 and that the following individuals be permitted to act as Directors of the Corporate Debtor duly appointed under the provisions of the Companies Act, 2013, and direct the Registrar of Companies to do all such acts, deeds and things that are necessary to appoint the following individuals as directors of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition; (19) A direction that the Corporate Debtor shall have a right to review and terminate any contract that was entered into prior to the date of the Liquidation Order; (20) A direction that on and from the Transfer Date, all the assets (including any receivables but excluding the restricted cash/cash equivalents amounting to INR 92,455,262/- (Indian Rupees Nine crores Twenty-Four lakhs fifty-five thousand two hundred and sixty-two only), shall continue to be the assets of the Corporate Debtor, towards which the Applicant has made payment by way of the Sale Consideration; (21) A direction that upon approval of this application by the Adjudicating Authority, all the Brands (including Brand Name KSK ), IPRs (Intellectual Property Rights) belonging to the Corporate Debtor shall remain vested with the Corporate Debtor. The Existing Promoters/Existing Guarantors, erstwhile Promoters or any member, associate of the Existing and Erstwhile Promoter groups shall be restrained to do any business directly or indirectly in connection with the products and services presently offered by Corporate Debtor ( Corporate Debtor Business ) by using, directly or indirectly, any of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irection that the brought forward tax losses of the Corporate Debtor be permitted to be carried forward and set-off against future income as change of shareholding of the Corporate Debtor is pursuant to the bid submitted by the Applicant under the E-Auction Process; (27) The bid submitted by the Applicant should be considered to be a resolution plan under Section 79 of the Income Tax Act, 1961; (28) A direction that the brought forward tax losses of the Corporate Debtor be permitted to be carried forward and set-off against future income as change of shareholding of the Corporate Debtor is pursuant to the bid submitted by the Bidder pursuant to the Process Document. (29) A direction that the Corporate Debtor and the Bidder shall not be liable for any Taxes and shall be granted an exemption from all Taxes, levies, fees, transfer charges, transfer premiums, and surcharges that arise from or relate to the Acquisition, since payment of these amounts may make the Acquisition unviable. Any reference to Taxes shall include any transfer premiums or charges, change of ownership/Control charges payable in connection with the Acquisition and the consequent change in ownership a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, customs, octroi, excise duty, service tax, goods services tax, Income-tax Act including but not limited to any income tax and Minimum Alternate Tax (MAT) liability arising on capital reduction in Corporate Debtor, consolidation of share capital of Corporate Debtor, write off/write down of current amounts due to employees, vendors, Operational Creditors, Financial Creditors, value of assets, value of inventories, etc. without any impact on brought forward tax and book loss/depreciation; and waive all liabilities whether crystallized or not in respect of Taxes (including interest and penalty) arising in respect of periods up to the Transfer Date. (30) Pass an order to provide the Bidder 100% exemption on stamp duty and registration fee and local taxes and levies imposed by the appropriate Governments, applicable in respect of any transaction required to be undertaken pursuant to this acquisition, and taxes thereon. 7. Reply is filed by the Liquidator. The Liquidator submits that the E-auction Process Document stated that the sale of the Company is on going concern basis in accordance with the provisions of the Code, IBBI (Liquidation Process) Regulations and E-Aucti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Since the decision to sell the Corporate Debtor as a going concern is taken by the Liquidator in consultation with the creditors/stakeholders and the proceeds from the sale of assets are going to be utilized for distribution to the creditors in the manner specified under Section 53 of the Code, all the creditors of the Corporate Debtor get discharged and the assets are transferred free of any encumbrances. 12. The Applicant has further relied on the following judgments to buttress its case:- i) NCLT Hyderabad Bench-1 order in the matter of Bank of India vs. Southern Online Bio-Technologies Ltd. passed in CP(IB) No. 343/7/HDB/2018. ii) NCLT Mumbai Bench order passed in IA No. 2264/2020 in CP(IB) No. 1239/MB/2018 in the matter of Topworth Pipes Tubes Pvt. Ltd. 13. Hence, by relying on the said judgment of Hon'ble Supreme Court stated supra, as the Corporate Debtor is being sold as a ongoing concern, it is a fit case to grant certain reliefs in favour of the Applicant/purchaser. 14. As a sequel to the above discussions and documents placed on record and submissions made by the Learned Counsel for the Applicant and the Liquidator, we pass the following or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liabilities of the Corporate Debtor as on date stands extinguished, qua the Applicant. 5 Any proceedings pending against the Corporate Debtor (other than against the erstwhile promoters or former members of the management of the Corporate Debtor) as on date with respect to its liabilities/inquiries/investigations/assessment/claims/disputes/litigations etc shall not have any bearing against the assets sold in the process. The said assets are free from any financial implications arising out of any pending proceedings before relevant authorities, if any. Further noncompliance of provisions of any laws, rules, regulations, directions, notifications, circulars etc on the Corporate Debtor under various Acts and Regulations stands extinguished, qua the Applicant. 6) Relief sought at Para 6(18) stated supra is allowed subject to payment of renewal fees, if any, from this date to the Licensing Authorities. 7) The Applicant/Corporate Debtor shall have the right to review and terminate any contract that was entered into prior to the date of this order. 8) The assets specified in the e-auction memorandum, on payment of the consideration shall vest with the Applicant. All th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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