TMI Blog2021 (3) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... the Operational Creditor considering the liquidation value, in that case shortfall amount will be paid to them by reducing amount available to the Financial Creditor. In the case in hand, this Adjudicating Authority is of the view that as the amount available to the Operational Creditor as per Section 53 of the Code, is considered as nil but Resolution Plan provided for payment @ 18.84% of claim admitted amount of the operational creditors which is more than the liquidation value and all the operational creditors has been treated equally thus the prayer of the operational creditor to modify the Resolution Plan to the extent of claim of RPPL is not sustainable. Thus it is a well settled proposition of law that the commercial wisdom of COC are not open to judicial review thus the Adjudicating Authority cannot enquire into it. It is however reiterated that the Resolution plan in question meets the requirement specified in Sec 30(2) of the Code and the reasoned commercial decision of COC is neither discriminatory nor perverse - this bench is satisfied that the requirements as per the Code and regulations have been complied with. Moreover, the Resolution Plan has been approved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tribunal for extension of CIR Process by 90 days beyond 180 days which was approved by this Tribunal. 5. Further stated that in spite of tremendous efforts and receipt of no. of EOI's no resolution was submitted and in absence of any resolution plan, the applicant convened 91h COC meeting on 18% February,2019 in which COC approved the Resolution for liquidation of the corporate debtor and authorized the Resolution Professional to make an application for liquidation, in pursuance of which RP has submitted application for liquidation as CA No. 83/2019. 6. On 09/07/2019, during the course of arguments, counsel for RP submitted that the CIRP period has been completed, and no option was left except liquidation, but the Tribunal considering the spirit of Code and in paramount interest of the corporate debtor granted one more opportunity to suspended management to approach COC, meanwhile impleadment application IA No. 260/2019 was filed objecting the liquidation application on behalf of employees of the corporate debtor. 7. It is further stated that RP, as per the compliance of the order of this Adjudicating Authority, convened 13% COC meeting on 13% January,2020 and placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the Resolution Plan is also silent about the current assets of the Corporate Debtor and is also not in accordance with the settlement agreement dated 13.11.2017 which was entered into by the promoter of the Corporate Debtor from the business by selling their assets/shares, waiving of their rights and relinquish their investments and outstanding dues in the Corporate Debtor to meet the third party allegations. The said agreements also provided that in case of sale of assets of the Corporate Debtor, the claim for amount due to the Operation creditors will be paid first in order of priority which was also approved by financial creditors and lenders of the Corporate Debtors. Thus according to the settlement agreement, the Resolution Plan should provide for payment of claims of Operational Creditors in entirety. 11.It is further stated that the Resolution Plan has been prepared without considering the Report of Forensic auditors. The CoC in its 11%, 12th, and 13th meeting convened on 19.06.2019, 04.11.2019 and 13.01.2020 respectively, decided to appoint a forensic auditor, the same was appointed on 06.06.2020, however the report from the forensic auditor is still awai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholders. Further, the working is mainly meant for procurement and inventory of raw sugar, packing materials, coal, consumables and financing of finished goods and receivables for operating business, payments to the suppliers is required after the revival period of Corporate Debtor. All the Operational Creditors, subject to their quality, competitiveness and willingness can become the supplier, however no amount can be earmarked for the operational creditor against their claim out of working capital contemplated under the plan and the Resolution Plan describes the method of utilization of the working capital and working capital margin. 15.Heard the Ld. Counsels for the parties and perused the record available. 16.Section 30 of the Code provides as below: (1)A resolution applicant may submit a resolution plan to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the repayment of other debts of the corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resolution plan to the Board to be recorded on its database. 17. It is observed that the Resolution Professional has examined the Resolution Plan and has found it to be in compliance with Section 30 (2) of the IBC read with Regulation 38 of the CIRP Regulations. In accordance with Regulation 39 (4) of the CIRP Regulations, the RP vide his Affidavit certified that: a) The contents of the Resolution Plan submitted by M/s NCIRCLE Exim LLP meet all the requirements of the IBC and the Regulations thereunder; and b) The Resolution Plan submitted by M/s NCIRCLE Exim LLP has been approved by the Committee of Creditors by 100% voting share under Section 30 (4) of the IBC in its meeting. c) Further, Resolution Professional has submitted compliance certificate in Form-H as required under Regulation 39(4) of the CIRP regulations, inter alia, certifying eligibility of Resolution Applicant under Section 29 A of the Code and feasibility viability of the Resolution resolution. Further, Regulation 38 39 of CIRP Regulations specify certain mandatory contents of the resolution plan. 18. The resolution plan approved by the Committee of Creditors meets the requirements l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a representative or an advisor of the financial creditors (COC) other than related party) a representative of the resolution applicant and Resolution Professional e) Plan does not contravene any of the provisions of the law for the time being in force. The Resolution Plan submitted by the Resolution Applicant does not contravene any provisions of law for the time being in force. f) Confirms To Such Other Requirements As May Be Specified By The Board The Resolution Plan confirms to all such other requirements as may be specified by the Board under the Code and the Regulations. 19. The following table shows that the requirements of Regulation 35 A, Regulation 38,8 Regulation 39(2), Regulation 39(4) CIRP Regulation are met by the approved plan: Reference of relevant Regulations Requirement Compliance in Resolution plan 38(1) The amount due to the operational creditors under a resolution plan shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entation (d) It has provisions for approval required and the timelines for the same (e) The resolution applicant has the capability to implement the resolution plan a) The Resolution applicant has addressed the cause of default of the Corporate Debtor as set forth in Clause 29 (i) (iii) page no. 59-60 of the Resolution Plan. b) The Resolution Plan does not contain Clause 29(iv) at page 61 of the Resolution Plan. c) The Resolution Applicant has provided for the effective implementation under Clause 19 at page 57 of the Resolution Plan. d) The Resolution Applicant has provided provisions for approvals required and the timeline in Clause 12 at page 41 of the Resolution Plan. e) The Resolution Applicant has provided the statement in regards to its capability as set forth in Clause 5 at page 37 of the Resolution Plan. 39(2) The RP has filed applications in respect of transaction observed, found or determined by him Yes 20. That the compliance certificate form H to the Resolution Plan is being filed before the Hon'ble Adjudicating Authority within time. A Complia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Towards financial Creditors (including Interest @8 P.A.) Within 12 Months of vesting date 21.865 (Principal =20.2370 Interest 1.6189) The last installment shall be made after deducting Rs. 1.00 Crores of pledged fixed deposit amount) - Towards financial creditors (including Interest @ 8 P.A.) Within 6 Months of vesting date - 8.00 - Refurbishment, Repairs of maintenance deposits and start-up expenses) Witkin 6 months of vesting date 27.00 Working Capital Margin Within 6 months of vesting date - - 81.00 Working capital borrowing/expansion It is stated that Fixed Deposit of Rs. 2.50 Crores shall be made in escrow account (opened on the approval of COC by RP) as mentioned in Clause 3.12 of RERP and the same shall be pledged as performance guarantee with resolution professional along with accepted Letter of Intent. Out of this Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors. 23. With regard to the objection raised by the operational Debtor, this Adjudicating Authority has observed that the plan has dealt with the interest of the stakeholders as per Section 53 of IBC, 2016. The amount available to the Operational Creditor as per Section 53 of the Code, is considered as nil in view of large due to Secured Financial Creditors. Inspite of that, some amount is provided for operational creditors, workman and employees. It is proposed in the plan that t4lhe residual amount due to the Operational Creditors and employee, if any, (After allocation of Resolution Plan fund to Financial Creditor) shall be given priority in payment over Financial Creditors and the amount proposed for Operational Creditor and employees is as per Financial Plan and if there is shortfall in amount available to operational Creditor as per the Resolution Plan when compared to what is available to the Operational Creditor considering the liquidation value, in that case shortfall amount will be paid to them by reducing amount available to the Financial Creditor. 24. In the case of Pratap Technocrats (P) Ltd Ors vs Monitoring Committee Of Reliance the Hon'ble NCLAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs are given priority in payment over all financial creditors does not lead to the conclusion that such payment must necessarily be the same recovery percentage as financial creditors. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution Applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors. Again in para 57 of the same judgment, it was observed by the Hon'ble Apex Court as under: - 57 . the equality principle cannot be stretched to treating unequals equally, as that will destroy the very objective of the Code-to resolve stressed assets. Equitable treatment is to be accorded to each creditor depending upon the class to which it belongs: secured or unsecured, financial or operational. 25. In the case in hand, this Adjudicating Authority is of the view that as the amount available to the Operational C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting the proposed resolution plan. Whereas, from the legislative history there is contra indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority. 28. Thus it is a well settled proposition of law that the commercial wisdom of COC are not open to judicial review thus the Adjudicating Authority cannot enquire into it. It is however reiterated that the Resolution plan in question meets the requirement specified in Sec 30(2) of the Code and the reasoned commercial decision of COC is neither discriminatory nor perverse. 29. In the facts as stated, this bench is satisfied that the requirements as per the Code and regulations have been complied with. Moreover, the Resolution Plan has been approved by 100% voting share of the members of COC and has been submitted in compliance of Sec 30 of the Code for approval. In view of the aforesaid discussions and as no infirmity have been brought out upon screening of the Resolution plan, this Adjudicating Authority hereby approve the Resolution plan under sub- section (1) of Section 31 of the Code. 30. This bench further di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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