a8ad2d821d8b24fd249c4dc6bff4e50d

Per: Chief Justice (Retd.) RAMALINGAM SUDHAKAR, PRESIDENT

IA(IBC)/288(CHE)/2022 is an Application which is moved by the Resolution Professional of the Corporate Debtor viz., Vasan Health Care Private Limited on 03.03.2022 under Section 30(6) & 31 of the Insolvency and Bankruptcy Code, 2016 (in short 'IBC, 2016') read with Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (in short, 'CIRP Regulation, 2016') seeking relief as follows;

The Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor viz. Vasan Health Care Private Limited was initiated by this Tribunal in an Application filed by an Operational Creditor under Section 9 of IBC, 2016 in CA/1/IB/2017 vide its order dated 21.04.2017, and one Mr. V. Mahesh was appointed as the 'Interim Resolution Professional' (IRP).

In the meantime, pursuant to a Company Petition filed before the Hon'ble High Court of Madras, an order of stay of CIRP proceedings was granted on 04.05.2017. Thereafter, on 05.09.2019 the Hon'ble High Court of Madras vacated the aforesaid order of stay and observed that the proceedings under IBC can continue against the Corporate Debtor.

Thereafter, the IRP filed an Application before the NCLT, Chennai seeking continuation of the CIRP of the Corporate Debtor and permission to make public announcement afresh, as the earlier time period for announcement lapsed due to the stay order dated 04.05.2017 as aforesaid. This Tribunal allowed the said Application, pursuant to which the CIRP for the Corporate Debtor was revived on 03.10.2019.

In view of Covid – 19 pandemic the erstwhile IRP filed an application in IA/515/1B/2020 seeking extension of time under Section 12(2) of the I&B Code and for exclusion of the time lost due to Covid-19 for a period of 150 days, pursuant to a resolution passed in the 5th CoC meeting held on 24.03.2020. The said Application was allowed by this Tribunal vide its order dated 06.08.2020 and the period of 150 days was ordered to be excluded.

Thereafter, another application in IA/56/1B/2021 was filed by the erstwhile IRP seeking exclusion of another 150 days, as resolved in the 10th meeting of the Committee of Creditors held on 12.12.2020 as the Covid nation-wide lockdown was continuing and several States had imposed restrictions on the movement of men and materials, which disrupted the CIRP of the corporate debtor to a great extent as they were in the business of providing eye care facilities. The said Application was allowed by this Tribunal vide its order dated 26.02.2021 by excluding a period of 150 days till 31.05.2021, with an observation that, if a resolution could not be arrived at on or before 31.05.2021 an order under Section 33 of the IBC Code, may be passed.

In the 11th meeting of the Committee of Creditors held on 12.03.2021, a resolution was passed appointing the Applicant herein as the 'Resolution Professional' replacing the Interim Resolution Professional and the said resolution was passed with 90% of the CoC voting in favour. Pursuant to which, an application under Section 22(3) of the IBC, 2016 was filed by the CoC. The said application was allowed on 23.04.2021 and the applicant herein took charge as the Resolution Professional of the Corporate Debtor.

In the same CoC meeting, it was submitted that a Resolution Plan from Dr. Agarwal's Health Care Limited was considered. However, the said Resolution plan was rejected with 89.04% voting of the CoC.

In the 12th meeting of the Committee of Creditors held on 21.05.2021 the CoC members expressed that the Resolution Plan submitted by Dr. Agarwal's was rejected by them as the same was not a feasible plan in the health care sector of the Corporate Debtor, considering the brand value, dedicated staff, footfall in various branches despite the litigations and the pandemic. The CoC was of the view that the previous round of expression of interest did not yield the desired results due to various reasons and that the resolution applicant reportedly did not have adequate information to offer an acceptable/viable resolution plan.

The CoC after taking note of the pending matters that require completion, such as carrying out compliances, revising the Information Memorandum, floating of Expression of Interest, process of issuing Request for Resolution Plan, obtaining a Resolution Plan, holding negotiations with bidders, identifying and approving a viable and feasible resolution plan, decided that at least a minimum of 6 months was required with effect from 01.06.2021 taking into consideration the timelines prescribed under the Regulations. A resolution came to be passed with 13 members of the Committee of Creditors constituting 88.02% voting in favour of resolution seeking exclusion / extension of 180 days from the CIRP of the Corporate Debtor. Further, the CoC in the same meeting approved floating of a fresh Expression of Interest (EoI).

Thereafter, an application seeking extension / exclusion of 180 days till 30.11.2021 was filed in IA/510/IB/2021. Also, fresh EoI was floated on 28.06.2021. It was submitted that eight bidders expressed interest to submit a resolution plan out of which 7 of them were shortlisted after scrutiny and placed before the CoC in the 14^th meeting held on 29.07.2021. The following were the shortlisted Resolution Applicants;

It was submitted that the Information Memorandum (IM) and Request for Resolution Plan (RFRP) were shared with the shortlisted resolution applicants after obtaining confidentiality undertaking. As per the terms of the RFRP, the last dated for submission of the resolution plan was 13.09.2021.

On the last date for the submission of the Resolution plan, i.e. 13.09.2021, the following Resolution Applicants submitted Resolution Plans as per the RFRP issued;

On 29.11.2021, the 16th meeting of the CoC was called for and the resolution plans submitted by the Resolution Applicants in password protected pen – drive and sealed cover were opened and discussed in detail by the CoC. The Resolution applicants submitted their bid security deposit of Rs. 5 Crores along with the resolution plan. The Resolution Applicants were invited and given an opportunity to present their respective resolution plans, Resolution Applicants interacted with the CoC members and clarified the doubts of the creditors. They further expressed their willingness to negotiate the proposal submitted. It was decided that the evaluation of the resolution plans received and examination of the terms of the plans would take a week, the next meeting of the CoC was scheduled on 20.12.2021. During the interactions with the Resolution Applicants in the COC when they were presenting their resolution plans references were made to the amendment dated 30thSeptember 2021 to IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 which stipulates that the modification to the resolution plan can be made only once. The Resolution Applicants were requesting whether a challenge mechanism, if any, was planned to be used to enable the applicants to improve their plan. RP responded that no challenge mechanism was proposed in the RFRP, as it was issued much earlier to the above-stated amendment and that the resolution plans were submitted by 13thSeptember 2021 prior to the amendment.

In the 17th CoC meeting held on 20.12.2021, detailed discussion on the resolution plans were held by the CoC members and the resolution applicants sought time to submit their improved resolution plans. The COC therefore decided to grant time until 04.01.2022 to the RA's to submit improved resolution plans. Details of operations of the corporate debtor, performance of the corporate debtor, bank account balances, appointment of professionals for internal audit, accounts finalization, GST filings, ESI, EPF and TDS compliance, updated list of creditors as on 30.11.2021, legal issues, pending cases, CIRP costs, avoidance transactions, etc., were also discussed in the said meeting.

On 04.01.2022, the following three (3) Resolution Applicants submitted their revised / improved resolution plan.

It was submitted that iLabs India Special Situations Fund, Hyderabad did not submit their revised or Improved resolution plan, however they stated that the resolution plan submitted by them on 13.09.2021 was still valid and the CoC may consider it. Another resolution applicant i.e., Maxivision Eye Hospitals Private Limited sent a letter on 03.01.2022intimating that they were withdrawing from the resolution process of the corporate debtor and sought return of their bank guarantees submitted for process participation deposit and bid security deposit.

In the 18th CoC meeting held on 07.01.2022, the CoC discussed each of the four resolution plans with the respective resolution applicants. It is stated that substantial improvement in the resolution plan amounts were made by the resolution applicants (except iLabs India Special Situations Fund).

Evaluation Matrix and a Synopsis of the improved resolution plans were shared with all CoC members and the director of the corporate debtor after scrutiny under Section 29A of the Code and other applicable laws. Clarifications with regard to the terms of the resolution plans were discussed in detail with the Resolution Applicants in the 19th CoC meeting held on 28.01.2022.

After discussion with each of the resolution applicants, the CoC members present in the meeting deliberated on the possibility of further maximization of value of the Corporate Debtor and by a majority of 51.03% of voting share decided in favour of giving all the resolution applicants a final chance to improve upon their plans and to submit the final and improved resolution plans incorporating all the mutually agreed modifications. The Resolution Applicants were thereafter informed that they have a final chance to further improve their resolution plans. All RA's except Labs India Special Situations Fund agreed to submit their improved resolution plan by 02.02.2022 as agreed with the CoC.

Three Resolution Applicants, viz., Dr. Agarwal's Health Care Limited, Mr. M.K. Rajagopalan and ASG Hospital Private Limited submitted their revised and final resolution plans in the said meeting. The request of Maxivision Eye Hospitals Private Limited to withdraw their resolution plan was put for e-voting and the request was approved by the CoC with 96.63% voting.

At this juncture one of the Resolution Applicants viz. Mr. M.K. Rajagopalan filed IA(IBC)/507(CHE)/2022 before this Tribunal with a plea to reject the Resolution Plan submitted by M/s ASG Hospitals Private Limited alleging that it is in flagrant violation of the provisions of IBC, 2016. The said IA was heard extensively by this Tribunal and was disposed of by its order dated 28.09.2022 holding that there is no violation of the Code or Regulations as alleged in the Resolution Plan submitted by ASG Hospitals Private Limited.

In the 20th meeting of the CoC held on 08.02.2022, all aspects of the improved and final resolution plans were deliberated in detail. CoC decided to put to vote the Resolution Plan after the applicant herein confirmed that all four resolution plans were compliant with Section 30(2)(b) of the Code and Regulation 38 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and that none of the RAs were ineligible as per Section 29A of the Code. The Resolution Plans of the following applicants were put to vote through e-voting process:

It was recorded that the e-voting process commenced on 11.02.2022 at 10AM and ended on 21.02.2022 at 6PM. The e-voting results were announced by the RP after the closure of the e-voting window.

ASG Hospital Private Limited, Jodhpur emerged as a Successful Resolution Applicant whose Resolution Plan was approved by the CoC with 97.90% voting share on 21.02.2022. The result of the e-voting was shared with the CoC on the same day. A Letter of Intent (LoI) was issued by the RP to the Successful Resolution Applicant on 22.02.2022. the LoI was accepted by ASG Hospital Private Limited on 24.02.2022. Further, it was submitted that the Performance Bank Guarantee dated 25.02.2022 for a sum of Rs.25 Crore was submitted to the RP within the stipulated period.

It is seen that the successful Resolution Applicant has filed IA(IBC)/489(CHE)/2022 before this Tribunal seeking to implead in the present Application. The said IA(IBC)/489(CHE)/2022 came to be allowed by this Tribunal vide its order dated 25.11.2022. The Successful Resolution Applicant has filed certain Affidavits in IA(IBC)/489(CHE)/2022 and the same will be dealt with in the later portion of this order.

The Applicant has filed a Compliance Certificate in the prescribed form i.e. Form 'H' in terms of Regulation 39(4) of the CIRP Regulations, 2016. A brief snapshot of the Resolution Plan submitted by the Successful Resolution Applicant, is as follows;

The Summary of the Resolution Plan submitted by ASG Hospital Private Limited is as under:

As per the Resolution Plan, the Resolution Applicant shall set up a Special Purpose Vehicle (SPV) which will be wholly owned by the Resolution Applicant. The SPV will infuse INR 385.07 Crores (Initial Infusion amount') into the corporate debtor as a mix of equity INR 54 Crores and quasi-equity INR 331.07 Crores. Further, the SPV will pay INR 8.93 Crores directly to the Operational Creditors of the corporate debtor towards assignment of debt. The Initial Infusion amount and OC settlement amount together forms Rs. 394 Crores being the resolution plan amount for distribution to various creditors.

As per the plan, the Resolution Applicant along with the SPV, intends to fund the acquisition from a mix of their internal accruals, existing banking facilities and their anchor investor, Foundation Holding. The Resolution Applicant has cash and bank balances of INR 56.7 Crores as on 31st December 2021. INR 126 Crores is proposed to be infused for capital expenditure for year one and working capital. The committed funds are stated to be infused into the corporate debtor within the timelines as stipulated in Resolution Plan. Further, Foundation Holdings has submitted a commitment letter dated 03.02.2022 to Resolution Professional for supporting fund infusion to honor commitments under this resolution plan. Further a letter dated 10.02.2022 by Ajman Bank, UAE, informing approved lines of credit in place to Foundation Corporation Holdings for a sum of USD 75 Millions, has been submitted by the Successful Resolution Applicant in support of their Resolution Plan.

Details of investment in subsidiaries as per audited financial statements as of 31st March 2020

As per the Resolution Plan, the Resolution Applicant intends to continue to hold ownership of the subsidiary and be the beneficial owner of the assets/proceeds from the subsidiary from the date of approval of the Resolution Plan. As per the Resolution Plan, the CoC may continue to proceed with any PUFE transaction application under the Code and the RA may choose to support the CoC without any additional cost. The Corporate Guarantees in respect of Vasan Dental Hospitals Private Limited shall stand dissolved and the RA or any of its directors or the CD shall not be liable for any sum due by Vasan Dental Hospitals Private Limited. Corporate Guarantees given by the CD in respect of debts of group companies / SPV / subsidiaries/ trust shall stand waived and such creditors in this respect shall have no claim whatsoever against the CD.

In respect of Vasan Healthcare International Pte. Ltd., proceedings under FEMA in respect of the issue transfer of shares as FDI, and in respect of remittances towards setting up of a subsidiary company outside India (ODI), proceedings before Directorate of Enforcement and ED under PMLA are pending as on date. RA, its directors, or the CD shall not be held liable for any liability/non-compliance / past malfeasance / legal action in respect of any of the subsidiaries of the CD. RA however undertakes to fully cooperate with all Government Agencies in their investigations and further action to the extent possible.

In respect of all other matters, it will be at the discretion of RA or any of its directors or the CD to exercise its rights in respect of any subsidiaries as per applicable laws and agreements.

The Resolution Plan provides for –

It is seen that on the approval of the Resolution Plan by NCLT, a Monitoring Committee is proposed to be constituted which shall comprise (a) Resolution Professional as its Chairman, (b) two representatives appointed by the Resolution Applicant; and (c) two representatives of the Financial Creditors.

The monitoring committee shall supervise the Implementation of the Resolution Plan and ensure that it is implemented without any deviations, ensure timely disbursement of funds, facilitate approvals to the extent required, bring to the notice of Adjudicating Authority any deviation / violation of the Resolution Plan by any person, provide regular updates to the AA as and when required and control the management of the CD from the date of approval of Resolution Plan till the implementation is complete. Monitoring Committee shall have the powers and functions of the Board of Directors. The monitoring committee shall stand disbanded and the reconstituted board of the RA shall take control of the management of the CD upon payment to all creditors on the closing date.

Upon approval of Resolution Plan by NCLT, the existing Board shall stand dissolved and vacated the office and the Resolution Professional under the supervision of the monitoring committee shall have absolute control to do all necessary things to give effect to the Resolution Plan in pith and substance.

After payout of its consideration to Financial Creditor's or upon deposit of the Resolution Plan amount in the escrow account, the Resolution professional shall handover the control of the Board and operations of the Corporate Debtor to the Resolution Applicant. The following key managerial personnel will be appointed to the Board of Directors, subject to the supervision of the monitoring committee;

F. DETAILS OF THE SCHEME OF MERGER BETWEEN SPECIAL PURPOSE VEHICLE (SPV) AND THE CORPORATE DEBTOR.

The Resolution Plan envisages, payments towards the settlement/discharge of claims of the creditors of the Corporate Debtor in the following manner.

A Special Purpose Vehicle (SPV) viz. ASG Eye Hospital Ventures Private Limited has already been incorporated on 10.05.2022 having its registered office situated at Plot No.1, Shyam Nagar, ASG Hospital Private Limited, Jodhpur Shyam Nagar Pal, Link Road, Jodhpur, Rajasthan – 342 008.

The Resolution Applicant would infuse INR 394 crores into the SPV within 21 to 28 days from the date of approval of the Resolution Plan by this Tribunal. Thereafter, the SPV will infuse INR 385.07 crores (out of INR 394 crores) ("Initial Infusion") into the Corporate Debtor as equity of INR 54 crores and quasi-equity (debt junior to existing Financial Creditors), INR 331.07 crores.

In order to infuse the said equity of INR 54 crores, the Resolution Plan provides reduction/cancellation/extinguishment of the existing share capital of the Corporate Debtor, pursuant to approval of the Resolution Plan. Post such reduction/consolidation of the existing share capital of the Corporate Debtor, the RA proposed to infuse INR 54 crores (through SPV) into the Corporate Debtor as consideration towards acquiring 0.54 crore equity shares which would be issued to the SPV at the issue price of INR 100/- share. In lieu of the consideration to the above share capital, the SPV shall become 100% shareholder of the Corporate Debtor, as follows:

Post infusion of funds from Resolution Applicant to SPV and thereafter from SPV to Corporate Debtor as indicated in the points above, the equity share capital held by Resolution Applicant into SPV and SPV into Corporate Debtor will be INR 54 crores each at 100% shareholding.

This Initial Infusion by SPV into the Corporate Debtor of INR 385.07crores, would be utilised towards settlement of outstanding CIRP cost of INR 42.07 crores and Financial Creditor's claim at INR 343 crores.

In addition to the above and upon satisfaction of the above indicative steps, the Resolution Plan proposes merger of the SPV with the Corporate Debtor, on the closing date i.e., after the payment of dues to all the creditors of the Corporate Debtor. In addition, after the merger, the authorized share capital of the SPV, as the transferor company, will be merged with the authorized share capital of the Corporate Debtor, as the transferee company. Accordingly, the authorized share capital of the Corporate Debtor, as the transferee company, will stand increased and reclassified into equity shares/preference shares/quasi equity etc. The new equity shares of the Corporate Debtor which were held by SPV as part of the issuance of new shares and infusion of capital will be cancelled without any consideration.

As part of the accounting treatment, the merger will be accounted in accordance with the "purchase method" prescribed under the Accounting Standard 14 (Accounting of Amalgamations)/ under requirements of Ind-AS 103 Business Combinations (principles of reverse merger) as may be. Further, the assets, liabilities, rights and obligations of the Corporate Debtor, as the transferee company along with assets and liabilities of SPV will be vested in the merged Corporate Debtor upon the merger, and will become the assets, liabilities and obligations of the Corporate Debtor. The new equity shares of the Corporate Debtor which were held by the SPV would be cancelled without any consideration. The effective date for the merger will be the closing date, and on such effective date, ASG becomes 100% shareholder of the Corporate Debtor holding an equity share capital of INR 54 Crore in the Corporate Debtor.

The Applicant has submitted the details of various compliances as envisaged within the provisions of IBC, 2016 and CIRP Regulations, which requires a Resolution Plan to adhere to, which is reproduced hereunder:

G. MEASURES REQUIRED FOR IMPLEMENTATION OF THE RESOLUTION PLAN IN TERMS OF REGULATION 37 OF CIRP REGULATIONS

H. MANDATORY CONTENTS OF THE RESOLUTION PLAN IN TERMS OF REGULATION 38 OF THE CIRP REGULATIONS:-

The Applicant has submitted the certificate of proof of eligibility under section 29A of the Code of successful Resolution Applicant, vide memo dated 27.07.2022.

The relevant information with regard to the amount claimed, amount admitted and the amount proposed to be paid by the Resolution Applicant, i.e., ASG Hospital Private Limited under the said Resolution Plan which is tabulated as under:

In so far as the payments related to the Operational Creditors (other than Employees and Workmen) are concerned the Resolution Applicant through an SPV proposes to pay INR 2 Crores to these Operational Creditors within 30 days of NCLT approval date. Upon receipt of consideration, all the Operational Creditor's claims, whether claimed or not, shall mandatorily be deemed to be assigned / transferred / conveyed to the SPV by virtue of the NCLT approval order. The outstanding dues of such Operational Creditors shall be deemed to be assigned to SPV at NIL consideration. All material proceedings before all and any Court / legal forum shall abate on the date of Resolution Plan approval by the NCLT.

In this regard, a question was posed by this Tribunal to the RP that the Resolution Applicant has proposed to assign the outstanding dues of the Operational Creditors to the SPV at a NIL consideration and whether the non – extinguishment of liability on the part of the Corporate Debtor after the approval of the Resolution Plan is against the provisions of IBC, 2016. In response to the same, the Resolution Applicant has filed an Affidavit dated 21.11.2022 in IA(IBC)/489(CHE)/2022, which states as follows:

The above-said Affidavit dated 21.11.2022 filed by the Resolution Applicant is taken on record. The dues of the Operational Creditors shall be paid by the SPV or RA, as the case may be, however, it is made clear that there shall be NO assignment of the dues of the Operational Creditor to the RA or the SPV. The Affidavit dated 21.11.2022 shall be treated as an integral part of the Resolution Plan, which is the subject matter of consideration in the present Application.

In respect of the Landlords of the Corporate Debtors are concerned, it is seen that multiple applications have been filed by the Landlords seeking payment of rent and other charges which is due and payable during the CIRP period, which are pending adjudication. If any orders are passed, then the same would be a part of the CIRP costs and will become due and payable. However, in relation to the same, it is seen that Clause 6.1 of the Resolution Plan contemplates a clause that states that “Any CIRP costs in excess of the Amount proposed and over and above the contingency fund created by the Resolution Applicant shall be borne on actuals, but will be reduced from the amount payable to the Financial Creditors.”

In so far as the dues of the Statutory authorities are concerned, it is seen that the RP has admitted the claim of the ‘Statutory Authorities’ to the tune of Rs.139,88,18,326/-. As against the said admitted claim amount, the Resolution Applicant intends to pay a total consideration of Rs.1 Crore to the Statutory Authorities in discharge of their claims. A statement showing the details of the claims received from the statutory authorities and the claim admitted along with break – up is extracted hereunder;

From the above table, it could be seen that the RP has admitted the claims of the Statutory authorities to the tune of Rs.139.88 Crores. As per the terms of the Resolution Plan, the Resolution Applicant has proposed to pay a lump sum of Rs.1 Crore to the 'Statutory Authorities'.

At this juncture, it is significant to refer to the Judgment of the Hon'ble NCLAT in the matter of Jet Aircraft Maintenance Engineers Welfare Association -Vs-Ashish Chhawchharia Resolution Professional of Jet Airways (India) Ltd. and Others;2022 SCC OnLine NCLAT 418 wherein it has been held that non-payment of the dues of the Employees Provident Fund Organization in full would amount to breach of the provision of Section 30(2)(e) of IBC, 2016. Further, by relying upon the Judgment of the Hon'ble Supreme Court in the matter of Maharashtra State Cooperative Bank Limited -Vs- Assistant Provident Fund Commissioner; (2009) 10 SCC 123, it has been held by the Hon'ble NCLAT that any amount due from the employer appearing in sub-section (2) of Section 11 also covers the amount determined under Sections 7A, 7Q, 14B and 15(2) and there cannot be any quarrel to the preposition as laid down by the Hon'ble Supreme Court in the above case. Also, by placing reliance upon Section 36(4)(a)(iii) of IBC, 2016 it was held that Provident Fund dues are not subject to distribution under Section 53(1) of IBC, 2016.

In so far as the present case is concerned, it is seen that the EPFO has claimed a sum of Rs.69.15 Crores, and the RP has admitted the claim of the EPFO to the tune of Rs.24.39 Crore. As per the Resolution Plan, the Resolution Applicant proposes to pay only a sum of Rs. 0.17 Crore to the EPFO. If the dues of the EPFO are not paid in full it goes against the dictum laid by the Hon'ble NCLAT in the matter of Jet Aircraft Maintenance Engineers Welfare Association(supra)and as such it is in violation of Section 30(2)(e) of IBC, 2016.

Further, it is also seen that the EPFO department has also filed a total of 11 IA's viz. IA/799/2022, IA/997/2022, IA/1011/2022, IA/1012/2022, IA/1024/2022, IA/1027/2022, IA/1028/2022, IA/1088/2022, IA/1208/2022, IA/1214/2022, IA/1303/2022 as against the rejection of the claim and the same is also pending adjudication before this Tribunal.

Hence, under the said circumstances, since the EPFO has claimed a sum of Rs.69.15 Crore and the RP has admitted the claim of EPFO to the tune of Rs.24.39 Crore, in terms of the dictum laid down by the Hon'ble NCLAT in the matter of Jet Aircraft Maintenance Engineers Welfare Association (supra), the RP is directed to pay the admitted dues of the EPFO to the tune of Rs.24.39 Crore. Further, we also direct the RP to earmark a sum of Rs.44.76 Crore (Rs.69.15 Crore – Rs.24.39 Crore) i.e. the disputed amount to be kept in a separate No lien Account maintained in IDFC First Bank, Indira Nagar, Adyar branch, till such time final orders are being passed in the above referred 11 (eleven) IA's filed by EPFO. The remaining amount of Rs.450.85 Crore shall be distributed to the stakeholders of the Corporate Debtor in accordance with Section 53 of IBC, 2016. This we order to enable the resolution plan to go forward and adjudicate disputed issues separately. This will ensure the better implementation of the Resolution Plan.

It is seen from Form – H that the Liquidation value of the Corporate Debtor has been arrived at Rs.115.18 Crore and the Fair value is arrived at Rs.175.12 Crore. The Resolution Applicant proposes to infuse a sum of Rs. 520 Crore into the Corporate Debtor. It is further seen from Form – H that RP has filed Applications under Section 66 of IBC, 2016, and the same is pending adjudication before this Tribunal.

In so far as the fate of these Applications are concerned, Clause 6.5 of the Resolution Plan states as follows;

Further, the Division Bench of the Hon'ble High Court of Delhi in the matter of Tata Steels BSL Limited-Vs- Venus Recruiters Private Limited & Ors.; 2023/DHC/00025 7while dealing with the continuation of PUFE transaction Applications after the completion of CIRP, has held as follows;

Hence in the present case, the PUFE Transactions applications shall be continued to be prosecuted by the CoC.

In so far as the approval of the Resolution Plan is concerned, this Authority is convinced on the decision of the Committee of Creditors, following the much-celebrated Judgment of the Supreme Court in the matter of K. Sashidhar –Vs– Indian Overseas Bank (2019) 12 SCC 150, wherein in para 19 and 62 it is held as follows;

Further, the Hon’ble Supreme Court of India in the matter of Committee of Creditors of Essar Steels –Vs– Satish Kumar Gupta & Ors. in Civil Appeal No. 8766 – 67 of 2019at para 42 has held as follows;

Further the Supreme Court in the matter of K. Sashidhar v. Indian Overseas Bank and Ors. (2019) 12 SCC 150 has lucidly delineated the scope and interference of the Adjudicating Authority in the process of approval of the Resolution Plan and held as follows;

(emphasis supplied)

Also, the Supreme Court of India in the matter of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors. (2020) 8 SCC 531 after referring to the decision in K. Sashidhar (supra) has held as follows;

(emphasis supplied)

The Supreme Court in its recent decision in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors. in Civil Appeal no. 3395 of 2020 dated 24.03.2021 has held as follows;

The assessment about maximisation of the value of assets, in the scheme of the Code, would always be subjective in nature and the question, as to whether a particular resolution plan and its propositions are leading to maximisation of value of assets or not, would be the matter of enquiry and assessment of the Committee of Creditors alone. When the Committee of Creditors takes the decision in its commercial wisdom and by the requisite majority; and there is no valid reason in law to question the decision so taken by the Committee of Creditors, the adjudicatory process, whether by the Adjudicating Authority or the Appellate Authority, cannot enter into any quantitative analysis to adjudge as to whether the prescription of the resolution plan results in maximisation of the value of assets or not. The generalised submissions and objections made in relation to this aspect of value maximisation do not, by themselves, make out a case of interference in the decision taken by the Committee of Creditors in its commercial wisdom

To put in a nutshell, the Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is well defined and circumscribed by Sections 30(2) and 31 of the Code read with the parameters delineated by this Court in the decisions above referred. The jurisdiction of the Appellate Authority is also circumscribed by the limited grounds of appeal provided in Section 61 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the CoC. Within its limited jurisdiction, if the Adjudicating Authority or the Appellate Authority, as the case may be, would find any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by Code and exposited by this Court.

Thus, from the catena of judgments rendered by the Supreme Court on the scope of approval of the Resolution Plan, it is amply made clear that only limited judicial review is available for the Adjudicating Authority under Section 30(2) and Section 31 of IBC, 2016 and this Adjudicating Authority cannot venture into the commercial aspects of the decisions taken by the Committee of Creditors. We find that the CoC has taken into consideration its relevant parameters before approving the plan.

On hearing the submissions made by the Ld. Counsel for the Resolution Professional, and perusing the record, we find that the Resolution Plan has been approved with 97.90% voting share. As per the CoC, the plan meets the requirement of being viable and feasible for the revival of the Corporate Debtor. By and large, all the compliances have been done by the RP and the Resolution Applicant for making the plan effective after approval by this Adjudicating Authority. On perusal of the documents on record, we are also satisfied that the Resolution Plan is in accordance with sections 30 and 31 of the IBC and also complies with regulations 38 and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Hence, there is no impediment in approving the plan.

As far as the question of granting time to comply with the statutory obligations/seeking sanctions from governmental authorities is concerned, the Resolution Applicant is directed to do the same within one year as prescribed under section 31(4) of the Code.

In case of non-compliance with any part of this order or withdrawal from implementing the Resolution Plan by the Successful Resolution Applicant, the CoC shall forfeit the Performance Security furnished by the Resolution Applicant in the form of Performance Bank Guarantees and the Resolution Applicant will be subjected to such other action / actions as permissible under the law.

The Resolution Plan is hereby Approved by this Adjudicating Authority, subject to the observations made in para 11.3 and 12.6 as above and in terms of this order. The Resolution Plan dated 02.02.2022 shall form part of this Order. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that the revival of the Debtor Company shall come into force with immediate effect. The Moratorium imposed under section 14 shall cease to have effect from the date of this Order. All authorities are bound by this Order to enable the effective implementation of this Order.

The Resolution Professional shall submit the records collected during the commencement of the proceedings to the Insolvency & Bankruptcy Board of India for their record and originals to be handed over to the Resolution Applicant or New Promoters. The Resolution Professional is further directed to hand over all records, premises/factories/documents to the Resolution Applicant to enable the further line of action required for starting the operation of the Corporate Debtor under the control of the Resolution Applicant and assist to get necessary changes in statutory and non-statutory records, so as to give effect to the approved Resolution Plan.

Certified copy of this Order be issued on demand to the concerned parties, upon due compliance.

Liberty is hereby granted to the concerned and necessary party for moving any Application if required in connection with the implementation of this Resolution Plan.

A copy of this Order is to be submitted to the Office of the Registrar of Companies, Chennai for compliance as per law.

The Resolution Professional, Mr. S. Rajendran shall stand discharged from his duties with effect from the date of this Order.

The Regional Director (Southern Region), Ministry of Corporate Affairs is hereby directed to ensure statutory compliance like allotting a new CIN number to the successful Resolution Applicant and ensure a fresh start.

IA(IBC)/288/CHE/2022 is ordered as above.

The Registry is directed to send e-mail copies of this order forthwith to all the parties and to their Counsel if information is available. Files to be consigned to the record after following the procedure prescribed.