Andhra Bank vs M/s.Leo Meridian Infrastructure Projects & Hotels Ltd.

[PER : BENCH]

The instant Application bearing IA (IBC) (Plan) 1/2025 has been filed on behalf of the Resolution Professional of the Corporate Debtor, M/s. Leo Meridian Infrastructure Projects & Hotels Ltd. (CD/LMIPHL), under Section 30(6) and 31(1) of IBC^{11.Insolvency & Bankruptcy Code, 2016}, r/w regulation 39(4) of the applicable Regulations^{22.IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016}, seeking inter alia, approval of the Resolution Plan^{33.Resolution Plan dated 27.12.2024 as Annexure-1 @ pg. nos.54-114 of the application}, submitted by the Successful Resolution Applicant, M/s. Jalavihar Entertainment Private Limited Consortium (JEPL Consortium/SRA) duly approved in the 78^th Committee of Creditors (COC) meeting held on 31.12.2024 and e-voting concluded on 15.01.2025 with 100% voting share.

The Company Petition CP(IB) No. 43/7/HDB/2018 filed by Andhra Bank (now Union Bank of India), the Financial Creditor (FC/AB), was admitted by this Authority u/s 7 of IBC, vide Order dated 09.04.2019 (Admission Order) ordering commencement of CIRP^{44.Corporate Insolvency Resolution Process} against M/s. Leo Meridian Infrastructure Projects & Hotels Ltd., the CD, by appointing Mr.Naga Bhushan Bhagawati as the Interim Resolution Professional (IRP). Subsequently Mr. Raj Kumar Ralhan was appointed as Resolution Professional (RP) in the 2^nd COC Meeting held on 22.05.2019 and later replaced by Mr. Krishna Mohan. Thereafter, Mr. Devendra Prasad/Applicant was replaced as RP in place of Mr. Krishna Mohan.

Public Announcement^{55.Annexure-4 @ pg. 145-146 of the Application} of the commencement of CIRP was made in Form-A on 13.04.2019 in the newspapers^{66.Economic Times, English Newspaper & Andhra Prabha, Telugu Newspaper, Hyderabad editions.}, inviting claims from the creditors of the CD. In response, claims were received from the Financial Creditors.

After collating all the claims received and determining the financial position of the CD, the IRP constituted the COC.

The list of Creditors of CD was updated from time to time on the basis of the additional information and claims received and verified. A summary of the claims received and admitted as on 30.12.2022 is as under:

(Rs. in Crores)

Initially, Mr. Gauri Shankar Mittal and Intech Insurance Surveyors and Loss Assessors Pvt. Ltd. were appointed as the Registered Valuers, who were later replaced with Ms.Madhu Pagolu.

Mr. TR Chadha & Co. was appointed as the Transaction Auditors for the CD for the purposes of audit and review of transactions of the CD, for categorisation of the same as preferential, undervalued, extortionate or fraudulent transactions. After reviewing all the transactions, the Transaction Auditors submitted their Report on 29.11.2019.

The RP conducted a total of Seventy Nine (79) meetings of the COC during the CIRP.

The RP invited Expression of Interest from Prospective Resolution Applicants (PRAs), by issuing Form-G on 09.07.2019 and last date for submission of Expression of Interest was fixed as 25.07.2019. In response, six EOIs were received from the PRAs and the Applicant shared the RFRP^{77.Request for Resolution Plan} on 09.08.2019 to the eligible PRAs, which was approved in the 4^th COC Meeting including the Evaluation Matrix. After receipt of requests from PRAs, the last date for submission of Resolution Plans was extended from time to time.

In response to the RFRP, the following two PRAs submitted their Resolution Plans, which were placed before the COC for its consideration:

In response to the request made to furnish the revised compliant resolution plans, only Mr. D.V. Satyanarayana submitted his revised plan, which is non-compliant.

Due to lack of a compliant Plan, the RP had filed an IA 19/2020 seeking for (a) Extension of CIRP period by 60 days; and also (b) Waiver of publishing a fresh EOI for the reissuance of RFRP. On 03.01.2020, this Authority opined that a specific resolution from the COC may be submitted in the record allowing reissuance of RFRP without publishing the IEOI. On 31.01.2020, this Application was disposed of by this Authority directing the RP to complete the resolution process within 330 days from the Admission Order.

The Directorate of Enforcement passed a Provisional Attachment Order (PAO) dated 30.12.2019 and also filed an Original Complaint bearing No.1252 of 2020 u/s 5(5) of the Prevention of Money Laundering Act, 2002 (PMLA) before this Authority under PMLA (PMLA Authority). The RP had filed an IA 54/2020 before this Authority seeking stay of the execution of PAO, which was dismissed by this Authority on 06.05.2020^{88.Annexure-32 @ pg. 369-398 of the application}. Aggrieved by this order, the RP had filed an Appeal CA(AT)(Ins) 666/2020 before the Hon’ble NCLAT, New Delhi, which is currently pending before the Hon’ble NCLAT.

With the approval of COC in the 12^th meeting held on 06.01.2020, the RP published an invitation for Submission of Resolution Plan (ISRP)^{99.Annexure – 21 @ pg. 297 of the application.} on 13.01.2020 in Business Standard Newspaper. After litigations and stay on the CIRP, the last date for submission of Resolution Plan was on 27.12.2024.

In the 13^th COC Meeting held on 06.02.2020, M/s.Omkara ARC has withdrawn its EOI on 14.01.2020 and a new entity M/s.Prudent ARC has submitted its EOI and requested 4 weeks’ time for conducting due diligence of the CD and for submission of Resolution Plan.

In response to the RFRP, JEPL Consortium/SRA submitted their EOI on 02.03.2020. Thereafter, the RP shared access to VDR, Information Memorandum (IM) and reissued the same RFRP with the three (3) PRAs.

In the light of the lockdown imposed due to Covid-19 and the request made by Prudent ARC, the COC in its 16^th Meeting held on 18.04.2020 extended the time for submission of Resolution Plan as 27.04.2020.

During the 17^th COC Meeting held on 29.04.2020, the resolution plans received from the SRA on 14.04.2020 and M/s.Prudent ARC on 27.04.2020 were opened.

One of the PRAs, Mr.D.V.Satyanarayana had filed an IA 299/2020 seeking for extension of two weeks’ time for submission of resolution plan, which was allowed and extended the time to submit the Resolution Plan till 04.05.2020¹⁰. Accordingly, Mr. D.V.Satyanarayana submitted his Resolution Plan on 04.05.2020.

¹⁰ Annexure-28 at pg. no.352-355 of the application

The COC deliberated on the resolution plans submitted by M/s.JEPL Consortium, M/s.Prudent ARC and Mr.D.V.Satyanarayana and after satisfaction of the compliance requirements of the resolution plans, granted time to submit the revised compliant plans by the PRAs except M/s.Prudent ARC.

In the 24^th COC Meeting held on 01.07.2020, M/s.JEPL Consortium was declared as H1 bidder with 91.5% out of 100 score as per the evaluation matrix. In the 25^th and 26^th COC meetings held on 04.07.2020 and 18.07.2020 respectively, the COC had discussed on the commercial aspects of the Resolution Plan with M/s.JEPL Consortium and requested to submit their revised resolution plan. Accordingly, SRA submitted its revised plan which was refused by the COC for voting as the same was a conditional plan.

In view of the amended Regulation 39(3) of CIRP Regulations, introduced by IBBI on 07.08.2020, the RP informed the COC at their meeting held on 12.08.2020 that the resolution plans received from the SRA and Mr.D.V.Satyanarayana are compliant in terms of the provisions of the Code and CIRP Regulations and shall be put forth before the COC for voting and COC may record their deliberations on the feasibility and viability of both the resolution plans and vote. Accordingly, vide mail dated 13.08.2020, the RP informed the PRAs to send final compliant resolution plans by 15.08.2020. Aggrieved by this action, the SRA had filed IA 606/2020 and 650/2020 before this Authority praying to set aside the mail dated 13.08.2020 and to set aside the meeting of the COC dated 12.08.2020 respectively.

Mr. D.V.Satyanarayana, one of the PRAs had filed an impleadment application IA 697/2020 in IA 606/2020, wherein this Authority imposed a temporary stay on the voting on compliant resolution plans in the interim. Aggrieved by this Order, the SRA filed a memo seeking for transfer of IA 606 to a different Bench and the matter was transferred to this Authority from Bench-I. IA 606/2020 was dismissed by this Authority on 07.05.2021 by allowing the RP to consider final compliant plan submitted much after due date for submission of Resolution Plans (NCLT Order). Aggrieved by this order, the SRA preferred an appeal CA(AT)(CH)(Ins) No.61/2021 (CA 61) dated 17.05.2021 before the Hon’ble NCLAT, Chennai Bench for setting aside the NCLT Order, which was allowed on 16.08.2022 (NCLAT Order)^{1111.A copy of the Hon’ble NCLAT order is filed as Annexure-60 at pg. nos.563-595 of the application} , wherein it was held that –

In the 35^th Meeting of the COC held on 13.05.2021, the COC members voted and allowed the RP to put the final Resolution Plans submitted by M/s.JEPL Consortium and Mr. D.V.Satyanarayana to vote.

In the 36^th Meeting held on 07.06.2021, the COC had unanimously decided to allocate a token amount of Rs.5.00 lakhs each to the Unsecured Financial Creditors under both the Resolution Plans and the balance amount may be distributed among the Secured Financial Creditors.

At the request of Mr. D.V.Satyanarayana, the COC in its 37^th meeting unanimously extended the e-voting timelines till 13.06.2021 to provide confirmation on continuing with his Resolution Plan.

In the 38^th COC Meeting held on 15.06.2021, after negotiations with shortlisted PRAs, the RP invited views of COC on the improved resolution plans. The COC unanimously decided to continue the e-voting on the existing resolution plans and extended the e-voting timeline on the resolution plans till 25.06.2021, which was further extended till 02.08.2021.

The Hon’ble NCLAT on 23.06.2021 in IA 61/2021 has imposed an interim stay on the announcement of voting results.

Aggrieved by the NCLAT Order, Mr. D.V.Satyanarayana preferred a Civil Appeal C.A.No.008914 of 2022 before the Hon’ble Supreme Court of India seeking to direct the COC to consider his Resolution Plan (SC Appeal).

Pursuant to the NCLAT Order, the COC decided that the resolution plans submitted prior to 12.08.2020 should be put to vote. Accordingly, RP presented the compliant resolution plan dated 24.07.2020 submitted by the SRA as well resolution plan dated 09.06.2020 submitted by Mr. D.V.Satyanarayana before the COC.

This Authority vide Order dated 17.10.2022 in IA 1068/2022, replaced the Resolution Professional Mr.Rajkumar Ralhan with Mr. G. Krishna Mohan as Resolution Professional^{1212.Annexure 69 at pg. nos.653-654 of application}.

This Authority vide Order dated 29.11.2022 in IA 1286/2022 rejected to include the Challenge Process in RFRP as prayed for.

The Hon’ble Supreme Court vide its order dated 25.11.2022 in SC Appeal kept the NCLAT Order dated 16.08.2022 at abeyance and allowed Mr. D.V.Satyanarayana to file an application for impleadment in CA 61 before the Hon’ble NCLAT (SC Interim Order).

M/s.Ankita Financial Services were engaged for identification of the assets of CD.

This Authority vide order dated 04.03.2024 kept the e-voting on resolution plans at abeyance till disposal of IA 516/2024 which was filed seeking to keep e-voting on resolution plan in abeyance till disposal of the SC Appeal.

The COC had filed an IA 1540/2024 seeking for appointment of the Applicant, Mr. Devendra Prasad as Resolution Professional before this Authority in light of impending expiry of Authorisation for Assignment of the Resolution Professional Mr.Krishna Mohan on 03.07.2024, which was approved by this Authority vide Order dated 24.07.2024.

The Hon’ble Supreme Court vide Order dated 26.07.2024 (SC Order)^{1313.Annexure – 103 @ pg. nos.948-952 of the application}by dismissing the SC Appeal had held as follows:

Pursuant to the SC Order, the COC in its 72^nd meeting resolved to only invite the H1 bidder i.e. SRA for negotiations and accordingly invited SRA for negotiations. After negotiations, the SRA filed initially their amended plan on 25.11.2024 and subsequently revised on 27.11.2024. After deliberating on the feasibility and viability of the Resolution Plan by the COC, on the advise of COC, the SRA filed their Final Amended Resolution Plan vide email dated 27.12.2024, which was opened by the Applicant before the COC in the 78^th meeting held on 31.12.2024.

In the 78^th COC Meeting held on 31.12.2024, the COC discussed upon the compliance, feasibility and viability of the Final Amended Resolution Plan and approved the Resolution Plan amounting to Rs. Rs.237.00 crores (Rupees Two Hundred and Thirty Seven Crores only) submitted by M/s.JEPL Consortium with 100% voting share in the electronic voting concluded on 15.01.2025. The voting share is detailed as follows:

The Applicant has further submitted that as the approved Resolution Plan meets all the requirements envisaged under IBC and Rules/Regulations made thereunder, the RP on 18.01.2025, issued ‘Letter of Intent’ (LoI)^{1414.Letter of Intent as Annexure-111 @ pg. nos.1030A – 1030C of the application} to M/s. JEPL Consortium (JEPL) declaring them as Successful Resolution Applicant (SRA). They were requested to comply with the terms of the LOI and submit the Performance Security. In response, the SRA submitted the Performance Security by way of Bank Guarantee No.0897425BG0Y00008, dated 18.01.2025 for Rs.10.00 crores (Rupees Ten Crores only)^{1515.Performance Bank Guarantee as Annexure – 112 @ pg. nos.1031 – 1035 of the application}, valid upto 18.07.2025 with further claim period upto 18.08.2025 with acceptance of LOI.

After availing the extensions and exclusions allowed periodically due to Covid-19 general exclusion provided by the IBBI^{1616.Insolvency and Bankruptcy Board of India} on 29.03.2020, Hon’ble NCLAT suo moto order dated 30.03.2020, stay orders, multiple litigations pending in the Hon’ble NCLAT during the CIRP period and Appeal CA No.008914/2022 pending before the Hon’ble Supreme Court of India, the last date for completing the CIRP was set at 25.01.2025 as per the SC Order dated 26.07.2024.

The salient details of the Resolution Plan dated 27.12.2024¹⁷ submitted by M/s.JEPL Consortium and as approved by the CoC, are as follows:

Mr. N.V.Rama Raju

Mr. N.V.Rama Raju is a first class contractor in civil works and diversified the group into Power, Mining, Entertainment, Food Processing, Hospitality and Real Estate, having 35 years of experience. He was awarded ‘Bharath Udyog Pratibha” for his contribution in creating employment. He is a director in (i) Jalavihar Entertainment Pvt. Ltd; (ii) North Coastal Integrated Food Park Pvt. Ltd.; and (iii) North East Impex Pvt. Ltd.

Mrs. N. Indira. Mrs. N. Indira is a business woman and started her career in 2001 as a Director of M/s.Jalavihar Entertainment Pvt. Ltd. She has keen business management skills with flair for both domestic and International Business relationship and has a passion for development of projects alongwith family members.

¹⁷ Resolution Plan dated 27.12.2024 as Annexure-1 @ pg. nos.54-114 of the application

M/s. Jalavihar Entertainment Private Limited (JEPL) – M/s.JEPL started its operations since 2000, situated at Central Part of Hyderabad and is carrying on the business of running recreational activities for kids, families and friends.

M/s.North East Infrastructure Private Limited (NEIPL) M/s.NEIPL was established in September, 2003 having its Registered office at Visakhapatnam and is carrying on the business of Housing Projects, Real Estate, Power Projects, Civil Works etc.

ii) The amounts provided for the stakeholders under the Resolution Plan are as under:

**Note: The contingency amount will be utilized to pay any dues relating to CIRP period arising after approval of Resolution Plan by NCLT but not factored by the RP as CIRP Cost within a period of 90 days. Any unpaid amount available in the contingency provision after expiry of 90 days will be paid to the Financial Creditors.

iii) As per the approved Resolution Plan, the Payout to various Stakeholders is as follows:

*** CIRP Costs are stated as ‘Nil’. In case any amount is payable under this head, such payment will be paid from Financial Creditors payout.

iv) Fund infusion by Resolution Applicant for Capex / Working Capital in 2 Phases: The Resolution Applicant proposed to infuse an aggregate sum of Rs.90 crores into the CD through Special Purpose Company (SPC) for the purpose of augmenting the working capital and operations and also for renovation, construction or completion of the pending projects after a thorough Techno Economic Viability (TEV) and feasibility study.

Management of the Corporate Debtor^{1818.Pg. no.78 of the Application}: The implementation of the Plan until the final payment of Resolution Plan shall be supervised by the Monitoring Committee. The Monitoring Committee shall comprise of (i) Resolution Professional as Chairperson; (ii) Two representatives from the COC; and (iii) Two representatives from M/s.JEPL Consortium. On and from the Effective Date, the Reconstituted Board shall be responsible for daily affairs and operations of the Company/CD.

vi) Source of Funds^{1919.Pg. No.75 of the application}: The SRA has made arrangements to make the entire payment of the Resolution Plan Amount in a phased manner and the following statement furnished giving the details of the liquid funds mobilised by JEPL Consortium and the assets being proposed to be sold for raising the required funds:

vii) Compliance of mandatory contents of Resolution Plan under IBC and CIRP Regulations: The Applicant is stated to have conducted a thorough compliance check of the Resolution Plan in terms of Section 30(2)(a), (b) & (c) of IBC as well as Regulations 38 & 39 of the CIRP Regulations and has submitted Form-H under Regulation 39(4). A copy of the Form-H has also been filed.^{2020.Page nos. 1048 - 1063 of the Application} It is submitted that the Resolution Applicant has filed an Affidavit pursuant to Section 30(1) of IBC confirming that they are eligible to submit the Plan under Section 29A^{2121.Annexure – 115 (colly.) @ Pg. nos.1064 – 1079 of the application} of IBC and that the contents of the said Certificate are in order. The Fair Value and Liquidation Value as submitted in Form-H are stated to be Rs.397.13 crores and Rs.109.37 crores respectively.

viii) Reliefs & Concessions: Besides seeking approval of the Resolution Plan submitted by M/s.JEPL Consortium, the Applicant has also prayed for grant of reliefs, waivers and concessions^{2222.Reliefs, Waivers and Concessions - @ pg. nos.86 to 94 of the application} to the Resolution Applicant, as set out in SECTION-III K of the Resolution Plan.

In the above backdrop, we have heard the Learned Counsel for the Applicant and perused the records.

We have carefully considered the present application seeking approval of the Final Amended Resolution Plan submitted by M/s. JEPL Consortium on 27.12.2024.

While reviewing the resolution plan as aforesaid, we have taken into account the judgment in the case of K. Sashidhar v. Indian Overseas Bank^{2323.In K. Sashidhar v. Indian Overseas Bank & Others (in Civil Appeal No. 10673/2018) decided on 05.02.2019: (2019) 12 SCC 150} where the Hon’ble Supreme Court has held that:

And held further in para 35 of the judgement that –

The Hon’ble Supreme Court reiterated this view in the case of Essar Steel^{2424.Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. in Civil Appeal No.8766-67/2019, decided on 15.11.2019: (2020) 8 SCC 531} by holding that:

Reinforcing the above, the Hon’ble Supreme Court more recently has held in Vallal RCK vs M/s Siva Industries^{2525.Vallal RCK vs M/s Siva Industries and Holdings Limited & Ors. in Civil Appeal No.1811-} that:

1812/2022, decided on 03.06.2022: (2022) 9 SCC 803

Emphasizing yet again, that

and, by referring to an earlier judgment in the case of Arun Kumar Jagatramka^{2626.Arun Kumar Jagatramka v. Jindal Steel & Power Ltd. (2021) 7 SCC 474] : (SCC p. 533, para}, added a note of caution that

foundational principles of the IBC…..”

Therefore, when tested on the touch stone of the rulings, and considering the facts of the case, we are of the view that the Resolution Plan satisfies the requirements of Section 30 (2) of IBC and Regulations 37, 38 & 39 of CIRP Regulations. We also find that M/s.JEPL Consortium/SRA is eligible to submit the Resolution Plan under Section 29A of IBC. Copies of the Affidavits filed by the M/s.JEPL Consortium are filed as Annexure – 115 (colly.) at pg. nos. 1064-1079 of the application.

It is also to be clarified that approval of the resolution plan shall not be construed as waiver of any statutory obligations/ liabilities of the Corporate Debtor and shall be dealt with by the appropriate Authorities in accordance with law. Any waiver sought in the resolution plan, shall be subject to approval by the Authorities concerned. As regards to the reliefs sought, the Corporate Debtor has to approach the authorities concerned for such reliefs and we trust the authorities concerned will do the needful.

With the above remarks, we hereby approve the Final Amended Resolution Plan dated 27.12.2024 submitted by the M/s. JEPL Consortium and Order as under:

1553/2021, decided on 13.04.2021.: (2021) 9 SCC 657

Accordingly, IA (IBC) (Plan) No.1/2025 in CP(IB) No.43/7/HDB/2018 is allowed and disposed of.