Asset Reconstruction Company (India) Limited vs Mohan Jute Mills Limited

The court convened by video conference today.

IA No.445/KB/2021 is an application filed by Asset Reconstruction Company (India) Limited, the Financial Creditor through the Resolution Professional (RP) of the Corporate Debtor praying for the underlying Company Petition bearing CP No.393/KB/2019 be disposed of in terms of the settlement arrived at between the Committee of Creditors (CoC) and the members of suspended board of directors of Mohan Jute Mills Limited, the Corporate Debtor.

The Applicant submits that upon an application filed by Asset Reconstruction Company (India) Limited under section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor vide order dated 21.10.2019 by this Adjudicating Authority. Mr. Kamal Nayan Jain was appointed as the Resolution Professional (RP) by replacing the Interim Resolution Professional of the Corporate Debtor.

During the course of the CIRP, the RP was in receipt of resolution plans which were put up before the CoC for its consideration and the same were put up for vote and the voting results were circulated.

All this while the members of suspended board of directors were maintaining an appeal before the Hon’ble National Company Law Appellate Tribunal (NCLAT), challenging the order of admission of the Corporate Debtor in to CIRP. This appeal was dismissed by the Hon’ble NCLAT on 26.03.2021.

Thereafter, the Applicant was in receipt of a settlement proposal dated 31.03.2021 from the members of suspended board of directors. upon receipt of such proposal, the Applicant entered into negotiations with the members of suspended board of directors and the said fact was conveyed to the RP.

In the fourteenth CoC meeting held on 02.04.2021 and fifteenth CoC meeting held on 08.04.2021 and 09.04.2021 respectively, the agenda to withdraw the and approved by the CoC with 100% votes in favour.

It is submitted that the proposal received by the members of suspended board of directors would be more viable than the approved Resolution Plan and the same would lead to maximisation of value for all the stakeholders including the Creditors.

The Applicant and the Corporate Debtor have consequently arrived at a full settlement of the dues in relation to which the underlying Company Petition was initiated. A sum of ₹ 18.92 crore has been paid by the members of suspended board of directors to the Applicant under the settlement. The CIRP expenses have been paid in to the account of the Corporate Debtor. Further, the CoC has deliberated and unanimously agreed that the unsecured financial creditors would be in a position to realise their maximum value upon withdrawal of the underlying Company Petition.

We have heard the learned counsel appearing for the Applicant. As per section 12A of the Code, the Adjudicating Authority may allow the withdrawal of application admitted under sections 7, 9 or 10, on an application made by the applicant with the approval of ninety per cent voting share of the committee of creditors.

It is seen from the record that the CoC has by 100% votes approved the withdrawal of the underlying Company Petition bearing CP No.393/KB/2019. Further, the Applicant has submitted that the entire settlement amount has already been paid. It is also submitted that the CIRP cost has also been paid.

In these circumstances, we see no impediment in allowing the present application. The present application bearing IA No.445/KB/2021 is allowed and, resultantly, the underlying Company Petition bearing CP No.393/KB/2019 is disposed of.

Consequently, IA No.445/KB/2021 along with all the pending applications stand disposed of.

The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

Certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities.

Mr. Shaunak Mitra, Ld. Counsel present for the R.P. Mr. Kamal Nayan Jain, RP present. Mr. Vikram Wadehra alongwith Ms. Vidushi Chokhani, Ld. Counsel present for the petitioner in IA Nos.445/KB/2021. Mr. Jishnu Chowdhury, Ld. Counsel present for the applicant in IA 1494/KB/2021.

IA 160/KB/2021 is an application filed by the RP seeking exclusion of certain periods from the CIRP period. Mr. Shaunak Mitra, Ld. Counsel, appearing for the RP submits that the present application has become infructuous, in view of the orders dated 26.03.2021 passed by the Hon’ble NCLAT in Company Appeal (AT) (Insolvency) No.3/2020, wherein in paragraph 24, the entire period spent in the litigation has been excluded by the Hon’ble Appellate Tribunal itself.

The present petition has, therefore become infructuous and is therefore dismissed as such.

IA No.445/2021 is an application under section 12A seeking closure of the CIRP. This has been considered and allowed vide separate orders.

Therefore, the three other IAs – IA No.1494/2020 (related party application), IA No.160/2021 (application for initiating liquidation) and IA No.80/2021 (application for condonation of delay in filing EoI for submission of resolution plan) -have all become infructuous, in the light of the orders passed by this Adjudicating Authority in IA No.445/KB/2021, and are accordingly dismissed.

Any other pending IAs shall also stand dismissed in the light of the orders closing the CIRP passed in IA No.445/2021.