Axis Bank Limited vs Lanco Mandakini Hydro Energy Pvt. Ltd.

Per: Praveen Gupta, Member (Judicial)

The present interlocutory application bearing IA. No. 59/2023 was moved on behalf of Mr. Bhrugesh Ramchandra Amin, Resolution Professional (“RP”) of Lanco Mandakini Hydro Energy Pvt. Ltd. (under the provisions of Sections 30(6) and 31(1) of the Insolvency & Bankruptcy Code,2016 [hereinafter referred to as “the Code” or “IBC”] read with Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) for approval of the Resolution Plan in respect of Lanco Mandakini Hydro Energy Pvt. Ltd. (“Corporate Debtor”).

The corporate debtor is engaged in the production of electricity from hydropower.

The underlying Company Petition CP (IB) No.85/ALD/2020 filed by the Axis Bank Limited under Section 7 of the Code for initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor namely Lanco Mandakini Hydro Energy Pvt. Ltd. which was admitted by this Adjudicating Authority vide its order dated 11.06.2020 (“Admission Order”). On that date, i.e., 11.06.2020 (“Insolvency Commencement Date”) Mr. Bhrugesh Ramchandra Amin (IBBI Reg. No-IBBI/IPA-002/IP-N00353/2017-2018/11003) was appointed as IRP. Subsequently, he was appointed as the Resolution Professional in a CoC meeting dated 13.07.2020.

It is stated in Resolution Plan that the public announcement was made on 12.06.2020 in widely circulated newspapers, he called for proof of claims from the creditors of the Corporate Debtor, and informed lenders to submit their claims as envisaged under the Code.

The list of Financial Creditors and distribution of the voting share among them is as under:

The details of claims submitted are as follows:

The RP submits that a total of 32 CoC meetings have been held during the whole CIRP period.

It is stated in the Resolution plan that the First Request for Resolution plan (First RFRP) was issued by the Resolution professional in consultation with the CoC and pursuant to its approval vide voting dated 19.11.2020. Subsequently the First RFRP was amended thrice on 27.01.2021, 23.03.2021 and 07.04.2021 respectively (collectively referred to as “Amendments”). The First RFRP and its Amendments were presented to potential Resolution Applicants who submitted their respective resolution plans for consideration by the CoC. However, the CoC exercised its commercial wisdom and rejected all the plans, leading the Resolution Professional to initiate liquidation proceedings as per the IBC provisions. The Resolution Professional then filed a liquidation application before this Tribunal. Meanwhile, a prospective Resolution Applicant filed an application before the Tribunal seeking permission to submit a resolution plan and participate in the CIRP of the Company. The Tribunal allowed the application vide order dated October 20, 2021, and directed the Resolution Professional to issue the RFRP, inviting resolution plans from Resolution Applicants and setting out timelines for completing the resolution process. The Tribunal modified some of the timelines and extended the time for completing the resolution process of the Company vide an order dated October 26, 2021. Accordingly, invitations for Expression of Interest (EoIs) in Form-G were published firstly on 23.10.2021 and then on 30.10.2021.

In pursuance thereto, the resolution professional received the Nine EoIs for submission of the Resolution plan. The PRAs who have submitted EoIs are given under:-

Two Resolution Applicants viz, Statkraft IH Holding AS and Scatec Solar Netherlands BV submitted their Resolution Plans. However, the Resolution Plan of Scatec Solar Netherlands BV was not considered by the CoC on account of commercial wisdom of the CoC Members

Resolution Applicant submitted addendum to resolution plan on January 27, 2022 (“Addendum” which has to be read with the Plan”)

After due discussions and deliberations on various occasions, in the 26^th COC meeting dated 29.02.2022, to consider the Original Plan read with the First Addendum submitted by Statkraft IH Holding AS for voting purpose. The CoC also deliberated in accordance with Section 30(4) and 30(6) of the Code read with CIRP Regulations, 2016. The e- voting on the compliant resolution plan commenced at 06:00 PM on 31.01.2022 and concluded on 25.02.2022.

The Resolution Plan submitted by the Successful Resolution Applicant i.e. Statkraft IH Holding AS was approved by a majority of 100% voting share by the CoC in the 26^th COC meeting dated 29.02.2022. The 26^th COC meeting was conducted on 29.02.2022. Minutes of the 26^th CoC meetings have been reproduced hereunder;

The application for approval of the resolution plan by this Adjudicating Authority was filed by the RP by way of IA No.83/2022. However, vide order dated 23.11.2022, this Adjudicating Authority observed that certain provision of the Successful Resolution Plan were not in accordance with the objectives of the Code and hence, sent the Successful Resolution Plan back to CoC for reconsideration on the points mentioned in the order and to check the overall viability and feasibility of the Plan. Subsequent, to this various meetings were held between the CoC of the Corporate Debtor and the Resolution Applicant. Consequent to the deliberation between the parties, the Applicant submitted a clarificatory letter to the Successful Resolution Plan dated 10.01.2023. This letter addressed all the concerns raised by this Adjudicating Authority in its order dated 23.11.2022. Thus, the Successful Resolution Plan has now entailed the Plan, addendum, letter and clarificatory letter. Pursuant to this in the 32^nd CoC meeting dated 13.01.2023, the Successful Resolution Plan was put to vote and was approved with a 100% majority. The relevant portion of the 32^nd COC meeting dated 13.01.2023 is reproduced hereunder:-

A compliance Certificate in terms of prescribed Form H under regulation 39 (4) of the CIRP Regulations was filed before this tribunal.

Thus, as per the registered valuers report., the fair value of the corporate debtor is Rs. 187.72/- Crores and the liquidation value is Rs. 123.60/- Crores

The successful Resolution Applicant i.e. Statkraft IH Holding AS is a company engaged in the engaged in the production of electricity from hydropower. The Resolution Applicant, i.e. Statkraft IH Holding AS is a 100% (one hundred percent) fully owned subsidiary of Statkraft AS of Norway (i.e. the ultimate parent company), a leading company in hydropower internationally and largest renewable energy player of Europe. Statkraft AS is wholly owned by the Norwegian state, through the Ministry of Trade, Industries and Fisheries. The business activity of Statkraft AS through participation in or cooperation with other companies is to plan, build, construct, operate and own energy plants, buy and sell energy, and run operations that are naturally connected to these activities.

The amount proposed in the Resolution Plan are tabulated below:

Rupees in Crores

The Resolution Applicant proposes to invest the Upfront Capital Contribution, i.e. an amount of INR 180,00,00,000 in the Company, within 90 (ninety) days of approval of this Resolution Plan by the Adjudicating Authority for meeting the payment towards CIRP Costs, Outstanding Workmen and Employee Dues, upfront payment to the Financial Creditors and other stakeholders. Equity shares and/or quasi equity instruments will be issued by the Company to the Resolution Applicant against the investment of the Upfront Capital Contribution in accordance with Applicable Laws as per the Implementation Steps set forth in Annexure XV (Implementation Steps). An undertaking from the Resolution Applicant to the effect that it has the necessary financial resources available for supporting the Resolution Plan and for any further infusion/ contribution of funds into the Corporate Debtor is set forth in Annexure V.I (Undertaking on Source of Funds).

The Applicant has submitted the details of various compliances as envisaged by the Code and the CIRP Regulations which a Resolution Plan is required to adhere to, as follows:

The Applicant submits that the successful resolution applicant has submitted an affidavit in regard to the eligibility under section 29A of the Code, as required by Regulation 39(1)(a) of the CIRP Regulations. An undertaking has also been submitted by the successful Resolution Applicant, as mandated in terms of regulation 39(1)(c) of the CIRP Regulations. The affidavit under section 29 A is at pg no. 325 in the application which is reproduced there under:-

The Applicant has filed a Compliance Certificate in prescribed Form, i.e. Form ‘H’ in compliance with Regulation 39(4) of the CIRP Regulations. The RP has issued the Letter of Intent dated 25.02.2022 to the Successful Resolution Applicant and the Successful Resolution Applicant provided the Performance Bank Guarantee of Rs. 20,00,00,000/- (Rupees Twenty Crores Only) through Bank Guarantee dated 01.03.2022 is annexed as Annexure-G at pg no 226-230 which is required under Regulation 36B (4A) of CIRP Regulations, 2016. It is submitted by the RP that the PBG expires on 28.02.2023.

The Applicant submits the relevant information about the amount claimed, the amount admitted, and the amount proposed to be paid by the Successful Resolution Applicant, i.e., StatKraft IH Holding AS. under the said Resolution Plan which is tabulated as under:

The Resolution plan size is approximately ₹180 Cr (Rupees One Hundred Eighty only). The “Effective Date” will be the date on which the Adjudicating Authority approves the Resolution Plan.

The Resolution Plan also provides for details of management and control, implementation and supervision of the Resolution Plan and term of plan and the same is already set out in Section 10, 11 and Annexure XV supra.

The Resolution Professional via Form H confirms that the suspended Board of Directors of the Corporate Debtor has not been engaged in the any kind of fraudulent and avoidance transaction.

The SRA has sought/prayed for the reliefs, waivers and concessions as enumerated under the Resolution Plan approved by the CoC , namely, that from the plan approval date all inquiries, investigation and proceedings, whether civil or criminal, suits, claims, disputes, interests and damages in connection with the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future in relation to any period prior to the plan approval date, or arising on account of implementation of this Resolution Plan, shall stand withdrawn, satisfied and discharged. From the date of approval of the ‘Resolution Plan’, the Resolution Applicant shall be legally authorized to seek appropriate orders from respective authorities/courts/tribunals for renewal of licenses/withdrawal/dismissal or abetment of the proceedings as the case may be.

There are certain litigation pending involving corporate debtor as mentioned in the resolution plan at page number 129 of the Resolution Plan. It may be mentioned that the said litigations would be governed by Section 32A of the Code.

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

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;

Thus, from the catena of judgments rendered by the Hon’ble 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.

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 by the CoC with 100% of the members voting in favour of the Resolution Plan. As per the CoC, the Plan meets the requirement of being a viable and feasible revival of the Corporate Debtor. By and large, there are provisions for making the Plan effective after approval by this Bench.

On perusal of the documents on record, we are 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.

The reliefs, concessions and waivers sought by the Successful Resolution Applicant will be dealt with strictly in accordance with the applicable laws.

It may be clarified that litigations wherever pending against the corporate debtor would be governed by Section 32A of the Code.

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 this order or withdrawal of the Resolution Plan within the stipulated time, in addition to other consequences which follow under law, the CoC shall forfeit the EMD amount of Rs. 5 crores already paid by the Resolution Applicant as well as the Performance Bank Guarantee of Rs. 20 crores.

Subject to the observations made in this Order, the Resolution Plan ₹180 Cr. (Rupees One hundred and eighty crores only) is hereby approved. The Resolution Plan shall form part of this Order. The reliefs, concessions and waivers sought/prayed by the Successful Resolution Applicant will be dealt with strictly in accordance with the applicable laws.

The Moratorium imposed under section 14 of the Code shall cease to have effect from the date 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.

IA No. 59/2023 and the main Company Petition, i.e., CP (IB) No.85/ALD/2020 shall stand disposed of accordingly.

Liberty is hereby granted for moving appropriate application if required in connection with implementation of this Resolution Plan.

A copy of this Order shall be filed by the Resolution Professional with the Registrar of Companies

The Resolution Professional shall stand discharged from his duties with effect from the date of this Order, save and except those duties that are enjoined upon him for implementation of the approved Resolution Plan.

The Resolution Professional is further directed to hand over all records, premises/ factories/documents available with it to the Resolution Applicant to finalise the further line of action required for starting of the operation. The Resolution Applicant shall have access to all the records and premises through the Resolution Professional to finalise the further course of action required for starting of operations of the Corporate Debtor.

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

The registry is further directed to send the copy of the order to the IBBI also for their record.

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

File be consigned to the record.