Bank Of India vs Mahavir Roads & Infrastructure Pvt. Ltd.

Per: Sh. Prabhat Kumar, Member (Technical)

The present Application is moved by Resolution Professional Mr. Amit Gupta (“Applicant”) under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (“Code”) r/w Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) for seeking approval of the Resolution Plan (Revised Resolution Plan dated 16 December 2023), submitted by the Bermaco Energy Systems Limited (“Successful Resolution Applicant/SRA”) which is approved by 78.83% of the voting share of the members of the Committee of Creditors (hereinafter referred to as ‘CoC’), under the provisions of Section 31(1) of the Code, for Mahavir Roads & Infrastructure Private Limited (“Corporate Debtor”) and for passing order/appropriate direction that this Tribunal may deem fit in the present matter.

The Successful Resolution Applicant, Bermaco Energy Systems Limited proposed total of INR 60.16 crores and the summary of payments proposed to be made to different classes of the creditors and stakeholders of the Corporate Debtor are as follows: (clause 4.7, 4.8 and 4.9 of Proposed Resolution Plan)

The Summary of repayment terms in the Resolution Plan provides for the repayment terms of the amount proposed in the Resolution Plan as follows (clause 4.9 of the proposed Resolution plan)

Effective date: the date of approval of the Resolution Plan by the NCLT or the date of receipt of certified copy of the order, whichever is later (“Effective Date”).

Upfront Cash Payment: Upfront Cash Payment means the amounts committed to be paid to the Financial Creditors by the Resolution Applicant(s) within 30 (thirty) days from the NCLT Approval Date.

Creditworthiness and financial capability of Successful Resolution Applicant (clause 3.2 of the proposed plan):

As per the Audited financial statements of Successful Resolution Applicant, below provided are the brief financial indicators of proceedings three years.

Qualification of the Successful Resolution Applicant under Section 29A: (Clause 3.3 of the proposed resolution plan)

The Successful Resolution Applicant confirms that he and connected persons are not disqualified under Section 29A of the Code and will continue to be not disqualified as of the effective date.

Implementation Schedule (Clause 5.2 of the proposed resolution plan)

The term of the Resolution Plan shall commence from the Effective Date and shall continue till the closure date, subject to no injunction being granted by any legal or judicial authority to the implementation of the Resolution Plan. Implementation Schedule of proposed Resolution Plan along with the corresponding timelines is as per mentioned in the Plan.

Source of Funds (clause 6 of the proposed resolution plan)

The Successful Resolution Applicant proposed to infuse the fund as mentioned in this plan in the bank account as approved by CoC and the same shall be utilized for the purposes of settlement of claims and/ or dues.

- The SRA would utilize the internal sources to fund the amount proposed. The SRA shall also infuse funds by availing debt from the Banks/ Financial Institutions or Inter Corporate Loans/Deposit. - The SRA proposes to raise finance from Renaissance Fiscal Services Pvt. Ltd., a non-banking financial corporation, towards which a letter of interest is received by the Successful Resolution Applicant.

Monitoring Committee (clause 5.4 of the proposed resolution plan)

The Monitoring Committee shall comprise of the following members:

Release of charges on securities of Corporate Debtor and Guarantors (Clause 7.1 the proposed resolution plan)

That on full payment of amount as proposed in this Resolution Plan, immediately / simultaneously against the payment to the Financial Creditors, the Financial Debt shall stand settled and extinguished, and the Corporate Debtor shall have no liability in respect of the Financial Debt and no further amounts shall be payable towards the settlement and extinguishment of the Financial Debt.

Receivables from the Avoidance Application (Clause 10.1 of the proposed resolution plan)

As per Resolution Plan any application(s) pending under Section(s) 43, 44, 45 and/or 66 of the Code as on the date of approval of this Resolution Plan shall be proceeded with by the Secured Financial Creditors and all proceeds shall be distributed by the Secured Financial Creditors as he may deem fit and appropriate.

Treatment for Suraksha Realty Ltd in plan if considered as Secured Financial Creditor ( clause (e) the proposed resolution plan)

The Resolution Professional has provided the Resolution Applicant with a copy of Order dated 1 November 2023 passed in Interlocutory Application No. 318 of 2021, and 6 and 7 December 2023 passed in Interlocutory Application No. 5559 of 2023 by the Adjudicating Authority in relation to Suraksha Realty Limited's claim of being a Secured Financial Creditor of the Corporate Debtor. It is clarified that the total financial commitment under this Resolution Plan remains unchanged, irrespective of Suraksha Realty Limited's position on the Corporate Debtor's Committee of Creditors. Accordingly, irrespective of the status of Suraksha Realty Limited's claim on the Corporate Debtor's Committee of Creditors, the distribution proposed under this Resolution Plan shall remain unchanged. To clear any and all doubts, it is expressly clarified that should Suraksha Realty Limited's claim be admitted as a Secured Financial Creditor either (i) before approval of this Resolution Plan by the Committee of Creditors; (ii) after approval by the Committee of Creditors and prior to the Adjudicating Authority's approval; or (iii) after approval by the Adjudicating Authority, the distribution proposed under this Resolution Plan shall stand automatically modified and will be divided amongst the Secured Financial Creditors as on the date of submission of this Resolution Plan, as stated above, and Suraksha Realty Limited, in proportion to their respective inter se claims, in the manner to be decided and settled by the Secured Financial Creditors of the Corporate Debtor. It is further clarified that the Secured Financial Creditors shall have no recourse to the Resolution Applicant either for distribution of the financial proposal set out in this Resolution Plan, or otherwise, for any issues / concerns / disputes, if any, as may arise between the Secured Financial Creditors.

In compliance of Section 30(2) of IBC, 2016, the Resolution Professional has examined the Resolution plan of the Successful Resolution Applicant and confirms that this Resolution Plan:

Provides for payment of Insolvency Resolution Process cost in a manner specified by the Board in the priority to the payment of other debts of the corporate debtor;

Provides for payment of debts of Operational Creditor in such manner as may be specified by the board which shall not be less than

the amount to be paid to such creditors in the event of liquidation of the Corporate Debtor under Section 53; or

the amount that would have been paid to such creditors, if the amount to be distributed under the Resolution Plan had been distribute in accordance with sub-section (1) of Section 53 in the event of liquidation of the corporate debtor.

Provides for management of the affairs of the Corporate Debtor after approval of Resolution Plan;

The implementation and supervision of Resolution Plan;

Does not prima facie contravene any of the provisions of the law for time being in force,

Confirms to such other requirements as may be specified by the Board.

As per the Affidavit, the Resolution Applicant is not covered under 29A.

In compliance of Regulation 38 of CIRP Regulations, the Resolution Professional confirms that the Resolution plan provides that

The amount due to the Operational Creditors under Resolution Plan shall be given priority in payment over Financial Creditors.

It has dealt with the interest of all Stakeholders including Financial Creditors and Operational Creditors of the Corporate Debtor.

A statement that neither the Resolution Applicants nor any related parties have failed to implement nor have contributed to the failure of implementation of any other Resolution Plan approved by the Adjudicating Authority in the past.

The terms of the plan and its implementation schedule.

The management and control of the business of the Corporate Debtor during its term.

Adequate means of Supervising its implementation.

The Resolution Plan Demonstrate that it addresses

The cause of the Default ii. It is feasible and viable iii. Provision for effective implementation iv. Provisions for approvals required and the time lines for the same.

Capability to Implement the Resolution Plan

The Resolution Professional has submitted Form-H under Regulation 39(4) of the CIRP Regulations to certify that the Resolution Plan as approved by the CoC meets all the requirements of the IBC and its Regulations, the relevant parts of which are reproduced below:

I have examined the Resolution Plan received from Resolution Applicant, Bermaco Energy Systems Limited and to be put for approval of Committee of Creditors (“CoC”) of Mahavir Roads and Infrastructure Private Limited

I hereby certify that-

the said Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force.

the Resolution Applicant viz. Bermaco Energy Systems Limited has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit resolution plan. The contents of the said affidavit are in order. iii. the said Resolution Plan is being voted upon by the CoC in accordance with the provisions of the Code and the CIRP Regulations made thereunder. The Resolution Plan is being approved by financial creditors after considering its feasibility and viability and other requirements specified by the CIRP Regulations iv. I sought vote of members of the CoC by electronic voting system which was kept open from 22 January 2024 till 6 March 2024 in compliance with regulation 26

The list of financial creditors of the Mahavir Roads and Infrastructure Private Limited being members of the CoC and distribution of voting share among them is as under:

The Resolution Plan includes a statement under regulation 38(1A) of the CIRP Regulations as to how it has dealt with the interests of all stakeholders in compliance with the Code and regulations made thereunder.

The amounts provided for the stakeholders under the Resolution Plan is as under: (Amount in Rupees)

On perusal of the Resolution Plan, we find that the Resolution Plan provides for the following:

Payment of CIRP Cost as specified u/s 30(2)(a) of the Code.

Repayment of Debts of Operational Creditors as specified u/s 30(2)(b) of the Code.

For management of the affairs of the Corporate Debtor, after the approval of Resolution Plan, as specified U/s 30(2)(c) of the Code.

The implementation and supervision of Resolution Plan by the RP and the CoC as specified u/s 30(2)(d) of the Code.

The RP has complied with the requirement of the Code in terms of Section 30(2)(a) to 30(2)(f) and Regulations 38(1), 38(1)(a), 38(2)(a), 38(2)(b), 38(2)(c) & 38(3) of the Regulations.

The RP has filed Compliance Certificate in Form-H along with the Plan. On perusal the same is found to be in order. The Resolution Plan has been approved by the CoC by majority of 78.83%.

In K Sashidhar v. Indian Overseas Bank & Others (in Civil Appeal No.10673/2018 decided on 05.02.2019) the Hon'ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon'ble Apex Court further observed that the role of the NCLT is 'no more and no less'. The Hon'ble Apex Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan "as approved" by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements.

In view of the discussions and the law thus settled, the instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38 (1A) and 39 (4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The same needs to be approved. Hence, ordered.

The Resolution Plan is hereby approved. It shall become effective from this date and shall form part of this order with the following directions:

It shall be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force is due, guarantors and other stakeholders involved in the Resolution Plan.

The approval of the Resolution Plan shall not be construed as waiver of any statutory obligations/liabilities of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law. Any waiver sought in the Resolution Plan, shall be subject to approval by the Authorities concerned in light of the Judgment of Supreme Court in Ghanshyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited, the relevant paragraphs of which are extracted herein below:

The Memorandum of Association (MoA) and Articles of Association (AoA) shall accordingly be amended and filed with the Registrar of Companies (RoC), Mumbai, Maharashtra for information and record. The Resolution Applicant, for effective implementation of the Plan, shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed.

The moratorium under Section 14 of the Code shall cease to have effect from this date.

The Applicant shall supervise the implementation of the Resolution Plan and file status of its implementation before this Authority from time to time, preferably every quarter.

The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with copy of this Order for information. vii. The Applicant shall forthwith send a certified copy of this Order to the CoC and the Resolution Applicant, respectively for necessary compliance.