Dhaval Jitendrakumar Mistry vs Gajanand Corporation Private Limited

The present application is filed under Section 30(6) read with Section 31 of the Code, 2016 and other relevant provisions of the Code, seeking for approval of the resolution plan in the matter of Gajanand Corporation Private Limited (IN CIRP).

The facts as narrated in the application and explained by the Ld. Counsel for the Applicant/RP is summarized hereunder : 2.1 The company petition came to be filed by the Operational Creditor i.e. Eco Green Products Private Limited under Section 9 of the Code seeking inter alia, initiation of Corporate Insolvency Resolution Process (hereinafter referred to as 'CIRP') against Gajanand Corporation Pvt. Ltd. (hereinafter referred to as “Corporate Debtor”).

This Hon’ble Tribunal vide its order dated 22.02.2022 was pleased to admit the petition filed by the operational creditor and appointed Mr. Dhaval Jitendrakumar Mistry, the applicant herein as an Interim Resolution Professional (hereinafter referred to as ‘IRP’) of the corporate debtor.

The applicant made a public announcement as contemplated under the provision of Section 15 of the code and invited claims from all the creditors. The applicant submits that the said announcement was published in the newspapers viz. Business Standard English (Ahmedabad Edition) and Sandesh Gujarati (Ahmedabad Edition) on 28.02.2022 in prescribed Form A.

Pursuant to the public announcement dated 28.02.2022, the IRP has inter alia received claims from the creditors of the Corporate Debtor and constituted the Committee of Creditors (“CoC”) as required in Section 21(1) of the Code and the report certifying the constitution of CoC as per Regulation 17 (1) of IBBI (Insolvency Process of Corporate Persons) Regulations, 2016 (“CIRP Regulations”) on 17.03.2022. Subsequently, the IRP received several claims after constituting the Committee of Creditors hence the IRP filed the report of re-constitution of the Committee of Creditors on 25.04.2022, 17.06.2022 and 17.08.2022.

The applicant convened 1st meeting of the Committee of Creditor (hereinafter referred to as ‘CoC’) on 25.03.2022 wherein the CoC Members inter alia resolved to appoint Mr. Dhaval Jitendrakumar Mistry as Resolution Professional (hereinafter referred to as ‘RP’) of the Corporate Debtor and further resolved to reduce the notice period for inviting the CoC Meeting from five (5) days to two (2) days.

The applicant convened the 2nd Meeting of the CoC on 11.05.2022 wherein the members of CoC inter alia resolved to initiate the process of Expression of Interest (hereinafter referred to as 'EoI'); further, the CoC also approved minimum eligibility criteria and evaluation matrix and draft Request for Resolution Plan.

The applicant convened the 3rd Meeting of the CoC on 11.07.2022 wherein the RP apprised the members of the CoC that he has received three (3) EoI from the Prospective Resolution Applicants (hereinafter referred to as 'PRA') namely M/s. Shlok Enterprise, M/s. Thakurji International Private Limited and M/s. Avadh Infra. From the aforementioned PRA, Two prospective Resolution Applicants had submitted the Resolution Plans namely i.e. M/s. Shlok Enterprise and M/s. Thakurji International Private Limited and the same was opened in the said meeting in the presence of the members of the CoC. 2.8 The applicant convened the 4th Meeting of the CoC on 10.08.2022 wherein members of the CoC had a detailed discussion on the Resolution Plan received from PRA i.e. M/s. Shlok Enterprise and M/s. Thakurji International Private Limited. In the said meeting, RP as well as CoC members had requested the PRA to increase their Financial Bid and submit a revised Resolution Plan on or before 16.08.2022. The applicant further submits that in the said meeting, the RP apprised the CoC members that he had received the Transaction Audit Report on 20.07.2022 for the period between 01.04.2017 till 22.02.2022 from the Forensic Auditor.

The applicant convened the 5th Meeting of the CoC on 18.08.2022 wherein the RP apprised the members of the CoC that he has received two Revised Resolution Plans from Prospective Resolution Applicants i.e. M/s. Shlok Enterprise and M/s. Thakurji International Private Limited. In the said meeting, the RP had a detailed discussion on the feasibility and viability of the Revised Resolution Plan with the members of the CoC.

The Revised Resolution Plan dated 16.08.2022 submitted by M/s. Thakurji International Private Limited came to be approved by a member of the CoC with 67.88% votes in favour. A copy of the Revised Resolution Plan dated 16.08.2022 submitted by M/s. Thakurji International Private Limited Successful Resolution Applicant. The payment structure in the Revised Resolution Plan dated 16.08.2022 is as below: -

[The Applicant submits that the Effective date shall be considered from the date of order of this Hon'ble Tribunal approving the resolution plan.]

The said payment is categorized as under: -

- The Resolution Applicant has proposed an amount of Rs 10 Lakhs towards CIRP cost. The CIRP Costs as estimated at Rs. 10 Lakh will be paid on an actual basis in full and priority to any other creditors of the company within 90 days from the Effective Date. In case any additional cost of CIRP is there as approved by RA, the same shall be adjusted from secured financial creditors.

PART B: SETTLEMENT OF CORPORATE FINANCIAL DEBTS AND OPERATION DEBT (WORKMEN OR EMPLOYEES DUES) AND STATUTORY DUES:

- As per the Information Memorandum, under “List of Financial Creditors” total outstanding of Secured Financial Creditors of the Company is ₹ 5,80,12,685/- who has submitted the claims and also verified and admitted by Resolution Professional are as follows:

- The amount claim received & admitted for Secured Financial Creditor is ₹ 5,80,12,685. - The Resolution Plan proposed a Consolidated sum of ₹ 11,00,000/- inclusive interest for all the dues and all claims of Secured Financial Creditors over a period of 90 days from the effective date as specified in accordance with Repayment Schedule in the Resolution Plan; (Principal Amt.: ₹ 11,00,000/-)

- The aggregate amount of claims received from employees is Rs. 4,37,529 of which RP has admitted a claim of Rs. 3,17,806/- RA has proposed to pay Rs. 1000/- towards Employees dues within 90 days from effective date

- The aggregate of the claims received from the Operational Creditors (Other than Statutory Authorities) by the RP amounts to ₹ 28,64,85,213/- whereas RP has admitted a claim of Rs. 21,41,65,657/- RA has proposed ₹ 5,000/- within 90 days from the effective date without any interest.

- The aggregate of the claims received from the Operational Creditors (Statutory Authorities) by the RP amounts to ₹ 35,716/- and RA has proposed ₹ 1,000/- within 90 days from the effective date without any interest

- All outstanding dues of operational Creditors shall stand waived against the Corporate Debtor immediately upon sanction of this resolution plan subject to payment reserved and allocated for them. - Operational Creditors will have no right to seek any remedy under any law for recovery of Principal Amount, Unpaid interest, damages, charges, claims and/or any form of recompense upon sanction of the Resolution Plan by Adjudicating Authority.

- As per the Information Memorandum, under “List of Financial Creditors” total outstanding of Unsecured Financial Creditors (Non-Related) of the Company is Rs. 2,30,46,376/- who has submitted the claims and also verified and admitted by Resolution Professional are as follows:

- The amount claim received & admitted for Unsecured Financial Creditor is ₹ 2,47,41,090/- and ₹ 2,30,46,376/- respectively. - The Resolution Plan proposed a Consolidated sum of ₹ 93,000/- within 90 days from the effective date without any interest - The valuation report does not contain any assessment on the expected cash flows of the JV contract agreement in the project with 2 parties namely P R Patel & Vidhata Associates presently the only source of income for the Corporate Debtor nor the Resolution Professional has confirmed the contract which is contradicted by ICICI to be existing.

- There is a demand of Rs 13.02 lakhs from the Income Tax Department which was sought clarification on 1 August 2023 which does not figure as a liability to be paid. The total number of operational creditors is mentioned as Rs 2366.39 lakhs of which the due to the Government is only shown as 0.36 lakhs. The Resolution Professional has in clarification stated that there is a claim of the IT Department being the operational debt, however, vide email dated 19.08.2023 will be settled the outstanding dues of the IT department in terms of settlement as proposed for the operational creditor (statutory dues) in its Resolution Plan in the respective ratio.

- Only ICICI Bank with 67.88% of the voting share has approved the plan.

PART D: PROPOSAL FOR CONTINGENT LIABILITIES AND OTHER OPERATIONAL CREDITOR OF CORPORATE DEBTOR:

- As per the Audited financial statements as of 31.03.2021, there is no contingent liability outstanding with Corporate Debtor. Hence no amount has been proposed by the Resolution Applicant.

The fair value of the corporate debtor is Rs. 24,22,749/- and the liquidation value is Rs. 20,01,621/-. A copy of a summary of valuation and valuation reports of all valuers is attached with the present.

The Applicant has also received an EMD of Rs. 5,00,000/- along with the submission of the EOI and an EMD of Rs. 2,20,000/- along with a Resolution plan.

We have heard the Learned Counsels and perused the material available on record. The Resolution Plan does not address the cash flows and value of the Assets enumerated and the Operational Debt claims received from Statutory Authorities. The valuation report(only a summary is submitted) of the assets is not satisfactory. The Resolution Plan presupposes approval and ignores the claim that has been received from the Income Tax Department of dues to be paid. It also proposes to pay only Rs 1000 to employees in 90 days after the approval of the Plan. The Resolution Plan is rejected as it does not satisfy the provisions of Section 31(2) of IBC 2016 and Regulations 36 of the Act of the Code.

In view of the above, the present application IA 733 of 2022 in CP (IB) 70 of 2021 is rejected and disposed off.