Girish Siriram Juneja vs Osian's Connoisseurs Of Art Pvt. Ltd. & Anr.

PER: MS. LAKSHMI GURUNG MEMBER (JUDICIAL)

The instant Application is filed by, Interim Resolution Professional (Applicant) under section 30 and 31 of the Insolvency and Bankruptcy Code, 2016 (“the Code”), seeking following reliefs:

M/s. Osian’s Connoisseurs of Art Pvt Ltd (‘Corporate Debtor’) was admitted into Corporate Insolvency Resolution Process (‘CIRP’) vide order dated 09.12.2021 under Section 7 of the Code and Mr. Girish Siriram Juneja i.e. the Applicant was appointed as the Interim Resolution Professional (‘IRP’).

After becoming aware of the appointment of the IRP, the Applicant in compliance with Section 13, 15 and other applicable provisions of the Code read with Regulation 6 of the IBBI (CIRP) Regulations, 2016 made a public announcement regarding commencement of CIRP of the Corporate Debtor and invited proof of claim from the creditors of the Corporate Debtor in the following newspapers:

The Applicant received claims for Rs.611,56,27,734/- (Rupees Six Hundred Eleven Crores Fifty-Six Lakhs Twenty-Seven Thousand Seven Hundred and Thirty-Four out of which Rs.557,79,46,861/- (Rupees Five Fifty-Seven Crores Seventy-Nine Lakhs Forty-Six Thousand Eight Hundred and Sixty-One has been admitted as per following details:

Based on the admitted claims, Committee of Creditors ('CoC') was constituted on 06.01.2022, consisting of the following members with their voting percentage:

The Applicant submits that as on the date of filing the Application, 10 (Ten) CoC meetings have been held during CIRP period, as follows:

However, during the course of the hearing of this IA various queries were raised by this Tribunal, in response to which CoC meetings were held as apparent from the additional affidavits discussed in the later part of this order.

The Registered Valuers appointed for conducting valuation are as follows:

The summary of Valuation along with Valuation Reports provided by the above four valuers are annexed as Exhibit F to the Application. According to the valuation summary and Form H the fair market value and Liquidation value are as under:

The Expressions of Interest ('EOIs') were invited by publication of Form G on 26.02.2022 and revised Form G on 13.03.2022. Further, the Final List of Eligible Prospective Resolution Applicants was published on 22.04.2022.

The Information Memorandum and Request to submit Resolution Plan were issued to the Prospective Resolution Applicants on 12.04.2022.

As per the Revised Form G on 13.04.2022 the last date of submission of the Resolution Plan was 12.05.2022. However, based on the extension request received from the Prospective Resolution Applicants, with approval of CoC time for submission of the Resolution Plan has been extended time and again and final extension was granted upto 08.08.2022.

The IRP had filed an extension application under Section 12(2) r/w Section 12(3) of the Code, r/w Regulations, 40 of CIRP Regulations, 2016 for seeking extension for a period of 90 days (i. e. IA no. 1520 of 2022) as the 270-day CIRP period was to end on 06.06.2022 so as to extend the said period till 04.09. 2022.The said IA was allowed by this Tribunal vide its order dated 10.06.2022.

The IRP again filed an exclusion application under Section 12(2) r/w Section 12(3) of the Code, r/w Regulations, 40 of CIRP Regulations, 2016 for seeking exclusion for a period of 15 days (I.A.2613 of 2022) as CIRP period was to end on 04.09.2022 so as to extend the said period till 19.09.2022. The said I.A. was approved by this Tribunal vide its order dated 11.11.2022.

The final PRAs who submitted their Resolution Plans by the last submission dates were:

i) Karan Pal Singh ii) Prudent ARC Limited

The Resolution Plan submitted by Mr. Karan Pal Singh, i.e. the Successful Resolution Applicant ('SRA') was approved by the CoC in its 10th COC Meeting held on 25.08.2022 by 100% of the vote in favour of the Plan. Copy of the Minutes of the 10th CoC meeting along with e-voting results is annexed as Exhibit E to the Application.

The Applicant submits that the Applicant has also issued a Letter of Intent ('LOI') on behalf of CoC to the SRA dated 12.09.2022.

We may mention that the unsuccessful Resolution Applicant i.e. Prudent ARC Limited had filed an I.A. bearing No.2629 of 2022 on 08.09.2022 seeking directions to the Applicant to allow the unsuccessful Resolution Applicant to submit its modified Resolution Plan for consideration of the CoC. This Tribunal after perusing the facts and submissions made by the parties and considering the decision taken by the CoC in its commercial wisdom, vide order dated 10.10.2024 dismissed the said I.A. There is no other objection to the present application.

According to the Resolution Plan submitted by the SRA, Mr. Karanpal Singh, is an entrepreneur and investor who has closed around Rs.500 crores worth investments in India and overseas that deals in varied sectors such as Art work, mining, real-estate, retail, hospitality, media and new age start-ups and technology having experience of around 2 decades. He is a Founder of Hunch Ventures, Hunch Circle, KJS Concrete, Nameh Hotels and Resorts, headquartered in New Delhi.

The SRA has deposited performance bank guarantee of INR 1,66,50,000/- (Rupees One Crore Sixty-Six Lakhs Fifty Thousand only) dated 16.09.2022 and has undertaken to keep it alive till 100% payment is made to all the stakeholders in accordance with the Resolution Plan.

The SRA has submitted an Affidavit dated 20.06.2022 stating that Resolution Applicant nor any other person who is a connected person (as defined under the IBC are ineligible under Section 29 A of the IBC. 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 Affidavit under 29 A of the Code is annexed to the Application as Exhibit H.

A committee comprising of Mr. Girish Siriram Juneja and one representative of each Secured Creditor from IDBI Bank and Axis Bank, together with proposed CEO & CFO of Corporate Debtor (Resolution Applicant) are proposed to be appointed as monitoring agency as per the provisions of the Code until full consideration is paid as per the Resolution Plan and original documents are handed over to the Resolution Applicant.

It is proposed that the Company shall be a Board managed company upon approval of the Proposed Plan. A Board would be formed within 30 days of the date of approval of Resolution Plan by the Adjudicating Authority and other approvals, if any, required.

The new board shall consist of following members:

It is proposed to reduce the share capital and issue fresh share to the SRA and his wife Mrs. Himangini Singh.

With cancellation of present paid up capital to Rs.0 and additional capital of Rs.6,00,00,000/- through fresh issue of 60,00,000 shares will be made to the resolution Applicant at face value per share of Rs.10 each at par, to make the shareholding of Resolution Applicant and his wife at 100% shareholders/members of the Corporate Debtor.

The new proposed shareholding pattern is as follows:

As per the proposed Plan, RA has proposed a total financial outlay of Rs.30.20 crores to be paid to different categories of stakeholders in 5 tranches out of which Rs. 10 crores shall be paid upfront within 30 days.

According to the Form H, the amounts provided for the stakeholders under the Resolution Plan are as under:

During the course of the hearing 05.04.2024, upon query from this Tribunal Ld. Counsel for the Applicant sought time to provide details of Rs.2.26 crores payable to the employees, on the account of salary/gratuity/leave salary/LTA. Therefore, the Applicant was granted time to place the details of amount payable to the employees on various heads by way of an Affidavit. Accordingly, an additional Affidavit dated 12.04.2024 was filed, the relevant extract of which is given below:

According to Annexure 1, the breakup of details of admitted claim of employees of Rs.2,26,12,131/- is given below:

It was noted that the out of the admitted claim of Rs.2.26 crores an amount of only Rs. 25 lakhs was proposed to be paid to the employees. Subsequently the SRA has provided undertaking by way of affidavit dated 19.08.2024, to pay the full amount of gratuity in following terms:

The Applicant has stated that Osian's Art Fund ('Fund') was sponsored & created as an unregistered private trust by the Corporate Debtor under a Trust Deed dated 10.03.2006 pursuant to which the Corporate Debtor has entered into an Asset Management Agreement dated 08.06.2006 and thereby assumed the role of the Asset Management Company for the Fund. Since the assets of the Fund do not form part of the assets of the Corporate Debtor, all and any claims arising in relation to the said Fund trust shall be dealt with in accordance with the Fund documentation and in compliance with SEBI/SAT order, if any.

During the hearing dated 15.10.2024 it was noted that Clause 1.20 of the Resolution Plan provides that all disputed liabilities and cases pending against the Corporate Debtor shall be withdrawn and would stands abated on the approval of the Resolution Plan by NCLT. It was further observed that Form H was undated therefore the Tribunal directed the Applicant to provide latest position as to the pending list of litigations and date of Form H.

The Applicant vide its Additional Affidavit dated 13.11.2024 provided the date of Form H and List of Cases pending against the Corporate Debtor.

The Cases involving the Corporate Debtor apart from those IAs pending before this Tribunal are as follows:

The details of PUFE/ avoidance applications which are pending are given below:

The SRA in Para 10.1 Section 10 of the Resolution Plan had stated that the Proceeds (if any) arising out of any such transaction, shall vest with the Resolution Applicant/ Corporate Debtor. Therefore, this Tribunal on 14.01.2025 had sought clarification whether the CoC had considered the said clause and had taken conscious decision for the same. Extract of the daily order dated 14.01.2025 is given below:

Pursuant to daily order dated 14.01.2025, the IRP filed Additional Affidavit dated 18.03.2025, relevant extract of which is reproduced below:

(Emphasis Provided) The CoC members consented to the clarification provided by SRA vide their email dated 24th February 2025.”

From the affidavit dated 18.03.2025 it is noticed that 15th CoC meeting was reconvened on 28.02.2025, and the emails of the SRA and CoC members were placed before the CoC. The SRA has also executed an undertaking dated 11.03.2025 in support of the said clarification. We take on record the undertaking given by the SRA that the proceeds from the PUFE transactions shall be transferred to COC subject to the legal expenses to be borne by the CoC, which will form an integral part of the Resolution Plan.

We note that the resolution Applicant has offered an amount of Rs.29,58,00,000/- to the Creditors under the Resolution Plan. Considering the CIRP Cost of Rs. 62,00,000/- and the additional amount of Rs. Rs.99,18,732/- to be paid towards gratuity in addition to previously committed payment of Rs. 25,00,000/-, the Resolution Plan value comes to Rs.31,19,18,732/-.

Pursuant to Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Successful Resolution Applicant has prepared a Compliance Certificate dated 16.09.2022 in Form H which is annexed to the Application as Exhibit J.

Compliance under mandatory requirements under IBBI (Insolvency Resolution Process of Corporate Debtors) Regulations, 2016

On perusal of Form-H, it is seen that the Resolution Plan is in compliance with the mandatory compliances as stipulated under Section 30(2) of the Code. The Resolution Plan also meets the requirements of Regulations 37, 38, 38(1A) and 39 (4) of the IBBI Regulations, 2016.

The Bench also observes that, Resolution Plan of the SRA, 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 Monitoring Committee as specified u/s 30(2)(d) of the Code.

This Bench further observes in the present application that the CoC with requisite majority has approved to the Resolution Plan in the 10th CoC Meeting held on 25.08.2022 with 100% voting share respectively, hence as per the CoC, the plan meets the requirements of being viable and feasible for the reviving the Corporate Debtor. The Resolution Plan provides for a detailed implementation schedule with specific timelines and the manner in which the management, control and supervision of the Corporate debtor would lie.

In K Sashidhar v. Indian Overseas Bank & Others (2019) 12 SCC 150, 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 Committee of Creditors of Essar Steel India Limited through Authorised Signatory Vs. Satish Kumar Gupta & Ors (2020) 8 SCC 531, the Hon’ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom has approved.

In view of the law laid down by Hon’ble Supreme Court, the commercial wisdom of the COC is to be given paramount importance for approval / rejection of the resolution plan. As the Resolution Plan meets the requirements of the Code and the IBBI Regulations, the same needs to be approved. Accordingly, the Resolution Plan is approved with the following directions:

The Resolution Plan submitted by Mr. Karan Pal Singh read with additional affidavit dated 12.04.2024, 19.08.2024, and 13.11.2024 and 18.03.2025, is hereby approved. The additional affidavit dated 12.04.2024, 19.08.2024, 13.11.2024 and 18.03.2025 offering clarifications by the IRP and undertakings given by SRA shall form integral part of this order.

As per Section 31 of the Code the Resolution Plan 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.

As far as Osian Art Fund is concerned, all claims arising in relation in said fund shall be dealt in accordance with the Fund documentation and in compliance with SEBI/SAT order, if any, subject to section 32A of the Code.

No person will be entitled to initiate or continue any proceedings in respect to a claim prior to CIRP which is not part of the Resolution Plan.

The Monitoring Committee shall supervise the implementation of the Resolution Plan and shall review operational performance of the Corporate Debtor.

The Resolution Professional is further directed to handover all records, premises / documents to Resolution Applicant to finalise further line of action required for starting of the operation as contemplated under the Resolution Plan. The Resolution Applicant shall have access to all the records premises / documents through Resolution Professional to finalise further line of action required for starting of the operations.

As per the Resolution Plan, extinguishment of existing shares of the Corporate Debtor, allotment of shares to the Resolution Applicant and to New Investor and reduction of share capital do not require the consent of shareholders as required under the Companies Act or any other authority for implementation of the Resolution Plan.

Reliefs and Concessions:

Approval of the Resolution Plan shall not be a ground for termination of any existing consents, approvals, licenses, concessions, authorizations, permits or the like that has been granted to the Corporate debtor or for which the Corporate Debtor has made an application for renewal, grant permissions, sanctions, consents, approvals, allowances, exemptions etc.

Any exemption as sought for in relation to the payment of registration charges, stamp duty, taxes and fees arising out of the implementation of the Resolution Plan is not granted but the Resolution Applicant is at liberty to approach Competent Authorities for the exemptions if permitted under the law.

For past non-compliances of the Corporate debtor under applicable laws the Resolution Applicant shall not be liable for any liabilities and offences committed prior to the commencement of CIRP and as stipulated under Section 32A of IBC, 2016.

The reliefs and concessions sought by the Resolution Applicant but not expressly granted are deemed to not be granted. However, in terms of the Judgement of Hon'ble Supreme Court in the matter of Ghanshyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited, on the date of approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of Resolution Plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect of a claim which is not a part of the Resolution Plan.

With regard to other concessions and reliefs, most of them are subsumed in the reliefs granted above. The relief which is not expressly granted above, shall not be construed as granted. The exemptions if any sought in violation of any law in force, it is hereby clarified that such exemptions shall be construed as not granted.

ii) Any amount out of the action taken against other persons for Preferential/ Fraudulent Transactions u/s. 43 and 66 of the IBC, 2016 as found in the Audit Report and also Unauthorized Transaction post CIRP order, shall vest with the CoC.

iii) The Memorandum of Association (MoA) and Articles of Association (AoA) shall accordingly be amended and filed with the concerned Registrar of Companies (RoC), 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.

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

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.

vi) The Applicant shall forthwith send a certified copy of this Order to the CoC and the Resolution Applicant, respectively for necessary compliance.

Accordingly, the Resolution Plan in IA.2645 of 2022 is hereby allowed and approved.