Indian Bank vs Bostin Engineers Private Limited

ORDER

A. About the Corporate Debtor

B. Initiation of Corporate Insolvency Resolution Process

C. Publication

D. Constitution of CoC

E. Collation of Claims

F. CIRP and compliances

G. Compliance of the approved Resolution Plan with various Provision

H. Details of Resolution Plan/Payment schedule

I. Our Inference

On the conduct of CoC

On the Statutory Obligations or Seeking Approvals from the Authorities:

On the Reliefs, Waivers and Concessions:

o. The CD be permitted to waive off any past Granted in liabilities irrespective whether claimed terms of the or unclaimed from any authority and Ghanashyam including any penal charges for past Mishra and Sons non- compliance of filings, forms other Pvt Ltd v returns and statements etc. relating Edelweiss thereto. The liability arising on Asset account of failure of filing Reconstruction returns/forms or complying with Company Ltd, necessary provisions of law for period wherein the prior to effective date shall be waived Hon'ble off and the Resolution Applicant under Supreme Court no circumstances will be liable towards has held in any such liability for non-compliance of para 95(i) that any laws prior to the effective date.; once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Govt, any State Govt or any local authority, guarantors and other stakeholders. On the date of approval of 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 to a claim, which is not part of the resolution plan. The Hon'ble Supreme Court also held that all the dues including the statutory dues owed to the Central Govt, any State Govt or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under section 31 could be continued.

p. The CD be allowed to waive of any penal Granted in charges for past non-compliances of terms of the filing/secretarial obligations by Ghanashyam passing appropriate directions to the Mishra and Sons Ministry of Corporate Affairs, Pvt Ltd v Government of India, Provident Fund Edelweiss Authority, Income Tax authorities, Asset Service Tax Authorities and GST Reconstruction Authorities etc. to the extent any Company Ltd, secretarial filings, corporate actions wherein the and/or any other actions filings, Hon'ble intimations, tax returns etc are Supreme Court required to be made in connection with has held in any period prior to the approval of the para 95(i) that resolution plan by the Hon'ble NCLT, the once a newly constituted board of directors resolution shall be deemed to be fully authorized plan is duly to act on behalf of the Company and will approved by the be entitled to receive all assistance Adjudicating from the respective ministries/ Authority departments/ authorities to undertake under sub-all such actions to comply with all the section (1) of provisions of all laws, to the extent section 31, the possible and provided sufficient claims as information is available, without provided in the imposing any fine or penalty or interest resolution (by whatever name called) for such plan shall delayed filing and treating the said stand frozen filing, intimation or returns (by and will be whatever name called) to be made after binding on the effective date as if they have been filed Corporate on time and in compliance with all laws, Debtor and its as if within the respective due dates employees, which had occurred in the past. Also the members, company will not be denied, after the creditors, filing of such documents or returns or including the intimations, any benefit which would Central Govt, have accrued to it had the said filing any State Govt been completed by the previous or any local management within those respective due authority, dates in the past.; guarantors and other stakeholders. On the date of approval of 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 to a claim, which is not part of the resolution plan. The Hon'ble Supreme Court also held that all the dues including the statutory dues owed to the Central Govt, any State Govt or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under section 31 could be continued.

q. The CD be permitted such waivers of all Granted in liabilities arising from Operational terms of the Creditors, other Creditors, Statutory Ghanashyam Dues, Litigation other liabilities, Mishra and Sons Municipal due, Gram Panchayat or loan Pvt Ltd v body dues-whether claimed or unclaimed, Edelweiss specified or unspecified, accrued or Asset non-accrued which do not form part of Reconstruction the Resolution Plan; Company Ltd, wherein the Hon'ble Supreme Court has held in para 95(i) that once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Govt, any State Govt or any local authority, guarantors and other stakeholders. On the date of approval of 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 to a claim, which is not part of the resolution plan. The Hon'ble Supreme Court also held that all the dues including the statutory dues owed to the Central Govt, any State Govt or any local authority, if not part of the resolution plan, shall stand extinguished

and no
	proceedings in
respect of such
dues for the
period prior to
the date on

			which the Adjudicating Authority grants its approval under section 31 could be continued.
	r.	Any right of subrogation, reimbursement, recompense or any other right of similar nature under any Corporate Guarantee, Letter of Comfort or similar guarantees or other instruments of debt or any obligation provided by any promoter, affiliate or related party of the CD, shall stand extinguished and will not be enforceable against the CD. Notwithstanding the approval of the Resolution Plan by the concerned NCLT, the right of the Secured Financial Creditors as against the Corporate Guarantors, Personal guarantors and the third party securities shall continue to subsist and the relevant Secured Financial Creditor(s) shall be entitled to take recourse against such Corporate Guarantors, Personal guarantors and the third party securities in accordance with the terms of such guarantees and securities for recovery of their residual dues;	Granted
	s.	From the Effective Date, all inquiries, investigations and proceedings, whether civil or criminal, suits, claims, disputes, proceedings in connection with CD or affairs of CD, pending or threatened, present or future in relation to any period prior to the Effective Date, or arising on account of implementation of this Resolution Plan shall stand withdrawn and dismissed and all liabilities and obligations therefore upon approval of this	Granted in terms of the Ghanashyam Mishra and Sons Pvt Ltd v Edelweiss Asset Reconstruction Company Ltd, wherein the Hon'ble Supreme Court

Resolution Plan, all new inquiries, has held in investigations, notices, suits, claims, para 95(i) that disputes, litigations, arbitrations or once a other judicial, regulatory or resolution administrative proceedings will be plan is duly deemed to be barred and will not be approved by the continued, initiated or admitted against Adjudicating CD and/ or its new management in relation Authority to any period prior to the Effective under sub-Date; section (1) of section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Govt, any State Govt or any local authority, guarantors and other stakeholders. On the date of approval of 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 to a claim, which is not part of the resolution plan. The Hon'ble Supreme Court also held that all the dues including the statutory dues owed to the Central Govt, any State Govt or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under section 31 could be continued.

t. All relevant Governmental Authorities, Granted, including the ROC and Revenue Authority, subject to the shall grant relief from payment of stamp law and duty, registration charges and applicable applicable fees for (1) successful Regulations implementation of the Plan (including

		transactions contemplated herein, for any increase in authorised share capital, any capital reduction, issuance or transfer of shares or debentures, provision of loan and related security Interest, release of security Interest, Equity Shares and the Post Closing Transfers, as contemplated in this plan); (a) all documents that may be executed by the Resolution Applicant and Corporate Debtor in respect of the transactions contemplated under the Plan (including under Restructuring Agreement and Allotment T&Cs); (b) change in shareholding of Corporate Debtor;
	u.	The CD shall be granted approvals, including but not limited to approval from Gram Panchayat, statutory permissions, other facilities, etc., granted to the Corporate Debtor whether in its name or in the name of its Directors and same shall continue to be valid and shall be transferred in toto to the Resolution Applicant or the Representatives of the Resolution Applicant as may be deemed necessary. The Resolution Applicant seeks express waiver of any fees, duties, taxes, penalties or other levies for transfer of the said licenses, leases, approvals, statutory permissions, other facilities, etc. to the RA or its Directors / Representatives/ Partners;	Granted, subject to the law and applicable Regulations
	v.	Local Municipal Corporation, local water and electricity supply agency / department to waive off all demands, penalties, taxes, dues, charges, levies, and cess for any period prior to the Plan Effective Date and neither the CD nor the Resolution Applicant shall be liable for the above under Applicable Laws for the period prior to the an Effective Date and	Granted in terms of the Ghanashyam Mishra and Sons Pvt Ltd v Edelweiss Asset Reconstruction Company Ltd,wherein

the Hon’ble Adjudicating Authority shall the Hon'ble pass an order to that effect; Supreme Court

has held in para 95(i) that once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Govt, any State Govt or any local authority, guarantors and other stakeholders. On the date of approval of 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 to a claim, which is not part of the resolution plan. The Hon'ble Supreme Court also held that all the dues including the statutory dues owed to the Central Govt, any State Govt or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under section 31 could be continued.

w. The Collector of Stamps, Revenue Granted, Department of concerned State Government subject to the and the Ministry of Corporate Affairs to law and exempt the Resolution Applicant and the

		Corporate Debtor, from the levy of stamp duty and fees applicable in relation to this Resolution Plan and its implementation, Including any stamp duty applicable on and the issue of shares or NCDs by the Corporate Debtor;	applicable Regulations
	x.	Hon’ble Adjudication Authority may kindly give appropriate directions that after the bid is successful, no capital asset or any movable material shall go outside the premises without the prior approval of the Resolution Applicant;	Granted, subject to the law and applicable Regulations.
	y.	All existing bank/ loan accounts will be deemed to be closed from effective date and all instruments already issued or contracts already signed by the CD which are found to be adversarial to the interest of the CD or give rise to any claim against the CD in future will be deemed to have been cancelled, without any further act, from effective date. The resolution applicant will remit the amount as proposed in this resolution plan to the bank account which is advised by the Monitoring Committee for further distribution. All old negotiable instruments issued by the Corporate Debtor will automatically get cancelled as of effective date.	Granted
	z.	For a period of 6 months from the Effective Date, all subsisting contracts and arrangements entered by the Corporate Debtor shall continue to be in subsistence. For a period of 6 months from the Effective Date, the Corporate Debtor shall have a right to review and re-negotiate/ terminate any contract that was entered into prior to the Completion Date. If during such review, the Corporate Debtor terminates any contracts then the Corporate Debtor shall not be liable towards any claims with respect to termination of such contracts, including but not limited to any claims, penalty, damages (liquidated or otherwise), arbitration claims or claims for specific performance.	Granted as per the terms of contract and arrangements
	aa.	The Secured Financial Creditors to issue No dues certificate, satisfy all existing charge created on MCA/CERSAI, handover all ownership documents of assets of the CD, remove all lien on all assets of the CD and confirm that, on and from the full payment to financial credits, all accounts of the Corporate Debtor shall stand regularized and their asset classification shall be "Standard" for the purposes of all Applicable Laws.	Granted
	bb.	By way of approval of the present Resolution Plan, all stakeholders of the Corporate Debtor agree and undertake that the consideration paid for the extinguishment of their liability, crystallised or otherwise, under this Resolution Plan shall be full and final settlement of their debt with the Corporate Debtor and neither the Corporate Debtor nor the Resolution Applicant shall at any point of time be held liable for the same upon approval of this Plan by the Hon’ble Adjudicating Authority.	Granted
	cc.	In the event it is determined that any provision of the Resolution Plan is unenforceable and/or in the event any provision of the Resolution Plan becomes invalid for reasons other than by breach by the Resolution Applicant of the terms of the Resolution Plan, the Resolution Applicant reserves the right to apply to the Hon’ble NCLT for appropriate modification of such provisions of the Resolution Plan. If any such application is required to be made before the Hon’ble NCLT before the Implementation Date, then such application shall be made with the prior consent of the CoC.	Granted
	dd.	The requirement of adding “and reduced” in the name of the CD to be dispensed with,	Granted
	ee.	All existing share certificates issued/ printed by the CD shall be deemed to have been cancelled,	Granted
	ff.	Approval of this plan shall be deemed approval for removal of Directors from the record of the Company as appearing on the MCA portal/ website/ income tax web site/ Any Indirect website. Certified copy of the order approving Resolution Plan shall be a direction on such statutory authorities to do the needful.	Granted
	gg.	Upon occurrence of any Force Majeure event which would seriously impact the ability of the Resolution Applicant to implement the Plan in accordance with its term; the Resolution Applicant shall have the right to propose suitable modification of the approved Resolution Plan with the Monitoring Committee and any change shall be made only after obtaining requisite approvals from the constituted body of Committee of Creditors and Hon’ble Adjudicating Authority.	Granted
	ii.	Notwithstanding anything to the contrary contained in the resolution plan, the charge created on the assets of the corporate debtor in favour of the secured financial creditor(s) shall continue to subsist and recovery proceedings shall not get extinguished till full and final payment of the resolution amount as proposed to be paid to the relevant secured financial creditor(s) is made by the resolution applicant and received by the relevant secured financial creditor.	Granted

jj. Concessions to the Corporate Debtor Granted that, on and from the Plan Effective Date, NHAI, Government departments and ministries/ bodies/ companies and PWD shall not blacklist the CD for its previous failure to timely complete the awarded contract;

kk. The period from CIRP commencement to the Granted effective date, shall be excluded while calculating the existing validity of empanelment/ eligibility of the corporate debtor, to be eligible to bid for/ be awarded any project/ tender of/ by the State & Central Government /Departments/Companies.

On the Extinguishment of Claims:

[2021]13SCR737 that “once a resolution plan is duly approved by the Adjudicating Authority Under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of 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 to a claim, which is not part of the resolution plan.” (Emphasis Added)

“61.

All these details are required to be contained in the information memorandum so that the resolution applicant is aware, as to what are the liabilities, that he may have to face and provide for a plan, which apart from satisfying a part of such liabilities would also ensure, that the Corporate Debtor is revived and made a running establishment. The legislative intent of making the resolution plan binding on all the stakeholders after it gets the seal of approval from the Adjudicating Authority upon its satisfaction, that the resolution plan approved by CoC meets the requirement as referred to in Sub-section (2) of Section 30 is, that after the approval of the resolution plan, no surprise claims should be flung on the successful resolution applicant. The dominant purpose is, that he should start with fresh slate on the basis of the resolution plan approved.’

“62.

This aspect has been aptly explained by this Court in the case of Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra).’

“107.

For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment must also be set aside on this count. (Emphasis Added)

On Guarantors:

“The Resolution Plan does not absolve the personal guarantors from their guarantee. The law well settled by the Hon’ble Supreme Court in the matter of “Lalit Kumar Jain vs. Union of India & Ors. – (2021) 9 SCC 321), that by approval of resolution plan the guarantees are not ipso facto discharged.” (Emphasis Added)

On Inquiries, Litigations, Investigations, and Proceedings:

“67.

Thus, Section 32A broadly leads to:

a. Extinguishment of the criminal liability of the corporate debtor, if the control of the corporate debtor goes in the hands of the new management which is different from the original old management.

b. The prosecution in relation to "every person who was a "designated partner" as defined in Clause (j) of Section 2 of the Limited Liability Partnership Act 2008 (6 of 2009), or an "officer who is in default", as defined in Clause (60) of Section 2 of the Companies Act. 2013 (18 of 2013), or was in any manner in charge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence" shall be proceeded and the law will take it’s own course. Only the corporate debtor (with new management) as held in Para 42 of P. Mohanraj will be safeguarded.

c. If the old management takes over the corporate debtor (for MSME Section 29A does not apply (see 240A), hence for MSME old management can takeover) the corporate debtor itself is also not safeguarded from prosecution Under Section 138 or any other offences.” (Emphasis Added)

On PUFE Application(s):