Indian Overseas Bank vs R.D.Rubber Reclaim Limited

Per: Rajasekhar V.K., Member (Judicial)

This Court convened through video conferencing.

IA (IB) No.1332/KB/2020 is an application under section 30(6) of the Code after approval of the resolution plan by the Committee of Creditors (“CoC”).

The underlying Company Petition in CP (IB) No. 1724/KB/2018 was filed by Indian Overseas Bank against R.D.Rubber Reclaim Limited, the Corporate Debtor, under section 7 of the Insolvency and Bankruptcy Code 2016 which was admitted vide order dated 25.10.2019 in CP (IB) No. 1724/KB/2018.

Initially, the Applicant herein, Ms Mamta Binani (IBBI Reg. No. IBBI/ IPA-002/IP-N00086/2017-18/10227) was appointed as the Interim Resolution Professional. She was later confirmed as the Resolution Professional of the Corporate Debtor at the first meeting of the Committee of Creditors on 27.11.2019.

The IRP made public announcement dated 31.10.2019 on 02.11.2019 in Business Standard (English) and Aajkaal (Bengali) - Kolkata edition and Sanmarg (Hindi) – Ranchi edition newspapers regarding initiation of Corporate Insolvency Resolution Process (“CIRP”) and called for proof of claims from the financial and operational creditors, workers and employees of the Company in the specified forms till 13.11.2019.

The claims of financial and operational creditors as existing as on the date of filing the present application is as follows:

The applicant states that a total of fourteen CoC meetings have been held during CIRP period, as follows:

The Applicant submits that in terms of the provisions of section 25(2)(h) of the Code read with regulation 36A(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”), invitations in Form ‘G’ for Expressions of Interest (“EoI”) from potential resolution applicants were issued on five occasions, the last Form ‘G’ dated 17.06.2020 was published on 18.06.2020 fixing the last date for receipt of EoIs as 03.07.2020. This was published in Business Standard (English), Aajkal (Bengali), Kolkata editions and Sanmarg (Hindi) Ranchi edition of the newspapers.

The Applicant submits that in response to the invitation for EoI, upto the last date, i.e., 03.07.2020, five EoIs were received. Two of the prospective Resolution Applicants (“PRA”) withdrew their EoI and one PRA did not file any viable Resolution Plan till the extended last date of submission of Resolution Plan i.e., till 10.09.2020. Two Resolution Plans were submitted, one each by Girik Securities Private Limited and Glix Securities Private Limited by the last date of submission. In furtherance of the discussions by the CoC, these Resolution Plans were revised from time to time and final Resolution Plan was submitted by Girik Securities Private Limited on 30.10.2020 and by Glix Securities Private Limited on 04.11.2020.

On 06.11.2020, the Resolution Plans were discussed in the fourteenth CoC meeting. In the said meeting the CoC unanimously rejected the Resolution Plan of Girik Securities Private Limited and approved the Resolution Plan submitted by Glix Securities Private Limited (“Resolution Applicant” or “RA”] with 100% voting. Copy of the voting sheets are annexed to the Application and marked as Annexure ‘A’ (Colly) at pages 28 to 30 and Copy of the Minutes of meeting of fourteenth CoC meeting are annexed to the Application and marked as Annexure ‘C’ at pages 111-129.

It is submitted that the RP issued the Letter of Intent (“LoI”) to the RA on 16.11.2020. Subsequent to this, the RA furnished an unconditional performance deposit amounting to ₹1,00,00,000/- (Rupees one crore only) by way of a Demand Draft dated 18.11.2020 drawn in favour of the Corporate Debtor. A copy of the said LoI is annexed to the Application and marked as Annexure ‘F’ at pages 142 to 144 and a copy of the performance deposit along with undertaking dated 19.11.2020 is annexed to the Application and marked as Annexure ‘G’ at pages 145 to 148.

The Applicant submits details of various compliances as envisaged within the Code and the CIRP Regulations which requires a Resolution Plan to adhere to, which is reproduced hereunder:

The Applicant submits that the successful Resolution Applicant has submitted a certificate of eligibility under section 29A of the Code, which is annexed to the application as Annexure ‘B’ at pages 108 to 110.

The Applicant has filed a Compliance Certificate in prescribed form, i.e., Form ‘H’ in compliance with regulation 39(4) of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which is annexed to the application as Annexure ‘E’ at pages 131 to 141.

The Applicant submits the relevant information with regard to the amount claimed, amount admitted and the amount proposed to be paid by the Resolution Applicant, i.e., Glix Securities Private Limited, under the said Resolution Plan is tabulated as under:

Summary of the financial proposal/payment under the Resolution Plan dated 04.11.2020 of Glix Securities Private Limited is tabulated hereunder:

The Resolution Plan defines “Approval Date” or “Date of Approval” as the date of receipt of copy of the order approving the Plan by the Adjudicating Authority.

The Resolution Plan also provides for –

Management of Company after resolution in clause 6 Part II;

Term of the resolution plan in clause 4 of Part II; and

Implementation and Supervision of the resolution plan in clause 6.1 Part II.

The Reliefs, Exemptions and Waivers sought by the Resolution Applicant from the Adjudicating Authority are set out below for the successful implementation of the Resolution Plan. The orders thereon are indicated against each.

On hearing the submissions made by the Resolution Professional, and perusing the record, we find that the Resolution Plan has been approved with 100% voting share. As per the CoC, the plan meets the requirement of being viable and feasible for revival of the Corporate Debtor. By and large, all the compliances have been done by the RP and the Resolution Applicant 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. No circumstances exist that militate against grant of approval for the resolution Plan.

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.

Any relief sought in the Resolution Plan, where any contract, agreement, understanding, proceeding, action, notice, etc., not specifically identified, or is for a future contingency, is, at this point of time, rejected.

Therefore, subject to the observations made in this Order, we hereby accord our approval to the Resolution Plan. The Resolution Plan shall form part of this Order.

The Resolution Plan as approved is binding on the Corporate Debtor and other stakeholders involved so that the revival of the Corporate Debtor can come into force with immediate effect.

The moratorium imposed under section 14 shall cease to have effect from the date of this order.

In case of non-compliance of this order or withdrawal of Resolution Plan, the CoC shall forfeit the Performance Security amount already paid by the Resolution Applicant.

The RP shall stand discharged from his duties with effect from the date of this Order. She shall, however, perform his duties in terms of the Resolution Plan as approved by this Adjudicating Authority.

The Resolution Applicant shall have access to all the Corporate Debtor’s records, documents, assets and premises with effect from the date of this order, to finalise the further line of action required for starting the business operations of the corporate Debtor.

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

The Resolution Applicant shall file a copy of this Order with the Registrar of Companies, West Bengal, inter alia for updating the status of the Corporate Debtor in the master data.

IA (IB) No.1332/KB/2020 along with CP (IB) No.1724/KB/2018 are disposed of accordingly.

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

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

File be consigned to the record.

Per: Rajasekhar V.K., Member (Judicial)

This Court convened through video conferencing.

IA(IB) 1455/KB/2020 is an application by Jharkhand Bijli Vitran Nigam Ltd, one of the Operational Creditors of R.D.Rubber Reclaim Limited, the Corporate Debtor against praying to direct the Resolution Professional (RP) to consider its claim as per the revised claim filed on 20.10.2020.

Applicants case in brief is that –

a. The Corporate Debtor was sent into Corporate Insolvency Resolution Process (CIRP) vide order of this Adjudicating Authority dated 25.02019 and Ms. Mamta Binani was appointed as the Interim Resolution Professional and later confirmed as Resolution Professional (RP).

b. The Corporate Debtor has been a regular defaulter in paying electricity dues since the year 1995. There have been serious allegations of theft of electricity against the Corporate Debtor, the Hon’ble High Court, Ranchi in WP No.2197/2003 had directed the Corporate Debtor to pay ₹47,00,000/- (Rupees forty-seven lakh only) to the Applicant herein.

c. The Applicant herein had served the Corporate Debtor with several notices under the Electricity Act, 2003 including that on 09.12.2019 and 17.01.2020 for disconnection of electricity because of non-payment of the dues and finally disconnected the electricity supply on 30.01.2020 and removed the metering system on 03.06.2020.

d. On 08.06.2020, the Corporate Debtor that CRIP had been initiated against the Corporate Debtor, therefore the removal of metering system was in violation of the CIRP.

e. Thereafter, a claim along with “provisional final bill” dated 13.06.2020 was filed before RP. On 15.07.2020, the RP sent a notice disputing the amount of provisional final bill. The Applicant herein submitted its claim before the RP on 17.07.2020 and subsequently filed a revised claim on 31.07.2020.

f. On 07.10.2020 the Applicant provided bill abstract belonging to the Corporate Debtor in the books of the Applicant from the period 2012 to 2019 to the RP. The said abstract further helped the RP to verify and collate the Applicant’s claims. On 08.10.2020, the RP requested the Applicant to resubmit the claim form. On 18.10.2020, the RP informed the Applicant that a sum of ₹6,60,32,866/- has been verified and collated.

g. In furtherance of the mail dated 08.10.2020 from the RP, the applicant submitted its revised claim amounting to ₹7,66,69,324/- on 20.10.2020. On 21.10.2020, the RP admitted the claim only to the extent of ₹6,66,20,682/- thus, rejecting the claim of ₹1,00,48,642/- on grounds that the amount of ₹1,00,48,642/- is for delayed payment surcharge (DPS) for the period when the CIRP had been undergoing and moratorium was in force.

h. The RP has erroneously and without considering the relevant documents and provisions rejected part of the claim. The RP has failed to provide any valid reason to reject the part of the claim. The DPS is delayed payment surcharge is payable since even after the commencement of CIRP the electricity connection was reconnected as per the Direction of the Adjudicating Authority, and the bills have been raised for the service and supply strictly as per law. The Applicant has not charged any penalty as wrongly.

Ms Mamta Binani, RP, appeared in person and submitted as follows:

a. Regulation 13 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, mandates that the RP shall verify every claim as on the insolvency commencement date, within seven days from the last date of receipt of the claims.

b. Further, Form B prescribed under regulation 7 of the Regulations ibid also requires in Sl. No.4 that the total amount of claim including interest shall be computed as on the insolvency commencement date.

The RP therefore contends that it is not within her competence to accept a claim in which various elements of the claim in question are for periods after the insolvency commencement date.

Mr Akhilesh Shrivastava, learned counsel appearing for the applicant, submitted that the claim is based on contractual obligations undertaken in pursuance of another statute, i.e., the Electricity Act, 2003. He urged us to take a harmonious view of both the Acts – the Electricity Act, 2003 and the IBC – and direct the RP to accept the claim. Further, he submitted that the electricity distribution companies (discoms) would suffer huge losses if, after supplying electricity as per the contract, they are deprived of their right to charge interest or Delayed Payment Surcharge (DPS).

We have heard the learned counsel appearing for the applicant and the RP, appearing as party in person, and perused the records.

We find from the records that admittedly, the claim of the applicant is not restricted to the amount due as at the insolvency commencement date, but includes period well into the CIRP. Therefore, prima facie, there is merit in the contention of the RP that she cannot include claims for any period after the commencement of the CIRP, i.e., after 29.10.2019.

Mr Akhilesh Shrivastava, learned counsel for the applicant, has contended that the applicant is a State entity, public money is involved, and that the claims are all in pursuance to a statutory obligation. However, we are unable to accept the contentions since the IBC is a complete Code in itself. Any claim filed with the IRP or the RP, as the case may be, has to be in consonance with the IBC and the regulations framed thereunder. There is no way that the RP can be directed to collate a claim, part of which has arisen after the insolvency commencement date. That will do violence to the statutory provisions of the Code itself.

Moreover, while the applicant may raise a contention that its claim is based on a statute, we are reminded of the provisions of section 238 of the Code, which stipulates that the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.

In this view of the matter, we hold that the RP was right in not accepting the claim of the applicant for time-periods extending beyond the insolvency commencement date. The RP was right in restricting the collation to the claim subsisting as on the insolvency commencement date.

The result is that IA No.1455/KB/2020 shall stand dismissed as devoid of merit and it is ordered accordingly.

The Registry is directed to communicate a copy of this order to the counsel on record for the parties immediately.

Urgent certified copies of this order be issued on completion of requisite formalities.