Kanishkdeep Stock Consultants Pvt. Ltd. vs Sanjay Badrilal Punglia

Per: Shri Deep Chandra Joshi, Judicial Member

This Application is filed by Mr. Sanjay Badrilal Punglia, Resolution Professional ('RP' / 'Applicant') of Mls Kanishkdeep Stock Consultants Pvt. Ltd. ('Corporate Debtor') under Sections 31 of the Insolvency and Bankruptcy Code, 2016 ('IBC' / 'Code') read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 ('Regulations') seeking approval of resolution plan as approved by the Committee of Creditors.

The insolvency application was filed by the Corporate Debtor M/s Kanishkdeep Stock Consultants Pvt. Ltd. under Section 10 of the Code for initiation of Corporate Insolvency Resolution Process ('CIRP') against itself, and the same was admitted by this Adjudicating Authority vide order dated 09.02.2021. The Applicant was appointed as the Interim Resolution Professional ('IRP') to manage the affairs of the Corporate Debtor, who later on confirmed to act as RP by the CoC in the matter. The Applicant submits that on 12.02.2021, he issued a public announcement as per Regulation 6 of the Regulations read with Sections 13 and 15 of the Code in Form A in two newspapers, i.e., Indian Express (English) and Rashtradoot Kota (Hindi), thereby inviting claims from the creditors of the Corporate Debtor as envisaged in the Code.

Upon receipt of claims till 24.02.2021, the Applicant constituted the Committee of Creditors ('CoC') on 04.03.2021 and convened the 1st CoC meeting on 11.03.2021 wherein there was only one creditor (Operational Creditor), namely J.N. Khandelwal & Co. and therefore holding 100% voting rights. The Applicant further submits that in the 2nd CoC meeting convened on 31.03.2021, the Applicant got Form G approved from the CoC for publication and got the draft for request for Resolution Plan and approved the eligibility criteria. The RP also appointed Registered Valuer to valuate the Securities and Financial Assets of the Corporate Debtor. In the 3rd CoC meeting held on 10.06.2021, the CoC approved the decision of RP for extension of invitation of Expression of Interest and re-issue of Form G in the newspaper.

The Applicant stated that on 29.07.2021, the 4th meeting of CoC was convened, and after considering the feasibility and viability of the Resolution Plan submitted by the Resolution Applicant, it was approved with 100% voting share.

It is further stated that the RP, in compliance with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, has prepared Form H.

The Applicant RP has provided brief details of the Resolution Plan, which are as follows:

It is stated in the Auditor's Report filed at Annexure F of CP No. (IB) 252/10/JPR/2019 that the company does not have any immovable properties; the inventories of the company comprise of shares and securities kept in the electronic format. Further, the company neither has any loans or borrowings from any financial institution, banks or government nor raises any money through an initial public offer or further public offer (including debt instruments).

It is further stated that as per the Information Memorandum, no claims have been received concerning Financial Creditors and any liability arising after the effective date; the maximum liability of the Resolution Applicant shall not exceed Rs. 1,000/- for each case. The Resolution Applicant is not aware of the liquidation value of the Corporate Debtor; therefore, no amount shall be payable to any Operational Creditors. However, as a goodwill gesture, has proposed Rs. 16,000/- payable to the Operational Creditors for the admitted claim of Rs. 1,50,000/-.

Accordingly, the Applicant RP is duty-bound to prefer an application under Section 30(6), and 31 of the Code read with Regulation 39(4) of the Regulations seeking approval of the revised Resolution Plan duly accepted by the CoC from this Authority. The Applicant has submitted the resolution plan and a compliance certificate in Form H under Regulation 39(4) of the Regulations. In the matter of Committee of Creditors of Essar Steel India Private Limited v. Satish Kumar, Civil Appeal No. 8766-67 of 2019 the Hon’ble Supreme Court held that in consonance with the provisions of Regulation 28(1A), the Resolution Plan should take care of the interest of all the stakeholders, including operational creditors of the Corporate Debtor. Therefore, the resolution plan has fulfilled parameters of the said judgement, inter alia, maximisation of value of the assets of the Corporate Debtor and interest of all the stakeholders has been taken into consideration. The copy of the Resolution Plan and the compliance certificate in Form H is annexed as Annexure 4.

The Applicant RP has stated that the Resolution Plan envisages the Corporate Debtor's revival and sustain it as a going concern. However, the RP proposes to convert Corporate Debtor into a Limited Liability Partnership. In case of rejection of the revised Resolution Plan, the Corporate Debtor would require liquidation, which would seriously prejudice all stakeholders' interests.

Moreover, the Applicant RP states that as per Section 30 of the Code, amended vide Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (No. 6 of 2018) that came into force on 06.06.2018, the Resolution Plan ought to be approved by 66% of voting share of financial creditors. It is submitted that the CoC has duly authorised the Resolution Plan by a majority of 100% of the members.

We have carefully considered the submissions of the learned Counsel for the RP and the learned Counsel for the resolution applicant and have perused the record.

The Corporate Debtor was incorporated on 09.02.2007, and the CIRP proceedings were initiated under Section 10 of the Code against the Corporate Debtor vide order dated 09.02.2021. The present Application is filed for approval of the resolution plan submitted by Mr. Satish Chaudhary (Successful Resolution Applicant). The permission has been sought under the provisions of Section 31 (1) of the Code.

We may state that after receipt, verification and collation of claims as discussed above, the IRP constituted the CoC as per the provisions of Section 21 of the Code. The details of the financial creditors, the distribution of voting share among them and the position of voting for the resolution plan is as under (Para-No.5 of Form H) –

The details of stakeholders under the resolution plan are given in Para 7 of Form-H:

[*If there are sub-categories in a category, please add rows for each sub-category. Amount provided overtime under the Resolution Plan and includes the estimated value of non-cash components. It is not NPV.]

The abovementioned amount of Rs. 16,000/- payable to the Operational Creditors is proposed to be paid within a period of 30 days of the effective date as per the Repayment Schedule provided in the Resolution Plan. Furthermore, the RP to buy the all-outstanding dues/liability standing in the books of accounts due from the Corporate Debtor without any further action the creditors for a total consideration of Rs. 1,000/- as full and final settlement of their dues, which shall be paid within 30 days of the effective date.

The compliance aspect of the resolution plan has been given in Para No. 9 of Form H, which is as follow:

The approval of the resolution plan has been sought under Section 31(1) of the Code, which reads as follows:

The conditions provided in Section 31(1) of the Code for approval of resolution plan are as follows: -

The RP submits that the committee has approved the resolution plan with 100% of the voting share of the financial creditors, and the conditions provided for by Section 30(4) of the Code are satisfied.

The provisions of Section 30(2) of the Code are as follows:

The compliance of Section 30(2) of the Code is given in Para-No. 9 of Form H (supra). The same is being further examined as under:

The RP has also certified that Mr. Satish Chaudhary, the resolution applicant, has submitted an affidavit pursuant to Section 30(l) of the Code confirming its eligibility under Section 29A of the Code to submit the resolution plan, and the contents of the said affidavit are in order.

As per the requirement of Regulation 39(4) of the Regulations for performance security, it is stated in the 4th Meeting of CoC that the Earnest Money Deposit (EMD) received from the Resolution Applicant should be considered as performance security and the committee approved the same with 100% of voting share. Thus, it is stated in Form H that the same has been complied with.

With regard to the compliance under Regulation 35A, it is stated that the same is not available/applicable and also not mentioned in any of the Clauses of the Resolution Plan.

A perusal of Regulation 38 would clearly show that by virtue of mandatory contents of resolution plan as discussed in the preceding paragraphs in relation to Section 30 and Section 31 of the Code, the requirement of Regulation 38 also stands fulfilled. Thus, the resolution plan fulfils all the requirements of Regulation 38 of the CIRP Regulations.

The Resolution Plan inter-alia entails the following:

In view of the above discussion, the Resolution Plan submitted by Mr. Satish Chaudhary as approved by the CoC under Section 30(4) of the Code is hereby authorised. The Resolution Plan so approved shall be binding on the Corporate Debtor and 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 such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the Resolution Plan.

Under the provisions of Section 31(3) of the Code, we also direct as under:

In view of the foregoing, IA No. 249/JPR/2021 is disposed of.