M/s Bheemasamudra Land Developers and Builders vs M/s Metrik Infraprojects Private Limited

Per: Manoj Kumar Dubey, Member (Technical)

This Application is filed by Mr. Vinay Mruthyunjaya (hereinafter referred to as ‘Applicant/Resolution Professional’) under section 30 (6) read with section 31 read with section 60(5)( c) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016, seeking approval of the Resolution Plan as approved by the CoC Members.

Brief facts of the case are given hereunder:

It is submitted that the Resolution Plan provides for the management of the affairs of the corporate debtor after approval of the Resolution Plan as follows:

Heard Shri. A.S Vishwajith, learned Counsel for the RP and carefully perused the pleadings on record.

The Corporate debtor herein, namely, M/s Metrik Infraprojects Private Limited was incorporated on 22.11.2010 and CIRP proceedings were initiated against the Corporate Debtor by this Adjudicating Authority, vide order dated 16.04.2021 passed in CP(IB) No. 60/BB/2020. The present application is filed for approval of the Resolution Plan submitted by Maniveera Structure Private Limited. The approval has been sought under the provision’s of Section 31(1) of the Code.

Pursuant to the public announcement inviting claims from the creditors of the Corporate Debtor, the Resolution Professional has constituted the COC. 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 5 of Form H) :-

The details of stakeholders and the amounts provided for them under the Resolution Plan given in Para No. 7 of revised Form H. Form H attached along with the application dated 19.08.2022 was revised vide diary No. 308 dated 17.01.2023 and further revised vide diary No. 4388 dated 24.08.2023. (Rs in Lakhs)

It is submitted that Bhairav Holdings Inc. has abstained from voting. Further, Financial Creditors in class i.e., Homebuyers shall be settled by way of completion of construction of the project and handing over the possession of their respective flats/unit in accordance with the Resolution Plan. The plan only addresses the construction of the flats of the claimants/homebuyers and providing the Units to homebuyers as specified in their respective agreements for sale. Moreover, an amount of Rs. 8,19,97,568/- is estimated for completion of construction of Block G to the class of creditors to make it livable and habitable condition within a period of 1 year from the date of approval of Resolution Plan by NCLT.

The compliance of the Resolution Plan has been given in Para No. 9 of Form H are as follows:-

It is submitted by the Resolution Professional that the COC in its 15^th meeting held on 05.08.2022 has approved the Resolution Plan with 69.12% voting share and therefore, the conditions provided for Section 30 (4) of the Code are satisfied.

At this juncture it is necessary to refer to sec 30(2). The Provisions of Section 30(2) of the I&B Code, 2016 are as follows:

The compliance of Section 30(2) of the Code is given in Para No.09 of Form-H (supra). The same is being further examined as under:

a. Section 30(2)(a): The Resolution Plan in Point 14 states that the RP has provided an estimate of Rs. 2,55,27,142/- for CIRP costs pertaining to the Corporate Debtor. It is submitted that the CIRP cost is being contributed by way of Interim Finance from the erstwhile Secured Financial Creditor, i.e., Piramal Enterprises Limited and from the Financial Creditors in a Class- Homebuyers. The entire interim finance, contribution or such other fund of whatsoever nature, provided or to be provided/incurred or to be incurred by homebuyers towards the CIRP Cost of the Corporate Debtor, shall stand adjusted towards the cost to be incurred for completion of construction at Block-G and hence the same shall be deemed to have been paid in priority for the purpose of compliance with the provisions of the Insolvency and Bankruptcy Code, 2016 and rules and regulations made thereunder. The interim finance provided by Piramal Enterprises Limited has been settled by Jain Heights and Structures Private Limited (Holding Company of the Resolution Applicant) and a letter has been addressed to the RP informing that the contributions made by Piramal enterprises Limited may be reimbursed and deposited to the account of Jain Heights and Structures Private Limited. Further, the letter provides for a confirmation from Piramal Enterprises Limited as interim finance provider that there is no other additional CIRP costs payable to them. Jain Heights and Structures Private Limited, being the holding company of the Resolution Applicant has provided its NOC pursuant to which no interim finance be payable by the Resolution Applicant to Jain Heights and Structures Private Limited and hence the unpaid CIRP cost stands reduced to that extent and is accordingly deemed to have been paid in priority in compliance of the provisions of the Code and rules and regulations made thereunder. Any excess unpaid CIRP cost shall be borne by the Resolution Applicant.

b. Section 30(2)(b ): The Resolution Plan in Point 15 provides for the following settlement:

All title deeds and other documents, if any, in relation to the above falts held by Piramal Enterprises Limited or any third party shall be immediately released in fit and proper condition to the Corporate Debtor/Resolution Applicant/Corporate Guarantor to the Corporate Debtor i.e., Jain Heights a& Structures Private Limited.

It is further noticed from Para 17.2 of the Plan that the Resolution Applicant proposes to settle the Claims and debt of the Homebuyers by completing the construction at Block – G with twelve (12) months from the date of receipt of the order of NCLT approving this resolution plan and providing the Units specified in their respective agreements for sale in full and final settlement of their Claims and debt. All the homebuyers will have to pay the balance consideration, if any, as mentioned in their respective agreements, within 45 days from the date of receipt of order of the Hon’ble NCLT approving this Resolution Plan.

The Resolution Plan 16.7 deals with the payment to the financial creditors who did not vote in favour of the resolution plan. Financial creditors who do not vote in favour of the resolution plan shall be paid not less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. However, as per the updated information memorandum there is no secured financial creditor of the corporate debtor and hence this requirement does not arise.

c. Section 30 (2)(c ): Resolution Plan Para 34. The responsibility of management of the affairs of Corporate Debtor of the Company and implementation and supervision of the Resolution Plan after the date of approval by NCLT, shall be of the Monitoring Committee.

d. Section 30(2)(d): The Resolution Plan Para 31 deals with implementation and supervision of the Resolution Plan. Effective from the NCLT Approval Date, a Monitoring Committee (“MC”) comprising of members comprising One representative nominated by the Resolution Applicants and One representative nominated by Financial creditors in a Class, i.e., Home buyers will be constituted. Post the NCLT Approval Date and till the Resolution Plan is implemented the affairs of the Corporate Debtor shall be manged by Resolution Applicant and the tenure of the Monitoring Committee shall come to an end on completion of construction at Block- G and upon communication to homebuyers regarding handover of flats.

e. Section 30 (2)(e) : Resolution Plan Para 35. The Resolution Applicant declares that the Resolution Plan does not contravene any of the provisions of the Law for the time being in force.

f. Section 30 (2)(f): The Insolvency and Bankruptcy Board of India has notified the requirements under Regulation 38 of Insolvency and Bankruptcy Board of India (Insolvency resolution process for corporate persons) Regulations, 2016. It is submitted that Resolution Plan complied with all the regulation provided under the Code. The compliance thereof is stated in subsequent paragraphs:

Regulation 38 (1): As per Regulation 38 (1) of the insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the amount due to the operational creditors under the resolution plan has been given priority in payment over financial creditors. It is submitted by the Applicant that per the terms of the resolution plan, the Operational Creditors are being settled at NIL i.e., no amount is being proposed towards Operational Creditors. Accordingly, the condition regarding priority payment is deemed to have been satisfied.

Regulation 38 (1A): It is submitted that the Resolution Applicant has, to the extent possible, considered the interest of all the stakeholders and therefore believes that the Resolution Plan will create a sustainable capital structure that will enable the Company to continue as a “going concern”.

Regulation 38(1B): As mandated under Regulation 38 (1B) of the CIRP Regulations, the Resolution Applicant confirms that neither the Resolution Applicant nor any of its related parties have failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past.

Regulation 38(3)(a): The Resolution Applicant submits that the cause of default has been the litigation filed against the Corporate Debtor to trouble the functioning and operations of the Corporate Debtor. Such litigation caused delays in delivery of flats leading to subsequent escalation of construction cost and delay in receipt of receivables which lead to delay in service of debt. All of these factors had strangled the Corporate Debtor from completing the construction and delivery of flats on time and for servicing of debt to the creditors. The Resolution Applicant is committed to complete the construction of Block-G at “Jain Heights – East Parade” and deliver the same to the flat buyers in the committed time period as per the implementation schedule and in this manner shall address the cause of default.

Regulation 38(3)(b): The Business Plan of the Resolution Applicant is made on reasonable assumptions, to demonstrate the feasibility and viability of this resolution plan.

Regulation 38(3)(c): It is submitted that the Monitoring Committee shall Provide relevant Support for all applications for regulatory and third-party approvals required for implementation of the transactions contemplated in the Resolution Plan in a form and manner agreed with the Resolution Applicant, and for this purpose, to authorize such persons as proposed by the Resolution Applicants; Provide support on litigations, if any, which may be revived on the expiry of the moratorium period after the Approval Date, and any fresh litigation which may be filed against the affairs and operations of Corporate Debtor by any person. It is clarified that the Resolution Applicants will not be liable for any claims that may be adjudicated in such Proceedings, except to the extent explicitly admitted and addressed in this Resolution Plan;

It is observed that in Para 4 of Form H, the resolution professional has certified that the said Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force. Further, the resolution applicant Maniveera Structure Private Limited has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under Section 29A of the Code to submit Resolution Plan. The content of the said affidavit are in order. The affidavits are attached as Annexure K to the application. It is further certified that the Resolution Plan has been approved by the COC in accordance with the provisions of the Code and the CIRP Regulations made thereunder. The Resolution Plan has been approved by 69.21% of voting share of financial creditors after considering its feasibility and viability and other requirements specified by the CIRP Regulations.

It is further observed that in accordance with regulation 36B(4A), the resolution applicant has furnished the Corporate Guarantee of Rs. 1,00,00,000/- by way of a Bank Guarantee. Further it is submitted that this Corporate Guarantee shall be valid and binding on the Corporate Guarantor and shall in no event be terminable by notice or any change in the constitution of the Corporate Guarantor or by any other reasons whatsoever and our liability hereunder shall not be impaired or discharged by any extension of time or variations or alterations made, given, or agreed with or without our knowledge or consent by or between the parties. The said Corporate Guarantee is attached as Annexure M of the Application.

It is noted from the plan that the Corporate Debtor shall continue as a going concern and operate in its normal course upon implementation of the Resolution Plan.

The Applicant vide diary no: 5564 dated 20.12.2022 filed the MSME certificate of the Corporate Debtor and the same is taken on record.

It is further observed from the plan that in Para 28 the sources of funds for completion of construction at Block – G have been given:-

With regard to para 28.3 (b) above, the list of five flats have been mentioned above at Para 10.

It is noted that on August 2, 2022, the RP vide an email shared the updated Information Memorandum (“IM”) dated August 02, 2022, with the RA intimating substantial changes with respect to the debt of the Corporate Debtor and constitution of Committee of Creditors (“CoC”) and requested to submit the revised / updated resolution plan taking into consideration the updated Information Memorandum. Accordingly, the RA has submitted a revised plan on August 04, 2022 (“Revised Resolution Plan”).The Resolution Professional, vide his email dated August 8, 2022, had made certain observations on the Revised Resolution Plan which shall be addressed by the Resolution Applicant. Accordingly, addendum (attached at Pg 780 of the application) is prepared for the purpose of addressing the same by making the necessary corrections and this shall not be construed as modification of resolution plan as the basic structure of the plan remains intact. The following changes shall be made to the revised resolution plan as per the observations made by the Resolution Professional.

In respect of reliefs and concessions at Para 30 of the Plan, it is observed that the relief and concessions claimed by the Resolution Applicant by with the approval of the plan, are to be allowed only in accordance with Law. The applicants has filed details of reliefs and concessions vide diary no. 2714 dated 25.05.2023 it is clarified that it is not possible for us to issue any blanket direction except to say that the Resolution Applicant may take necessary steps in accordance with Law in respect of the said claims of reliefs and concessions and the public authorities / government authorities / Taxation department would duly consider the said requests / applications of the Resolution Applicant and take appropriate decision in accordance with Law.

This tribunal vide order dated 22.12.2022 directed the applicant to file revised Form –H and affidavit with regard to clarifying the treatment of government dues, if any, in view of Judgment of Hon’ble Apex Court in the matter of State Tax Officer vs Rainbow Paper Limited and also affidavit with regard to preferential transaction. And further, it was also directed to file two page note regarding the nil value provided under the plan and to the amount claimed. The compliance to the above order was made vide diary Nos. 305, 306, 307 and 308 dated 17.01.2023 and an affidavit was filed clarifying the treatment of Government dues, in view of the judgment in the matter of State Tax Officer vs Rainbow Papers Limited. It was stated that no claims were submitted by any of the statutory authorities in the relevant claims form prescribed by the Code despite intimations sent to the relevant statutory authorities, as well as in response to the public Announcement dated 27.04.2021 for the invitation of claims. Further, it is submitted that the resolution plan provides for treatment of statutory dues under Clause 21, Part D of the Resolution Plan. The Resolution Applicant has assumed the liquidation value of the Company for the purpose of this Resolution Plan to be NIL. As a result, under the Resolution Plan, the value to be paid the Statutory Authorities is NIL in accordance with the liquidation waterfall provided under Section 53 of the Code is NIL. Accordingly, the requirement of Section 30(2)(b) of the Code to pay at least liquidation value to Operational Creditors does not apply in this case. Further, Clause 21.1. of the Resolution Plan states that as on the date of submission of resolution plan, no claims were received from Statutory Authorities and the same is considered as final. Therefore, the resolution plan reflects NIL statutory dues to be paid as the Government Authorities as they have not submitted claims with proof to IRP / RP in the manner as provided in the Code.

The Applicant has also attached revised Form H as prescribed under Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and also submits that Application filed under Sections 43, 44, 45, 46, 48 and. 66 read with Section 60(5)(C) of the Insolvency and Bankruptcy Code, 2016 and Rule 11 of the National Company Law Tribunal Rules, 2016 for Avoidance of Transactions (IA No.74 of 2022) is pending before the Hon’ble NCLT. To that effect, Clause 30.18 read with Clause 3 of the addendum to the resolution plan provides that if the avoidance application continues to be heard even after NCLT Approval Date, the Resolution Applicant shall at its own discretion decide whether or not to contest such litigation keeping in mind the cost associated with such litigation. The Resolution Plan further provides that the proceeds, if any, from the outcome of such application shall be utilised towards the construction of the Project at Block-G and the same shall be considered as distribution to the homebuyers.

It is observed that vide diary no. 305 dated 17.01.2023 the Applicant has filed clarification for nil value provided under the resolution plan. It is submitted by the Applicant that according to the valuation reports of Land and Building of the Corporate Debtor issued by the appointed Registered Valuers, the estimated cost of works to be completed is more than the estimated amount realizable from unsold flats and balance receivable from other Flat Buyers where registrations are pending. Therefore, the asset has been considered a liability by the registered valuers in their respective valuation reports. The total liquidation value of the Corporate Debtor is INR 23,58,110/- (Rupees Twenty-Three Lakh Fifty-Eight Thousand One Hundred and Ten only):

It is further stated that the Resolution Professional has provided an estimate of INR 2,55,27,142/- (Rupees Two Crore Fifty-Five Lakh Twenty-Seven Thousand One Hundred Forty-Two only) towards the CIRP costs pertaining to the Corporate Debtor. Till date the Resolution Professional has incurred a total sum of Rs 1,92,97,868/- (Rupees One crore Ninety-Two lakhs Ninety-Seven thousand Eight Hundred and Sixty-eight) towards CIRP expense. Since the Liquidation Value determined in accordance with Regulation 35 of the CIRP Regulations, i.e., an amount of INR 23,58,110/-(Rupees Twenty-Three Lakh Fifty-Eight Thousand One Hundred and Ten only), is significantly less than the CIRP Costs of INR 2,55,27,142/-(Rupees Two Crore Fifty-Five Lakh Twenty-Seven Thousand One Hundred Forty-Two only), the liquidation value can be said to be inadequate to meet the distribution requirements under Section 53 of the Code. Further, if the Resolution Applicant in the matter consider payment of CIRP costs in priority to the payment of other debts of the Corporate Debtor, the Liquidation value will reduce to that effect and thus shall stand at NIL as per Section 53 of the Code.

Further written submissions vide diary No. 2476 dated 09.05.2023 was filed by Financial Creditors in a class (Homebuyers) submitting that.

The Learned Counsel for the applicant has relied on the judgment of Hon’ble NCLAT in the matter of “Genius Security and Allied Services vs Shivadutt Bannanje and Another” Company Appeal (AT) (CH) (Insolvency) No. 110 of 2021dated 07.04.2022. Relevant para are as under:

The Applicant has further placed on record the decision of Hon’ble NCLAT, Principal Bench, New Delhi in the case of “Dharmindra Constructions Pvt.Ltd. &Anr vs Rajendra Kumar Jain, Resolution Professional of Kudos Cheme Ltd. & Ors dated 18.01.2023 in Company Appeal (AT) (Insolvency) No. 1477 of 2022 wherein it is held that operational creditors are only entitled for minimum of the Liquidation value and there being no breach of any provisions of the Code.

On 26.04.2023 this Tribunal directed the applicant to file an undertaking by the PRA as per Regulation 39 (1) (c), clarification regarding the timeline for implementation of the plan as per Regulations 38 (2) (a), an affidavit under provisions of Regulation 31A, affidavit regarding pending litigations if any and explanations/justifications regarding all the reliefs and waivers sought in the resolution plan. The compliance to the said direction was made vide diary no. 2714 dated 25.05.2023 wherein it is undertaken vide affidavit dated 23.05.2023 that every information and records provided in connection with or in the resolution plan is true and correct as mentioned under Regulation 39 (1) ( c) of IBC. It is further submitted that a monitoring committee comprising of one representative nominated by the resolution applicant and one representative nominated by the Homebuyers shall be constituted within 7 days of approval of the plan and all the creditors, existing shareholders and stakeholders will be notified of the approval of the resolution plan. The term of the MC shall come to an end upon competition of construction of all apartments and handover of the flats to the homebuyers, which shall be done within 365 days from the approval of the resolution plan. Further, it was stated that within 44 days from the date of approval, the resolution applicant shall make payments towards unpaid CIRP costs. Vide affidavit dated 24.05.2023 the SRA submits that it shall bear the entire regulatory fees in compliance with the provisions of Regulation 31A of the CIRP Regulations, 2016. The Applicant further filed affidavit dated 24.05.2023 regarding the pending litigations and explanation regarding all reliefs and waivers sought in the Resolution Plan. However, this Tribunal is not granting any reliefs and waivers as sought by the Resolution Applicant. The Resolution Applicant to file necessary application before the concerned authorities for reliefs in accordance with law.

In the circumstance and for the aforesaid reasons, the instant IA bearing I.A. No.373 of 2022 is allowed and accordingly, the Resolution Plan dated 09.08.2022 (‘Resolution Plan’) submitted by M/s. Manivera Structure Private Limited (annexed to the Application as Annexure-I) is hereby approved. 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:

a. The moratorium imposed vide order dated 16.04.2021 in the main CP shall cease to have effect from the date of communication of this order.

b. The resolution professional shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the Board to be recorded on its database.

Further, the Resolution Professional is directed to handover the management, control and all the assets, documents/records in physical and/or digital form to the Resolution Applicant immediately and the resolution professional will cease to be resolution professional.