M/s National Products vs M/s Delhi Control Devices (P) Ltd.

The present interlocutory application bearing IA No.3814 (PB) 2020 was moved on behalf of Mr. Ashok Kumar Gupta, Resolution Professional ("RP") of Delhi Control Devices Private Limited (CIN: U31200DL1984PTC017281), by Mr Abhishek Anand , Learned Counsel for the RP, under the provisions of Sections 30(6) and 31(1)of the Insolvency & Bankruptcy Code,2016 [hereinafter referred to as “the Code” or “IBC”] read with regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) for approval of the Resolution Plan in respect of Delhi Control Devices Private Limited (“Corporate Debtor”).

The corporate debtor is engaged in the business of design, developing and manufacture of power distribution products for electrical utilities.

The underlying Company Petition CP (IB) No.1567(PB)2018 filed by National Products under Section 9 of the Code for initiation of Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor was admitted by this Adjudicating Authority vide its order dated 15.02.2019 (“Admission Order”). On that date, i.e., 15.02.2019 (“Insolvency Commencement Date”) Mr. Ashok Kumar Gupta (IBBI Reg No. IBBI/IPA-003/IP-N00010/2016-17/10072) was appointed as IRP. Thereafter the parties entered into settlement and withdrawal application was filed which was allowed by this Adjudicating Authority vide order dated 07.03.2019 with the liberty to the Operational Creditor to file appropriate application if the terms of settlement are not complied with by the corporate debtor. Pursuant thereto, the settlement was dishonoured and the Operational creditor filed an application i.e. CA No. 1074 (PB) 2019 for revival of the main company petition which was allowed vide order dated 11.06.2019 and further vide order dated 05.07.2019, the applicant was directed to proceed with the CIRP of the corporate debtor. In the 1st CoC meeting dated 29.07.2019, the applicant was confirmed as RP with 95.21% of voting share.

The Applicant submits that the public announcement was made on 11.07.2019 in Economic Times (English) and Jansatta & Jagran (Hindi) (Dehradun Edition) and called for proof of claims from the creditors of the Corporate Debtor and informed lenders to submit their claims as envisaged under the Code.

The details of claims submitted are as follows:

The RP submits that a total of twenty-four CoC meetings have been held during CIRP period as follows:

The Applicant submits that invitations for Expression of Interest (EoIs) in Form-G was issued on 25.08.2019 by way of a public notice ("Public Notice") whereby prospective resolution applicants (PRAs) were invited to submit the EoIs for submitting a resolution plan of the Corporate Debtor on or before 12.09.2019. Thereafter revised Form G was published thrice on 12.10.2019, 22.10.2019 and 30.01.2020.Pursuant to it, the applicant received 3 EoIs and the last date for submission of refundable EMD amount was 29.02.2020.

Thereafter, in the 9th CoC Meeting held on 19.03.2020, it was apprised by RP to the members of COC that two resolution plans were received from two PRAs, viz. Statcon Electronics India Ltd and M/s Sunrise Industries.

The appointed registered valuers have submitted their reports providing the average fair value and average liquidation value of the Corporate Debtor as per the valuation report which are as follows:

On 11.05.2020, in the 11th COC meeting, the two PRA's has submitted their Resolution Plan along with DD of Rs 50 Lakhs besides existing EMD of Rs. 10 lakhs. The CoC decided to seek further revised and improved resolution plans from the RAs which was further extended twice at the request of the RAs with the consent of CoC.

After due discussions and deliberations on various occasions, in the 21st COC meeting dated 19.08.2020, it was apprised to COC that the prospective Resolution Applicants have submitted their revised and improved resolution Plans and in view of the amendment in Regulation 39(3) of CIRP Regulations, 2016 both the plans were put to vote simultaneously and the Resolution Plan which receives the highest votes was to be considered as approved and the CoC members also had to decide a tie breaker formula before placing two or more resolution plans for voting. The COC decided that in case of tie breaker situation; the applicant will convene a COC on urgent notice of one day and re-conduct voting. It is further submitted that the Resolution Applicants were scored on Evaluation Matrix and Statcon Electronics India Limited secured the highest score.

During the 21th CoC meeting dated 19.08.2020, the RP placed the agenda concerning Regulation 39B, 39C and 39D of CIRP Regulations before the members of CoC in which CoC estimated the liquidation cost and to provide interim finance for liquidation expenses, if required.

The CoC deliberated in accordance with section 30(3) of the Code read along with Regulation 39(3) of CIRP Regulations during the 22nd meeting of the CoC held on 27.08.2020. The feasibility and viability of the resolution plans was also discussed in the meeting by the CoC. The e-voting on the compliant resolution plan commenced at 11.00 am on 28.08.2020 and concluded at 03:00 hours on 02.09.2020.

The Resolution Plan submitted by the Successful Resolution Applicant i.e Statcon Electronics India Limited was approved by a majority of 80.60% voting share by the CoC in the 22nd COC meeting dated 27.08.2020 and the application for approval of the resolution plan by this Adjudicating Authority was filed by the RP on 09.09.2020.

The successful Resolution Applicant i.e Statcon Electronics India Limited is one of the leading supplier of Integrated Power Supply Systems (IPS), hybrid solar inverter etc and is involved in manufacturing and trading of electrical and electronics items. It is further stated in the Resolution Plan that the Resolution Applicant will continue with all existing business of corporate debtor and continue to complete the orders in hand for the agreement executed/ MOU pending as on date of this Resolution Plan or any other previous date.

The amount proposed in the Resolution Plan are tabulated below:

The Applicant has submitted the details of various compliances as envisaged by the Code and the CIRP Regulations which a Resolution Plan is required to adhere to, as follows:

The Applicant submits that the successful resolution applicant has submitted an affidavit in regard to the eligibility under section 29A of the Code, as required by Regulation 39(1)(a) of the CIRP Regulations. An undertaking has also been submitted by the successful Resolution Applicant, as mandated in terms of regulation 39(1)(c) of the CIRP Regulations.

The Applicant has filed a Compliance Certificate in prescribed Form, i.e Form 'H' in compliance with Regulation 39(4) of the CIRP Regulations^{11.Page 512-522 of the Application}. The RP has issued the Letter of Intent to the Successful Resolution Applicant on 03.09.2020. Evidence of receipt of performance bank guarantee of Rs. 110 Lakhs in form of FDR as required under regulation 36B (4A) is also placed on record.^{22.Page 526 of the Application}

The Applicant submits the relevant information about the amount claimed, amount admitted, and the amount proposed to be paid by the Successful Resolution Applicant, i.e., Statcon Electronics India Limited, under the said Resolution Plan is tabulated asunder:

The Resolution plan size is approximately ₹24,00,00,000/- (Rupees Twenty Four crores only) . The Resolution Plan defines "Effective Date" as the date on which the Adjudicating Authority approves the Resolution Plan.

The Resolution Plan also provides for details of management and control, implementation and supervision of the Resolution Plan and term of plan and the same is already set out in Para 5.1(c) & (d) supra.

The Resolution Plan provides in Para 9(vi) that any outcome proceed/ amount realized on pursuant to Fraudulent and avoidance transaction application filed before this Adjudicating Authority shall be distributed to Secured FC as per provision of the Code or as per direction of this Adjudicating Authority. In case the same is not pursued by the FC, then in that case RA will pursue the matter and if any outcome made, then 50% of the recovery amount will be paid to FC after deducting all expenses made by RA.

The SRA has prayed for the reliefs, waivers and concessions as enumerated under the Resolution Plan approved by the CoC, namely, that from the plan approval date all inquiries, investigation and proceedings, whether civil or criminal, suits, claims, disputes, interests and damages in connection with the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future in relation to any period prior to the plan approval date, or arising on account of implementation of this Resolution Plan, shall stand withdrawn, satisfied and discharged. From the date of approval of the 'Resolution Plan', the Resolution Applicant shall be legally authorized to seek appropriate orders from respective authorities/courts/tribunals for renewal of licenses/withdrawal/dismissal or abetment of the proceedings as the case may be.

On examination of the Resolution Plan, on 27.09.2022, a query was raised by this Adjudicating Authority regarding the claims proposed to be paid to the workmen and employees in the Resolution Plan. It was conceded by the learned Counsel for SRA that they will ensure 100% payment of the workmen and employees dues i.e. 80 Lakh Rupees instead of 20 Lakhs. The Resolution plan size now stands at approximately ₹24,60,00,000/- (Rupees Twenty Four crores Sixty Lakhs only) and the payment schedule there by stands amended as follows:

On hearing the submissions made by the Ld. Counsel for the Resolution Professional and perusing the record, we find that the Resolution Plan has been approved by the CoC with 80.60% of the members voting in favour of the Resolution Plan. As per the CoC, the Plan meets the requirement of being a viable and feasible revival of the Corporate Debtor. By and large, there are provisions 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.

The reliefs, concessions and waivers sought by the Successful Resolution Applicant will be dealt with strictly as per law.

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.

In case of non-compliance of this order or withdrawal of Resolution Plan within the stipulated time, in addition to other consequences which follow under law, the CoC shall forfeit the EMD amount already paid by the Resolution Applicant as well as the Performance Bank Guarantee.

Subject to the observations made in this Order, the Resolution Plan of ₹24,60,00,000/- (Rupees Twenty Four crores Sixty Lakhs only) is hereby approved. The Resolution Plan shall form part of this Order.

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

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

The Resolution Professional shall submit the records collected during the commencement of the proceedings to the Insolvency & Bankruptcy Board of India for their record.

IA (IB) No.3814(PB) 2022 and the main Company Petition, i.e., CP (IB) No. 1567(PB)/2018 shall stand disposed of accordingly.

This application has been filed by Greater Noida Industrial Development Authority under Sec 60(5) IBC, 2016 against the decision of RP for considering the applicant/ GNIDA as Operational Creditor and not informing for participating in a meeting of COC.

The issue of considering the applicant as Financial Creditor instead of Operational Creditor does not need consideration as the claim of the applicant has already been considered in approved Resolution Plan and further in the letter dated 05.02.2021, the resolution Applicant has also given an undertaking to pay the applicant as per the proportionate ratio given to other Financial Creditors in the Resolution Plan, so no prejudice will be caused to the applicant.

It was urged by the learned Counsel for Greater Noida Authority that the lease rentals are due for the CIRP period which have to be included in CIRP cost as per Regulation 31(b) of CIRP Regulations, 2016. It is fairly conceded by the Learned Counsel for RP that the same has been included in the CIRP costs and will be paid to Grater Noida Development Authority within 60 days of the approval of Plan.

In view of the above, IA No. 380(PB)2021 is ordered as above.

This application has been filed by RP against Madya Pradesh Poorv Kshetra Vidyut Vitran Company. Ltd. And Karnataka Bank Ltd. seeking ad interim injunction against the bank guarantee and direction to the Respondents not to act further in pursuance of the notice dated 27.11.2019.

At this juncture, as the resolution Plan has already been approved in IA (IB) No. 3814/2021 supra, no useful purpose will be served in keeping this application pending. Therefore, the present application being IA No. CA 2891/2019 293/20210 becomes infructuous and is dismissed as such.

The present application has been filed under Sec 43 and 66 r/w Sec 25(2)(j)IBC, 2016 with the prayer to declare the transaction entered into by promoters and suspended management of the corporate debtor as preferential under Sec 43 and certain Transactions as fraudulent under Sec 66 as same were done with the intent to defraud the creditors. As

After perusal of application and in view of the direction of Hon'ble Supreme Court in the case of "Anuj Jain Interim Resolution Professional vs. Axis Bank Limited &Ors. in Civil Appeal Nos.8512-8527 of 2019", it is directed that the present application be segregated and separate applications be filed for each kind of transactions and same be done within four weeks.

Further as the resolution plan has already been approved, thus present matter needed to be pursued further as per the clause inserted in Para 9(vi) of the Resolution Plan and memo of parties to be amended accordingly. With the above directions, the present application stands disposed of.

Certified copy of this Order be issued on demand to the concerned parties, upon due compliance.

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

A copy of this Order shall be filed by the Resolution Professional with the Registrar of Companies, NCT of Delhi & Haryana.

The Resolution Professional shall stand discharged from his duties with effect from the date of this Order, save and except those duties that are enjoined upon him for implementation of the approved Resolution Plan.

The Resolution Professional is further directed to hand over all records, premises/ factories/documents available with it to the Resolution Applicant to finalise the further line of action required for starting of the operation. The Resolution Applicant shall have access to all the records and premises through the Resolution Professional to finalise the further course of action required for starting of operations of the Corporate Debtor.

The Registry is directed to send 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.