Modtech Tradecom Private Limited vs Basu & Co. Road Contractors Private Limited

Per: Harish Chander Suri, Member (Technical)

This Court convened via hybrid mode.

IA (IB) No. 64/KB/2022 is an application under section 30 (6) of the Code after approval of the resolution plan by the Committee of Creditors (“CoC”).

This Application was moved on 06 April, 2020 by Mr. Arun Kumar Gupta, Resolution Professional of Basu & Co. Road Contractors Private Limited by invoking the provisions of section 30 (6) of the Insolvency and Bankruptcy Code, 2016 (“the Code” or “IBC”) read with regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulation”) for approval of a Resolution Plan in respect of Basu & Co. Road Contractors Private Limited.

The underlying Company Petition in CP (IB)No.2050/ KB/ 2019 was filed by Modtech Tradecom Private Limited (‘Operational Creditor’) against Basu & Co. Road Contractors Private Limited, (“Corporate Debtor”), under section 9 of the Insolvency and Bankruptcy Code 2016 which was admitted vide order dated 19 February, 2020 in CP (IB)No.2050/ KB/ 2019 and Mr. Ananda Rao Korada, Insolvency Professional having Registration no. IBBI/IPA–002/IP-N00286/2017-18/10844 was appointed as the Interim Resolution Professional. Subsequently, this Adjudicating Authority vide its order dated 29 December, 2020 appointed Mr. Arun Kumar Gupta having Reg. No.IBBI/IPA-001/IP-P00013/2016-2017/10037 as the Resolution Professional under Section 22(3)(b) of the Code (‘Applicant’).

In terms of the Public Announcement, under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 issued by IRP, Mr. Ananda Rao Korada on the subject matter inviting claims from all creditors of Basu & Co Road Contractors Pvt. Ltd, IRP received 2 claims from the financial creditors and 13 claims from the operational creditors. The said public announcement was published on 22.2.2020 in Financial Express (English) and Aajkal (Bengali) newspapers circulated in West Bengal where the Registered Office of the Corporate Debtor is situated.

The RP received further claims and has upon verification issued the list of creditors on 10.3.2021. As per Regulation 13(1), the claims received under Regulation 12(2) upto the 90th day of CIRP commencement has to be verified within 7 days of the receipt of claim which is10.3.2021. As per IBBI Circular no. IBBI/CIRP/36/2020 dated 27.11.2020, the RP filed the list of creditors under clause (ca) of sub-regulation (2) of regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 on the IBBI website in the prescribed format after the 97th day of CIRP commencement on 13.3.2021 and circulated the list amongst the claimants/ creditors of the CD as per the list of creditors by an email on 13.3.2021 itself. Upon further verification and new information received by the Resolution Professional, the list of creditors was last updated on 15.7.2021. Presently there are a total of 22 creditors out of which 2 are Financial Creditors and 20 Operational Creditors.

The CoC was constituted on with 2 (two) Secured financial, i.e., HDFC Bank Limited and IndusInd Bank Limited, having 96.08% and 3.92% of voting right in CoC, respectively.

The Summary of List of Creditors as on 15.7.2021 is:

The applicant states that a total of Eleven CoC meetings have been held during the CIRP Period, as follows:

As discussed in the 10th COC meeting held on 13.12.2021, the 11^th COC meeting to vote upon the Resolution Plan was scheduled on 21.12.2021.

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, invitations in Form ‘G’ for Expressions of Interest ( “EoI”) from potential resolution applicants were issued. Form ‘G’ was published on 01 February, 2021 for submission of resolution plans for the Corporate Debtor. The last date for receipt of EOIs was 25 March, 2021. This was published newspapers in English (Financial Express) and Bengali (Aajkaal) in West Bengal. The notice was also published on the website of the Insolvency and Bankruptcy Board of India (“IBBI”).

The applicant submits that pursuant to the publication of the Form G the RP had received requests from 9 interested parties. The names of all such parties are as follows :-

RP informed the CoC that out of these EOI requestors only 3 interested parties had finally submitted EOI documents and refundable process participation fees of Rs. 1,00,000/- within the stipulated time which was 28.2.2021. The 3 provisional resolution applicants are :-

Thereafter, as decided in the 4th meeting of the CoC and also as per Form G, the RP had shared the Information Memorandum and COC approved Evaluation Matrix and other process documents for Request for Resolution Plans with all the 3 prospective resolution applicants above as per Regulation 36B of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 on 15.3.2021.

Further, the RP issued the final list of prospective resolution applicants as per Regulation 36A(12) on 25.3.2021. The Committee noted that all the 3 Resolution applicants were eligible as per the criteria laid down by the CoC and also under Section 29A of the IBC, 2016. The names of the final prospective 3 Resolution applicants are (1) Gaurav Enterprises, (2) Shyamsree Infrastructure Private Limited and (3) BJD Engineers India Private Limited.

The RP also received a request from BJD Engineers India Pvt Ltd, a prospective resolution applicant for extension of time to submit resolution plan twice by 15 days each till 30.4.21 and then till 15.5.2021 (both requests approved by COC and ratified in 5th COC meeting held on 17.5.21) and another request to extend the same by another month till 15.6.2021 (not approved by COC). RP also received a request from Gaurav Enterprises, another prospective resolution applicant for extension of time period for submission of resolution plan by 21 days after 15.4.21 (not approved by COC). In terms of CIRP Regulation No.36B(6), the RP may with the approval of the COC extend the timeline for submission of resolution plan. Accordingly the COC had approved on both the occasions the request and decided to extend the timeline for submission of resolution plan finally till 15.5.21.

An Expression of Interest was received by the RP from a consortium of Mr N Navaneeth and Sowmiya Constructions, Chennai after the last date for EOI as per Form G published on 1.2.21. The delay in submission of EOI has been condoned by Hon'ble NCLT Kolkata vide an order passed on 5.5.2021 in IA No.482/2021 and that the RP was directed to share the IM and other information with the new resolution applicant within 24 hours (order complied with eligibility also ascertained and no objections received too) and they were required to submit the resolution plan within the last date which is 15.5.2021. Out of the 4 prospective resolution applicants in the final list, the RP received resolution plans from only 3 resolution applicants before the stipulated deadline of 15.5.2021 by 6 p.m., namely:-

After a detailed discussion, the members of the CoC reached an agreement on all its observations with the Resolution Applicant and it was decided that BJD Engineers India Private Limited would submit another revised Resolution Plan document with all the amendments as discussed. The updated resolution plan document would then be submitted to the CoC for voting to approve the resolution plan and the RP would thereafter submit the same to the Hon’ble Adjudicating Authority for its approval.

All the 3 Resolution Applicants being Gaurav Enterprises, the consortium of N Navaneeth and Sowmiya Constructions and Shyamsree Infrastructure Pvt Ltd., had requested the RP to return the DD of Rs. 1,00,000 submitted at the time of submission of EOI. The RP had returned the same after approval from COC.

BJD Engineers India Private Limited (‘Resolution Applicant’) submitted the final draft of the resolution plan on 9.10.2021 which was circulated to the Financial Creditors for their verifications. No more amendment was suggested and the same version was voted upon in the 11^th COC meeting held on 21.12.2021.

The RP has filed an application under Section 43 being IA 401/KB/2021 on 30.3.2021 and another application under Section 66 being IA 441/KB/2021 filed on 12.4.2021 before this Adjudication Authority. Both these applications have been filed based on transactions determined by the RP as avoidable and have been filed within the timelines as specified in the CIRP Regulations. However, As per the Resolution Plan - All pending applications which are filed by RP and pending for adjudication prior to approval of plan by the Adjudicating Authority, including IA 401/2021 and IA 441/2021 for avoidable transactions shall be pursued by HDFC Bank to safeguard the interest of all financial and operational creditors. The RA or the corporate debtor will not pursue these applications. Any benefit which accrue to the corporate debtor subsequent to the adjudication of these applications shall act as pass through and the full benefit shall be distributed to the creditors in the same ratio as funds already being distributed now through this resolution plan subject to compliance of Section 30(2)(b) of the Code [Page 62 of the plan].

An application being IA 407/KB/2021 under section 14(1)(c) and section 74(2) of IBC has been filed by the RP with Hon’ble NCLT for the reversal of the interest amount that was debited by HDFC Bank and for return of the fixed deposits that were encashed after CIRP commencement. Depending on the outcome of the application, the amount proposed for payment to HDFC Bank and its claim admitted may change. Presently the amounts of claim admitted and payment proposed to HDFC Bank includes the value of principal amount of subject fixed deposits, since the encashment of Fixed Deposit (‘FD’) was done after CIRP commenced. Payment proposed to HDFC Bank over a period of 18 months is Rs.3.81 crore. The amount proposed to be paid to HDFC Bank now includes value of FD of Rs.0.99 crores plus further accrued interest on FD will also go to HDFC Bank in IA 407/2021.

As per Resolution Plan, if judgment of case number IA 407/2021 is pronounced in favour of HDFC Bank Limited, then the total amount payable to HDFC Bank Limited will reduce accordingly since this FD is already encashed by HDFC Bank and the money is already with the bank. However, as per the Resolution Plan - If judgment of case number IA 407/2021 pronounced in favour of hdfc bank limited then the total amount payable to hdfc bank limited within 60 days will be Rs. 14,42,964.24 and total resolution amount payable to hdfc bank limited will be Rs. 2,81,24,106.48 [page 31 of the plan].

The amount proposed in the Resolution Plan are tabulated below:

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:

Applicant submits that the Successful Resolution Applicant has submitted a affidavit of eligibility under Section 29A of the Code, which has been annexed as to the Application.

Applicant submits that the RP has submitted the certificate certifying and confirming the eligibility of the SRA under Section 29A of the Code, which has been annexed as to of the Application.

The Applicant has filed a compliance certificate in the prescribed form, i.e., Form ‘H’ incompliance with Regulation 39(4) of the CIRP Regulations which has been annexed as to with the Application.

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

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

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

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

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.

n. The CD be allowed to waive of any penal Granted in terms of the charges for past non-compliances of Ghanashyam filing/secretarial obligations by passing Mishra and Sons Pvt Ltd v appropriate directions to the Ministry of Edelweiss Asset Corporate Affairs, Government of India, Reconstruction Company Provident Fund Authority, Service Tax ^{55.2021 SCC OnLine SC 313 decided on 13.04.2021.} Ltd, wherein the Authorities and GST Authorities etc. to the Hon'ble Supreme Court has held in extent any secretarial filings, corporate para 95(i) that actions and/or any other actions filings, once a resolution plan is duly intimations, tax returns etc are required to be approved by the made in connection with any period prior to Adjudicating Authority under the approval of the resolution plan by the sub-section (1) of Hon'ble NCLT, the newly constituted board section 31, the claims as provided of directors shall be deemed to be fully in the resolution authorized to act on behalf of the Company plan shall stand frozen and will be and to undertake all such actions to comply binding on the with all the provisions of all laws, to the Corporate Debtor and its employees, extent possible and provided sufficient members, information is available, without imposing creditors, including the any fine or penalty or interest (by whatever Central Govt, any name called) for such delayed filing and State Govt or any local authority, treating the said filing, intimation or returns guarantors and (by whatever name called) to be made after other stakeholders.

On the date of effective date as if they have been filed on approval of time and in compliance with all laws, as resolution plan by the Adjudicating if within the respective due dates which had Authority, all such occurred in the past. Also the company will claims, which are not a part of not be denied, after the filing of such resolution plan, documents or returns or intimations, any shall stand extinguished and benefit which would have accrued to it had no person will be

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,

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.

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 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 also 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.

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, the CoC shall forfeit the EMD amount already paid by the Resolution Applicant.

Subject to the observations made in this Order, the Resolution Plan in question is hereby approved by this Bench. 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 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 the record and also unto the Resolution Applicant or New Promoters.

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 is to be submitted in the Office of the Registrar of Companies, West Bengal.

The Resolution Professional shall stand discharged from his duties with effect from the date of this Order.

The Resolution Professional is further directed to handover all records, premises/factories/documents 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/premises/factories/documents through the Resolution Professional to finalise the further line of action required for starting of the operation.

IA(IB) No. 64/KB/ 2022 along with C.P. (IB) No. 2050/KB/2019 shall stand 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.