Mr. Amit Gupta vs Kundan Care Products Limited & Anr.

- (a) Allow the Applicant to withdraw C.A. No. 1526 of 2019 in C.P. No. (IB) 940/ND/2018 along with the Affidavit dated 2 November 2021 and consider the present application as a fresh/consolidated application for the purposes of adjudication for approval of the Revised Resolution Plan, being the resolution plan submitted on 12 November 2019 as modified by the addendums dated 13 November 2019 and 17 September 2021; - (b) Allow the present application and approve the resolution plan submitted for the Corporate Debtor by Kundan Care Products Limited (Successful Resolution Plan) in terms of Section 31(1) of the Code; - (c) Direct that the resolution plan approved/sanctioned by this Hon'ble Adjudicating Authority shall be binding on the Corporate Debtor, its employees, members/ shareholders, creditors, guarantors and other stakeholders including Central Government, any State Government or any other local authority to whom 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 involved in the Successful Resolution Plan;

(d)

Pass such other or further order(s) as this Hon'ble Adjudicating Authority may deem fit and proper in the facts and circumstances of present case.

NATIONAL COMPANY LAW TRIBUNAL NEW DELHI BENCH

(IB)-940(ND)2018

PRESENT: MS. INA MALHOTRA HON'BLE MEMBER(J)

ATTENDANCE-CUM-ORDER SHEET OF THE HEARING BEFORE NEW DELHI BENCH OF THE NATIONAL COMPANY LAW TRIBUNAL ON 06.09.2019.

NAME OF THE COMPANY: M/s. Astonefield Solar (Gujarat) Pvt. Ltd.

SECTION OF THE COMPANIES ACT: 10 of IBC, 2016

S.NO.	NAME	DESIGNATION	REPRESENTATION	SIGNATURE

Present for the Petitioner: Mr. Krishnendu Datta, Mr. Prithvi Garg, Mr. Siddharth Mehta and Ms. Niharica Khanna, Advocates

Present for the Respondent: Mr. Savar Mahajan, Advocate

ORDER

CA 1119/2019 has been filed under Section 60(5) by Resolution Applicant praying for directions to the RP to provide the information memorandum and direct him to entertain the resolution plan. Ld. Counsel appearing for the Resolution Applicant submits that 270 days after excluding of certain period granted by the Bench shall expire on 20^th September, 2019.

Ld. Counsel for the Resolution Applicant submits that they can give their proposal before the next COC is constituted. The information memorandum be provided within 1 day.

The fact that no plan being approved as yet, it may be expedient and in the interest of the resolution process to consider the best deal. Accordingly, due permission is granted. The date of COC is being communicated to the Resolution Applicant.

(Tajana)

It is also been pointed out that in terms of the notification, additional 90 days period commenced from 16^th August, 2019. 330 days therefore expire around 15^th November 2019.

Application stands disposed off.

(Ina Malhotra) Member (J)

“196.

This Court had been informed that EXIM Bank and PFCL represent 98 per cent of the financial creditors of Astonfield. In view of the above agreement which has been arrived at, we deem it appropriate to exercise our jurisdiction under Article 142 of the Constitution of India for a one-time relief and direct that:

(i)

The A-CoC shall convene and take a decision on the proposal submitted by Kundan Care on 5 July 2021, and the response by EXIM Bank and PFCL dated 12 July 2021;

(ii)

In the event, that a revised Resolution Plan is agreed upon by the A-CoC, it shall be submitted through the A-RP for the approval of the NCLT within a week thereafter. In the event that a revised Resolution Plan is not agreed upon, the original Resolution Plan, as submitted before the NCLT on 15 November 2019, shall prevail; and

(iii)

The NCLT shall dispose of the application with the revised Resolution Plan expeditiously and preferably within a period of two weeks from the date of receipt of an application from the A-RP for the approval of the revised Resolution Plan...”

“RESOLVED THAT pursuant to Hon’ble Supreme Court directions vide order dated 13 September 2021 in the Civil Appeal No. 3560 of 2020 in the matter of Kundan Care Products Limited v/s Mr. Amit Gupta & Ors., approval of the members of the Committee of Creditors be and is hereby accorded to approve the revised Addendum no. 3 dated 17th September 2021 to the Resolution Plan dated 12 November 2019 submitted by Kundan Care Products Limited, Resolution Applicant vide email 17th September 2021 with reference to their earlier communication dated 5 July 2021.

FURTHER RESOLVED THAT Mr. Amit Gupta, Resolution Professional be and is hereby authorized to submit the decision as approved by the members of Committee of Creditors to National Company Law Tribunal, New Delhi Bench for its approval.”

Voting Results – Resolution wise [1]

“6.3.1

The total consideration is proposed to be paid/ settled to all stakeholders in cash and to be infused by the shareholders/ promoters (of SRA) in the form of Equity / Shareholder Contribution with Equity like features/ Redeemable Optionally Convertible Debentures/ Unsecured Subordinated Debt sourced from SRA, SRA’s associate/group companies/family members/ Internal Accruals as per sole discretion of the SRA. Any instrument shall be ranked subordinate to the Secured Debt. (Ref: Annexure 2 @ pg. 52 Vol 1)

6.3.2

The SRA shall repay the debt of the CD from own funds. Further the SRA has credit limit facility available from Punjab National Bank and Canara Bank amounting to INR 85 Crores which can be utilized towards the repayment of the debts of the Corporate Debtor. (Ref: Annexure 2 @ pg. 49 Vol 1) (Net Worth of the SRA as on 31 March 2019 - INR 135,23,92,186.) (Annexure 2 @ pg. 49 Vol. 1)

6.3.3

SRA has availed a Comfort Letter from a Non-Banking Finance Company (NBFC) - Gogia Leasing Limited for the purpose of Capital Expenditure to be made at the Plant which amounts to INR 9 Crore. The Asset Under Management of the NBFC is INR 258 Crores for the year ending 31 March 2018. (Ref: Annexure 2 @ pg. 78 Vol 1)”

6.2.

A comparison table, which indicates the amounts offered under Old Resolution Plan and the revised Resolution Plan (i.e. Old Resolution Plan as amended by way of Addendum 3) (“New Resolution Plan”) is:

Particulars	Old Resolution Plan	New Resolution Plan (in INR) (in lakhs) (at actuals)
CIRP Costs	250
Operational Creditors	50	50
Statutory Liabilities	0.44	0.44
Secured Financial Creditors (Principal)	2950	2450 (24.5 Crore)

	(29.5 Crore)1
Total	32.5 Crore (including CIRP Cost)2	25.0044 Crore + CIRP Cost on actuals
Payment to Secured Financial Creditors
(i) Upfront payment	1350 (13.5 Crore)3	1450 (14.5 Crore)
(ii) Deferred payment (principal)	16004 (16 Crore)	10005 (10 Crore)
(iii) Interest on deferred payment	4816 (4.81 Crore) [As calculated by the RP]	3017 (rounded off) (3.01 Crore) [As calculated by the RP]
Secured Financial Creditors (Total payment, including interest)	3431 (34.31 Crore)	2751 (rounded off) (27.51 Crore)8
Total Payout (A)	3481.44 (34.81 Cr) (without CIRP Cost) [3731.44 including CIRP Cost of INR 2.5 crores]	2801.44 (28.01 Cr) (without CIRP Cost)9

Note:

i.

Only the total amount proposed towards secured financial creditors has been revised/modified. Rest other amounts payable under the original resolution plan (to OCs and others) submitted remain the same. ii. Capital expenditure of INR 9 crore remains same in the Old Resolution Plan and the New Resolution Plan iii. The total payment proposed to secured financial creditors under the earlier Resolution Plan was INR 34.31 Crore which comprised of principal of INR 29.5 Crore and interest on deferred payment at the rate of (9.25%) p.a. amounting to INR 4.81 Crore. Whereas the total payment proposed to secured financial creditors through Addendum 3 is INR 27,50,62,500 (approx. INR 27.5 Crore) which comprises of principal payment of INR 24.5 and interest on deferred payment at the rate of (9.25%) p.a. amounting to INR 3,00,62,500 (approx. INR 3.01 Crore). iv. Hence, the principal amount stands reduced from INR 29.5 Cr to INR 24.5 Cr (i.e. 5 crore reduction). On account of reduction in deferred component, the interest payout stands reduced from INR 4.81 Crore to INR 3.01 Crore (i.e. reduction of INR 1.8 Crore).

v.

The revisions/modifications contained in the Addendum dated 17 September 2021 shall be read and construed as an integral part and parcel of the Resolution Plan. Subject to the revisions/modifications contained in the addendum dated 17 September 2021, the Resolution Plan shall continue to be binding and operative on all stakeholders, subject to approval.

7.

The amounts provided for the stakeholders under the Resolution Plan is as under:

(Amount in Rs Lakhs)

Sr. No.	Category of Stakeholder*	Amount Claimed	Amount Admitted	Amount Provided under the Plan#	Amount Provided to the Amount Admitted (%)
1	Dissenting Secured Financial Creditors	0	0	0	0
2	Other Secured Financial Creditors	7300	7279	3431	47.14
3	Dissenting Unsecured Financial Creditors	52.44	52.44	0	0
4	Other Unsecured Financial Creditors	765.76	477	0	0
5	Operational Creditors	3383	186	50	26.88
	Government	0	0	0.44	N/A
Total		11501.2	7,994.44	3481.44	43.55

*If there are sub-categories in a category, please add rows for each sub-category.

Amount provided over time under the Resolution Plan and includes estimated value of non-cash components. It is not NPV.

8.

The interests of existing shareholders have been altered by the Resolution plan as under:

Dear Sir,

Sub: Resolution Applicants' undertaking under the Insolvency and Bankruptcy Code (Amendment) Act, 2018

In furtherance of the Request for Resolution Plan dated 06.03.2019 and in view of Section 29A of the IB Code, [I/We] ("Resolution Applicant") state, submit and confirm as follows:

1.

[I/We] hereby unconditionally state, submit and confirm that [I/We] are not disqualified from submitting a Resolution Plan in respect of Astonfield Solar (Gujarat) Private Limited, pursuant to the provisions Section 29A of the IB Code and/or otherwise.

2.

[I/We] hereby submit and confirm that I/We or any of our related parties have not failed to implement, neither contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past.

3.

[I/We] hereby state, submit and declare that none of (a) [me / us] being the Resolution Applicant; (b) any other person acting jointly with [me / us]; (c) any person who is a promoter and/or in the management and/or control of the Resolution Applicant; (d) any person who shall be the promoter and/or in management and/or control of the business of Astonfield Solar (Gujarat) Private Limited during implementation of the Resolution Plan; and/or (e) the holding company, subsidiary company, associate company or related party of any person referred to in (c) and/or (d).

(a)

is an undischarged insolvent;

(b)

is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949;

(c)

at the time of submission of the resolution plan has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 or the guidelines of a financial sector regulator issued under any other law for the time being in force, and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor;

(d)

has been convicted for any offence punishable with imprisonment –

(i)

for two years or more under any Act specified under the Twelfth Schedule; or

(ii)

for seven years or more under any law for the time being in force;

(e)

is disqualified to act as a director under the Companies Act, 2013;

(f)

is prohibited by the Securities and Exchange Board of India from trading in securities or assessing the securities markets;

(g)

has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code.

For Handan Care Products Adml. Sign.

(h)

has executed a guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code and such guarantee has been invoked by the creditor and remains unpaid in full or part;

(i)

is subject to any disability corresponding to (a) to (h) above under any law in a jurisdiction outside India;

(j)

has a connected person not eligible under clauses (a) to (i)

Yours sincerely,

For and on behalf of Afghan Care Products Ltd For Handan Care Products Ltd, Sanjay, India Director

9.

The compliance of the Resolution Plan is as under:

18 Term Of The Plan And Implementation Schedule

18.1

The term of this Resolution Plan shall be from the Effective Date until the Completion Date.

18.2

The indicative implementation schedule for this Resolution Plan is set out below:

Sr. no	Activity	Timeline (Days)
1.	Effective Date	Approval of this Resolution Plan by the Hon'bleNCLT
2.	Completion Date	Effective Date + 60days(maximum)

18.3

The aforementioned timeline is indicative and a delay on account of regulatory or other reasons shall not be considered to be a contravention of this Resolution Plan, if all the steps contemplated in the plan are completed. However, any approvals or permission required by the Resolution Applicant, under any law time being in force, shall be obtained from relevant statutory and regulatory approvals in time specified under that law, but in no event later than 12 months from the Effective Date.

Reconstituted Board of Directors to file/ upload the documents relating to their appointment as Directors.

6.5.4

On dissolution of monitoring committee, as mentioned in earlier chapters, the Reconstituted BoD shall assume their powers as per the provisions of the Companies Act, 2013.

ORDER

The Bench sought certain clarifications as detailed below from the Applicant in IA-5467/2021/ Resolution Professional :

1.

As per the provisions of Section 30(2), the Financial Creditors, who do not vote in favour of the Resolution Plan, shall not be paid less than the amount to be paid to such Creditors in accordance with Section 53(1) of IBC in the interest of the Corporate Debtor. In the instant case, we find that there is one "Dissenting Unsecured Financial Creditor" namely, M/s Astonfield Renewables Pvt. Ltd. having voting percentage of 0.72% and "Other Unsecured Financial Creditors having an admitted claim of Rs. 477 lakhs are also being paid Nil value. Whereas, the Operational Creditors, who come lower in priority in terms of the provision under Section 53 are getting paid Rs. 50 lakhs. What is the clarification/justification for paying the 'Nil' value to the only "Dissenting Unsecured Financial Creditor" and "Other Unsecured Financial Creditors" ?

2.

Whether the Unsecured Financial Creditor namely, M/s Astonfield Renewables Pvt. Ltd. is a related party ?

3.

What is the time period and source(s) of funds by which the Successful Resolution Applicant will infuse capital investment of Rs.9 crores in the Corporate Debtor ?

4.

The Applicant in IA-5467/2021/ Resolution Professional is directed to file the query-wise response by way of an Affidavit by tomorrow i.e., 17.12.2021 both in softcopy on the DMS and physical copy to the Bench Officer.

Applicant's Response:

4.1.1

Clause 6.3.4(v) of Successful Resolution Plan states that “It is proposed that the claims of the dissenting financial creditors shall be paid out of Total Consideration to the Financial Creditors laid out in this Resolution Plan. The distribution of the consideration to the dissenting Financial Creditors shall be in accordance with Section 30(3) along with Section 53(1) of the Code, at the sole discretion of the CoC” (Ref: Annexure 2 @ page 73 of the Plan Approval Application).

4.1.2

As mentioned in the Form H, the total admitted claim of the secured financial creditors of the Corporate Debtor is INR 72.79 crores while the Liquidation Value of the Corporate Debtor is INR 28.77 cores. Hence, in the event of liquidation of the Corporate Debtor, the distribution to be made by the Liquidator as per Section 53(1) of the Code will not be sufficient to even discharge the claims of the Secured Financial Creditors in full. In view of these facts, in the event of liquidation of the Corporate Debtor, no amounts would be left to be distributed either to the dissenting unsecured financial creditors or the other unsecured financial creditors.

Applicant's Response

4.2.1

ARPL filed its claim with the RP in Form C dated 8 April 2019 as per which ARPL has, on an affidavit, declared that ARPL is not a related party of the Corporate Debtor as defined under Section 5(24) of the Code and is eligible to be a part of the CoC by virtue of proviso to Section 21(2) of the Code. Further, while verifying the claim form submitted by ARPL with me, I had reviewed the relationship of ARPL with the Corporate Debtor and concluded that ARPL is not a related party of the Corporate Debtor as per the Code (Ref: Annexure 8 @ page 134 of Plan Approval Application). A copy of the claim form is attached as Exhibit A.

Applicant's Response

4.3.1

As per the Successful Resolution Plan, the Successful Resolution Applicant has committed to infuse an amount of INR 9 crores within 1 year from the Cut Off date. I understand that the Cut Off date is the Completion (i.e. 15 days from the date plan the resolution plan is approved by this Hon'ble Adjudicating Authority) and the same has been confirmed by the Resolution Applicant by way of its email dated 17 December 2021. A copy of the email dated 17 December 2021 attached as Exhibit B.

“35.

Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan “as approved” by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code.”

“38.

Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with 31(1) of the I&B Code. No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (NCLAT) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters “other than” enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I & B Code and not to act as a court of equity or exercise plenary powers.”