Mr. Ashok Kumar Golechha vs Sovika Aviation Services Private Limited

[PER: K. R. SAJI KUMAR, MEMBER (JUDICIAL)]

The instant I.A. (IBC)(Plan) No. 79 of 2024 has been filed by Mr. Ashok Kumar Golechha, the Applicant/Resolution Professional (RP) of ‘Sovika Aviation Services Private Limited’, the Corporate Debtor (CD), under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (IBC/Code), seeking approval of the Resolution Plan, under Section 31(1) of the IBC, submitted by ‘PRYM Solutions Private Limited’, the Successful Resolution Applicant (SRA), and approved by 100% of the voting share of the Committee of Creditors (CoC) of the CD.

This Tribunal initiated the Corporate Insolvency Resolution Process (CIRP) of the CD in C.P. (IB) No. 628/MB/2022 filed by ‘Air India Limited’, under Section 9 of the IBC, vide Order dated 30.08.2023. Mr. Hajib Raghavan Vishwanath, was appointed as the Interim Resolution Professional (IRP). The IRP caused public announcement in Form A on 04.09.2023, informing of the commencement of the CIRP of the CD, thereby inviting claims from creditors, with the last date for submission of claims as on 13.09.2023 to enable the constitution of the CoC. In furtherance of the public announcement, the IRP received claims from the creditors of the CD, and accordingly, the CoC was duly constituted.

Upon constitution, the 1st meeting of the CoC was convened on 30.10.2023 with one financial creditor, viz., Union Bank of India. The IRP, in accordance with Regulation 27 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), appointed two registered valuers to determine the fair value and liquidation value of the CD for each category of the assets, i.e., Land & Building; Plant & Machinery; and Financial Assets, in terms of Section 35 of the CIRP Regulations.

The IRP published invitation for Expression of Interest (EOI) in Form G on 22.11.2023, in terms of Regulation 36A of the CIRP Regulations, and the last date for submission of EOIs was 06.12.2023. As a result, two (2) EOIs were received by him.

In the 4th CoC meeting held on 08.12.2023, the IRP apprised the CoC about the details of the responses received in response to the Form G published on 22.11.2023. Further, the CoC also resolved, with 100% majority, to replace the IRP with Mr. Ashok Kumar Golechha as the Resolution Professional (RP) to conduct the CIRP. This Tribunal confirmed his appointment by order dated 06.02.2024.

In the 6th CoC meeting held on 26.02.2024, the RP placed the resolution plan received from AKB Ventures Private Limited. However, the CoC resolved to issue a fresh Form G. The RP thereafter issued fresh Form G on 01.03.2024 and the last date for submission of EOIs was stipulated as 16.03.2024, and also the last date of submission of the plans as 01.05.2024.

In the 7th CoC meeting, which was held on 05.04.2024, the RP apprised the CoC that pursuant to the issuance of fresh Form G, total 29 EOIs were received and the EMD of Rs.2,00,000/- was received from 10 persons. The RP thereafter issued the final list of Prospective Resolution Applicants (PRAs) on 28.03.2024, and simultaneously issued the Request for Resolution Plan (RFRP) to the eligible PRAs.

In the 9th CoC meeting held on 04.05.2024, the RP apprised the CoC that four (4) resolution plans had been received. During the 10th CoC meeting on 10.05.2024, the PRAs were invited to present their plans; address queries; and participate in the preliminary discussions and negotiations. All the PRAs were requested to submit revised resolution plans by 15.05.2024.

In the 12th CoC meeting held on 29.05.2024, the RP apprised the CoC of the progress in the CIRP after the last meeting on 18.05.2024. The PRAs submitted revised resolution plans, which were placed before the CoC for consideration and for e-bidding for the approval of the CoC. The e-bidding was scheduled on 24.05.2024. Furthermore, by email dated 24.05.2024, the PRAs were requested to submit the revised financial proposals, based on the e-bidding process conducted, on or before 27.05.2024. Before the e-bidding, two PRAs, Mindsweep Ventures LLP and Gautam Fathepuria expressed their desire to withdraw their resolution plans and requested refund of the EMD amount deposited. Accordingly, the EMD deposited by both the PRAs was refunded. Further, the two remaining PRAs, AKB Ventures Private Limited and PRYM Solutions Private Limited, participated and placed their bids. In the same CoC meeting, after detailed deliberations and further negotiations, the PRAs were requested to submit their final resolution plans for being placed for voting. The e-voting was opened from 01.06.2024 to 07.06.2024.

In the 14th CoC meeting held on 20.07.2024, the RP apprised the CoC of the e-voting on the revised resolution plans. Union Bank of India, the sole member, requested for extension for e-voting till 22.07.2024. Further, on 05.07.2024, they requested an addendum from both the PRAs with respect to the treatment of the Personal Guarantee given in the matter.

The Resolution Plan, read with the addendum dated 06.07.2024 submitted by ‘PRYM Solutions Private Limited’, was approved by the CoC with 100% of voting share through e-voting on 22.07.2024. The Applicant issued Letter of Intent to the SRA on the same day. The bidding process concluded with the highest bid at Rs. 4,59,00,000/- by PRYM Solutions Private Limited.

The Applicant submits that the Resolution Plan approved by the CoC is in compliance with the legal requirements mandated under Sections 30(1), 30(2)(a), 30(2)(b), 30(2)(c), 30(2)(d), 30(2)(e) and 30(2)(f) of the IBC, read with Regulations 37 and 38 of the CIRP Regulations.

It is relevant to refer to the extensions and/or exclusions sought/granted for the CIRP of the CD, as under:

In view of the above, it is seen that this Application for approval of the Resolution Plan filed on 06.08.2024, is within the CIRP period as allowed by this Tribunal.

It is stated that PRYM Solutions Private Limited, (having CIN No. U72200MH2022PTC374857) and registered address: C 104, Floor 10, Plot 210, C Wing, Mittal Tower, Barrister Rajani Patel Marg, Nariman Point, Mumbai, Maharashtra- 400021, is known by its brand name Salam Kisan, and was founded in 2022 by Ms. Dhanashree Mandhani. PRYM Solutions Private Limited is a pioneering tech-enabled agricultural platform committed to transforming the landscape of Indian agriculture. With a core vision of cultivating a future of abundance, they are dedicated to empowering farmers through data-driven insights, fostering sustainability, and democratising access to advanced agricultural technologies.

It is further stated that PRYM Solutions Private Limited serves as an integrated agricultural ecosystem, offering comprehensive assistance from pre-sowing preparations to post-harvest activities. They not only empower farmers but also contribute to creating a more connected, sustainable, and transparent agricultural ecosystem. In less than a year, Salam Kisan has engaged with 59,456 farmers across more than 250 centers in 7,000 villages, covering more than 69 crop varieties and impacting 80,000 acres of farmland.

The Resolution Plan addresses the causes of default by the CD. The CD was the sole Cargo Agent of Go Airlines (India) Ltd., and Tata SIA Airlines Limited (Vistara). The Company, Go Airline (India) went into voluntary liquidation vide order of the NCLT dated 10.05.2023, which affected the operation of the CD. The CD had entered into an agreement with Air India Limited and Air India Air Transport Services Limited (a subsidiary of Air India Limited) for availing X-Ray screening of cargo at Pune Airport. Accordingly, invoices were issued by the party; however, the CD failed to make payment against the same. Hence, an application under section 9 was initiated by Air India Limited and was admitted by this Tribunal on 30.08.2023.

The SRA proposes to pay the actual unpaid CIRP cost within 30 days from the Trigger date, which shall be paid in priority to the payment of other debts of the CD.

It is submitted that if the approved unpaid CIRP cost is less than Rs.28 Lakh as provided in the Plan, then the difference amount after paying the unpaid CIRP cost shall be paid to the financial creditor. If the approved unpaid CIRP cost is more than Rs.28 Lakh as provided in this Plan, then the difference amount over the approved unpaid CIRP cost shall deducted from the amount to be paid to the financial creditor.

The cash and cash equivalents of the CD on the Effective Date shall be used towards the payment of CIRP Cost. If there is a shortfall, the SRA will infuse to meet the shortfall.

The total amount admitted by the RP towards Workmen and Employees is NIL. Thus, the SRA does not propose any payment towards the settlement pertaining to the Workmen and Employees.

- (a) The total amount admitted by the RP towards Government Dues is Rs.9,37,95,623/-. The SRA proposes to pay Rs.1,00,000/- within 30 days from the Trigger Date, as full and final payment towards operational creditors (Government Dues). - (b) The total amount admitted by the RP towards Other Operational Creditors is Rs.86,86,47,208/-. The SRA proposes to pay Rs.1,50,000/- within 30 days from Trigger Date, as full and final payment towards other operational creditors.

It is submitted that, pursuant to the Information Memorandum received from RP, no claims were obtained from any related parties. The SRA, therefore, proposes to pay NIL as the settlement towards Other Creditors (Related Parties).

An amount of Rs. 1,00,000/- has been set aside for any contingent liabilities which may arise/crystallise after the Effective Date that relates to the period prior to the order of the NCLT approving the resolution plan, whether it is mentioned or not in the Plan, subject to a maximum of Rs. 5,000/- per case on issue of full and final settlement letter, no dues letter, receipt of the amount paid and withdrawal of all litigation including delayed payment interest and penalty. The payment will be made only against receipt of No Dues/Full and Final settlement within a span of 2 months from the Effective Date. No further amounts will be payable by the SRA on account of contingent liabilities. The unspent amount from the Contingency Fund will be paid to the financial creditors.

As per the Information Memorandum, five fixed deposits totaling Rs.27,84,507/- of the CD are being used as margin and security against Bank Guarantee with Union Bank of India. Upon approval of the Plan by the NCLT, the above fixed deposits shall be treated as an asset and shall be transferred to the SRA’s subsidiary company, Prym Aerospace Private Limited.

The SRA proposes to infuse Rs.25 Lakh for the working capital requirement of the CD in order to improve its business operations on need basis.

The Applicant/RP has confirmed in Form H that the SRA has deposited Performance Security of Rs.49.50 Lakh, i.e., 10% of the total Resolution Plan.

The EMD / BG of Rs.20 Lakh submitted with this Resolution Plan and the amount of Rs.2 Lakh deposited along with the EOI shall be refunded once the Implementation Certificate is issued by the Monitoring Agent.

The Resolution Plan provides that pursuant to the approval of the Plan, the SRA intends to reduce the entire shares of the CD as per the shareholding pattern provided in the Information Memorandum. With effect from the Completion Date, the CD shall be merged with the SRA or a subsidiary of the SRA. The Addendum for Scheme of Merger states that the SRA proposes to invest in the CD directly or through a Special Purpose Vehicle and merge the CD with the SRA, i.e., merger of Sovika Aviation Services Private Limited with PRYM Solutions Private Limited or merge with its subsidiary Prym Aerospace Private Limited, as the SRA deems fit.

Pursuant to the approval of the Resolution Plan, the SRA undertakes to reduce the entire 1,00,00,000 shares of Rs. 10/- each (as per Shareholding Pattern provided in IM) of the Corporate Debtor to zero and cancel the share capital to NIL.

The SRA has additionally sought certain Reliefs and Concessions in the Resolution Plan. However, no reliefs, concessions and dispensations that fall within the domain of other government departments/authorities are granted, and the same shall be dealt with by the respective competent authorities/fora/offices, Government (State or Central), with regard to the respective reliefs, if any. Be that as it may, the SRA has categorically affirmed that the implementation of the Resolution Plan is not conditional or contingent upon grant of any or all of such reliefs, concessions and dispensations by this Tribunal.

During the period between the Effective Date and the Closing Date, a Monitoring Committee shall be constituted which shall be comprised of two representatives of SRA, two representatives of CoC and the RP. The RP will be the Chairman of the Monitoring Committee. A fixed monthly fee shall be paid to the Chairman of the Monitoring Committee from the Handover Date up to the Closing Date.

On and from the Effective Date, the Monitoring Committee shall be responsible for overall supervision of the implementation of the Resolution Plan.

The Resolution Applicant states that any application filed before the NCLT in terms of Sections 43,45,47,49,50 or 66 of the Code shall be pursued by the CoC or by any person as decided by them or by the Monitoring Committee. However, the Applicant/RP submits that there are no pending Preferential, Undervalued, Fraudulent and Extortionate Transactions (PUFE) and related recoveries/ expenses before the Adjudicating Authority.

The SRA, viz., PRYM Solutions Private Limited has confirmed that it is eligible to submit the Resolution Plan as per Section 29A of the Code, and has duly filed an affidavit dated 13.03.2024 to that effect.

The Registered Valuers were appointed to conduct the valuation of the Securities and Financial Assets of the CD. As per the Applicant/RP, the average of the Fair Value and Liquidation Value has been determined by the Registered Valuers. The Liquidation Value and Fair Value as per the Valuation Reports submitted by the Valuers are as under:

It is stated that the SRA proposes to infuse Rs.25 Lakh for the working capital requirement of the CD in order to improve the business operations of the CD, on need basis. It is further stated that the Resolution Plan is feasible and viable for the reasons that:

The Applicant/RP submits that the Resolution Plan approved by the CoC complies with the legal requirements mandated under the IBC, viz., Sections 30(1), 30(2)(a), 30(2)(b), 30(2)(c), 30(2)(d), 30(2)(e), 30(2)(f) of the IBC, read with Regulations 37 and 38 of the CIRP Regulations. The RP has annexed Certificate in Form H to the Application under Regulation 39(4) of the CIRP Regulations, certifying that the Resolution Plan, as approved by the CoC, meets all the requirements of the IBC and the Regulations.

The SRA has sought various reliefs and concessions based on the 'clean slate' concept laid down by the Hon'ble Supreme Court in various judgements, i.e., reliefs which are necessary to keep the CD as going concern; release from any and all liabilities/proceedings; disputes and noncompliance prior to the NCLT Approval Date; and any extended period for renewal or revival of licences for running the business of the CD.

The Addendum, dated 06.07.2024, to the Resolution Plan, the SRA has clarified that the Plan approval shall in no way affect the validity and enforceability of the personal guarantees; the corporate guarantees; the unrecovered financial debt from the guarantors under their respective security documents. The CoC shall have recourse to recover remaining dues from the personal/corporate guarantees, their assets and to initiate any legal action for recovery.

In the circumstances mentioned above, the Applicant/RP seeks approval of this Tribunal on the Resolution Plan, submitted by the SRA, i.e., PRYM Solutions Private Limited, stating that the Plan is in accordance with Section 30(2) and the other provisions of the Code.

On perusal of the Resolution Plan, it is observed that the Resolution Plan provides for the following:

a. Payment of CIRP Cost as specified under Section 30(2)(a) of the Code;

b. Repayment of debts of the operational creditors as specified under Section 30(2)(b) of the Code;

c. Management of the affairs of the CD, after the approval of the Resolution Plan, as specified under Section 30(2)(c) of the Code; and

d. Implementation and supervision of the Resolution Plan by the RP and the CoC as specified under Section 30(2)(d) of the Code.

The RP has complied with the requirements of the Code in terms of Clauses (a) to (f) of Sub-section (2) of Section 30, and Regulations 38(1), 38(2)(a), 38(2)(b), 38(2)(c) and 38(3) of the CIRP Regulations.

The RP has filed the Compliance Certificate in Form H along with the Plan. On perusal of the same, it is found to be in order. The Resolution Plan has been approved by the CoC on 22.07.2024, with 100% voting share.

In K. Sashidhar v. Indian Overseas Bank & Others [(2019) ibclaw.in 08 SC], the Hon’ble Supreme Court held that if the CoC approves the resolution plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the resolution professional to submit the same to the Adjudicating Authority. On receipt of the plan approved by the CoC, the Adjudicating Authority is required to satisfy itself that the plan, as approved by the CoC, meets the requirements specified in Section 30(2) of the IBC. The Hon’ble Court observed that the role of the NCLT is ‘no more and no less’. It further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 of the IBC and is 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 in reference to matters specified in Section 30(2) of the Code when the resolution plan does not conform to the stated requirements.

In CoC of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. [(2019) ibclaw.in 07 SC], the Hon’ble Supreme Court clearly laid down that the Adjudicating Authority would not have power to modify the resolution plan, which the CoC in their commercial wisdom, have approved. In para 42 Hon’ble Court observed as under:

Reliefs and waivers are granted only to the extent permitted under the 'clean slate' principle established by the Hon'ble Supreme Court. Any additional reliefs or waivers requested in the Resolution Plan that fall outside the scope of this principle shall not be allowed.

In view of the discussions and the law thus settled, the instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A), and 39(4) of the CIRP Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with the law. The same deserves to be approved.

In view of the above, I.A.(IBC)(Plan)No.79/2024 in C.P.(IB) No.628/MB/IV/2022 is allowed. The Resolution Plan dated 30.05.2024 is hereby approved, with the Addendum dated 06.07.2024, which shall form part of the approved Resolution Plan, with effect from the date of this Order.

a. The Resolution Plan shall be binding on the CD, 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 is due, the guarantors and other stakeholders involved in the Resolution Plan.

b. In terms of the judgment of the Hon'ble Supreme Court in Ghanshyam Mishra And Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited, [(2021) ibclaw.in 54 SC], on the date of approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not a part of the plan. Accordingly, no person, including the Central Government, any State Government or any local authority, guarantors and other stakeholders, will be entitled to initiate or continue any proceedings in respect of a claim prior to CIRP which is not a part of the Resolution Plan.

c. The approval of the Resolution Plan shall not be construed as a waiver of any future statutory obligations/liabilities of the CD and shall be dealt with by the appropriate authorities in accordance with the law. Any waiver sought in the Resolution Plan relating to the period after the date of this order, more particularly licences and approvals for keeping the CD, shall be subject to approval by the authorities concerned and this Tribunal will not deter such authorities from dealing with any of the issues arising after effecting the Resolution Plan. This Tribunal, however, recommends due consideration of the revival of the CD.

d. The Memorandum of Association (MoA) and Articles of Association (AoA) of the CD shall accordingly be amended and filed with the Registrar of Companies (RoC) for information and record. However, if any approval of shareholders is required under the Companies Act, 2013 for the implementation of actions under the Resolution Plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. The Resolution Applicant is at liberty to approach competent Authorities for any exemption as sought in relation to Income Tax Returns, waivers from the applicability of any section under the Income-tax Act, 1961, the Central Goods and Services Tax Act, 2017, and other indirect taxes arising out of the implementation of the Resolution Plan.

e. With respect to the grant of licence/Government approval, if the licence or approval is terminated, suspended, or revoked, the Resolution Applicant may approach the concerned Authorities for such approvals or renewals.

f. In accordance with Section 32A of the Code, the liability of the CD for an offence committed prior to the commencement of the CIRP shall cease, and the CD shall not be prosecuted for such an offence committed prior to the commencement of the CIRP from the date of this order.

g. The Resolution Applicant, for effective implementation of the Plan, shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed.

h. The moratorium under Section 14 of the Code shall cease to have effect from the date of this Order.

j. The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with a copy of this Order for information and record.

k. The Applicant shall forthwith send a certified copy of this Order to the CoC and the SRA, respectively for necessary compliance.

The I.A.(IBC)(Plan) No. 79/2024 in CP (IB) No.628/MB-IV/2022, having the Plan Value of Rs.4,94,50,000/- is approved and disposed of in terms of the above.