Mr. Sandeep Goel vs Committee Of Creditors Of Brys Hotels Private Limited & Ors.

PER SH. AVINASH K. SRIVASTAVA, HON’BLE MEMBER (TECHNICAL)

The present Application (IA-5027 (PB)/2022) has been filed under Section 30(6) and 31(1) of the Insolvency & Bankruptcy Code, 2016, (the Code) read with regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) on behalf of the Resolution Professional (RP) (Mr. Sandeep Goel), seeking approval of the Resolution Plan submitted by M/s SERVEALL LAND DEVELOPERS PRIVATE LIMITED AND MR. ANIL KHANDELWAL duly approved by the members of COC with 85% voting share in respect of M/s BRYS HOTELS Private Limited (“Corporate Debtor”). Applicant/RP has prayed for the following reliefs:

The Corporate Debtor is involved in the business of running hotels. It has two hotels, one located at Jaisalmer, Rajasthan and other at Sahibabad, Ghaziabad. Latter hotel is yet to be constructed and be operational.

An Application under Section 7 of the Code was filed by Bank of Baroda in respect of the default committed by the CD in relation to loan facilities. The Company Petition CP (IB) No.1527(PB)/2018 filed by Bank of Baroda Limited under Section 7 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 18.03.2019 (“Admission Order”) and Mr. Sandeep Goel (IBBI Reg. No. IBBI/IPA-003/IP-N00073/2017-18/10583 as appointed as IRP. Copy of Admission order is annexed as Annexure A-1. The Admission order was assailed by M/s Damont Developers Private Limited before Hon’ble NCLAT which was dismissed vide order dated 24.04.2019 annexed at Annexure A-2. Relevant portion of the order dated 24.04.2019 is extracted below:

Applicant/RP has stated the details of two hotels of the corporate debtor, one is HOTEL BRYS FORT located at Plot 7, Hotel complex Jodhpur-Jaisalmer Road, rajasthan-345001 and another Hotel, BRYS ELAN HOTEL located at 41/7, Site IV, Sahibabad, Ghaziabad, Uttar Pradesh. The physical possession of Hotel Brys Fort, Jaisalmer, Rajasthan, i.e. the asset of the Corporate Debtor was handed over to the RP on 28.05.2022 on the basis of the order of Hon'ble Supreme Court of India. The same has been recorded by this Adjudicating Authority vide order dated 09.06.2022. Relevant portion of the order dated 09.06.2022 is extracted below:

The hotel building of second hotel is still under construction and the lease deed of the Hotel land is contested by the old allottee and that there is a litigation/FIR by the erstwhile owner of the Sahibabad land against the CD challenging the title of the land. Further the Sahibabad land allotment is under scrutiny of Special Investigation Team (SIT), Lucknow and all the official files of the property are in possession of SIT, Lucknow.

- The Applicant carried out a public announcement in Form A on 20.03.2019 and invited claims from the creditors of the Corporate Debtor. Last date to submit proof of claims was 01.04.2019. In accordance with Section 22(1) of the Code, the IRP constituted the COC and convened 1^st COC meeting on 16.04.2019. Thereafter in the first meeting of COC, a resolution was passed approving the appointment of IRP as RP. - In the 5^th COC meeting dated 18.07.2019 Applicant/ RP had reconstituted the COC on the basis of claims received. The Revised share of the COC after reconstitution is as under:

- In accordance to Section 25 of the Code, the Applicant/RP issued an invitation for Expression of Interest (EOI) in form G on 20.06.2019. Pursuant to which EOIs were received from 14 potential resolution applicants. Basis on the EOIs received, the Applicant/RP prepared a provisional list of eligible prospective Resolution Applicant (PRAs) which comprises of 11 PRAs. CIRP Period of 180 days was expiring on 14.09.2019. RP accordingly filed CA No. 1683/2019 before this Hon'ble Adjudicating Authority seeking extension of 90 days. This Hon'ble Adjudicating authority granted the extension vide order dated 03.09.2019.

- A total of forty seven (47) CoC meetings have been held during CIRP period and various extensions were sought by Applicant/RP after passing the resolutions for the same in COC. Following is a list of all the COC meetings corresponding to which various IAs for exclusion/extension of time period from CIRP period were filed.

- RP issued provisional list of eligible PRAs on 10.10.2019 and Request for Resolution Plan (RFRP) was issued as per which last date for submission of Resolution Plan was 11.11.2019. In 13th Meeting of CoC, CoC was reconstituted due to slight change in percentage of voting share of CoC Members. The voting share of Bank of Baroda, Damont Developers and Sikka Hotels changed from 85.09% to 85%, 10.39% to 10.46% and 4.52% to 4.54% respectively (See Table 1 @page No.5).

- Two Resolution Plans were received by RP pursuant to EOI dated 12.09.2019, one by Mr. Paramjit Gandhi and another by M/s. Alchemist Asset Reconstruction Company Ltd. RP further submitted that detailed negotiations took place with two of the above mentioned RAs in order to maximize the value of CD. - IA-703/PB/2019 was filed by Applicant RP for seeking directions against the M/s Damont Developers Pvt. Ltd. to handover the custody of Hotel Brys Fort being the asset of Corporate Debtor. This Adjudicating authority vide order dated 04th January, 2021 directed M/s Damont Developers Pvt. Ltd. to handover the custody of Hotel Brys Fort to RP within 15 days of the order. Copy of the order dated 4.1.2021 is annexed as annexure A-14. An appeal No. Appeal (AT)(INS) No. 35/2021 before the Hon'ble NCLAT was filed against the order dated 04.1.2021 wherein Hon'ble NCLAT vide order dated 22.1.2021 had directed to maintain the status-quo. Relevant portion of the order of the NCLAT is extracted below:

- In the 27^th meeting of COC held on 21.01.2021, RP informed the CoC that he does not have the possession for the hotel and accordingly the value maximization of the Corporate Debtor is not possible. It was resolved to further extend the CIRP period by 90 days which was extended by this Adjudicating Authority vide order dated 03.02.2021.

- In the meantime, one of the RA namely M/s Alchemist Asset Reconstruction Co. Ltd. withdrew from the Resolution Plan illegally which resulted into forfeiture of its EMD. - The resolution plan of the only RA namely Paramjit Gandhi was put to vote and was not approved by COC. It is further submitted by the Applicant / RP that CIRP process of CD is not completed due to absence of possession of major assets of CD and the matter is still sub-judice before the Hon'ble NCLAT. Finally, the physical possession of Hotel Brys Fort was handed over to RP on 28.05.2022 on the basis of the order by Hon'ble Supreme Court dated 20.05.2022 vacating the stay of Hon'ble NCLAT. Order dated 20.05.2022 is extracted below:

- In the 33rd CoC meeting held on 10.01.2022, it was resolved to issue revised Form-G for inviting fresh EOI. Thereafter, RP received 13 EOI till 14.2.2022 and received four Resolution Plans. Another round of publishing fresh Form G was done in accordance to the COC resolution after taking the possession of the Hotel Brys. RP convened 43rd COC meeting and apprised the COC of receiving four resolution plans till 22.08.2022 from the final list of PRAs. The final PRAs were: - Dr. Mukesh Kr. Agarwal and M/s Chandra Laxmi Developers Private Limited (Consortium) - Sankalp Recreation Private Limited (Company) - Serveall Land Developers Private Limited and Anil Khandelwal (Consortium) - Swarn Nagari Hotel Proprietor Ganga Devi Vyas, Mahendra Kr. Vyas and Narendra Vyas (Consortium)

- Applicant/RP further submitted that the voting on the resolution plans concluded on 01.10.2022 wherein the resolution plan of M/s Serveall Land Developers Private Limited (60%) and Mr. Anil Khandelwal (40%) (consortium) dated 22.08.2022 cured on 06.09.2022 along with last offer was duly approved by a majority vote of 85% as per commercial wisdom of COC. Hence M/s Serveall Land Developers Private Limited and Mr. Anil Khandelwal (consortium) emerged as the Successful Resolution Applicant (SRA). - M/s Serveall Land Developers Private Limited is a private limited company incorporated on 05.01.1993 having CIN U74899RJ1993PTC024161 and Mr. Anil Khandelwal is an individual having Aadhar number 248994930012. Serveall Land Developers Private Limited is a part of the very famous Dangayach Group of Hotels (based out of Jaipur). The group manages Marriott hotels throughout India with a very active presence in Rajasthan. The CoC finds that SRA consortium is already running chain of 5 star hotels and they have good work experience and considered as a strategic investor in this industry. - Applicant/RP has submitted Form H, as per which the Average Fair Value is Rs. 64,28,16,424/- and Average Liquidation Value is Rs. 47,83,58,610/-. - The notice of the application for approval of the resolution plan by this Adjudicating Authority was issued to the non-applicant on 31.10.2022. Copy of the Resolution Plan submitted by SRA has been annexed as Annexed as A-34. - The Applicant/RP submits the relevant information about the amount claimed, amount admitted, and the amount proposed to be paid by the Successful Resolution Applicant, i.e. M/s Serveall Land Developers Private Limited and Mr. Anil Khandelwal under the said Resolution Plan which is tabulated as under:

Note: An amount of Rs. 34,15,316 which was provided to M/s Damont Developers (who was unsecured financial Creditor earlier) reduced to NIL vide order dated 30.11.2022 in IA 5643/2020.

*See Table 1 @page 5, after status report dated 13.12.2022, share of Bank of Baroda becomes 92.71%

** Jatinder Pal Builders Private Limited has been added as unsecured financial creditor vide order dated 30.11.2022 (IA 1439/2022). RP submitted an additional document during the court proceedings held on 6 March, 2023 wherein an amount of Rs 15,73,610/- is provided to newly added unsecured creditor (Jatinder pal)

*** Revised amount which is provided to Sikka Hotels is Rs. 33,23,216/-. Earlier it was Rs. 14,81,509/-

- • The timeline proposed to implement the resolution plan is 12 months. - • It is submitted by Applicant/RP that CIRP costs of ₹ 3.50 CRORES (given on page no 686), shall be paid in priority within 90 days before any other payments to any financial creditor, operational creditors or settlement of any other creditor's claims. - • SRA proposes to pay the total amount of Rs 61,70,00,000 (61,21,03,175 (secured creditors) + 48,96,825/- (unsecured creditors) within 90 days. - • Statutory dues & contingent liabilities to be paid within 60 days. Payment of Rs 2,00,000 upfront to operational creditors within 90 days. - • Applicant/RP submits in its plan (@page no 691, clause 8(i)) that all the statutory dues, pending litigations, contingent liabilities, Government Dues towards the Corporate Debtor whatsoever shall be deemed to be settled at Rs 5,00,000/-. All the dues and demands (assessed/unassessed, crystallized/uncrystallized, contested/uncontested) shall be deemed to be settled permanently and extinguished completely on payment of the Rs 5,00,000/- proposed as the resolution amount for the same.

- Applicant/RP submitted that all the claims and dues of employees, workmen, contract labour of whatsoever nature shall be deemed to be settled at NIL (as there are no claims filed/admitted of employees, etc). It is further submitted by the Resolution Professional that the settlement of the operational creditors of the Corporate Debtor is in confirmation to the terms of Section 30(2)(b) of IBC that the amounts to be paid to operational creditors shall not be less than: (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher. - It is further stated in the resolution plan that RP submits that Resolution Applicant proposes to pay NIL against dues of related parties. (Clause 9 @ page 694) - The Resolution Applicant proposes the reorganization of the capital structure of the Corporate Debtor by cancellation of 100 % of the all the existing equity shares of the CD outstanding on the effective date and simultaneous subscription of 20,00,000 fresh equity shares of face value of Rs. 10/- each by infusion of funds. The capital structure of the CD post infusion of equity is proposed to be as follows:

Post completion of the reorganization of the share capital, RA proposes To demerge the CD into a different special purpose company.

- Applicant/RP submits that Successful Resolution Applicant has submitted a certificate of eligibility under section 29A of the code annexed as Annexure 31 at page 569 to 585. At (page number 721, page 55 of resolution plan, Annexure A-38), the Resolution Applicant is eligible to submit the resolution plan in accordance with section 29A of the code. Applicant/RP has submitted additional affidavit for verification of eligibility as prescribed under Sec 29A of I & B Code, 2016. - The Applicant RP has submitted on record the Compliance Certificate in FORM-H as required under Regulation 39(4) of the CIRP regulations. The true copy of the FORM-H is filed as Annexure A-37. - RP further submits that in 47th meeting of CoC dated 03.10.2022 Members of CoC resolved to issue the letter of Intent to SRA. It is further submitted that SRA had already deposited EMD of Rs.1 crores as EMD alongwith Resolution Plan. The SRA has also deposited a sum of Rs.4 Crore by RTGS (UTR nos. PUNBR52022100417024996 on 4.10.2022) and the same is adjusted against performance security of Rs.5 crore (since Rs. 1 crore has already been deposited towards EMD). Copy of executed letter of intent dated 04.10.2022 along with proof of EMD and proof of RTGS are annexed as Annexure A-36. - Resolution professional has submitted a list of pending applications which includes avoidance transactions and it is submitted by the Applicant that in the event, any transaction is avoided/set aside by NCLT under Section 43,45,47,49, 50 and 66 of IBC and any amount is received by the resolution professional or the corporate debtor, such sum shall be deemed to have been received for the benefit of the secured financial creditors and shall be paid to secured financial creditors after deducting the applicable expenses and taxes.(@ page no. 688 of the application, Vol IV).

- After filing of the plan approval application bearing IA No. 5027/2022, this Tribunal disposed of IA No. 5643/2020 filed by M/s Damont Developers Pvt. Ltd. and IA No. 1439/2022 filed by M/s Jatinder Pal Builders Pvt. Ltd. This Hon'ble Tribunal vide order dated 30.11.2022 was pleased to partially allow IA No. 5643/2020 filed by M/s Damont Developers Pvt. Ltd. (Unsecured Financial Creditor) whereby as a consequence M/s Damont Developers Pvt. Ltd. is removed from the list of creditors and its claim stands excluded. - Further this Tribunal vide order dated 30.11.2022 was pleased to allow the IA No. 1439/2022 filed by M/s Jatinder Pal Builders Pvt. Ltd. (unsecured financial Creditor) for admission of claim for an amount of Rs. 1,90,00,000/-, whereby as a consequence M/s Jatinder Pal Builders Pvt. Ltd. is added in the list of creditors as unsecured financial creditors. - Further, RP submitted the status report dated 13.12.2022 for bringing on record the re-constituted COC as per order dated 30.11.2022 as per which the newly constituted COC consists of Bank of Baroda (92.71%), Jatinder Pal Builders Pvt. Ltd. (unsecured creditor with voting rights of 2.34%) and Sikka Hotels & Resorts Private Limited (4.95%). M/s Damont Developers which was an unsecured creditor earlier having voting share of 10.46% was reduced to NIL. - The change in voting share of the FCs in the reconstituted CoC does not have any adverse impact on the approval of the Plan, as the share of Bank of Baroda which had upvoted the plan has increased from 85% to 92.75%.

IA No. 682/2022 has been filed by M/s Sikka Hotels and Resorts Private Limited against Resolution Professional to set aside the decision of the Resolution Professional whereby partial claim of M/s Sikka Hotels and Resorts Private Limited to the tune of Rs. 86,59,052 was rejected. Applicant prayed for the following reliefs:

It is the plea of the Applicant that an amount of Rs. 39,96,920/- being the expenses that is incurred towards the vendors, to the third parties on behalf of the CD for which it provided the proof but RP rejected the same. Another submission made by the Applicant is against the rejection of amount of Rs. 46,62,132/- which is the interest payment has been rejected by the RP.

RP countered the submissions of CD by submitting that it is not clear whether the alleged expenses have been incurred on behalf of the Hotel/CD, on what basis and in what capacity and arrangement between the CD and Applicant. It is further submitted by the RP that applicant was not even in possession of Hotel. The payment allegedly made to the third parties could not be verified. RP further submits that it rightly rejected the claim of Rs. 46,62,132/- as interest since Agreement to Sell nowhere provides for a clause for imposing interest on payment to Corporate Debtor.

We have heard both the parties and considered their contentions, arguments advanced and perused the documents produced. During the hearing, this bench asked from Applicant regarding the relevant provision of 'Interest' in the 'Agreement to Sell' to which counsel for the Applicant failed to give a cogent reply. As regards payments to the third parties, the Applicant did not counter the argument of RP that it was not in possession of the Hotel. BE THAT AS IT MAY, after adjudication of IA 5643/2020, the payment to the Applicant (Sikka Hotels & Resorts) has increased from Rs. 14,81,509/- to Rs. 33,23,216/- as per the additional document given to this Adjudicating Authority in Court proceedings held on 6^th March, 2023. In our opinion, RP has rightly rejected Applicant's claim of Rs. 86,59,052/- . Accordingly, IA 682(PB)/2020 is DISMISSED.

We have heard the parties and perused the case records. First of all, we would like to throw some light on the dates and events that happened in the CIR process of CD. Time to time, Applicant/RP had sought various extensions and exclusions of time period from CIRP period which has been granted by this Adjudicating Authority for the sole purpose of reviving the CD and maximization of the value of the assets of CD. On page no 6 to 8(ibid) a tabulated chart is laid down for giving a clear picture as how a resolution process i.e. from inviting the claims to submission of EOIs, from requesting RFRP to putting resolution plans on voting and detailed deliberations on the resolution plans etc. takes place in a corporate. Repeatedly, we have mentioned the reasons for delay in the completion of CIRP proceedings. Above mentioned tabular chart clearly shows the instances wherein RP/ on behalf of COC asked for the extension/exclusion of CIRP. It is on the requests from the RP/COC to extend the time period to complete the CIRP process and as an Adjudicating Authority, we only have to see the reasons behind such extension. It is not the delay on the part of Adjudicating Authority as such, rather it is due to the process involved and time consumed by stakeholders, COC and RP to reach at consensus. We are deliberately highlighting the issue of delay as it is the need of hour to find out the real cause behind such inordinate delays specifically when time bound process is one of the key feature of this Code. This application u/s 7 came to this Adjudicating Authority in the year 2018 and resolution plan approval application is filed recently in late December 2022. It is our humble request to all the concerned stakeholders to not to seek extension and exclusion in a routine manner which will ultimately enable us to dispose of the applications in a speedy manner.

In view of Section 31 of the Code, the Adjudicating Authority, before approving the Resolution Plan, is required to examine that a Resolution Plan which is approved by the CoC under Section 30 (4) of the Code meets the requirements as referred under Section 30 (2) of the Code. Section 30 (2) is quoted below: -

Further, as per Regulation 38 of the CIRP Regulations, a Resolution Plan is required to contain a statement as to how it has dealt with the interests of all the stakeholders including Financial Creditors and the Operational Creditors and if these are sufficiently provided in the Resolution Plan, the Adjudicating Authority may approve the Resolution Plan.

In respect of compliance of Section 30(2)(a) of the Code, it is seen that there is a proposal in the Resolution Plan at page no. 686 that provides that the 100% CIRP cost will be paid.

As regards compliance of Clause (b) of Section 30(2) of the Code, which provides for the payment of the debts of operational creditors which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the Corporate Debtor under Section 53. The Resolution plan provides for the payment to Operational Creditors @ page 691, clause 8 of the Resolution Plan and it provides the payments to the Operational Creditors in priority to Financial Creditors.

In terms of Section 30(2)(c), the management of affairs and control of the business of the Corporate Debtor during the term of the Resolution Plan will be with the Resolution Applicant and complete structure and reorganization has been provided by the resolution applicant on page number 703- 706 of the resolution plan.

The next requirement envisaged by Section 30 (2)(d) is that it must provide for the implementation and supervision of the Resolution Plan. In this regard, relevant entries are given at page no 707-710 @ point 2(b) of the Resolution plan. Resolution Plan provides for the formation of the Monitoring Committee which shall include one member from the resolution applicant, one shall be nominated/appointed by the financial creditor and third shall be resolution professional (or any external qualified person appointed by FC in case RP declines to be a part of monitoring committee) who shall be chairman of the monitoring committee.

It is also clarified that till the constitution of new board of Directors, the decisions which could otherwise have been taken by CD's Board shall be taken by Monitoring Committee by a majority vote.

Ld. Counsel appearing for the Resolution Applicant submitted that the Resolution Plan is as per the provisions contained in the Code and so, the same may be approved. In terms of Regulation 39(4) of the CIRP Regulations, the Resolution Professional has filed compliance certificate in Form-H which is annexed as Annexure A-37 from page 651-666 (vol 3). It has been submitted in the application and in Form H duly certified by Resolution Professional that the Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code, 2016 and does not contravene any of the provisions of the law for time being in force. The timeline which is proposed to implement the resolution plan is 12 months.

As a sequel to aforesaid discussions, we are satisfied that all the requirements of Section 30(2) are fulfilled. In respect of compliances regarding CIRP Regulations especially Regulations 38 and 39, the Resolution Professional has certified in Form-H and explained in details that the Resolution Plan has complied with all the required Regulations.

For the reasons discussed above, in our considered view, the Resolution Plan fulfils the requirement as referred in Section 30(2) of the Code and there are sufficient provisions in the Plan for its effective implementation as required under the proviso of Section 31(1) of the Code. The Resolution Plan has been approved by CoC with 85% voting. Many judgements of Hon'ble Supreme Court and Hon'ble NCLAT have treated the commercial wisdom of CoC as final. Therefore, in our considered view, there is no impediment in giving approval to the Resolution Plan.

Accordingly, the Resolution Plan of ₹80,30,00,000 is hereby APPROVED which was earlier approved by the CoC by the majority vote of 85%. The Resolution Plan shall form part of this Order.

It is clarified that Section 30(2)(f) of the Code mandates that the Resolution Plan should not be against any provisions of the existing law. The Resolution applicant, therefore, shall adhere to all the applicable laws for the time being in force under the proposed Resolution Plan, whether or not specifically provided therein. As regards the reliefs and concessions sought in the Resolution Plan, same will be provided only 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.

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.

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

As far as the details of Sec 66 or avoidance application pending, any preferential transaction u/s 43, undervalued transaction u/s 45, extortionate credit transactions u/s 50, fraudulent transaction u/s 66, the Resolution Professional has submitted that it may be pursued by the COC/Secured Financial Creditor/Monitoring committee, as may be approved by COC.

The RP is directed to submit revised Form H as well as the revised statement of infusion of funds by the SRA to implement the plan of Rs. 80.30 cr within 1 week from the date of this order.

A copy of this Order shall be filed by the Resolution Professional with the Registrar of Companies, NCT of Delhi & Haryana. Also, The Resolution Professional shall submit the records collected during the CIRP proceedings to the Insolvency & Bankruptcy Board of India for their record.

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.

Accordingly, IA (IB) No.5027(PB)/2022 is hereby ALLOWED in aforesaid terms.

TO SUMMARISE:

a. IA (IB) No. 5027(PB)/2022 which is for approval of Resolution Plan is ALLOWED.

b. IA(IB)/682(PB)/2020 is DISMISSED.

c. The pending applications will be listed on 14.03.2022.