Niraj Agrawal vs Castal Extrusion Private Limited

Licenses/ Approvals/ Contractual Rights and Benefits

9.2.1 The Resolution Applicant has assumed that upon approval of this Resolution Plan by the NCLT all subsisting consents, licenses, approvals, rights, entitlements, benefits and privileges whether under law, contract, lease or license, granted in favour of the Corporate Debtor or to which the Corporate Debtor is entitled or accustomed to (whether applied for renewal by the Corporate Debtor or not) shall, notwithstanding any provision to the contrary in their terms, be deemed tocontinuewithout disruption for the benefit of the Corporate Debtor for a period of 36 months and till suchtime,the Resolution Applicant will apply for fresh licenses, whichever is later.

9.2.2 For the avoidance of doubt, it is hereby clarified that all consents, licenses,approvals,rights, entitlements, benefits and privileges whether under law, contract, lease or license, granted in favour of the Corporate Debtor or to which the Corporate Debtor is entitled or accustomed to, which have expired as of the Closing Date, shall be deemed to continue without disruption for the benefit of the Corporate Debtor for a period of 36 months or until renewed by the relevant authorities, whichever is later. Without any liability for the non-compliance during the time specified above, the Resolution Applicant undertakes tocausethe Corporate Debtor to expeditiouslyidentifysuch expired consents, licenses,approvals,rights, entitlements, benefits and privileges whether under law, contract, lease or license, granted in favour of the Corporate Debtor or to which the Corporate Debtor is entitled or accustomed to evaluate the steps required to address the same and take steps to remedy the same to the extent practically possible.

9.2.3 On approval of the ResolutionPlan,the Resolution Applicant shall apply to the department for the conversion of the nature of Factory Land from Industrial Land to the Residential/Commercial Land for Real Estate Project. The same should be approved and processed by the department in order to ensure proper implementation of the Resolution Plan.

9.2.4 It is further clarified that on approval of the resolution plan, the Resolution Applicantwould make necessary application/ representation before the relevant judicial/ governmentauthorityfor implementation of the Resolution Planwherever required.

If thereisanysuch condition specifically mentioned in the Resolution Plan, necessary applications to the concerned regulatory or statutory authorities for renewal of such business permits, licenses, approvals, clearances in terms of s.31(4)ofthe IBC, and suchauthority shall also grant the same keeping in mind the objectives of the Code.

Allowed. Provided, the ResolutionApplicant shall take necessary steps to make applicationsto the concerned authorities for renewal of such business permits in terms of s.31(4)oftheIBC within the moratorium period of oneyearand such authority shall also consider the same keeping in mind the objectives of the Code.

If and when an application is made for conversion of the nature of land used by the ResolutionApplicant, the concerned Government Authorities/Department may consider the same only as per the prevailing relevant policy, Rules and Regulations.

The concerned Judicial/Government Authorities shall allow the applications to be made by the Resolution Applicant in terms oftheResolution Plan as approved in accordance with the IBC.

Tax and stamp duty exemptions 9.3.1 Upon the approval of this Resolution Plan by the NCLT, an exemption shall be deemed to have been granted to the Resolution Applicant from the obligation to pay any taxes and any stamp duty in respect of actions undertaken pursuanttothe approval of the Resolution Plan by the NCLT, since such taxes and duties, if any required to be paid, will render the Resolution Planunviableforthe Resolution Applicant in monetary terms.

9.3.2 It is envisaged that, dispensation/ waiver be given by the State Governments, Central Governments or any other authorities, from payment of any stamp duty on transfer of land, transfer fees on account of change in shareholdings pursuant to this plan, Khazana, land taxes, conversion of land including interest, penalty or other charges/fees relating to the transfer/takeover of assets or state levies which may arise in the event of change in management of CEPL pursuant to the acceptance of this Resolution Plan. Further direction be issued to the state authorities for suitably amending all the licenses and rights pursuant to the change of managementon acceptance of the Resolution Plan. Any subsidies or entitlements, which are accruing to the corporate debtor either before or after the approval of the resolution plan, are to be continued.

9.3.3 Accordingly, upon the Resolution Plan being approved by the NCLT, the actionsundertaken pursuant to the implementation of the Resolution Plan shall be exempt from any tax obligation under various taxing statutes, including but not limited to Sections 50B, 50C, 50CA, 56 and 115JB under the Income-tax Act as well as the Central Goods and Services Tax Act, 2017 (as amended from time to time) and the provisions of the Indian Stamp Act, 1899 (as amended from time to time) and other laws relating to payment of stamp duty applicable in any state.

Granted. Theconcerned authorities are directed to exempt the Resolution Applicant from paying any tax and stamp duty in terms oftheapproved Resolution Plan.

Granted. Theconcerned Government and other statutory authorities are directed to grant dispensation/ waiver/exemption from payment of stamp duty or transfer fees, penalty and taxes accrued and accruable till closing date to the Resolution Applicant and to continue grant of anysubsidyor entitlement, which the Corporate Debtor was entitled to.

Allowed. Theconcerned authorities are directed to grant exemptiontothe Resolution Applicant from any taxobligation under various taxing statutes, including but not limited to Sections 50B, 50C, 50CA, 56 and 115JB under the Income-tax Act as wellastheCentral Goods and Services Tax Act, 2017 and the provisions oftheIndian Stamp Act, 1899 and other laws relating to payment of stamp duty.

Dispensation from all the cases whether listed or not in the Information Memorandum and not proposed to be settled as per the Resolution Plan Dispensation from all the cases whether listed or not in the Information Memorandum and not proposed to be settled as per the Resolution Plan.

Dispensation from fresh initiation of any case or proceedings including for decreed cases, against the Corporate Debtor or the ResolutionApplicant relating to any period prior to theInsolvency Commencement date, no amount would be paid to any creditor or authority under any circumstance relating to the period prior totheinsolvency commencement date except as specifically provided under this resolution plan and that any such amount would consequently qualify as “operational debt” (as defined under the IBC) and therefore the full amount of such Liabilities shall be deemed to be owed and due as of the Insolvency Commencement Date and therefore no amount is payable in relation thereto.

It is further re-iterated that any statutory liability or

government dues, by whatever name called, as on the CIRP commencement date is part of OC dues and all such liabilities gets settled with approval of the plan which is also bindingonallthe stakeholders. If COC proposesanyadditional payments towards such liabilities, it may do so from the total amount proposed in the plan. RA do not agree to provide any additional funds towards any liabilities either on or after the approval of the plan and that the payments envisaged in the Resolution Plan considers the settlement of all the liabilities relating to the period prior to Closing Date.

Uponapprovalofthe Resolution Plan, all pending cases, whether listed in Information Memorandum of unknown to the RP, cause of action of which arose till the date of approval of the Resolution Plan, shall be deemed to have been disposed of as withdrawn.

Granted in termsofthe Ghanashyam Mishra and Sons Pvt Ltd vs. Edelweiss Asset ReconstructionCo. Ltd,, wherein the Hon'ble Supreme Court has held in para 95(i)thatoncea resolution plan is duly approved by the Adjudicating Authority under sub-section(1)of section 31, the claims as provided in the resolution plan shall stand frozen and will be bindingonthe Corporate Debtor and its employees, members, creditors, including the Central Govt.anyState Govt. or any local authority, guarantorsand 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 standextinguished and nopersonwillbe entitled to initiate or continue anyproceedings 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 standextinguished and noproceedingsin 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.

Allowed. In the event the CoC proposes any additional payment to any Creditor over and above the payment proposed by the Resolution Applicant, such paymentshallbe made outofthetotal amount proposed by the Resolution Applicant.

Liability for past actions or omissions 10.1.1 The Resolution Applicant will acquire control over the Corporate Debtor pursuant to the order of the NCLT and not pursuant to the usual acquisition process which would ordinarily include a detailed due diligence and representation, warranties andindemnitiesin relation to the affairs of the Corporate Debtor from its existing promoters. Therefore, the Resolution Applicant may take some time to discover all the non-compliances that may exist in relation to the Corporate Debtor on the date of acquisition of control by theResolution Applicant over the Corporate Debtor. As such the Resolution Applicant may take some time to identify such non-compliances and to address them.

10.1.2 In light of this, the Resolution Applicant and the Corporate Debtor shall have immunity from any actions and penalties (of any nature) under any laws for any non-compliance of laws in relation to the Corporate Debtor or by the Corporate Debtor, as well as with the terms of anyagreementor arrangement entered into by the Corporate Debtor. Without any liabilityfortheaforesaid non-compliance for the past periodbeforethe Closing Date, the ResolutionApplicantshall endeavour to cause the Corporate Debtor to identify such non-compliances, evaluate the steps required to address such non-compliances and takestepsto remedy such non-compliancestotheextent practically possible. The Resolution Applicant and the Corporate Debtor shall be entitled to apply to and approach the NCLT for relief for continued implementation of the approved ResolutionPlan before or after any coercive action is taken against the Corporate Debtor or the Resolution Applicant, especially in view of the limited duediligence offered to the Resolution Applicant.

10.1.3 This Resolution Plan will be implemented pursuant to an order of the NCLT, and all actions stated in this Resolution Plan shall be deemed to be approved by the NCLT. Accordingly, any action or implementation of this Resolution Plan shall not be a ground for termination of any contracts entered into by the Corporate Debtor by the counter party(ies) to such contracts.

10.1.4 The Resolution Applicant assumes that, in compliance of its duties under Regulation 35A of the CIRP Regulations, the Resolution Professional had determined whether the Company has been subjected to any transactions covered under sections 43, 45, 50 or 66 of the Code or not and appliedtothe Adjudicating Authority for seeking appropriate relief. Accordingly, though the Resolution Applicant reserve its right to institute any investigation pertaining to any transaction(s) carried out by the ex-management of the Company or to file appropriate applications before the court/tribunal of competent jurisdiction, the Resolution Applicant and its officers, directors, employees and the new management of the Company shall never be liable/responsible for any such transactions carried out by the ex-management of the Company.

The Resolution Applicant is granted amoratorium period of 12monthsto identify any non-compliancesbythe Corporate Debtor and to address them.

Granted. No action to be taken and penalties to be imposed under any laws for any non-compliance of laws in relationtothe Corporate Debtororby the Corporate Debtor, as well as with the terms of anyagreementor arrangement entered into by the Corporate Debtor in the past and before the Closing Date

No action canbetaken against the Corporate Debtor or the Resolution Applicant relating to termination of any contract entered with any party bytheCorporate Debtor.

Granted. the Resolution Applicant and its officers, directors, employees and the new managementof the Company shall never be liable/responsiblefor any transactioncovered under sections 43, 45, 50 or 66 of the Code or not and applied to the Adjudicating Authority for seekingappropriate relief.

Title in respect of immovable property held by the Corporate Debtor 10.2.2 Based on the information received from the Information Memorandum and during due diligence, it is revealed that one T-RMC Private Limited having its registered office at 35A, Dr. Sarat Banerjee Road, 2nd Floor, Kolkata-700029, has been carryingonits business activities of ready-mixconcreteina substantial portion of the Land/Premisesofthe Corporate Debtor as an occupier. It has also been transpired that there are several number of workers are engaged in the business activities of the said T-RMC Private Limited. In this regard, the RA proposes for passing an order by the Hon’ble NCLT, Kolkata Benchdirecting eviction of the said T-RMC from theaforesaid Land/Premises of the Corporate Debtor along with its establishment/ machineries/ staffs/employees/raw materials and all other things whatsoever. It is clarified that the RA shall not be in any manner liable to take any responsibility and/or liability in respect of the said T-RMC including its suppliers / contractors / vendors / employees / workers / staffs or any other entities whatsoever and the amount of Rs.10.70 crore as offered by the RA shall remain unchanged. For the purpose of smooth and uninterrupted take over, possess and occupy the assets and properties of the Corporate Debtor by the RA, necessary order is to be passed by the Hon’ble NCLT directing the concerned District Administration, Police Authorities, Local Authorities and all other Statutory Authorities to provide fullco-operationand assistance as may be required and sought for by the RA. The Hon’ble NCLT shall also pass an order directing the said T-RMCtoremoveits establishment completelyfromtheaforesaid property immediately upon passing the order and communication of the same to them. 10.2.3 Based on the information available to the Resolution Applicant following assumption has been made relating to ownership, title and status of the immovable properties: i. all documents of title, deeds, and writings in respect of all immovable propertiesofthe Corporate Debtor, are complete title documents constituting all immoveable properties held in the name of Corporate Debtor, wherever situated

ii. the properties together with the buildings and other structures is owned by the company and that no other charge exists on such properties other than in favour of the Financial Creditors who are part of the CommitteeofCreditor (“CoC”) and that all the propertiesarein exclusive possession as on the Effective date.

iii. save and except the occupation of T-RMC in a portion of the said Property of the Corporate Debtor as stated herein above, that there are no encumbrances, encroachment or existing lease, sub-lease or rent, on the propertyownedor leased to the Corporate Debtor, except to the Secured Financial Creditors forming part of the Committee of Creditor (“CoC”)asdisclosed above and in the information memorandum. If, as on the Effective date any encumbrances, encroachment or existing lease, sub-lease or rent, on the property owned or leased to the Corporate Debtor is found, the same shall be deemed to be vacated w.e.f. approval of the Resolution Plan and all such contract in this respect, would be deemed to be cancelled.TheResolution Applicant accordingly expects thevacant& peaceful possession of the property subsequent to the approval of the Resolution Plan.

10.2.4 Any dues, liabilities, charge, interest, penalty or cost on the Corporate Debtor relating to any period prior to the insolvency commencement date is deemed to waived/written-off with respect to theimmovable property. Such dues for the periodpriortothe insolvency commencement date shall form part of the Operational Creditor (other than workmen/employees) and if claim has been filed by the concerned authorities then the same to be paid on pro-rata basis from the total payment envisaged under the resolutionplanfor Operational Creditors(Otherthanworkmen/ employees). Accordingly, if no such dues are claimed upto the Effective Date by the concerned authority then the Resolution Applicant cannot be held liable for any dues outstandingpriortotheinsolvency commencement date and no payment will be made by Resolution Applicant in that respect in addition to the amount as envisaged under the plan.

10.2.5 Upon approval of the Resolution Plan, the Department shall cause to convert the nature of the land from industrial purpose to residential/commercial purpose upon an Application made by the Resolution Applicant in that respect. The said conversion of land is an integral part for the success of the Resolution Plan.

The RP has argued that the impugned transaction vide 2014 Agreement was covered within the purview of Section 46 (1) (ii) of IBC. It has been brought on record by the RP thatat therelevanttimeof execution of the 2014 Agreement, the CD and T-RMC were related parties within the meaning of Section5(24)(d)of IBC. This is since Harshvardhan Tantia, one of the promoters of both the CD and T-RMC, was a director ofT-RMCand held more than 2% shares in the CD at the time of the execution of the purported 2014 Agreement.Inthis regard, the RP has drawn our attention to the following relating to Shareholding pattern:  Shareholding of T-RMC in FY 2014-15 at page 43 of the Application: Harshvardhan Tantia held 50% shares of and inT-RMCatthe relevant date.  Shareholding of CD in FY 2014-15 at page 107, Application: Harshvardhan Tantia personally held 6.22% shares of and in the CD at the relevant date at the time of execution of the 2014 Agreement.  Details ofappointment and resignation of HarshvardhanTantia from T-RMC (Form No. DIR-11) at pages 105-106: Harshvardhan Tantia was the director of T-RMC since 17.07.2014 to 14.03.2016. The said tenancy arrangement was subsisting, and being acted upon, as at 18.03.2018, i.e. two years precedingthe date of insolvency commencement. Accordingly, the arrangement pursuant to the 2014 Agreement was continuing within 2 years preceding theInsolvency Commencement Date, 18.03.2020, andas such, falls within the purview of Sections 46 (1) (ii) of IBC.

The RP has also submitted a valuation report, which shows that the fair monthly rent should have been Rs.4.85 lakh instead of Rs.55,000/- andassuch there was ashortfallof Rs.4.30 lakh per month.

Upon perusing the documents filed by the RP and considering submissions by the parties, it isorderedthatthe T-RMC PrivateLimited and any otherentity,if there be any, is directed to remove its establishment along with all its employees, staffs, officers, workmen engaged by them including all its machineries from the subject land/premisesof CEPL within 15 days from the date of approval of the Resolution Plan and handover vacant peaceful possession of the land/premises to the Resolution Applicant.

It is further directed that the Resolution Applicant shall not be in any manner liable to take any responsibility and/or liability in respect of the said T-RMC including its suppliers /contractors/ vendors / employees / workers / staffsorany other entities whatsoever.

It is further directed that in theeventthesaid T-RMC fails and/or neglects to remove its entire set-upalongwith all officers,employees, staffs and workmen engaged by them including all its machineries from the subject land/premisesof CEPL as stated above within the stipulated period, the concerned District Administration, Police Authorities, Local Authorities and all other Statutory Authorities to provide full co-operation and assistance as may be required and sought for by the Resolution Applicant.

Though the Valuation Report shows that the fair rent for the subject land/premises of the Corporate Debtor should be Rs.4.85 lakh but for the ends of justice, it is ordered that the said T-RMC shall make a further payment to the Corporate Debtor at the rate of Rs.2,00,000/-per month tobecalculated from the date of creation of such tenancy in its favour till the date of handing over peaceful vacant possession of the land to the Resolution Applicant within the period stipulated above. Intheeventof failure to make such payment within the stipulated period, the Corporate Debtor and/or the ResolutionApplicant shall be at liberty to claim and realisemesneprofit from T-RMC at such rate as maybereasonably decided by the Corporate Debtor and/or the Resolution Applicant. The Corporate Debtor and/or the ResolutionApplicant shall be at liberty to take appropriate step against T-RMC for their eviction and realisation of the said dues in theeventtheir failure to comply this order. The said I.A. (IB) 107//KB/2021 and I.A. (IB) 1302//KB/2020 IN C.P. (IB) No. 438/KB/2018 is thus disposed of with the directions as above.

Granted.All dues, liabilities, charge, interest, penalty orcostonthe Corporate Debtor relating to any period prior to the commencement date of insolvencyaretobe waived/written-offwith by the concerned authorities relating to the immovable property.

Allowed. Theconcerned Authority isdirectedto grant conversionofthe nature of land in terms of the application for conversion to be made by the Resolution Applicant.

Arbitration Proceedings:

Arbitration proceedings whether disclosed or not in the list of disputes furnished in the Information Memorandum related to any agreement or contract entered into by the promoters of thecorporate debtors prior to the insolvency commencement date is proposed to be dropped and not proceeded with any further. However, the resolution applicant may at their sole discretioncontinuearbitration proceedings filed by the corporate debtor prior to the insolvency commencement date, towards recovery of any dues.

Immunity

10.10.1 As the Resolution Applicant will acquire control over the Corporate Debtor pursuant to the order of the NCLT and not pursuant to the usual acquisition process which would ordinarily include a detailed due diligence and representation, warranties and indemnities in relation to the affairs of the Corporate Debtor from its existing promoters, the Resolution Applicant may takesometimeto discover all the non-compliances that may exist in relation to the Corporate Debtor on the date of acquisition of control by the Resolution Applicant over the Corporate Debtor.

10.10.2 Upon approval of the Resolution Plan by the NCLT, immunity shall be deemed to have been granted to the Corporate Debtor from any actions and penalties (of any nature) under any laws for any non-compliance of laws in relation to the Corporate Debtor or by the Corporate Debtor,whichwas existing as on the IC Date.

Post the approval of the Resolution Plan, set-off and carry forward of all losses pertaining to the period prior the takeover of the corporate debtor by the resolution applicant would continueduringthe balance remaining period as provided under Section 79 of the Income Tax Act, 1961 i.e. without any restriction relating to the change in shareholding of the existing management below 51% pursuant to implementation of this Resolution Plan. It is further envisaged that any tax benefit or holiday, which the corporate debtor is eligible whether under section 80IB, 115JB or any other applicable section of the Income Tax Act, 1961, is seamlessly allowed to the corporate debtor pursuant tothechangeof management. Resolution applicant further envisages that no additional tax liability should arise pursuant to the re-casting and re-structuring of the financial statement including for thewrite-offand/or write-back of infructuous orexcesscreditors liabilities, which would be done after the approval of

resolution plan by the Adjudicating Authority.