Pap Coat (India) Private Limited vs Mr. Iqbal Singh Gandhi

The case is fixed for pronouncement of order. The order is pronounced in the open court, vide separate sheet.

This application is filed by the Resolution Professional of Camerich Papers Private Limited (Corporate Debtor) under Section 30(6) and Section 31 of the Insolvency and Bankruptcy Code, 2016 (“Code”) r.w. Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Process of Corporate Persons) Regulations, 2016 seeking the following prayers: -

CIRP Admission It is stated that this Tribunal vide its order dated 27.02.2024 admitted the Corporate Debtor – M/s Camerich Papers Private Limited, to Corporate Insolvency Resolution Process (“CIRP”) in Company Petition No. 83 of 2023 filed by the Operational Creditor –M/s Saheb Impex (through its partner Mr. Raviraj T Aghara) Section 9 of the Code and thereby appointed the Mr. Ashish Shah as the Interim Resolution Professional (“IRP”) of the Corporate Debtor.

Public Announcement: It is stated that the public announcement inviting the claims from all creditors of the Corporate Debtor was made in Form-A on 01.03.2024 wherein the last date for submission of claims was 11.03.2024.

Constitution of CoC: That upon the collation of claims the Applicant constituted a Committee of Creditors (“CoC”) on 20.03.2024, However the applicant had received claims after Constitution of Committee of Creditor on 20.03.2024 from the respective Creditors hence the applicant had Re-constituted the Committee of Creditor on 05.06.2024.

It is stated that the 1^st meeting of CoC was held on 28.03.2024 wherein the member had resolved to reduce the notice period for calling the CoC Meeting from 5 days to 2 days, also resolved to replace the existing IRP and appoint the applicant as Resolution Professional of the Corporate Debtor and ratified the CIRP Cost.

It is stated that the erstwhile IRP had convened the Second Meeting of the CoC on 09.05.2024 wherein the CoC Members had resolved to publish Form-G for inviting Expression of Interest ("EoI") from the prospective Resolution Applicants, also resolved to appoint Registered Valuers for the Corporate Debtor and ratified the CIRP Cost.

The applicant stated that pursuant to approved resolution in the First Meeting of the CoC, the CoC Member had filed an application, wherein this Tribunal vide its Order dated 10.05.2024, Confirm the appointment of the applicant as Resolution Professional of the Corporate Debtor.

The applicant stated that, pursuant to the resolution approved in the Second CoC Meeting dated 09.05.2024, the applicant invited Expressions of Interest in Form G on 16.05.2024, published in Economic Times (English) and Financial Express (Gujarati). Wherein the last date of submission of EoI was 31.05.2024.

The applicant stated that the applicant had Convened the Third Meeting of the CoC on 23.05.2024 wherein the CoC Members had resolved to approved the EMD Amount to be submitted along with EOI as well as Resolution Plan from the PRA, however the CoC defer the agenda Item for the Evaluation Metrix and Request for the Resolution Plan and ratified the CIRP Cost.

The applicant submitted that the applicant had convened the Fourth Meeting of the CoC on 11.06.2024, wherein the CoC Members had Discussion with Registered Valuers for the Valuation and Methodology adopted by Valuer for the Valuation of the assets of the Corporate Debtor and discussion on Insurance Policy, Ratified the CIRP Cost.

The applicant stated that the applicant had convened the Fifth Meeting of the CoC on 24.06.2024 wherein the CoC Member had resolved to appoint M/s. K. Chetan & Associates as Forensic/ Transaction Auditor of the Corporate Debtor, also apprise that the applicant had received new 50 claims from the Creditor after issuance of RFRP and ratified the CIRP Cost.

The applicant submitted that the applicant had convened the Sixth Meeting of the CoC on 15.07.2024 wherein he apprised the CoC that applicant had received several new Claims from the Class of Creditors after issuance of RFRP, also resolved to extend the timeline for the submission of Resolution Plan till 25.07.2024, also defer the agenda item for the ratification of CIRP Cost and appointment of third Valuer for the Class of Securities and Financial Assets.

The applicant state and submit that the applicant had convened the Seventh Meeting of the CoC on 26.07.2024 wherein he apprised that the applicant had received three Resolution Plans till 25.07.2024, the details are reproduced as under:-

However, Two Prospective Resolution applicants (Sr. No. 2 & 3) are not eligible in view that the PRA had not submitted EMD amount along with Resolution Plan. The CoC Members had also discussed the Resolution Plan as Submitted by the Prospective Resolution Applicant Namely M/s. Shree Ram Vessel Scrap Pvt Ltd and resolved to Negotiate with the PRA in the subsequent CoC Meeting. Meanwhile, the applicant apprised the members that numerous claims were received from the class of creditors after the issuance of the RFRP, the members had recommended to admit the new claims in the list of the Creditors, also ratified the CIRP Cost.

The applicant stated that the applicant had convened the Eighth Meeting of the CoC on 01.08.2024 wherein the CoC Members together with RP had invited the Prospective Resolution Applicant namely M/s. Shree Ram Vessel Scrap Private Limited for negotiating enhancement in plan value. Members had requested the PRA to increase their financial bid substantially and submit the same on or before 06.08.2024.

The applicant stated that the applicant had convened the Ninth Meeting of the CoC on 08.08.2024 wherein the applicant apprised regarding the E-mail received from the PRA wherein that the applicant had received the Revised Financial Bid from the PRA. Since the PRA had not improved his offer sustainably, after detailed discussion the CoC Members had resolved to reject the Resolution Plan as Submitted by the PRA namely M/s. Shree Ram Vessel Scrap Private Limited. The Applicant suggested for publishing Form G (Invitation of Expression of Interest) once again for the revival of the Corporate Debtor. The CoC Members had approved the Resolution to republish Form G- Invitation of Expression of Interest, also approved the resolution to extend the period of Insolvency Resolution Process period for another period of 90 days beyond 180 days as per the provisions of Section 12(2) of the Insolvency and Bankruptcy Code, 2016. Accordingly, the applicant had put both the agenda items for voting, which were approved unanimously.

The applicant stated that, pursuant to resolution passed in the Ninth CoC meeting, Publication of Form G was made in the newspapers namely Gujarat Samachar - (Gujarati Language) and Economic Times - (English Language), on 10.08.2024 wherein the last date for submission of Expression of Interest was 26.08.2024 and last date of Submission of Resolution Plan was 04.10.2024 which is beyond 180 days of CIRP Period.

That pursuant to the resolution passed in the Ninth meeting of CoC dated 08.08.2024, The applicant/RP filed an application bearing IA No. 1336 of 2024 in CP IB No. 83 of 2023 seeking for an extension of the CIRP period of the Corporate Debtor by 90 days beyond 180 days. That This Hon'ble Tribunal vide its order dated 30.08.2024 passed in IA No. 1336 of 2024 was pleased to extend the CIRP period of the Corporate Debtor by 90 days from 26.08.2024.

The applicant stated that the applicant had convened the Tenth Meeting of the CoC on 02.09.2024 wherein the applicant has apprised that pursuant to the publication of Form G i.e. Expression of Interest dated 10.08.2024, the applicant had received 8 Expression of Interest received from the Prospective Resolution Applications, and ratified the CIRP Cost.

The applicant stated that the applicant had convened the Eleventh Meeting of the CoC on 07.10.2024 wherein he apprised that pursuant to publication of Form G dated 10.08.2024, the Last date of Submission of Resolution Plan was 04.10.2024, however the applicant had received 2 (Two) Resolution Plans from the Prospective Resolution Applicants the details are as under:-

The Applicant together with the CoC Members had discussed the Resolution Plans with Prospective Resolution Applicants. After detailed discussion, the Prospective Resolution Applicant sought time to submit revised/ enhanced amount on or before 12.10.2024. The CoC Members had also appointed M/s. Chirag R Shah & Associates as a statutory auditor for the F.Y. 2023-24 of the Corporate Debtor.

The submitted that the Applicant had convened the Twelfth Meeting of the CoC on 16.10.2024 wherein apprise that the applicant had received revised proposal from the aforesaid Resolution Applicants through E-mail on 11.10.2024 and 14.10.2024, the CoC Members had discussion, Negotiation with the Prospective Resolution Applicant to increase the financial bid substantially, after detailed discussion and negotiation with the Prospective Resolution Applicants, both the PRA sought time to submit their revised offer on or before 19.10.2024.

The applicant further stated applicant had received an EoI from one of the Prospective Resolution Applicant Namely M/s. Millenium Private Limited who is ready and willing to submit Resolution Plan.

The applicant stated that the applicant had convened the Thirteenth Meeting of the CoC on 23.10.2024 (Adjourned to 24.10.2024) wherein he apprised that pursuant to the last Meeting dated 16.10.2024, wherein in one of the PRA i.e. M/s. KR Pulp and Papers Limited had submitted the Revised offer on 19.10.2024 (through E-mail) After considering the quality of assets and potential of the Corporate debtor, The CoC Members had resolved not to consider the revised plan submitted by both PRAs and resolved to re-publish Form G - Invitation of Expression of Interest and also ratified the E-valuation of Metrix, RFRP and Performance Security after resolution Plan.

The applicant states and submits that, pursuant to resolution passed in the Thirteenth CoC meeting, Publication of Form G was made in the newspapers namely Divya Bhaskar - (Gujarati Language) and Financial Express (English Language), on 25.10.2024 wherein the last date for submission of Expression of Interest is 09.11.2024 and last dated of Submission of Resolution Plan is 17.12.2024 which is beyond 270 days of CIRP Period.

The applicant state and submit that the applicant had convened the Fourteenth Meeting of the CoC on 13.11.2024 wherein he apprised that pursuant to the publication of Form G dated 25.10.2024 the applicant had received 4(Four) Eol from the Prospective Resolution Applicants the details are as under:-

The Applicant together with CoC Members had invited all the Prospective Resolution Applicants, after detailed discussion all 4 PRA's apprised that PRA had visited the Plant of the CD and they were impressed by it, and also positive that can revive the plant, if Resolution Plan is approved. CoC also approved the resolution to extend the period of Insolvency Resolution Process period for another period of 60 days beyond 270 days as per the provisions of Section 12 of the Insolvency and Bankruptcy Code, 2016. Accordingly, the applicant had put both the agenda items for voting, which were approved unanimously.

That pursuant to the resolution passed in the Fourteenth meeting of CoC dated 13.11.2024, The applicant/RP filed an application bearing IA No. 1801 of 2024 in CP IB No. 83 of 2023 seeking for an extension of the CIRP period of the Corporate Debtor by 60 days beyond 270 days. That This Hon'ble Tribunal vide its order dated 02.12.2024 passed in IA No. 1801 of 2024 was pleased to extend the CIRP period of the Corporate Debtor by 60 days from 25.11.2024.

The applicant convened the Fifteenth to Eighteenth CoC Meetings between 19.12.2024 and 09.01.2025 to discuss Resolution Plans submitted by K R Pulp and Paper Limited and Nyssa Corporation Limited, pursuant to the Form G publication dated 25.10.2024. After negotiations, the CoC requested revised bids by 23.12.2024. Nyssa Corporation Limited submitted a final enhanced Resolution Plan with addendums dated 06.01.2025 and 09.01.2025, which was approved by the CoC with 99.95% votes on 21.01.2025, subject to the submission of a Performance Guarantee of Rs. 2.50 Crores by 28.01.2025. The CoC also ratified the CIRP cost and extended the e-voting period to 21.01.2025

The applicant stated and submitted that the applicant/RP had received the numerous request form the Members of the CoC to extend the E-voting period till 21.01.2025.

The applicant further submitted that the members of the CoC with 99.95% majority votes approved the revised resolution Plan submitted by the Nyssa Corporation Limited under Section 30(4) of the IB Code 2016.

The applicant further submits the key features of the Resolution Plan Submitted by M/s. Nyssa Corporation Limited as under:- Key features of the Revised Resolution Plan are tabulated and summarized herein below:-

The effective date of the plan shall be the date when the plan is approved by the concerned adjudicating authority viz. NCLT. The trigger date (T date) is the effective date.

The CIRP cost which are not met through the operations of the corporate debtor have been assumed at an amount of Rs. 100.00 lakhs comprising of the fees of the IRP/RP as approved by the COC, fees of the valuers who have carried out the valuation and such other fees and expenses as approved by the COC in accordance with the IBC as eligible BA 20 CIRP Costs under this head. It is understood that the CIRP costs are currently being borne from the cash flows of corporate debtor and/or Contribution from COC. In case if the actual CIRP costs are higher than the estimated cost then the higher cost would also be continued to be borne by the CD. However, in case if there is any shortfall in the available cash flows of the CD, such shortfall will be borne by the RA by way of additional infusion of fresh funds. However, in case if the actual CIRP cost is lower, then the differential will be infused in the corporate debtor as working capital. The RA will make payment of the Regulatory Fees prescribed under regulation 31A of the IBBI (CIRP) Regulations, 2016 as may be applicable. The RA will make the payment of the approved insolvency resolution process cost, to the extent not paid, in priority, i.e. in a month after the approval date.

The Payment proposed to various categories of the Operational Creditors are as under;

Rs. 6,627/- is proposed to be paid to the Provident Fund dues and Rs. 1,00,000/- is proposed to the GST Department, Morbi (50,000/- towards admitted claims and 50,000/- towards contingent claims), amounting to total payment for government dues of Rs. 1,06,627/-. 100% for Provident fund dues and 0.48% for the GST Department, Morbi. The above payment is proposed to made within 90 days from the Plan Approval Date (T+90). The remaining claims / liabilities of the all the Operational Creditors shall be cancelled and extinguished and nothing shall be payable towards the remaining dues of the operational Creditors.

SECURED FINANCIAL CREDITORS As per the IM and the latest details of claims available on the IBBI website dated 02.08.2024 and thereafter updated on 24.12.2024 and thereafter updated on 31.12.2024, There are 6 secured Financial Creditors as per the list envisaged above at para 5. Payment proposed to the Secured Financial Creditors are under:

The RA proposes to make the above payment within 90 days from the Plan Approval Date (T+90). The above payment should also be regarded as full and final settlement of the corporate debtor of all the dues payable to the secured creditors. Upon approval of the resolution plan and upon payment of the above amount within 90 days, all charge /mortgage /Hypothecation on all the Properties and Assets (Present and Future) of the Corporate debtor shall be released / satisfied and the secured financial creditors shall have no further right to on the corporate debtor/ Resolution Applicant.

In addition to the total payments to be made to all classes of creditors as envisaged above, amounting to a total of Rs. 8655.39 Lakhs and payment of CIRP Cost estimated to be 100.00 Lakhs, the resolution applicant will infuse additional Rs. 2325.00 Lakhs as under to revive the corporate debtor.

Hence, Total Fund infusion by the RA will be 11,080.39 Lakhs. The fund infusion will be in following form in the books of the Corporate debtor.

The summary of the total amounts payable to various classes of creditors is as under:

The Applicant has also received EMD of Rs. 25,00,000/- (Rupees Twenty-Five Lakhs Only) with EOI and EMD of Rs. 2,50,00,000/- (Rupees Two Crore Fifty Lakhs Only) along with the Resolution Plan respectively from the Resolution Applicant, Namely M/s Nyssa Corporation Limited. The said amounts of Rs. 2,75,00,000/- [Rs. 25,00,000/- + Rs. 2,50,00,000/-] is received in the bank account of the Corporate Debtor.

The Applicant further stated that the Resolution Applicant has to furnish the performance security/Bank Guarantee as mandated under sub-regulation (4A) of regulation 36 B of the CIRP Regulation, 2016 amounting to Rs 2,50,00,000/-(Rupees Two Crore Fifty Lakhs Only) within 7 days of approval of Resolution Plan by the CoC i.e. on or before 28.01.2025, which is yet to be received.

That the resolution plan submitted by the successful Resolution Applicant was approved by the CoC members with the requisite majority in favour of the resolution plan, and which is above the mandatory requirement under Section 30(4) of the Code, which reads as:

This Tribunal vide order dated 07.03.2025 directed the Applicant to place on record the subsequent/ material developments in the CIRP of the Corporate Debtor, more particularly with respect to the Resolution Plan. The same was filed before this Tribunal on 25.03.2025 vide inward diary no. D2037 and the applicant made the following averments:

This Tribunal vide order dated 08.04.2025 heard both the parties and recorded the following in the order:

This Tribunal vide order dated 30.04.2025 heard both the parties and recorded the following in the order:

This Petition is filed by the operational Creditor i.e. Pap Coat (India) Private Limited under Rule 11 of National Company Law Tribunal Rules, 2016 seeking the following prayers:

We have heard the Ld. Counsel for the Applicant/RP, along with RP, as well as Ld. Counsel for the Operational Creditor and perused the record. The primary issues for consideration are:-

The Resolution Plan proposed by M/s. Nyssa Corporation Limited included payments of Rs.86,55,38,768/- against admitted claims of Rs.2,20,22,41,899/-, with specific allocations for secured financial creditors (91.75% of admitted claims), operational creditors (workmen at 100%, employees at 20%, government dues at 0.52%, and others at 0.87%), and CIRP costs estimated at Rs. 100 lakhs. The SRA also proposed a fund infusion of Rs. 11,080.39 lakhs, including Rs. 1,500 lakhs as equity share capital and Rs. 9,580.39 lakhs as an unsecured loan, to revive the Corporate Debtor.

Despite CoC approval, the SRA failed to deposit the Performance Guarantee of Rs. 2.50 Crores by the stipulated deadline of 28.01.2025. The RP communicated repeatedly with the SRA on 23.01.2025, 12.02.2025, 03.03.2025, 18.03.2025, 19.03.2025, and 24.03.2025, and the CoC extended the deadline to 24.03.2025 during its 19th meeting on 19.03.2025. However, the SRA neither deposited the Performance Guarantee nor provided adequate justification, citing liquidity issues and a pending loan application.

This Tribunal also issued a show cause notice to the SRA on 08.04.2025, directing it to explain why the Resolution Plan should not be rejected for non-compliance and why the EMD and EOI amounts should not be forfeited. Despite due service, the SRA neither appeared nor filed an explanation by 30.04.2025, as recorded in the Tribunal's order.

Section 30(2) of the Code mandates that a Resolution Plan must be feasible and viable, providing for the payment of CIRP costs, debts of operational creditors, and management of the Corporate Debtor's affairs, among other requirements. The SRA's failure to deposit the Performance Guarantee, a critical condition of the CoC's approval, undermines the plan's feasibility and viability. The SRA's non-responsiveness to the RP's communications and this Tribunal's notice further demonstrate a lack of commitment to implementing the plan.

Section 31(2) of the Code empowers the Adjudicating Authority to reject a Resolution Plan that does not meet the requirements of Section 30(1). Given the SRA’s non-compliance and disinterest, this Tribunal finds that the Resolution Plan does not satisfy the mandatory conditions under the Code and cannot be approved.

The CoC, in its 19th meeting on 19.03.2025, resolved to forfeit the SRA’s EMD of Rs. 2,75,00,000 (Rs. 25,00,000 for EOI and Rs. 2,50,00,000 with the Resolution Plan) and sought permission to issue a fresh Form-G, excluding the period from 21.01.2025 to 24.03.2025 from the CIRP timeline.

The CIRP commenced on 27.02.2024, and by 24.01.2025, when the plan approval application was filed, 330 days had elapsed, exhausting the maximum permissible CIRP period under Section 12 of the Code, inclusive of extensions and legal proceedings. Section 12(3) allows extension beyond 180 days, not exceeding 330 days, as affirmed by the Hon’ble Supreme Court in Essar Steel India Ltd. v. Satish Kumar Gupta (2020) 8 SCC 531.

The Hon’ble Supreme Court in Kalyani Transco v. Bhushan Power and Steel Ltd. (Civil Appeal No. 1808 of 2020) held that once the 330-day period is exhausted, no Resolution Plan can be approved, and the Corporate Debtor must proceed to liquidation under Section 33 of the Code. The CoC’s request to issue a fresh Form-G would require additional time beyond the statutory limit, which is impermissible. Furthermore, excluding the period from 21.01.2025 to 24.03.2025 lacks legal basis, as no provision in the Code allows for such exclusion post the 330-day limit.

Regarding the forfeiture of the EMD, Regulation 36B(4A) of the CIRP Regulations mandates the provision of a Performance Guarantee, and non-compliance may result in forfeiture of amounts deposited, as decided by the CoC. The CoC’s resolution to forfeit the SRA’s EMD and EOI amounts is within its commercial wisdom and consistent with the terms of the EOI and Resolution Plan, which stipulate forfeiture in case of non-compliance with conditions such as the submission of the Performance Guarantee. This Tribunal finds no reason to interfere with this decision.

Pap Coat (India) Private Limited, an Operational Creditor, filed Intervention Petition 2 of 2025, seeking a copy of the Resolution Plan, permission to participate in the plan approval proceedings, and other just reliefs.

Given that the Resolution Plan is being rejected due to the SRA's non-compliance, the reliefs sought by Pap Coat (India) Private Limited for a copy of the plan and participation in the proceedings are infructuous, as no plan approval process is ongoing. The Operational Creditor's rights, including the opportunity to submit claims, will be addressed in the liquidation process as per the waterfall mechanism under Section 53 of the Code. Accordingly, the Intervention Petition is disposed of as infructuous.

The time-bound nature of the CIRP, as enshrined in Section 12 of the Code, is a cornerstone of the insolvency framework, ensuring expeditious resolution or liquidation. The CIRP period of 330 days has expired, and the SRA’s failure to comply with the Performance Guarantee requirement renders the Resolution Plan unviable. The CoC’s request for a fresh Form-G is unsustainable due to the statutory timeline constraint. Consequently, the Corporate Debtor must proceed to liquidation under Section 33 of the Code.

In view of the above findings, (a) IA(Plan)/2(AHM)/2025 is dismissed, and the Resolution Plan submitted by M/s. Nyssa Corporation Limited is rejected under Section 31(2) of the Code for non-compliance with Section 30(2).

The CoC’s resolution to forfeit the EMD and EOI amounts totaling Rs. 2,75,00,000 deposited by M/s. Nyssa Corporation Limited is upheld.

The request to issue a fresh Form-G is rejected as the CIRP period of 330 days has expired.

The provisions under Section 33(1)(b) of the Code are reproduced below:

As a consequence of the rejection of the application by this Adjudicating Authority and as the extended CIRP period of the Corporate Debtor expired on 24.01.2025, the Tribunal, relying on the provisions of Section 33(1)(b), is constrained to order the liquidation of the Corporate Debtor.

IBBI vide its circular number Liq-12011/214/2023-IBBI/840 dated 18.07.2023 in the exercise of its powers conferred under section 34(4)(b) of the Code, had recommended that an IP other than the RP/IRP may be appointed as liquidator in all the cases where liquidator (read liquidation) order is passed henceforth.

In view of the above, it is hereby ordered as follows: -

Accordingly, IA(Plan)/2/AHM/2025 stand disposed off accordingly.

The Intervention Petition 2 of 2025 filed by one of the Operational Creditor becomes infructuous and the same is dismissed as infructuous accordingly.

The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Learned Counsel for information and for taking necessary steps. Files be consigned to the record.