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Judgment
Per: Ajay Kumar Vatsavayi, Member (J)
This Application has been filed by Mr. Ravindra Beleyur (hereinafter referred to as 'Applicant / Resolution Professional') under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 ('IBC/Code') seeking approval of the Resolution Plan submitted by Sri Kauvery Medical Care (India) Limited, the Resolution Applicant in respect of the Corporate Debtor under Sec. 31(1) of the Code and declare that the same be binding on the Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan.
Brief facts of the case are given hereunder:
The main Company Petition bearing CP (IB) No.144/BB/2017 filed by the Financial Creditor i.e. Pegasus Assets Reconstruction Private Limited u/s 7 of the Code for initiation of the Corporate Insolvency Resolution Process (CIRP) in respect of Corporate Debtor, namely, M/s. Yashomati Hospitals Private Limited, was admitted by this Adjudicating Authority, vide order dated 16.03.2021, and the CIRP of the Corporate Debtor was initiated by appointing Ms.Medha Kulkarni as the Interim Resolution Professional and she was directed to take necessary actions in accordance with relevant provisions of the Code and Regulations made thereunder.
Pursuant to the appointment, the then IRP had issued public announcement on 19.03.2021 calling upon various creditors of the Corporate Debtor to submit their proof of claim. The IRP constituted the Committee of Creditors (CoC) and conducted the 1st meeting of the CoC on 28.05.2021, wherein, it was resolved to appoint Mr.Ravindra Beleyur as the Resolution Professional (RP) of the Corporate Debtor. Accordingly, this Tribunal appointed the Applicant herein as the RP, vide order dated 06.08.2021 in IA No.200 of 2021.
It is stated that the then IRP had constituted the CoC on 28.05.2021 and the Applicant herein had reconstituted the CoC on 17.09.2021. Pursuant to Regulation 27 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ('Regulations'), the IRP had appointed two registered Valuers viz., Protocol Valuers Pvt. Ltd. and RBSA Valuation Advisors LLP on 23.06.2021 to determine the fair value and liquidation value of the Corporate Debtor in accordance with the Regulation 35 of the Regulations. The Valuers had submitted their report on 22.11.2021 and 29.11.2021 respectively. The liquidation value of the Corporate Debtor is Rs.57.15 Crore.
It is further stated that then IRP had filed an application seeking exclusion of 66 days in view of the stay granted by the Hon'ble High Court of Karnataka i.e., from 09.04.2021 to 05.05.2021 and also due to the lockdown imposed in the wake of Covid-19 pandemic from 24.04.2021 to 14.06.2021 in calculating the timeline for completion of CIRP of the Corporate Debtor vide IA No.213 of 2021, and the same was excluded by this Tribunal, vide order dated 06.08.2021.
The Applicant after taking charge of the Corporate Debtor had once again published the public announcement on 30.09.2021 as a matter of abundant caution. Vide IA No.345 of 2021, the Applicant sought exclusion of 42 days i.e., from 22.06.2021 to 02.08.2021 in view of the stay granted by the Hon'ble High Court of Karnataka, and the same was excluded vide order dated 15.11.2021. In view of the said order, after excluding the aforesaid 66 days and 44 days, the (180^{\text{th}}) day for completion of CIRP is on 29.12.2021.
It is submitted that the necessary information memorandum as contemplated u/s 29(1) of the Code was prepared by the IRP and the same was circulated to the CoC Members. The Applicant had prepared the necessary eligibility criteria and the same was circulated with the CoC. It is stated that the Applicant had issued Form G on 23.08.2021 as approved by the CoC in its (8^{\text{th}}) meeting held on 20.08.2021 calling upon Expression of Interest for submission of Resolution Plan in respect of the Corporate Debtor with the last date being 09.11.2021.
Pursuant to the publication of Form G, the Applicant received 11 EOI. The Applicant after due diligence had prepared a list of Prospective Resolution Applicants ('PRA') totalling 8 as per eligibility criteria and placed the same before the CoC in its (10^{\text{th}}) meeting held on 17.9.2021, and the CoC had approved list of PRAs and Request for Resolution Plan (RFRP). The date of issuance of RFRP was 20.09.2021 and the last date for submission of resolution plan was extended till 09.11.2021 by the resolution of CoC in the said meeting. Originally the last date for submission of resolution plan was 20.10.2021.
The Applicant submits that he received four Resolution Plans from the following prospective resolution Applicants:
Bommidala Enterprises Private Limited ii. Shanti GD Ispat & Power Private Limited iii. Sri Kauvery Medical Care (India) Limited iv. Mr. Oleg Valentinovich Lezhnikov (Promoter/Director of Yashomati Hospitals Pvt. Ltd.)
The Applicant in the 14th meeting of the CoC held on 09.11.2021 apprised the CoC members that aforementioned four resolution plans were received and the password protected resolution plans were opened in the said CoC in the presence of respective resolution applicants on the same day. It is also stated that the resolution applicant Oleg Valentinovich Lezhnikov has not furnished bank guarantee / EMD for a sum of Rs.5 Crores along with the resolution plan and he was granted a weeks' time to furnish the same.
The Applicant while perusing the resolution plans called the resolution applicants to provide necessary details and documents so as to ensure its compliance with the last date being 18.11.2021, which was further extended till 20.11.2021 upon request. It is submitted that except one resolution applicant, namely, Oleg Valentinovich Lezhnikov, other three resolution applicants had provided necessary clarifications within the time limit provided.
The Applicant had forwarded three resolution plans to the Members of the CoC vide email dated 21.11.2021 along with his observations. Subsequently the resolution applicants were called to present the plans before the Members of the CoC in its 16th meeting held on 01.12.2021. In the said meeting CoC had requested all the resolution applicants to provide revised offer by way of a secured pdf file.
The resolution applicants submitted a revised offer on 06.12.2021 and the same was opened in the 17th meeting of CoC held on 07.12.2021 in the presence of respective resolution applicants. In the said meeting the three resolution applicants were requested to submit the final resolution plan after incorporating the revised offer by 10.12.2021. In view of the pending consideration of resolution plans by CoC, the Applicant was authorised by CoC in the 17th meeting to file appropriate application seeking extension of CIRP period by 90 days since 180th day for completion of CIRP is ending on 29.12.2021. Accordingly, an application u/s 12(2) of the Code was filed by the Applicant on 15.12.2021 for extension of CIRP timeline of Corporate Debtor from 30.12.2021 to 29.03.2022.
The Applicant submits that three resolution applicants had submitted their revised resolution plans on 10.12.2021. The password protected resolution plans were opened in the (18^{\text{th}}) meeting of CoC held on 11.12.2021. The Applicant informed the members of CoC that the revised plans would be forwarded along with certificate of compliance under the Code and Regulations tentatively by 15.12.2021 and the resolution applicants were also informed that there shall be no further rounds of discussion or negotiations.
The Applicant forwarded the revised resolution plans vide email dated 19.12.2021 to the Members of CoC as well as the promoter of the Corporate Debtor after taking confidentiality undertaking. The Applicant after having himself satisfied that 3 resolution plans are in conformity with the Code and Regulations put the plans for voting by CoC. The CoC in its (19^{\text{th}}) meeting held on 21.12.2021 approved the resolution plan submitted by Sri Kauvery Medical Care (India) Ltd. with (100%) voting. Copy of the minutes of (19^{\text{th}}) meeting of CoC and resolution plan as approved by the CoC have been placed on record as Annexures - A15 and A16 respectively.
Pursuant to Regulation 39(4) the Applicant has prepared the Compliance Certificate in Form-H and the same is placed on record as Annexure-A18. It is also stated that the Resolution Applicant at the time of submission of resolution plan had furnished a bank guarantee for a sum of Rs.5 crores and after the approval of the plan by CoC had provided a Bank Guarantee for a sum of Rs.20.62 crores on 25.12.2021.
It is certified by the RP in para 4 of Form-H that the said Resolution Plan complies with all provisions of the Insolvency & Bankruptcy Code, 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force. It is also stated in para 4(ii) of Form-H that the Resolution Applicant M/s. Sri Kauvery Medical Care (India) Limited has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under Section 29A of the Code to submit Resolution Plan and that the contents of the said affidavit are in order.
Pursuant to the approval of the Resolution Plan by the CoC u/s 30(4) of the Code as the successful Resolution Plan, the Applicant filed the instant Application.
Heard Shri T. Ravi Chandran, learned Counsel for the Applicant and carefully perused the pleadings on record.
The Corporate Debtor herein, namely, M/s. Yashomati Hospitals Private Limited was incorporated on 16.03.2007 and the CIRP proceedings were initiated against the Corporate Debtor by this Adjudicating Authority, vide order dated 16.03.2021 passed in C.P. (IB) No.144/BB/2017. The present application is filed for approval of the Resolution Plan submitted by M/s.Sri Kauvery Medical Care (India) Limited (Resolution Applicant). The approval has been sought under the provisions of Section 31(1) of the Code.
In pursuant to the public announcement inviting claims from the Creditors of the Corporate Debtor, the then IRP had constituted the Committee of Creditors on 28.05.2021 and the Applicant herein had reconstituted the CoC on 17.09.2021. The list of Financial Creditors of the Corporate Debtor being Members of the CoC and distribution of voting share among them is as under (Para No.5 of Form H):
| Sl. No. | Name of Financial Creditor | Remarks | Voting (%) |
|---|---|---|---|
| 1. | Pegasus Assets Reconstruction Private Limited | Secured Financial Creditor | 100% Voting Right |
| 2. | Mr. Artur V. Nikitin | Unsecured Financial Creditor and Related Party of the Corporate Debtor | Member of CoC without Voting Rights |
The details of stakeholders and the amounts provided for them under the Resolution Plan given in Para No.7 of Form H are as under:-
(Amount in Rs. Crores)
| Category of Stakeholders | Sub-Category of Stakeholder | Amount Claimed | Amount Admitted | Amount Provided under the Plan# | Amount Provided to the Amount Admitted (%) |
|---|---|---|---|---|---|
| Financial Creditors | Financial Creditors with voting rights | 24.80 | 24.80 | 24.80 | 100% |
| Other Financial Creditors | 205.33 | 3.21 | 3.21 | 100% | |
| Operational Creditors | Employees & Workmen | 7.64 | 0.91 | 0.91 | 100% |
| Other Creditors – Other than Financial Creditor & Operational Creditors (Workmen & Employee) | 5.84 | 2.92 | 2.92 | 100% | |
| Operational Creditors (Govt. dues) | 3.21 | 2.59 | 2.59 | 100% | |
| Grand Total | 246.82 | 34.43 | 34.43 | 100% | |
The compliance of the Resolution Plan has been given in Para No.9 of Form-H as follows:
| Section of the Code / Regulation No. | Requirement with respect to Resolution Plan | Clause of Resolution Plan | Compliance (Yes / No) |
|---|---|---|---|
| 25(2)(h) | Whether the Resolution Applicant meets the criteria approved by the CoC having regard to the complexity and scale of operations of business of the CD? | NA | Yes |
| Section 29A | Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, if any, of the Adjudicating Authority? | Page No.41, Clause XV(i) of the Resolution Plan | Yes |
| Section 30(1) | Whether the Resolution Applicant has submitted an affidavit stating that it is eligible? | Yes Appendix 10 | Yes |
| Section 30(2) | Whether the Resolution Plan – (a) provides for the payment of insolvency resolution process costs? | Page No.24 Clause X(A)ii | Yes If CIRP Cost exceeds the projected, the RA shall bear the same |
| (b) provides for the payment to the operational creditors? | Page No.26 Clause X(C) | Yes | |
| (c) provides for the payment to the financial creditors who did not vote in favour of the resolution plan? | NA | NA | |
| (d) provides for the management of the affairs of the corporate debtor? | Page No.17 Clause VIII | Yes | |
| (e) provides for the implementation and supervision of the resolution plan? | Page No.21 Clause VIII | Yes | |
| (f) contravenes any of the provisions of the law for the time being in force? | NA | No | |
| Section 30(4) | Whether the Resolution Plan (a) is feasible and viable, according to the CoC? | NA | Yes |
| (b) has been approved by the CoC with 66% voting share? | NA | Yes | |
| Section 31(1) | Whether the Resolution Plan has provisions for its effective implementation plan, according to the CoC? | NA | Yes |
| Regulation 38(1) | Whether the amount due to the operational creditors under the resolution plan has been given priority in payment over financial creditors | NA | Yes |
| Regulation 38(1A) | Whether the resolution plan includes a statement as to how it has dealt with the interests of all stakeholders? | Page No.23 – Clause X of the Resolution Plan | Yes |
| Regulation 38(1B) | (i) Whether the Resolution Applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any resolution plan approved under the Code. (ii) If so, whether the Resolution Applicant has submitted the statement giving details of such non-implementation? | Undertaking furnished NA | No |
| Regulation 38(2) | Whether the Resolution Plan provides: (a) the terms of the plan and its implementation schedule? (b) for the management and control of the business of the corporate debtor during its term (c) adequate means for supervising its implementation? | Page No.17 Clause VIII | Yes Yes Yes |
| Regulation 38(3) | Whether the resolution plan demonstrates that (based on the declaration by the Resolution Applicant) – (a) it addresses the cause of default? (b) it is feasible and viable? (c) it has provisions for its effective implementation? | Page No.39 Clause XIII Page No.39 & 41 Clause XIII & XV Page No.17 Clause VIII | Yes Yes Yes |
| (d) it has provisions for approvals required and the timeline for the same? (e) the resolution applicant has the capability to implement the resolution plan? | Page No.33 Clause VIII Page No.16 Clause VI & VII | Yes Yes | |
| Regulation 39(2) | Whether the RP has filed applications in respect of transactions observed, found or determined by him? | NA | Yes RP has filed 5 Avoidance applications u/s 66 and 1 Avoidance application u/s 43 with the Adjudicating Authority till date. The same is under consideration of the Hon'ble Tribunal. |
| Regulation 39(4) | Provide details of performance security received, as referred to in sub-regulation (4A) of Regulation 36B. | NA | Yes |
The approval of the resolution plan has been sought under Section 31(1) of the Code, which reads as under:
"If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and 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, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan.
Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation"
The conditions provided for in Section 31(1) of the I&B Code, 2016 for approval of Resolution Plan are therefore:
The Resolution Plan is approved by the CoC under Section 30(4) of the Code;
The Resolution Plan so approved meets the requirements as referred to in Section 30(2) of the Code;
The Resolution Plan has provisions for its effective implementation.
The satisfaction of the conditions is discussed below.
It is submitted by the RP that, the CoC in its 19th Meeting held on 21.12.2021 have unanimously approved the Resolution Plan submitted by Sri Kauvery Medical Care (India) Limited with 100% Voting and therefore, the conditions provided for by Section 30(4) of the Code are satisfied.
The provisions of Section 30(2) of the I&B Code, 2016 are as follows:
"The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan –
(a)provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor;
(b)provides for the payment of debts of operational creditors in such manner as may be specified by the Board which 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 subsection (1) of section 53,
whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor.
Explanation 1. — For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors.
Explanation 2. — For the purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor-
(i)where a resolution plan has not been approved or rejected by the Adjudicating Authority;
(ii)where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or
(iii)where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;
(c)provides for the management of the affairs of the Corporate debtor after approval of the resolution plan;
(d)The implementation and supervision of the resolution plan;
(e)does not contravene any of the provisions of the law for the time being in force
(f)confirms to such other requirements as may be specified by the Board."
The compliance of Section 30(2) of the Code is given in Para No.9 of Form-H (supra). The same is being further examined as under:
Section 30(2)(a): The Resolution Plan at Clause X(A)(ii) of the Resolution Plan (Page No.182 of the Application) states that the Information Memorandum read with the information / documents shared by the Resolution Professional in the Virtual Data Room does not contain detailed estimates of the CIRP cost and therefore in consultation with the Resolution Professional and based on best estimates, it is proposed to allocate Rs.3.25 Cr. against the CIRP Cost inclusive of projections for the months from November 2021 till March 2022 (tentative outer limit for Effective Date). Further, if such CIRP costs exceeds the projected sum, the Resolution Applicant shall bear the same subject to such excess being reduced / adjusted from the residual payment due to the shareholders. Kauvery undertakes that the actual CIRP cost shall be paid within 30 (Thirty) Business days from the Effective Date.
Section 30(2)(b): The Resolution Plan at Clause X(C) of the Resolution Plan (Page No.184-187 of the Application) states that there are no claims from the Workmen, and that there are 52 Claims from Employees amounting to Rs.50,39,770/- (Rupees Fifty Crores Thirty Nine Lakhs Seven Hundred and Seventy only) and agrees to pay 100% of the admitted claims from the Employees of the Corporate Debtor as upfront payment i.e., 0-30 days. Further, there are 17 Claims from Authorised Representatives of Workmen/Employees/Union based on the documentary submission to Labour Department (Government of Karnataka) regarding industrial dispute of unpaid wages sent to the Presiding office dues of employees payable for the period from February 2016 to March 2017 amounting to Rs.40,81,490/- (Rupees Forty Lakhs Eighty-One Thousand Four Hundred and Ninety only) and agrees to pay 100% of the admitted claims from the Authorised Representatives of Workmen/Employees/Union as upfront payment i.e., 0-30 days.
Section 30(2)(c): In Clause VIII of the Resolution Plan (Page No.177 and 178 of the Application), it is inter alia stated that the management and control of the business of the Corporate Debtor from the Effective Date till the Settlement Date envisaged in the Resolution Plan are as under:
On the Effective Date, it is proposed that the Resolution Professional Sri Ravindra Beleyur, who was acting as Resolution Professional and, therefore, experienced in managing the affairs of the Corporate Debtor during the CIRP Process, to act as a monitoring agent ("Monitoring Agent"), on such remuneration, as may be mutually agreed between the Monitoring Agent and the Resolution Applicant till completion of the Term, subject to the approval of the said remuneration by the Monitoring Committee. In the event, Mr. Ravindra Beleyur refuses to or is unable to continue post-approval of this Plan by the Adjudicating Authority, or if the Resolution Applicant seeks for a change, the Monitoring Committee shall appoint an independent person who is a Registered Insolvency Professional having experience in handling CIRP process, agreeable to the Resolution Applicant to act as the Monitoring Agent, and such person shall discharge all functions of the Monitoring Agent as envisaged under the Resolution Plan.
It is further proposed that on and from the Effective Date till the Settlement Date, the Monitoring Agent, acting on the sole instructions of the Monitoring Committee, shall perform duties as may be assigned by the Monitoring Committee towards successful implementation of this Resolution Plan.
During the Monitoring Period the Monitoring Committee shall monitor the implementation of the Plan
The management and operations of the Corporate Debtor shall solely be undertaken by the Resolution Applicant, in the ordinary course and on a going concern basis, and the erstwhile promoters or the erstwhile promoter group or their nominees or shareholders or other members of the Monitoring Committee and such other persons shall not, during such period, participate in the Corporate Debtor's management.
Section 30(2)(d): In Clause VIII of the Resolution Plan, implementation of Plan (Page No.179 and 180 of the Application) is given as under:
| S. No. | Activity | Indicative Timeline | Responsibility |
|---|---|---|---|
| 1. | Formation of Monitoring Committee in line with the Resolution Plan and execution of Memorandum of Understanding governing the functioning of the Monitoring Committee | Within Five Business Days from the Effective Date | Resolution Applicant in consultation with the Resolution Professional |
| 2. | Appointment of the Monitoring Agent | Within Two Business days from the date of formation of the Monitoring Committee | Monitoring Committee |
| 3. | Execution of Material Agreements, MOUs such as escrow agreement, agreement with monitoring agent, giving effect to the Plan | Within Two Business days of appointment of Monitoring Agent | Monitoring Committee / Resolution Applicant |
| 4. | Payment of Plan Consideration and Execution of Material Agreements | On or before the Settlement Date as per Clause X of this Resolution Plan | Resolution Applicant |
| 5. | All required process as contemplated in this Plan in relation to the Corporate Debtor | On or before the Settlement Date | Monitoring Committee / Resolution Applicant |
| 6. | Completion of payment towards admitted Claims as per Resolution Plan | As per Clause IV read with Clause X of this Resolution Plan | Monitoring Agent / Monitoring Committee / Resolution Applicant |
| 7. | Automatic Dissolution of Monitoring Committee | Immediately on Settlement Date | Automatic |
| 8. | Directions to complete the pending compliances required for De-merger and giving effect to De-merger of the Corporate Debtor with the Resolution Applicant (Subject to approval of Adjudicating Authority) | After Settlement date | Resolution Applicant / Corporate Debtor |
The terms of this Plan shall be binding on all stakeholders as provided under Section 31 of the Code. Further, the Corporate Debtor / Resolution Applicant shall be entitled to file for approvals and consents or intimate the Governmental Authorities as may be required to implement this Plan.
Section 30(2)(e): In Clause VIII of the Resolution Plan (Page No.177 of the Application), it is declared that the Resolution Plan does not contravene any applicable regulatory enactments including the Companies Act and Income Tax Act.
Section 30(2)(f): In Clause XV of the Resolution Plan (Page No.199 of the Application), it is inter alia stated that the Applicant has conducted a thorough compliance check of the Resolution Plan in terms of the Code as well as Regulations of the IBBI (Corporate Insolvency Resolution Process) Regulations, 2016 (the Regulations) and has submitted Form H under Regulation 39(4). It is stated by the Resolution Professional that the Plan is in compliance with the provisions of the Code and the Regulations. It is further stated that the Resolution Applicant is not disqualified from submitting Resolution Plan under Section 29A and other provisions of the Code and any other Applicable Law, and that the Resolution Plan submitted by it is feasible and viable to the best of its knowledge and belief. It is also confirmed that neither the Resolution Applicant nor any of its related parties have failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Authority at any time in the past.
We are now examining the compliance of the proviso to Section 31(1) of the I&B Code, 2016 that the Resolution Plan has provisions for its effective implementation. The Resolution Plan provides that the Monitoring Committee as defined in Clause VIII of the Resolution Plan (Page No.177 of the Application) proposed for the appointment of a Monitoring Committee on approval of the Resolution Plan by the Adjudicating Authority. It is proposed that the Monitoring Committee shall comprise of One Representative from the Member with Voting Rights of CoC i.e., Pegasus Asset Reconstruction Company Limited, One Representative of the Resolution Applicant and the Resolution Professional. The said Committee shall monitor the implementation of the Plan. In no event the total consideration for the claims or liabilities recognized in this Resolution Plan, including payment to Shareholders shall exceed Rs.85,40,00,000/- (Rupees Eighty Five Crores Forty Lakhs only).
Clause VII of the Resolution Plan (Page No.174-175 of the Application) provides for the Sources of Funds, wherein it is inter alia stated the infusion of funds for Resolution Plan would be met from the own sources of Sri Kauvery Medical Care (India) Ltd. and from Banks and Financial Institutions. The Board Resolution approving Kauvery's participation in the CIRP process of Yashomati Hospitals Pvt. Ltd. and its consequent intent to invest its available Equity funds towards acquisition of the Corporate Debtor has been enclosed as Annexure-3 of the Resolution Plan dated 09.11.2021. The letter of intent received from the Bankers of Kauvery i.e., HDFC Bank Limited, State Bank of India and IndusInd Bank are enclosed as Annexure 7A, 7B and 7C to the Resolution Plan dated 09.11.2021.
We have discussed above that the requirements under section 31(1) of the Code are satisfied in the present case. In para 4 of Form H the Resolution Professional has certified that the Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code, 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force. The RP has also certified that the Resolution Applicant M/s. Sri Kauvery Medical Care (India) Limited has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit the Resolution Plan and the contents of the said Affidavit are in order. Copy of the Affidavit of the Resolution Applicant regarding its eligibility under section 29A have been annexed as Annexure No.5 submitted along with Resolution Plan dated 09.11.2021. The RP has submitted that the Resolution Plan has been approved by the CoC with 100% voting share of financial creditors in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering its feasibility and viability and other requirements specified by the CIRP Regulations.
Pursuant to Regulation 38(3)(a) of the CIRP Regulations regarding whether the Resolution Plan demonstrates that it addresses the cause of default, it is inter alia stated in Clause XIII of the Resolution Plan (Page No.197 of the Application) that the causes of default of the Corporate Debtor were inter alia due to lack of experienced senior management, lack of customer care and clinical expertise, financial indiscipline and mismanagement & negligence. The Resolution Applicant believe that the aforesaid causes of default were more relating to a certain management style/functioning and does not represent the real value proposition of the underlying hospital. The Resolution Applicant intends to drive the business of the Corporate Debtor in line with the principles of financial prudence combined with great medical care to the community at affordable pricing.
Pursuant to Regulation 38(3)(b) of the CIRP Regulations regarding the feasibility and viability of the Resolution Plan, it is stated in Clause XIII and XV of the Resolution Plan (Page No.197 and 199 of the Application) that the Resolution Applicant had prayed for certain immunity, reliefs and concessions in addition to the inherent immunities, reliefs and concessions under the IBC, 2016. In this connection, it is declared that even if any of its prayed immunities, reliefs and concessions are not specifically approved by the Adjudicating Authority, the Resolution Plan would still be feasible and viable. It is further confirmed and stated that the Resolution Plan submitted by them is feasible and viable to the best of their knowledge and belief.
Pursuant to Regulation 38(3)(c) of the CIRP Regulations regarding whether the Resolution Plan has provisions for its effective implementation, it is inter alia stated in Clause VIII of the Resolution Plan (Page No.175-180 of the Application) that upon and with effect from the Effective Date, the ownership, control and management of the Corporate Debtor shall vest completely (100%) with the Resolution Applicant and it shall continue to operate the Corporate Debtor on a going concern basis as per the provisions of law. Post completion of the Effective Date, the Corporate Debtor, having come into the ownership and control of the Resolution Applicant intends to immediately use its assets and properties on a going concern basis for expanding the business operations. It is proposed for the appointment of a Monitoring Committee on approval of the Resolution Plan by the Adjudicating Authority and the said Committee shall monitor the implementation of the Plan. The detailed implementation of the Plan is already stated in para 12 of this Order.
Pursuant to Regulation 38(3)(d) of the CIRP Regulations regarding whether the Resolution Plan has provisions for approvals required and the timeline for the same it is inter alia stated in Clause XII of the Resolution Plan (Page No.191 of the Application) that the 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. Further, the Resolution Applicant confirms and states that it shall undertake the necessary actions to apply to give effect to the obtention of fresh licenses/approvals/renewals and other applicable licenses under this Resolution Plan within the said time period of one year. The Resolution Applicant intends to start the operations of the Hospital of the Corporate Debtor from Day 1 and hence prays that such action of conducting the hospital operations through the licenses and permits which are required to be obtained by the Corporate Debtor during the period from the Effective Date till such date the relevant licenses/approvals are obtained, shall be construed as operating the Hospital with all necessary approvals in place and shall not be construed as violation under any extant Law.
Pursuant to Regulation 38(3)(e) of the CIRP Regulations regarding whether the Resolution Applicant has the capability to implement the Resolution Plan, it is stated in Clause VI and VIII of the Resolution Plan (Page No.174 and 175 of the Application) that Kauvery Group, having a consolidated net worth of Rs.400.87 Crores (Audited) has a well standing record of servicing its debts. Brickwork Ratings India Pvt. Ltd. has assigned a rating of 'BWR A Positive'. It is also confirmed that Kauvery possess suitable financial and technical expertise in the turn-around of the Corporate Debtor and that the infusion of funds for Resolution Plan would be met from the own sources of Kauvery and from banks and financial institutions and that the Kauvery had Cash reserves of Rs.160 Crores (Audited) and Adjusted Net Debt to Adjusted-Equity Ratio of 0.63.
Further, according to Regulation 39(4) of the CIRP Regulations, the Resolution Applicant shall furnish evidence of receipt of performance security as required under sub-regulation (4A) of Regulation 36B which came into effect from 24.01.2019. In this regard, at Annexure-A23 (Page No.1037-1046 of the Application), the following Performance Guarantees are given:
| Bank | Bank Guarantee Details | Amount |
|---|---|---|
| State Bank of India | 0406021BG0000248 dt.24-12-2021 (Date of Expiry: 22-12-2022) | Rs.20,62,00,000/- |
| State Bank of India | 0406021BG0000204 dt.03-11-2021 (Date of Expiry: 03-11-2022) | Rs.5,00,00,000/- |
It is stated that the Applicant while going through the books of accounts of the Corporate Debtor found certain fraudulent and preferential transactions were carried out by certain persons who were in control and management of the Corporate Debtor (without any proper authority) during the relevant period. The Applicant submits that he has filed 5 applications u/s 66 of the Code and one application u/s 43 of the Code. He further submits that the then IRP had appointed one M/s. BDO India LLP for conducting forensic audit of the Corporate Debtor on 23.06.2021.
The Applicant vide Diary No.798 dated 28.02.2022 has enclosed the following judgments:
High Court of Delhi in Venus Recruiters Private Limited vs. Union of India & Ors. (2020) SCC OnLine Del 1479;
National Company Law Appellate Tribunal in Interups Inc. vs. Kuldeep Kumar Bassi in Company Appeal (AT) (Insolvency) No.1079 of 2020 dated 15.03.2021;
National Company Law Appellate Tribunal in 63 Moons Technologies Limited vs. Union of India in Company Appeals (AT) (Insolvency) Nos.454, 455 and 750 of 2021 dated 27.01.2022.
The Applicant also enclosed a copy of IBBI Notice dated 23.12.2021 proposed from the Ministry of Corporate Affairs to issue a clarificatory amendment with regard to Section 43; details of share capital allotment made to shareholders of the Corporate Debtor and copy of latest Audited Financial Statements.
In respect of the reliefs and concessions, it is declared that whatever reliefs and concessions entitled by the Resolution Applicant by virtue of the approval of the Plan, are entitled to it in accordance with Law. In respect of the remaining, it is not possible for us to issue any direction except to say that the Resolution Applicant may take appropriate steps in accordance with Law in respect of the said reliefs and concessions and the public authorities / government authorities / any other party would duly consider the said requests / applications of the Resolution Applicant in accordance with Law.
In the circumstances and for the aforesaid reasons, the Revised Resolution Plan dated 10.12.2021 ('Resolution Plan') as approved by the CoC and submitted by M/s. Sri Kauvery Medical Care (India) Limited (annexed to the Application as Annexure-A16) is hereby approved. The Resolution Plan so approved shall be binding on the Corporate Debtor and 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 such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the Resolution Plan. Under the provisions of section 31(3) of the Code, we also direct as under:
The moratorium order passed by this Adjudicating Authority under Section 14 of the Code on 16.03.2021 in the main CP shall cease to have effect; and
The Resolution Professional shall forward all records relating to the conduct of the Corporate Insolvency Resolution Process and the Resolution Plan to the Board to be recorded on its database.
Accordingly, IA No.06 of 2022 is disposed of.