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Judgment
ORDER
PER: SH. L. N. GUPTA, M(T) & SH. HARNAM SINGH THAKUR, M(J)
Mr. Hemanshu Jetley, Resolution Professional of M/s Shri Vishnu Overseas Pvt Ltd (“Applicant/ RP”) has filed the present IA No. 1979 of 2023 under Section 30(6) read with Section 31(1) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations 2016, seeking approval of the Resolution plan submitted by a Consortium of 04 members viz., Mr. Naresh Garg, Mr. Vijay Kumar Mittal, Mr. Sunil Kumar Mittal and Mr. Vikas Garg (“Successful Resolution Applicants” / “SRA”). The applicant has prayed for the following reliefs :
a)Issue notice to the Income Tax Department in view of Section 79 of the Income Tax Act, 1961.
b)Allow the present application and approve the Resolution Plan under Section 31 of the Insolvency & Bankruptcy Code, 2016 submitted by Mr. Naresh Garg (consortium of 4 members) as approved by the Committee of Creditors with 100% voting share in its 10th CoC meeting dated 28.06.2023;
c)Declare that upon approval of the Resolution Plan by this Hon'ble Adjudicating Authority, the provisions of the Resolution Plan shall be binding on the Company, its creditors, guarantors, members, employees, Statutory Authorities and other stakeholders in accordance with Section 31 of the Code, and shall be given effect to and implemented pursuant to the order of this Hon'ble Adjudicating Authority;
d)Approve the appointment of the monitoring agency as stipulated in the Resolution Plan and approved by the Committee of Creditors;
e)Approve and grant reliefs and directions sought under the Resolution Plan by the Resolution Applicant;
f)Pass such other further order / orders) as may be deemed fit and proper in the facts and circumstances of the present case.”
To put succinctly, the facts of the present case are that the Punjab National Bank filed an application under Section 7 of IBC, 2016 for initiating CIR Process against the Corporate Debtor M/s. Shri Vishnu Overseas Private Limited. The said Application was admitted by this Tribunal vide Order dated 04.11.2022 and Mr. Hemanshu Jetley IP, was appointed as the Interim Resolution Professional (IRP) of the Corporate Debtor. Subsequently, the IRP Mr. Hemanshu Jetley was confirmed and continued as RP of the Corporate Debtor.
It is submitted by the Applicant that in terms of Regulation 6(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the IRP made a Public Announcement in Form-A on 06.11.2022 to invite claims, which was uploaded on the website of Insolvency and Bankruptcy Board of India (IBBI).
It is further submitted that the Applicant constituted the Committee of Creditors (CoC) comprising of the following members:
It is stated by the Applicant that the ‘Form-G’ was published on 19.12.2022 in the daily newspapers, namely, Financial Express (English) and Dainik Jagran (Hindi) in Chandigarh Edition. Later, a Corrigendum to Form G was published on 05/06.02.2023, by which the last date for receipt of Expression of Interest (EOI) was extended from 03.01.2023 to 21.02.2023.
It is further stated that the Applicant received total 06 Expressions of Interest (EOIs) from the following Prospective Resolution Applicants (PRAs) :
It is further stated by the Applicant that after following due process and multiple negotiations, three of the PRAs had quit for negotiations and a consortium of Mr. Naresh Garg and 03 others (hereinafter referred to as “Successful Resolution Applicants” / “SRA”) emerged as H-1 Bidder. Further, they had submitted a bid bond Guarantee of Rs. 28.50 Crore.
It is further submitted by the Applicant that after negotiations on the plan amount with the SRA, the Final Resolution Plan was placed before the CoC in its 10th meeting held on 28.06.2023, which considered the resolution (page No. 321) as reproduced overleaf:
As per the averments and submissions made by the Ld. PCA during the hearing, the said Resolution was passed by the CoC with 100% majority in its 10th meeting held on 28.06.2023. The copy of the voting sheet, as placed on page 354 of the application, is reproduced overleaf:
The Applicant has annexed 29A certificates of all the consortium members of SRA individually from page No. 480 to 493 of the application. One such 29A certificate of the Lead member of consortium Mr. Naresh Garg is reproduced overleaf for an immediate reference:
xxxx xxxx xxxx xxxx
It is further stated by the Applicant in its application and during the hearing that in terms of the Regulation 36B(4A) of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016, the Applicant on 06.07.2023 received the Performance/ Bank Guarantee No. 0173NDDG00006524 for a sum of Rs. 2.85 Crore from the SRAs issued by ICICI Bank Ltd, Sector 12, Karnal. The said Guarantee is valid till 04.07.2024. The Bank Guarantee, as annexed from page No. 541 to 552 of the application, is reproduced below:
During the course of hearing of the present application on 07.02.2024, this Adjudicating Authority directed Mr. Krishan Vrind Jain, Ld. PCA representing the RP to file the net worth certificates of the SRAs duly certified by the CA and also an affidavit from the SRA stating that they will implement the Resolution Plan, even if no relief and concession is granted. The scanned copy of the order dated 07.02.2024 is reproduced overleaf for the sake of convenience
In compliance with the directions dated 07.02.2024, the Applicant then filed an Affidavit 19.02.2024 enclosing therewith the Net Worth Certificates of the 04 members of the Consortium of the Successful Resolution Applicant. The same, as placed on record, reproduced below:
As regards to the compliances, the Applicant has submitted, as part of the Form ‘H’ filed along with the Application, the following:
The details of the distribution of Resolution Plan amount amongst the creditors/stakeholders, as submitted in Form ‘H’, is reproduced below:
As per the Form ‘H’ placed by the Applicant on record, the Fair Market Value (FMV) of the Corporate Debtor is Rs.20.925 Crore and the Liquidation Value (LV) of the Corporate Debtor is Rs. 16.888 Crore. Whereas, the total amount provided under the Resolution Plan is Rs. 28.50 Crore, which is 136% of FMV and 168% of Liquidation Value.
As regards the term of Plan and implementation schedule, it has been proposed by SRAs to implement the Plan within 60 days from the “effective date” as per the following schedule (internal page 41-42 of the Resolution Plan and page 451-452 of the application):
Regarding supervision and monitoring over implementation of the Resolution Plan, it has been proposed to constitute a three-member Monitoring Committee comprising of one representative of SRA, one representative of CoC and RP. The relevant details given in the Resolution Plan (internal page 43-44 of the Resolution Plan and page 453-454 of the application) are reproduced overleaf:
On perusal of the Resolution Plan, it is seen that the SRAs have sought certain reliefs and concessions, as listed from page 51-57 of the Resolution Plan and page 461 to 468 of the application. The SRAs, through Mr. Naresh Garg, the Authorized Representative of all the 4 SRAs including himself, filed an Affidavit on 19.02.2024 stating that the same are without prejudice to the validity and implementation of the Resolution Plan and none of the reliefs and concessions sought shall be made conditions for effectiveness of the Resolution Plan. The said affidavit was taken on record by this Adjudicating Authority on 22.04.2024. During the final hearing, Ld. Counsel for the Applicant confirmed that the Resolution Plan shall be implemented even if no relief and concession is granted. The relevant extracts of the affidavit are reproduced below:
We are sanguine of the fact that the SRAs shall be eligible to get protection as available under Section 32A of IBC, 2016 and reliefs and concessions as admissible under the relevant law.
After going through the Application, Additional Affidavits and all other documents placed by the Applicant/RP on record and hearing the Ld.
Counsel appearing on behalf of the applicant, we observe that the CoC of the Corporate Debtor has duly considered and approved the Resolution Plan submitted by the Successful Resolution Applicants by a voting share of 100% in its 10th Meeting held on 28.06.2023.
The role of the Adjudicating Authority has been examined by the Hon’ble Supreme Court in a catena of judgements. The relevant extracts of the decision of the Hon’ble Supreme Court in Civil Appeal No. 10673 of 2018 in the matter of K. Sashidhar Vs. Indian Overseas Bank & Ors. is reproduced below:
“35.Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan “as approved” by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code.”
“38.Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with 31(1) of the I&B Code. No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (NCLAT) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters “other than” enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I & B Code and not to act as a court of equity or exercise plenary powers.”
In view of the decision of Hon’ble Supreme Court (Supra), it is a well-settled principle of law that the Adjudicating Authority is not required to interfere with the decision taken by the CoC in its commercial wisdom, save and except the circumstances referred to in Section 31(2) of the IBC, 2016.
In sequel to the above, we have no other option but to approve the Resolution Plan as approved by the CoC and as placed by the Applicant before this Adjudicating Authority. We, therefore, allow the present Application and approve the COC approved Resolution Plan placed before us by the Applicant/RP with the following directions in respect of the Corporate Debtor:
The Resolution Plan shall become effective from the date of passing of this Order and shall be implemented by the Monitoring Committee strictly as per the term of the Resolution P lan and Implementation Schedule given therein, i.e., within 60 days from the effective date;
The reliefs and concessions as sought by the Resolution Applicants shall be available subject to their admissibility under relevant law, regulations and rules;
The Performance Bank Guarantee submitted by SRA of Rs. 2.85 Crore issued by the ICICI Bank and valid till 04.07.2024, shall be ensured to be extended by the Monitoring Committee till the period of implementation of the Resolution Plan.
The order of the moratorium in respect to the Corporate Debtor passed by this Adjudicating Authority under Section 14 of the IBC, 2016 shall cease to have effect from the date of passing of this Order; and
The Resolution Professional shall forward all the records relating to the conduct of the CIRP and the Resolution Plan to the IBBI for its record and database.
The Applicant/Resolution Professional (RP) shall forthwith send a copy of this Order to the CoC and the Successful Resolution Applicants for necessary compliance. A copy of this order shall also be sent by the Applicant to the IBBI for their record.
The IA No. 1979/2023 is allowed and disposed of accordingly.