Rajiv Bhatnagar vs Canara Bank & Ors.

“a)

Allow the present Application;

b)

Approve the Resolution Plan submitted jointly by Embrace Gas Pipelines Private Limited and M/s. Printtech in the CIRP of the Corporate Debtor, in terms of Section 31 of the IBC.

c)

Pass such other or further and other relief(s) as this Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the present case”

“SUMMARY OF RESOLUTION PLAN

39.

That the approved Resolution Plan provides for the following payments to the creditors of the Corporate Debtor:

S. No.	Particulars	Number of Creditors under the Category	Claim Admitted	Amount Provided under the Plan	Amount Provided to the Amount Claimed (%)
6.	CIRP Cost	-	As actual	The CIRP Cost, as approved by the CoC, shall be payable as actual	100
7.	Secured Financial Creditor	1	26,22,01,249	12,12,12,121.23	46.23
8.	Unsecured Financial Creditors	NIL	-	-	-
9.	Operational	Government –	3,32,68,330	1,11,111.11	0.33
	Creditors	Tax Dues (2)
		Workmen/Employees (1)	15,28,489	15,28,489	100
		Other Operational Creditors (11)	18,94,70,671.25	10,00,000	0.53
10.	Other debts and dues		–	–	–
	Grand Total		48,64,68,739.25	12,38,51,721.34	25.45%

40.

That in addition to the aforesaid, the Resolution Applicant has also proposed to infuse an amount of INR 24,61,410.03 in the form of Working Capital, as and when the need arises. Furthermore, the Regulatory Fee under Regulation 31A of the CIRP Regulations has also been proposed to be borne by the Resolution Applicant over and above the amounts proposed under the Resolution Plan.

41.

That the respective payments proposed to the Operational Creditors by the Resolution Applicant are proposed to be completed within 60 days from the approval of the Resolution Plan by this Hon'ble Tribunal, and the payment proposed to the Secured Financial Creditor is proposed to be completed within 90 days from such date.

42.

That the Resolution Applicant has further proposed that the Secured Financial Creditor shall pursue the applications for Avoidance Transactions currently pending before this Hon'ble Tribunal and any amount received therefrom shall pass to such Secured Financial Creditor, over and above the amounts proposed under the Resolution Plan. Pertinently, as on the date of filing of the present application, an application under Section 43 for avoidance of preferential transactions is sub-judice before this Hon'ble Tribunal, wherein an aggregate amount of INR 2,95,49,266- is claimed to be liable for reversal to the Corporate Debtor.

(Amount in Rs. Lakh)

I.

Regulation 39(1A)

A resolution plan which does not comply with the provision of sub-regulation (1) shall be rejected. The Resolution Plan is compliant.

List of Operational Creditors (Government Dues)

7af. SUMMARY OF CONTRIBUTION OF FUNDS BY RESOLUTION APPLICANT & SOURCES OF FUNDS FOR THE RESOLUTION PLAN

a)

The summary of total contribution of the Resolution Applicant under the Resolution Plan is as below.

The total amount of INR 12,88,51,721.34 (including the balance amount already infused as security deposits and accrued interest thereon on amount kept in fixed deposits of Rs. 6.25 crores) is to be infused as per below table 90 days from the date of receipt of certified true copy of order for approval of Resolution Plan by the Hon'ble Adjudicating Authority / NCLT in the form of equity shares capital of Rs. 1,00,00,000/- & balance of Rs. 11,88,51,721.34 shall be in the form of Loan from New Management / New Directors / New Promoters / Resolution Applicants:

S No.	Particulars	Amount (Rs.)
1.	On or before 90 days from the date of issue of certified copy of order for approval of Resolution Plan	INR 12,88,51,721.34 (including the balance amount already infused as security deposits plus interest accrued thereon)
Total		INR 12,88,51,721.34
		(including the balance amount already infused as security deposits plus interest accrued thereon)

b)

The aforesaid amount is to be utilized for the purpose of payment of payment to the various stakeholders as per the terms of resolution plan.

c)

The Resolution Applicant will arrange the Funds from its internal accruals and its own resources/ reserves and their relatives.

d)

The Resolution Plan needs to be approved in its entirety and if any of the Resolution Plan cannot be enforced for any reason, the Resolution Applicant shall proceed to enforce the Resolution Plan to the extent possible. The Resolution Applicant shall not be liable for any damage/ loss on account of such impossibility to perform.

e)

The Resolution Applicant is open to modify the structuring of the consideration under this Resolution Plan to meet banking and other regulatory requirements.

7aj. INDICATIVE TIMELINE OR IMPLEMENTATION/ IMPLEMENTATION SCHEDULE

The Resolution Plan shall be implemented in the following manner, as per the timelines stated below or as per applicable laws:

“The Plan provides for appointing new Directors on the Board of Corporate Debtor with required competency and experience and also to appoint Independent Non-Executive Directors and Executive Directors within 03 months of the effective dates. It also provides for management and control of Corporate Debtor under the leadership of the lead member of Resolution Applicant (RA). It also proposes to restructure the equity of the Corporate Debtor by substantial acquisition of shareholding by the RA and to continue to remain listed on Bombay Stock Exchange. Provisions for appointment of Statutory, Internal and Cost Auditors have also been made. It also provides for continued Corporate existence, whereby the operation change in the normal course of business of the Corporate Debtor shall continue under the supervision of the Resolution Applicant. It provides for Indemnification of the Corporate Debtor and member of the new promoter group.”

“21.

This Court has consistently held that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the IBC. It has been held that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. xxxxx

27.

This Court has, time and again, emphasized the need for minimal judicial interference by the NCLAT and NCLT in the framework of IBC. We may refer to the recent observation of this Court made in the case of Arun Kumar Jagatramka v. Jindal Steel and Power Limited and Another :

“95.

...However, we do take this opportunity to offer a note of caution for NCLT and NCLAT, functioning as the adjudicatory authority and appellate authority under the IBC respectively, from judicially interfering in the framework envisaged under the IBC. As we have noted earlier in the judgment, the IBC was introduced in order to overhaul the insolvency and bankruptcy regime in India. As such, it is a carefully considered and well thought out piece of legislation which sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC...”

27.

From the Effective Date, all Inquiries, investigations and proceedings, whether civil or criminal, suits, claims, disputes, proceedings in connection with CD or affairs of CD (including those initiated by Governmental Authorities such as the SEBI an RBI), pending or threatened, present or future in relation to any period prior to the Effective Date, or arising on account of Implementation of this Resolution Plan shall stand withdrawn and dismissed and all liabilities and obligations therefore, whether or not set out In the balance sheets of CD or the profit and loss account statements of CD will be deemed to have been written off fully, and permanently extinguished and no adverse orders passed in the said matters should apply to CD or the Resolution Applicant. Upon approval of this Resolution Plan, all new inquiries, investigations, notices, suits, claims, disputes, litigations, arbitrations or other judicial, regulatory or administrative proceedings will be deemed to be barred and will not be initiated or admitted against CD and/ or its new management in relation to any period prior to the Effective Date. 28.Except to the extent of payments to be made to the Financial Creditor and Operational and Other creditors under Chapter 7 and This Chapter above, the Resolution Applicant and CD shall have no liability towards any Operational Creditors and other creditors with respect to any claims (as defined under the Code) relating in any manner to the period prior to the Effective Date. Any such liability shall be deemed to be owed and due as of the Insolvency Commencement Date, the liquidation value of which is NIL and therefore no amount Is payable in relation thereto. All such liabilities shall immediately, irrevocably and unconditionally stand fully and finally discharged and settled with there being no further claims whatsoever, and all forms of security created or suffered to exist, or rights to create such a security, to secure any obligations towards Operational Creditors and other creditors shall immediately, irrevocably and unconditionally stand released and discharged, and the Operational Creditors and other creditors shall waive all rights to invoke or enforce the same.

29.

Resolution Applicant shall not be impacted and will be kept indemnified financially or otherwise against any of the negative impact/observation/findings of Forensic Audit. Further, neither the Corporate Debtor nor any member of the new promoter group i.e resolution applicant shall be made party to any of the legal cases arising out of such forensic audit. 30.No action will be taken against the any dues non-compliance penalty, interest related to the period before the effective date, by any authority under SEBI Act, SCRA Act, Companies Act, Bombay Stock Exchange rules, regulations, bye laws, PF Act, ESI Factory Act, electricity department, Fire department, Pollution Department, Labour Law or any other department not mentioned here. 31.Liabilities that may accrue under Various Corporate Laws and Acts, Rules and Regulations – Approval of the Resolution Plan will be treated as Waiver Approval by NCLT for any past liabilities, penalties and any form of payment by way of Late Fees, Damages etc. which occurred or become due because. Of any non-compliances related to the below stated Acts from Commencement of Insolvency Process till 6 months from the Date of Hon'ble AA / NCLT Approval of Proposed Resolution Plan as it will provide Resolution Applicant, the time period to review the current compliance status of the Corporate Debtor under these Acts, Rules and regulations in terms of Compliances and action to be taken in this regard. The stated list is inclusive but not exhaustive of - a. The Companies Act, 1956 (the Act) and the Rules made there under; b. The Companies Act, 2013 (the Act) and the Rules made there under; c. Foreign Exchange Management Act, 1999 and d. the Rules and Regulations made there under to the extent of Overseas Direct Investment

32.

For VAT/Income Tax/Customs Duty/ Waiver – Upon payment to statutory authorities as proposed under the resolution plan, no further amounts will become due and payable by the CD after the plan is approved by NCLT. These Authorities will be required to drop all proceedings against the company upon approval of the plan by NCLT. 33.For Brands / Copyright / Intellectual Property rights- In order to efficiently revive the operations post implementation of Resolution Plan, the Brands / Copyright / Intellectual Property rights of CD shall continued to be used by corporate debtor and RA shall not have any restraint in using these Brands / Copyright / Intellectual Property rights. No act of suspended board shall lead to siphoning off of such Brands / Copyright / Intellectual Property rights to other entity. 34.In the event any material fact, which was available with the RP/COC during the process but was not provided to the Resolution Applicant, comes to the knowledge of the Resolution Applicant subsequently and because of such material non-disclosure the RA suffers a financial loss, the RP/ CoC shall be liable for such financial loss. 35.The Company shall take appropriate corporate actions necessary for implementation of the all the provisions of the Resolution Plan, which includes: a) filing of appropriate documents or forms with among others, the Registrar of Companies and Ministry of Corporate Affairs without affixing Digital signatures; b) issuance of shares and instruments as provided in the Resolution Plan; and c) other compliance as per the governing law. 36.Upon Completion date, the Corporate Debtor shall be recognized as a new entity for the purposed of availing various benefits/incentives granted by the Central/State government from time to time including but not limited to registration under the Micro, Small and Medium Enterprises Development Act, 2006 37.Neither the Resolution Applicant, nor any of its Affiliates or connected persons, will be disqualified from or considered ineligible under the Code for proposing and /or implementing a plan in relation to the insolvency resolution of any person (other than the Corporate Debtor), merely on account of the implementation of this Plan by the Resolution Applicant; 38.The jurisdictional Registrar of Companies to take on record and implement the Plan, upon approval of the Plan by Adjudicating Authority without any further compliances and re-instate all the approvals and waive all the financial or other penalties/ Interest/ prosecution of all type and nature. 39.Any other financial liabilities/ claims (as defined under the IBC): i) Arising out of the legal proceedings initiated before any forum including Debt Recovery Tribunal, by or on behalf of the Creditors, to enforce any rights or claims against the Corporate Debtor or enforce or invoke any security interest over the assets of the Corporate Debtor or any guarantees/ undertaking / surety by the Corporate Debtor; ii) On account of any violation or breach of any agreement of the Corporate Debtor, prior to the Completion date. iii) On account of all the outstanding negotiable instruments Issued by the Corporate Debtor (Including demand promissory notes, post-dated cheques and letter of credit, etc.). iv) On account of any corporate guarantees (whether contingent or crystallized), indemnities and all other forms of credit support provided by the Corporate Debtor prior to the Completion date. v) On account of any form or security provided by any person for and on behalf of, and /or In order to secure any obligations of the Corporate Debtor (whether by way of hypothecation, pledge, mortgage, guarantee or otherwise); and vi) Arising out of termination of all agreement executed with any and all persons associated with the Existing Promoter Group in any manner whatsoever or relatives of the existing Promoter Group who are employees of the Corporate Debtor or holds any managerial /supervisory/any other position in the Corporate Debtor by the Monitoring Agency shall stand extinguished and annulled. 40.Revocation of Power of Attorneys – All the power of attorneys provided to any person by the corporate Debtor stands revoked with effect from the date of NCLT approval. 41.For Grace period to comply with various future statutory /regulatory requirements: a. Grant of 6 (Six) months grace period (from the date of NCLT / AA approval) to be provided to the Corporate Debtor to comply with the provisions of the various Acts / Regulations, to enable Corporate Debtor to ascertain the status of various compliances and take necessary steps to regularize the same b. During grace period, no additional charges/ fees etc. to be charged including on account of Interest Penal Interest, Penalty, Interest on Penalty, any kind of Late Fee or Damages. 42.For Issuance/Renewal of all kinds of licenses/permissions / approvals - Central / State Government Departments / Local Bodies to Renew / Issue Fresh licenses/permissions / approvals on application of the same within 30 days of the Application.

43.

For Pollution Control Consent - To issue Consent to Operate by the respective pollution authorities to sustain the operations of the CD within 15 days of receipt of application from the Corporate Debtor. 44.For Water supply requirement – To be provided by the respective water authorities to sustain the operations of the CD. 45.For Electricity dues waiver - Outstanding dues, if any, with any of the DISTCOMS of the Corporate debtor to be waived. 46.For Power Connection by respective DISCOMS where the plants and offices of the CD are located - The Approval of the Resolution Plan by NCLT shall be treated as an order to provide the requisite electrical power connection by the respective DISTCOMS to the CD to restart the operations (in case the power connections have been disconnected) 47.For Permission to Modify/ construct furnish/ /expand/ extend the construction in the properties under the Corporate Debtor whether in merged form or demerged form - To be permitted, subject to compliance of applicable guidelines.

“14. Moratorium. –

(1)

Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: -

(a)

...

(b)

...

(c)

...

(d)

the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

Explanation.- For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period; (Emphasis Supplied)

'16. However, the resolution plan shall not be construed as waiver to any statutory obligations/liabilities arising out of the approved resolution plan and the same shall be dealt in accordance with the appropriate authorities concerned as per relevant laws. We are of the considered view that if any waiver is sought in the resolution plan, the same shall be subject to approval by the concerned authorities. The same view has been held by the Hon'ble Supreme Court in Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited and Embassy Property Development case (supra)."

"Adjudicating Authority has already referred to the Judgment of the Hon'ble Supreme Court in the matter of 'Ghanshyam Mishra & Sons Private Limited' Vs. 'Edelweiss Asset Reconstruction Company Limited', in Civil Appeal No. 8129 of 2019, which clearly laid down that all claims which have not been dealt in the Resolution Plan does not survive after the approval of Resolution Plan.

6.

Insofar as statutory waivers and concessions, Adjudicating Authority has rightly observed that SRA to file appropriate necessary application before the necessary Forum/Authority in order to avail the relief and the concession.

7.

The Resolution Plan having been approved it is always open for the Applicant to make an appropriate application before the Statutory Authority for grant of such relief as permissible after approval of the Resolution Plan.

8.

It goes without saying that all past liabilities which are not dealt with in the Resolution Plan stand extinguished by view of the Judgment of the Hon'ble Supreme Court in 'Ghanshyam Mishra & Sons Private Limited' (Supra) which is a well settled law."