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Judgment
Per se: Mr. Justice (Retd.) Rajesh Dayal Khare, Member (Judicial)
The instant application is filed under Section 30 (6) & 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Regulation 39 (4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 (CIRP Regulations) for seeking approval of Adjudicating Authority, under Section 31 of the IBC, of the resolution plan submitted by the successful resolution applicant i.e “ Atyant Capita India Fund-1”.
The Corporate Insolvency Resolution Process (“CIR Process) of the corporate debtor was initiated vide order of this tribunal dated 17.03.2017 upon admission of an application filed by the Corporate Debtor under Section 10 of the Code and Mr.Dinkar T. Venkatasubramanian was appointed as the IRP, Thereafter, the CoC of the Corporate Debtor at the meeting held on 19.04.2017 resolved to appoint Mr. Mukesh Mohan Gupta as Resolution Professional which was confirmed by this Adjudicating Authority
In accordance with the provisions of the Code, the statutorily prescribed period of one-hundred and eighty (180) days from the insolvency commencement date was expiring on 17 September 2017, accordingly, upon an application filed by the erstwhile Resolution Professional (being Mr. Mukesh Mohan Gupta) under Section 12 of the Code, the said period of the CIR Process Period was extended by this Hon'ble Tribunal by another 90 days vide its order dated 3 August 2017. Accordingly, the CIR process of the Corporate Debtor was due to expire on 12 December 2017.
During the CIR Process of the Corporate Debtor, the erstwhile Resolution Professional of the Corporate Debtor (being Mr. Mukesh Mohan Gupta) vide its decision dated 4 August 2017 rejected the claim of Exim Bank as a financial creditor which led to Exim Bank filing an application before this Adjudicating Authority challenging the said rejection of claim and the same finally resulted in an Order dated 27 November 2017 passed by this Adjudicating Authority whereby the decision of the erstwhile resolution professional rejecting the claim of Exim Bank as a financial creditor of the Corporate Debtor was upheld. The said order of this Adjudicating Authority dated 27 November 2017 was challenged by Exim Bank before the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No. 304 of 2017.
During the pendency of the above appeal, the resolution plan submitted by M/s. Atyant Capital was approved by this Adjudicating Authority vide order dated 15 December 2017. However, on account of the pendency of the appeal of Exim Bank, the Hon'ble NCLAT vide order dated 1 February 2018 in Company Appeal (AT) (Insolvency) No. 304 of 2017 directed this Adjudicating Authority to not give effect to the resolution plan approved vide order dated 15 December 2017 without their permission. A copy of the Order dated 1 February 2018 is annexed herewith as Annexure-1.
Finally the above issue was settled by judgment dated 14 August 2018 whereby the Hon'ble NCLAT recognized the status of Exim Bank as a financial creditor and directed the Resolution Professional of the Corporate Debtor to reconstitute the Committee of Creditors after including Exim Bank and thereafter directed the reconsideration of the resolution plans already submitted with respect to the Corporate Debtor. It was made clear by the Hon'ble NCLAT that Committee of Creditors cannot go in for "rebidding" on account of the resolution plans having already been opened. A copy of the Order dated 14 August 2018 is annexed herewith as Annexure-2.
Thereafter, vide order dated 6 September 2018, this Adjudicating Authority took note of the judgement of this Hon'ble NCLAT dated 14 August 2018 and the directions therein. The Adjudicating Authority also took note of the fact that the erstwhile resolution professional had resigned and at present there is no resolution professional for the Corporate Debtor. Accordingly, this Adjudicating Authority directed Exim Bank to call for a COC meeting and appoint a resolution professional.
Meanwhile, the judgement of the Hon'ble NCLAT dated 14 August 2018 was challenged before the Hon'ble Supreme Court in Civil Appeal No. 9090-9091 of 2018 whereby the Hon'ble Supreme Court vide order dated 7 September 2018, while issuing notice directed for maintenance of status quo as on the said date. The said civil appeal was thereafter taken up and dismissed by the Hon'ble Supreme Court vide its order dated 23 January 2019. A copy of the Order dated 23 January 2019 is annexed herewith as Annexure-4.
Subsequently, the Applicant herein was appointed as the Resolution Professional by the Committee of Creditors and thereafter such appointment was confirmed by this Adjudicating Authority vide order dated 8 March 2019. Thereafter, the Resolution Professional called for the 17th COC meeting on 29 March 2019 to inter alia discuss the future course of action and to evaluate the existing resolution applicants i.e. M/s. Atyant Capital and Hindustan Oil Exploration Co. Limited ('HOEC').
At the said meeting, on account of the fact that the CIR Process of the Corporate Debtor has been marred by litigations and the fact that the Hon'ble NCLAT has directed the "re-constituted" Committee of Creditors to consider/ re-consider the resolution plans of existing resolution applicants, and while the statutorily prescribed period of the CIR Process has already expired, the members of the Committee of Creditors inter alia decided to authorize the Resolution Professional to file an application before the Hon'ble Adjudicating Authority for seeking exclusion of time period consumed in litigation and another application before the Hon'ble NCLAT seeking clarification of the Order dated 14 August 2018 passed in Company Appeal no. 304 of 2017 with respect to consideration/reconsideration of plans and if resolution applicants could submit revised resolution plans to maximize the value of assets. A copy of minutes of meeting of 17th COC meeting are annexed herewith as Annexure-6.
Thereafter, on 10 April 2019, the Resolution Professional sent emails to both the resolution applicants i.e. Atyant Capital and HOEC seeking confirmation on their interest to participate in the resolution process of the Corporate Debtor. In response, HOEC and Atyant Capital sent their email confirmation vide email dated 11 April 2019 and 17 April 2019 respectively.
Subsequently, in pursuance of the discussions in (17^{\text{th}}) COC meeting held on 29 March 2019, the Resolution Professional on 18 April 2019 filed an application before the Hon'ble NCLAT seeking clarification of the 14 August 2018 order and another application before this Adjudicating Authority under Section 60(5) of the Code on 23 April 2019 seeking exclusion of time consumed in litigation.
On 24 May 2019, 18th COC meeting took place wherein the members of the COC decided the future course of action and unanimously agreed to issue a document; i.e., Process Document containing the detailed terms and conditions of the process to be conducted by the COC for negotiation with both the resolution applicants. A copy of minutes of 18th COC meeting dated 24 May 2019 are annexed herewith as Annexure-9. Accordingly, on 1 June 2019 the Resolution Professional, on behalf of the COC, circulated the Process Document where under the due date for submission of revised resolution plan was 10 June 2019. Thereafter, on 8 June 2019, an addendum to the Process Document was also circulated whereby the due date for submission of revised plan was revised to 13 June 2019. A copy of the process document along with addendum are annexed herewith as Annexure-10.
In pursuance of the above invitation, both the resolution applicants submitted their revised resolution plans dated 13 June 2019 in a sealed cover which were considered by the COC in their 19th meeting held on 13 June 2019 and it was noted that financial proposals submitted by both the resolution applicants were not in accordance with the Process Document and were discounted by more than 50% in comparison to plans originally submitted in 2017. A copy of minutes of 19th CoC meeting dated 13 June, 2019 is annexed herewith as Annexure-11.
The COC in its 20th meeting on 17 June 2019 evaluated and discussed the revised resolution plans submitted by both the resolution applicants and proceeded with the outbidding process as mentioned in the Process Document in an attempt to achieve value maximization of the Corporate Debtor without prejudice to its rights under the Process Document. As per the evaluation carried out by the COC, Atyant Capital was declared as the H1 bidder and HOEC was declared as the H2 bidder.
Thereafter the H2 bidder was given the opportunity to outbid the H1 bidder, in accordance with the process for outbidding stipulated under the Process Document. The H2 bidder i.e. HOEC declined to outbid the H1 bidder. Consequently, H1 bidder i.e. Atyant Capital was declared the highest evaluated resolution applicant. However, on the request of the COC, Atyant Capital reconsidered and submitted a revised financial proposal with an improvement of Rs.6 crores as its revised financial offer by way of letter dated 17 June 2019. The COC however indicated that the value should be improved further in view of the past financial offers submitted by Atyant Capital and the requirement in the Process Document and requested Atyant Capital to come back with a better offer in 2 days' time i.e. by 19 June 2019. A copy of minutes of 20th COC meeting dated 17 June 2019 are annexed herewith as Annexure-12.
Thereafter, on 19 June 2019 and 26 June 2019, in the 21st & 22nd COC meeting the members of COC further conducted negotiations with Atyant Capital to achieve an upward revision in the financial proposal and the same finally resulted in Atyant Capital offering Rs.123.1 crores by way of addendum dated 27 June 2019 along with certain amendments. The copies of minutes of minutes of 21st and 22nd COC meeting dated 19 June 2019 and 26 June 2019 are annexed herewith as Annexure 13 & 14 respectively.
Applicant stated that, the Resolution Plan dated 13 June 2019 along with its addendums ('Final Resolution Plan') was then put to voting by the Resolution Professional, by electronic voting, for approval of the COC members. The said electronic voting took place from 12:30 AM on 28 June 2019 to 12:30 AM on 29 June 2019. The members of CoC participated in the scheduled e-voting and the same resulted in approval of Final Resolution Plan submitted by Atyant Capital. The said plan was approved by 100% of the Financial Creditors, thereby the proposed resolution attained the requisite majority (i.e. 66%) as stipulated under Section 30(4) of the Code. A copy of voting results is annexed herewith as Annexure-15.
Applicant further stated that it was resolved by COC with 100% voting to authorize the Resolution Professional to issue the Letter of Intent to the Successful Resolution Applicant, and to file the Approved Resolution Plan before this Adjudicating Authority for approval in terms of Section 30(6) of the Code. Consequently, Letter of Intent was issued to the Successful Resolution Applicant on 28 June 2019. The Successful Resolution Applicant has also undertaken to provide the Performance Bank Guarantee as contemplated in the Process Document to the extent of 25% of the financial proposal in compliance of Regulation 36(4A) of the CIR Regulations.
Accordingly, the Resolution Professional has filed the present application seeking approval of the Final Resolution Plan in terms of Section 31(1) of the Code.
Heard the Ld. counsel for the Applicant and perused the record available.
The Resolution Professional has examined the Modified Plan and has found it to be in compliance with Section 30 (2) of the IBC read with Regulation 38 of the CIRP Regulations. In accordance with Regulation 39 (4) of the CIRP Regulations, the RP vide his Affidavit certified that:
The contents of the improved Resolution Plan submitted by "Atyant Capital India Fund-1" meet all the requirements of the IBC and the Regulations thereunder; and
The improved Resolution Plan submitted by "Atyant Capital India Fund-1" has been approved by the Committee of Creditors by 100% voting share under Section 30 (4) of the IBC in its meeting.
Further, Resolution Professional has submitted compliance certificate in Form -H, interalia, certifying eligibility of Resolution Applicant under Section 29 A of the Code and feasibility & viability of Modified Resolution.
Sub-section 2 of Section 30 of the Code reads as under:
"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 repayment of other debts of the Corporate debtor;
b)Provides for the repayment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under section 53;
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 requirement as may be specified by the Board."
Further, Regulation 38 & 39 of CIRP Regulations specify certain mandatory contents of the resolution plan.
The improved resolution plan approved by the Committee of Creditors meets the requirements laid down in various Clauses of Section 30 (2) as per the compliance table below:
| Sub-clause 2 of section 30 | Requirement | How dealt with in the plan |
|---|---|---|
| a) | Provides for payment of IRP cost in priority to repayment of other debts of CD in the manner specified by the Board. | Section 7.1 (k) of the Resolution Plan read with clause A4 in addendum A and addendum D-Final |
| b) | Provides for repayment of debts of operational creditors (OCs) in such manner as may be specified | Section 7.3 of the Resolution Plan read with Annexure 4 and Addendum D- Final. |
| Reference of relevant Regulations | Requirement | How dealt with in the plan |
|---|---|---|
| 38 (1) (a) | Plan shall identify specific sources of funds that will be used to pay the IRP cost in priority to any other creditor. | In Clause 7, the Plan stipulates payment of IRP cost in priority to any other creditor. Sources of funds- The sources of funds for meeting the cost of Resolution Plan are given in Clause 6 at page 144. The funds for payment of IRP cost will be provided by the Resolution Applicant as mentioned therein. |
| 38 (1) (b) | Plan shall identify specific sources of funds that will be used to pay liquidation value due to OCs and provide for | In Para 6.5/page 147, the Plan provides for payment of Rs. 594.89 lakhs within 30 |
The following table shows that the requirements of Regulation 38 & 39 of CIRP Regulation are met by the approved plan:
| Reference of relevant Regulations | Requirement | How dealt with in the plan |
|---|---|---|
| 38 (1) (a) | Plan shall identify specific sources of funds that will be used to pay the IRP cost in priority to any other creditor. | In Clause 7, the Plan stipulates payment of IRP cost in priority to any other creditor. Sources of funds- The sources of funds for meeting the cost of Resolution Plan are given in Clause 6 at page 144. The funds for payment of IRP cost will be provided by the Resolution Applicant as mentioned therein. |
| 38 (1) (b) | Plan shall identify specific sources of funds that will be used to pay liquidation value due to OCs and provide for | In Para 6.5/page 147, the Plan provides for payment of Rs. 594.89 lakhs within 30 |
| such payment in priority to any financial creditor and payment shall be made within 30 days after the approval of the Plan by Adjudicating Authority. | days of approval of resolution plan. Sources of funds-clause 6, the funds for payment of OCs will be provided by the Resolution Applicant as mentioned therein. | |
| 38(1) (c) | Plan shall identify specific sources of funds that will be used to pay the liquidation value due to the dissenting financial creditor which shall be made within 30 days after the approval of the Plan by Adjudicating Authority. | No dissenting financial creditors. |
| 38 (1A) | Plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of Corporate Debtor. | The Plan takes care of interest of all stakeholders as mentioned in the following paragraphs of the Plan- Settlement of dues of FCs- clause 6.3/page 146 read with Clause 6.2 at page 144 Full write off of dues of some connected persons—Clause 6.4/ page 146 Settlement of dues of OCs.- Clauses 6.5 / page 147 Disputed statutory liability - Clauses 6.6/ page 148 Employees' Interest protected - Amalgamation scheme Clause 8.4/8.5 on page 161 - |
| They will continue in service on same terms and conditions. | ||
| 38(2) (a) | Plan shall provide the term of the Plan and its implementation schedule. | Term of the Plan is 84 months as mentioned in clause 8 at page 150. Supervision, Monitoring of Implementation of the Plan is dealt with in clause 10/ page 150. Implementation of the Plan is through a scheme of Amalgamation which is Annexure B at pages 153-166. The Scheme provides for amalgamation of Swadisht Oils Private Limited with Rajasthan Liquors Limited upon sanction of the Scheme by this Hon'ble Tribunal. |
| 38 (2) (b) | Plan shall provide for the management and control of the business of CD during its term. | This has been taken care of in Clause 9 at page 150 of the Plan. |
| 38 (2) ( c) | Plan shall provide for adequate means for supervising its implementation. | This has been taken cate in Clause 10 at page 150 of the Plan. |
| 38 (3) | Plan shall contain details of resolution applicant and other connected persons as mentioned in Explanation to this Regulation. | The required details are given in Clause 3/ page 134 of the Plan. |
| 39(4) | RP shall submit the Plan to Adjudicating Authority with certification that the contents of the plan meet all the requirements of the IBC and the Regulations | The required certificate is given by RP in Para 16/ Page 6 of the Application read with affidavit at paragraph 3 at page 8 of application. |
The total cost of Improved Resolution Plan is Rs.95.79 Cr. and "Atyant Capital India Fund-1" is providing Rs. 65.79 Cr. of finance, Rs. 30 Cr. coming from SBI as working capital assistance. The Modified Resolution Plan treats all the financial creditors and operational debtors of the Corporate Debtor equally. Financial Creditors are being settled 100 %, out of their admitted dues of Rs. 39.68 Cr, Rs 18.66 Cr is settled in cash within 36 months and Rs. 21.03 Cr. settled through Optionally Convertible Debentures, redeemable within 84 months. Operational Creditor are to being paid Rs. 5.95 Crores within 30 days of the approval of the plan which amounts to 62.36 % of total admitted claims and 85 % of principal claim. The provision regarding waiver of any liability accruing in respect of Minimum Alternate Tax (MAT) kept in Resolution Plan originally has been deleted in Modified Plan. The term of plan is increased from three years to seven years without affecting the feasibility & viability of the Plan. The Resolution Professional Mr. Vikram Bajaj will be the Monitoring & Supervising Agency for implementation of the plan. The remuneration of the monitoring agency shall be Rs. 1,50,000/- plus taxes and out of pocket expenses at actual.
The Corporate Debtor will stand amalgamated with the Resolution Applicant as per the scheme of amalgamation. It is stated that the Scheme of Amalgamation between Swadisht Oils Pvt Ltd (Transferor Company) and Rajasthan Liquors Ltd (Transferee Company) as given in Annexure -B to Modified Resolution Plan at Page 153-168 is to facilitate the Insolvency Resolution of Transferor Company and shall enable continuity of operations of SOPL and enhance its viability, apart from saving employment of existing employees and works.
In view of the above discussion, Modified Resolution Plan submitted by "Atyant Capital India Fund-1" is found in conformity of Section 30 (2) of the Code and the same is approved.
It is directed that the resolution plan so approved shall be binding on the Corporate Debtor, its employees, members, creditors guarantors and other stakeholders involved in the resolution plan. With the approval of the resolution plan, the moratorium order passed by this Tribunal under Section 14 of the Code shall ceases to have effect. The Resolution Professional is directed to forward all the record relating to the conduct of the corporate insolvency resolution process and the resolution plan to the IBBI to be recorded on its database.
Accordingly, CA 188/2019 is disposed off.