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Judgment
It is stated by the learned counsel for the RP that the present application has been filed, seeking rectification of the typographical error caused inadvertently on the order which was passed by this Tribunal on 17.01.2019 in CA NO. 188/2019 and prays for modification/correction of the order.
The order dated 17.01.2019 is hereby corrected in terms of prayer clause vide separate modified/corrected order and the previous order dated 17.01.2020 to be read, in terms of this corrected/ modified order dated 04.02.2020
Accordingly, CA NO. 55/2020 is disposed off.
The present application (CA No. 55/2020) is filed by the applicant for the modification/ correction of the order dated 17.01.2020 passed by this tribunal in CA No. 188/2019 in CP No. (IB) 24/ALD/2017. However, it appears that certain inadvertent errors have been crepted in the order, so, this tribunal passes this Corrected Order which is to be considered in place of the order dated 17.01.2020.
The application (CA No.188/2019) 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
-Sd-the resolution plan submitted by the successful resolution applicant i.e "Atyant Capital 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 Atyant Capital India Fund -I 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.
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.
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.
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. Atyant Capital India Fund -I 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.
Thereafter, on 10 April 2019, the Resolution Professional sent emails to both the resolution applicants i.e. Atyant Capital India Fund -I and HOEC seeking confirmation on their interest to participate in the resolution process of the Corporate Debtor. In response, HOEC and Atyant Capital India Fund -I sent their email confirmation vide email dated 11 April 2019 and 17 April 2019 respectively.
Subsequently, in pursuance of the discussions in (17th) 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.
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.
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.
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 India Fund -I 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 India Fund -I was declared the highest evaluated resolution applicant. However, on the request of the COC, Atyant Capital India Fund -I 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 India Fund -I and the requirement in the Process Document and requested Atyant Capital India Fund -I to come back with a better offer in 2 days' time i.e. by 19 June 2019.
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 India Fund -I to achieve an upward revision in the financial proposal and the same finally resulted in Atyant Capital India Fund -I offering Rs.123.1 crores by way of addendum dated 27 June 2019 along with certain amendments.
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 India Fund -I. 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.
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. Further the RP has already received the performance guarantee from the Successful Resolution Applicant on (2nd) July, 2019.
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 Approved Resolution 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 Approved Resolution Plan.
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 Sec 29A and Sec 30 IBC:
| Section/ Regulation | Requirement | Clauses of the Approved Resolution Plan |
|---|---|---|
| Section 29 A | The disqualification under Sec 29 A of the Code should not apply | Annexure 1 and Annexure 2 to the Resolution plan which includes the affidavit by the successful resolution applicant and its special purpose vehicle (which shall acquire the corporate debtor) |
| Section 30 | (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan only one resolution plan received in the Insolvency resolution process of the CD) | |
| a) | The Resolution plan 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) | The Resolution plan provides for repayment of debts of operational creditors (OCs) in such manner as may be specified by the Board, which shall not be less than the amount payable to them in the event of liquidation u/s 53. | Section 7.3 of the Resolution Plan read with Annexure 4 and Addendum D- Final. |
| c) | The Resolution plan provides for management of the affair of the CD after approval of the resolution plan. | Section 9 of the Resolution Plan read with Annexure 5. |
| d) | The Resolution plan provides for Implementation and Supervision of resolution plan | Section 7 read together with section 9 of the Resolution Plan and Annexure-5. |
| e) | The Resolution plan does not contravene any of the provisions of the law for the time being in force. | Section 9 of the Resolution Plan read with Annexure 5. |
The following table shows that the requirements of Regulation 38 of CIR Regulation are met by the approved plan:
| Reference of relevant Regulations | Requirement | Compliance (yes/no) |
|---|---|---|
| 38(1) | The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditor. | Section 7 of the Resolution plan read with Clause A4 of Addendum A and Addendum D- Final |
| 38 (1A) | The Resolution 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. | Section 7 of the Resolution plan read with Annexure 6 |
| 38(2) (a) | The Resolution plan shall provide the term of the Plan and its implementation schedule. | Section 7.8 of the Resolution plan read with Annexure D- Final |
| 38 (3) | A resolution plan shall demonstrate that (a) The term of the plan and its implementation schedule | Section 7.2 of the Resolution plan read with |
| (b) It is feasible and viable | Section 7.4 of the Resolution plan read with |
| (c) It has provisions for its effective implementation | Section 7 read together with Section 9 of the Resolution plan read with Annexure 5 | |
| (d) It has provisions for approval required and the timelines for the same | Section 7(8) of the Resolution plan read with Addendum D-Final | |
| (e) The resolution applicant has the capability to implement the resolution plan | Section 5.3 of the Resolution plan. |
The approved resolution plan is for the amount of Rs.123.1 crores, payable to the secured financial creditors in compliance with the code within 30 days on which the resolution plan is approved by this adjudicating Authority which will be the date on which the corrected order is passed and the CIRP cost will be made out of the cash and bank balance of the corporate Debtor in priority to payment of other debts and against the total verified amount of Rs 123.1 crores, the approved plan provides for the payment of entire amount upfront towards settlement of claims of all secured financial creditors and nothing towards the payment of unsecured related party financial creditors against the verified amount of 7.57 crores.
The RP as required under regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 certified that the contents of the resolution plan meets with the requirements of the IBC and the regulations thereto and that the resolution plan has been approved by the CoC in the manner prescribed under the IBC.
This bench directs the RP to act as the Monitoring Agency and thus appointed RP as "Monitoring Agency" to monitor and supervise the implementation of the Resolution plan and the remuneration of the monitoring agency shall be Rs. 1,50,000/- plus taxes and out of pocket expenses at actual.
The Resolution Applicant is allowed to remove and/or substitute the Monitoring Agency with prior approval of this Adjudicating Authority if the Monitoring Agency is unable to satisfactorily perform its responsibilities or breaches terms of its appointment.
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.
In view of the above discussion, the Approved 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.
Accordingly, the resolution plan is hereby approved and will be effective from the date of modified order and CA 55/2020 and CA 188/2019 is disposed of.