S. Kangayan

8. CAPITAL STRUCTURE OF THE CORPORATE DEBTOR

a. Existing Capital Structure of the Corporate Debtor

b. Proposed Capital Structure of the Corporate Debtor

10. FINANCIAL STRENGTH OF THE RESOLUTION APPLICANT

I. Financial Information of the Resolution Applicant

II. Net-worth of the three partners of the Resolution Applicant is under:

11. SALIENT FEATURES OF THE RESOLUTION PLAN

III. The Resolution Applicant proposes to pay a sum of Rs.2,39,95,517/- to the Secured Financial Creditors, which is 91% of the admitted claim amount, and the entire sum will be paid within a period of 3 months after the approval of the Resolution Plan by this Adjudicating Authority.

IV. The Resolution Applicant proposes to pay a sum of Rs.26,08,183/- to the Unsecured Financial Creditors namely which is 68% of the admitted claim amount, and the entire sum will be paid within a period of 3 months after the approval of the Resolution Plan by this Adjudicating Authority.

V. The Resolution Applicant proposes to pay a sum of Rs.48,56,081/- which is 10% of the admitted claim, to the Operational Creditors other than workmen, employees and government dues ,within a period of 3 months after the approval of the Resolution Plan by this Adjudicating Authority.

VI. The RP has provided an estimate of Rs. 27,10,000/- for CIRP costs. It is stated that unencumbered assets of the Corporate Debtor have been put for sale with the requisite approval of the CoC and any realisation from the said sale shall be adjusted towards unpaid CIRP costs. In case, the realisation from the sale of unencumbered assets is not sufficient to cover the unpaid CIRP cost in full, the Resolution Applicant undertakes to pay the remaining CIRP cost and such amount shall accordingly be reduced from amount proposed to financial creditors.

VII. The Resolution Plan amount is to be distributed as under;

iUpon approval of this resolution plan, the amount of Rs. 5,38,690/- paid under protest to Commissioner of Income Tax, Circle 2 , Erode with respect to Complaint No: TBAASTSI 143(3)/2018-19/1014493602(1) shall be refunded to the Corporate DebtorThis is for the CBDT and other appropriate authorities to consider keeping in view the object of IBC, 2016 jAll Claims arising out of inquiries, investigations, notices, causes of action, suits, claims, disputes, litigation, arbitration or other judicial, regulatory or administrative proceedings against, the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future and the proceedings under Section 138 of the Negotiable Instruments Act, 1881 and the Tax related Claims or liabilities in relation to any period prior to the Approval Date or on account of acquisition of control by the Resolution Applicant over the Corporate Debtor pursuant to this Resolution Plan, shall be settled at NIL value.Granted, subject to the provisions of IBC, 2016 and other Applicable laws. kOn and from the Approval Date, all the guarantors/ third party security providers who have provided/ issued any guarantees/ security (on their assets) for and on behalf and in order to guarantee/secure the debt of the Corporate Debtor (including but not limited to the Identified Excluded Collateral), shall not be entitled to exercise any subrogation rights in respect of such guarantees/ security, on account of any invocation/ enforcement by the Financial Creditors of the Corporate Debtor of such guarantee security in any circumstance.Granted, subject to the provisions of IBC, 2016 and other Applicable laws lThe respective authorities to consider providing relief from applicability of and payment of Taxes including under the provisions of the Goods and Services Taxes Act, 2017 which may arise as a result of implementation of the Plan either on the Resolution Applicant or the Corporate Debtor or any other Person who is likely to be impacted due to implementation of the Plan.This is for the CBIC and other appropriate authorities to consider keeping in view the object of IBC, 2016 mLicenses and approvals held by the Company towards the Corporate Debtor, which effective date expire prior to the Closing Date or within a period of 12 (Twelve) months from Approval Date shall be renewed / extended by the relevant Authorities, and the Resolution Applicant shall be permitted to continue to operate the business and assets of CorporateThis is for the concerned Governmental authorities to consider, keeping in view the objects of IBC, 2016 and a fresh start of the Corporate Debtor. Debtor in the manner operated prior to or after the Insolvency Commencement Date. The relevant Authorities will provide a period of 6 months from the NCLT approval date in order for the Resolution Applicants to assess the status of licenses and approvals required by the Corporate Debtor and to ensure that the Corporate Debtor applies for the same and for renewing and regularizing any non-compliance under the Applicable Law existing prior to the Approval Date. The Resolution Applicant shall be entitled to unconditional continuance of all the approvals, sanctions, licenses and permits which have been obtained by the Corporate. nAll Governmental Authorities to grant any relief, concession or dispensation as may be required for implementation of the transactions contemplated under the Plan in accordance with its terms and conditions. All the litigations, proceedings, inquiries, investigations, etc. pending before quasi-judicial/ Governmental Authorities (including RBI) shall be disposed of and all any courts liabilities or obligations in relation thereto, whether or not set out in the balance sheets of the Corporate Debtor or the profit and loss account statements of the Corporate Debtor or the List of Creditors, will be deemed to have been written off in full against a NIL Value.This is for the concerned Governmental authorities to consider, keeping in view the objects of IBC, 2016 and a fresh start of the Corporate Debtor. oUpon the approval of this resolution plan, the Resolution Applicant / Corporate Debtor shall be entitled to the rights, benefits, privileges, duties, liabilities, obligations and interest whatsoever, arising from or pertaining to the Memorandum of Lease Deed dated June 14, 2007 executed between the SIPCOT and the Corporate Debtor, represented by the then managing director, without seeking any further approval or without any consent from SIPCOT and without any need to enter into modified Memorandum of Lease Deed or otherwise. Further, the Resolution Applicant not the Corporate Debtor shall be liable to pay any additional fees or payment or transfer fees or commission or any other charges, toThis is for the concerned Governmental authorities to consider, keeping in view the objects of IBC, 2016 and a fresh start of the Corporate Debtor. take on record the change of management of the Corporate Debtor by virtue of this Resolution Plan. pUpon approval of the Resolution Plan by NCLT, no further or prior approval of any member shareholder / creditor/claimant or any other counterparty shall be additionally required to be obtained for taking over the control over the assets and affairs of the Corporate Debtor, pursuant to the terms of this Plan and such parties in relation to Corporate Debtor shall be deemed to have waived all objections / liabilities of the Corporate Debtor arising out of the initiation of CIRP proceedings involving the Corporate Debtor, appointment of the Resolution Professional and in respect of the implementation of this Plan.Granted, subject to the provisions of IBC, 2016 and other Applicable laws qAll benefits and incentives, if any, including but not limited to, benefits and incentives under all such incentive schemes, subsidy schemes and policies that the Corporate Debtor was entitled to, shall continue to remain vested with the Corporate Debtor even after the date of approval of Resolution Plan by NCLT.This is for the concerned Governmental authorities to consider, keeping in view the objects of IBC, 2016 and a fresh start of the Corporate Debtor. rAll agreements arrangements between the Corporate Debtor and the persons currently classified as promoter or promoter group (including the Existing Promoter Group), persons acting in concert with promoters, holding companies, subsidiary companies, associate companies, group companies and/or their respective affiliates/ associates, except the business contracts agreements if any which are specifically required by the Resolution Applicant, shall stand terminated, beyond what has been recognised and addressed elsewhere in this Resolution Plan However, it is clarified that claims, if any against such Related Parties (and all Liabilities of such Related Parties towards the Corporate Debtor) shall remain outstanding, due and payable in accordance with their terms directly by such Related Parties and the Resolution Applicant has no liability towards the same.Granted, subject to the provisions of IBC, 2016 and other Applicable laws sThe Resolution Applicant seeks a time period of 12 (Twelve) months from NCLT approval Date to ensure compliances in relation to the non-compliance of Applicable Laws by the Corporate Debtor, if any, pertaining to anyGranted, subject to the provisions of IBC, 2016 and other Applicable laws period up to NCLT Approval Date. Further, the relevant Governmental Authorities shall not initiate any investigations, actions or proceedings against the Resolution Applicant or the new management (upon acquisition of the Corporate Debtor) including the incoming directors, in relation to any non-compliance with Applicable Laws by the Company pertaining to any period up to date of approval of Resolution Plan by NCLT. tThe Resolution Applicant assumes that, in compliance of its duties under Regulation 35A of the CIRP Regulations, the Resolution Professional had determined whether the Company has been subjected to any transactions covered under sections 43, 45, 50 or 66 of the IBC or not and will apply applied to the Adjudicating Authority for seeking appropriate relief. Accordingly, though the Resolution Applicant reserve its right to institute any investigation pertaining to any transaction(s) carried out by the ex-management of the Company or to file appropriate applications before the court tribunal of competent jurisdiction, the Resolution Applicant and its officers, directors, employees shall never be liable responsible for any such transactions carried out by the ex-management of the Company. And in the event, any application filed by the Resolution Professional under Section 43 to 51 or 66 of the IBC. Continues even after NCLT Approval Date, the Resolution Professional in consultation with the Committee of Creditors, shall decide whether or not to contest such litigation (including the cost associated with such litigation) and any benefit arising out of such litigation shall be distributed among the creditors of the Company.From the Form H filed by the RP it is observed that no avoidance application has been filed and accordingly the relief sought is not granted. uThe Registrar of Companies, Coimbatore, shall take on record the resignation of existing Board of Directors of the Corporate Debtor and appointment of the Reconstituted Board of Director, on an online or offline application made by Resolution Professional in accordance with the General Circular No. 08/2020 dated March 06, 2020, issued by Ministry of Corporate Affairs.Granted, subject to the provisions of IBC, 2016 and other Applicable laws vThe Resolution Applicants shall be permitted to continue using the current Goods and Services Tax (GST) registration number, or any other new registration (including but notGranted, subject to the provisions of IBC, 2016 and other Applicable laws limited to ESI, PF, Importer porter Code (IEC), TAN, Professional Tax) as may be required, in place of the existing GST registration, or any other existing registrations or existing licenses, as the case may be. wAt the time of renewal or fresh application for licenses and approvals, the said Authorities including government authorities will not charge any fee, cost, interest, penalty fine or any other amount of like nature pertaining to the period up to date of approval Resolution Plan by NCLT and such amounts due, if any, shall be deemed to have been extinguished and settled as per the terms of this Resolution Plan and the Resolution Applicants shall not be liable to pay any such amounts, other than as provided in this Plan at the time of revival, renewal or fresh application for licenses and approvals.Granted, subject to the provisions of IBC, 2016 and other Applicable laws xAll Governmental Authorities shall grant any such relief, concession or dispensation as may be legally permissible for implementation of the transactions contemplated under the plan in accordance with its terms and conditions including any stamp duty payable in respect any documents executed in relation to such transactions.Granted, subject to the provisions of IBC, 2016 and other Applicable laws yTo pass an order confirming that this Resolution Plan for the Corporate Debtor has dealt with the interests of all the stakeholders in the Corporate Debtor, including the Financial Creditors (whether secured or unsecured, assenting or dissenting), Operational Creditors, Other Creditors and all other stakeholders in accordance with the Code.No orders from this Tribunal is required to be passed in this regard. zThis income tax authorities in respect of all the pending proceedings and dues (including interest and penalty) of the Company arising for periods up to the Insolvency Commencement Date (including such proceedings and dues for periods prior to the Insolvency Commencement Date that have or may crystallize subsequent to the Insolvency Commencement Date/ Approval Date/Closing Date), and have been addressed, specifically or in general terms, in the proposals of this Plan.Granted, subject to the provisions of IBC, 2016 and other Applicable laws aaTransactions contemplated in this Plan shallGranted, subject to the not be treated as void or non-compliant with any provisions of the Income Tax Act, 1961; and all Tax Liabilities (including interest and penalty) and Tax proceedings arising in respect of periods up to the Insolvency Commencement Date, including such liabilities proceedings for periods up to the Insolvency Commencement Date that may crystallize subsequent to the Insolvency Commencement Date / Approval Date in respect of on-going or potential Income Tax litigations at all levels, whether claimed or not by the CBDT/DOR before the Resolution Professional except to the extent agreed to be settled under this resolution plan shall not devolve on the RA.provisions of IBC, 2016 and other Applicable laws All creditors (including the Financial Creditors) of the Company shall withdraw all legal proceedings commenced against the property of the Corporate Debtor in relation to Claims including proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Recovery of Debt and Bankruptcy Act, 1993Granted, subject to the provisions of IBC, 2016 and other Applicable laws abAll protection as envisaged in Section 32A of the Code shall be available to them for the purpose of this Resolution Plan and such immunity will include protection from any liability of a Company for an offence committed prior to the commencement of the corporate insolvency resolution process and the RA shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority.Granted, subject to the provisions of IBC, 2016 and other Applicable laws

"19...In the present case, however, our focus must be on the dispensation governing the process of approval or rejection of resolution plan by the CoC. The CoC is called upon to consider the resolution plan under Section 30(4) of the I&B Code after it is verified and vetted by the resolution professional as being compliant with all the statutory requirements specified in Section 30(2).

62.

...In the present case, however, we are concerned with the provisions of I&B Code dealing with the resolution process. The dispensation provided in the I&B Code is entirely different. In terms of Section 30 of the I&B Code, the decision is taken collectively after due negotiations between the financial creditors who are constituents of the CoC and they express their opinion on the proposed resolution plan in the form of votes, as per their voting share. In the meeting of the CoC, the proposed resolution plan is placed for discussion and after full interaction in the presence of all concerned and the Resolution Professional, the constituents of the CoC finally proceed to exercise their option (business/commercial decision) to approve or not to approve the proposed resolution plan. In such a case, non-recording of reasons would not per-se vitiate the collective decision of the financial creditors. The legislature has not envisaged challenge to the "commercial/business decision" of the financial creditors taken collectively or for that matter their individual opinion, as the case may be, on this count."

42.

...Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar (supra).

"55.

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 per cent 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.

58.

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 Section 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." (emphasis supplied)

"73.

There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or sub-class of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters. The reasons given by the Committee of Creditors while approving a resolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key features, it must then pass the resolution plan, other things being equal." (emphasis supplied)

76.

The expositions aforesaid make it clear that the decision as to whether corporate debtor should continue as a going concern or should be liquidated is essentially a business decision; and in the scheme of IBC, this decision has been left to the Committee of Creditors, comprising of the financial creditors. Differently put, in regard to the insolvency resolution, the decision as to whether a particular resolution plan is to be accepted or not is ultimately in the hands of the Committee of Creditors; and even in such a decision making process, a resolution plan cannot be taken as approved if the same is not approved by votes of at least 66% of the voting share of financial creditors. Thus, broadly put, a resolution plan is approved only when the collective commercial wisdom of the financial creditors, having at least 2/3rd majority of voting share in the Committee of Creditors, stands in its favour.

77.

In the scheme of IBC, where approval of resolution plan is exclusively in the domain of the commercial wisdom of CoC, the scope of judicial review is correspondingly circumscribed by the provisions contained in Section 31 as regards approval of the Adjudicating Authority and in Section 32 read with Section 61 as regards the scope of appeal against the order of approval.

77.1.

Such limitations on judicial review have been duly underscored by this Court in the decisions above-referred, where it has been laid down in explicit terms that the powers of the Adjudicating Authority dealing with the resolution plan do not extend to examine the correctness or otherwise of the commercial wisdom exercised by the CoC. The limited judicial review available to Adjudicating Authority lies within the four corners of Section 30(2) of the Code, which would essentially be to examine that the resolution plan does not contravene any of the provisions of law for the time being in force, it conforms to such other requirements as may be specified by the Board, and it provides for: (a) payment of insolvency resolution process costs in priority; (b) payment of debts of operational creditors; (c) payment of debts of dissenting financial creditors; (d) for management of affairs of corporate debtor after approval of the resolution plan; and (e) implementation and supervision of the resolution plan.

77.2.

The limitations on the scope of judicial review are reinforced by the limited ground provided for an appeal against an order approving a resolution plan, namely, if the plan is in contravention of the provisions of any law for the time being in force; or there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period; or the debts owed to the operational creditors have not been provided for; or the insolvency resolution process costs have not been provided for repayment in priority; or the resolution plan does not comply with any other criteria specified by the Board

77.6.1.

The assessment about maximisation of the value of assets, in the scheme of the Code, would always be subjective in nature and the question, as to whether a particular resolution plan and its propositions are leading to maximisation of value of assets or not, would be the matter of enquiry and assessment of the Committee of Creditors alone. When the Committee of Creditors takes the decision in its commercial wisdom and by the requisite majority; and there is no valid reason in law to question the decision so taken by the Committee of Creditors, the adjudicatory process, whether by the Adjudicating Authority or the Appellate Authority, cannot enter into any quantitative analysis to adjudge as to whether the prescription of the resolution plan results in maximisation of the value of assets or not. The generalised submissions and objections made in relation to this aspect of value maximisation do not, by themselves, make out a case of interference in the decision taken by the Committee of Creditors in its commercial wisdom

78.

To put in a nutshell, the Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is well defined and circumscribed by Sections 30(2) and 31 of the Code read with the parameters delineated by this Court in the decisions above referred. The jurisdiction of the Appellate Authority is also circumscribed by the limited grounds of appeal provided in Section 61 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the CoC. Within its limited jurisdiction, if the Adjudicating Authority or the Appellate Authority, as the case may be, would find any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by Code and exposited by this Court.