Shankar Mukherjee & Anr. vs Ravi Sethia, Resolution Professional of Suasth Healthcare Foundation & Ors.

Per: Bidisha Banerjee, Member (Judicial) and D. Arvind, Member (Technical)

This Court is congregated through hybrid mode.

I.A. (IB) No. 1733/KB/20237 Brief facts of the case:8 Submissions made by the Applicant:10 Submissions made by the Respondent, per contra:11 Analysis and Findings:12 IVN.P (IBC)/34(KB)2023 In I.A. (IB) No. 1551/KB/2023 And IVN.P (IBC)/37(KB)2023 In I.A. (IB) No. 1381/KB/202214 Factual Background:14 Applicant's Contention:16 Respondent' submission per contra:19 Analysis and Findings of this Adjudicating Authority:30 I.A. (IB) No. 1551/KB/202337 I.A. (IB) No. 1381/KB/2022 (Resolution Plan)38 Prologue38 Particulars of the Corporate Debtor39 Initiation of Corporate Insolvency Resolution Process of Suasth Health Care Foundation40 Constitution of Committee of Creditors40

Collations of Claims ... 43 Corporate Insolvency Resolution Process and Compliance ... 43 Evaluation and Voting ... 44 Compliance of the Resolution Plan submitted by the SRA with various provisions ... 46 Details of the Resolution Plan and/or Payment Schedule ... 52 Effective Date and NCLT Approval Date ... 54 Acquisition as a Going Concern ... 55 Management of the Corporate Debtor after the NCLT Approval Date ... 55 Regulatory Approvals and Implementation of Resolution Plan ... 56 Reliefs and Waivers ... 58 Our Inference ... 60

Heard the Ld. Counsels for both parties.

This application has been preferred under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, for brevity “I&B Code”/ “IBC”, by one Mr. Shankar Mukherjee and another member of the suspended board of directors of the Corporate Debtor (CD), Suasth Health Care Foundation, hereinafter referred to as “Applicant” seeking the following reliefs, inter alia:

The Applicant is aggrieved by the approval of the resolution plan by the Committee of Creditors (hereinafter referred to as “CoC”) consisting of Respondents 2 and 3, i.e., J. C. Flowers Asset Reconstruction Private Limited and Axis Bank Limited respectively.

The Corporate Debtor was put into insolvency process on 31.08.2021, by this Adjudicating Authority in C.P. (IB) No. 204/KB/2021 under section 10 of the I&B Code.

During the Corporate Insolvency Resolution Process (for brevity “CIR Process”), the Resolution Professional of the Corporate Debtor received resolution plan from the consortium of Nishkala Healthcare Private Limited and M/s. Ujin Pharma Chem.

While the Resolution professional did receive intent to submit resolution plans from two more resolution applicants, but ultimately received resolution plan only from the Successful Resolution Applicant, which in this case is Nishkala Healthcare Private Limited and M/s. Ujin Pharma Chem (hereinafter called as “SRA”).

The Applicant has challenged the Resolution plan on various grounds, particularly regarding the distribution of plan value amongst operational creditors such as employees and workmen. According to him, the distribution proposed is not fair and equitable as required in terms of Section 30 (2) (b) of I&B Code.

the Applicant claims that the resolution plan may suffer from illegality and may not be in the interests of all the stakeholders in the instant CIR Process contrary to the certification by the Resolution professional that the plan is in compliance with all the provisions of the code and the regulations made thereunder

It is submitted that in the application for plan approval, the plan value is less than the liquidation value and more particularly its financial layout, as put up before the CoC is contrary to the provisions of the I&B Code.

In this case, the manner of distribution in respect of class stakeholders i.e., employees and workmen were not even placed before the CoC and therefore the said plan could not have been approved in its entirety by the CoC in its commercial wisdom.

Further, the Applicant questions the allocation of the NIL amount to Hari Vitthal Mission who is an unsecured financial creditor and alleges that the manner of distribution is not in line with Section 30 (2) (b) and the plan is in violation of section 30 (2)(e), 30 (2) (f) and 30(3) of the IBC.

The applicant also questions the allocation to operational debt when unsecured financial creditors who are standing on higher footing under the Waterfall mechanism under Section 53 of I&B Code are proposed to be paid NIL amount is contrary to the provisions of Code.

The Applicant also submits in his application that the said resolution plan does not provide any statement of gratuity dues that are payable by the corporate debtor to the workmen and employees.

The Applicant further stated that the entire CIRP process has not been conducted in the manner that would result in maximization of wealth of the Corporate Debtor and therefore he submitted that the application seeking approval of the plan may be rejected as it is less than the liquidation value apart from irregularities in terms of Section 30 as well as in conducting the CIRP process.

The Ld. Counsel for the Applicant submits that the hospital operated by the Corporate Debtor has been shut down by the Resolution professional for the reasons best known to him, although he was obliged to keep the CD as a “going concern”.

The Ld. Counsel for the applicant submitted that the resolution professional has relied on the valuation report of the registered valuer, which has undervalued the assets of the Corporate Debtor to accommodate the Respondent Nos. 4 i.e., Successful Resolution Applicant (SRA).

The Ld. Counsel for the applicant submits that the liquidation and fair value of the Corporate Debtor was valued at Rupees 294 Crores and 398 Crores respectively by erstwhile IRP (Interim Resolution Professional) appointed Registered valuer.

He also submitted that in spite of Adjudicating Authority sending back to the plan earlier for reconsideration vide its order dated 28-08-2023, no modification has been done in the resolution plan which was already submitted earlier which make it clear that a Resolution professional is in hand and gloves with the SRA and the entire CIRP is vitiated by a fraud and material irregularity.

The Applicant submits that in the given case since the liquidation value is greater than the plan value, for the purpose of maximisation of the Corporate Debtor it would be better if the same is liquidated and the Corporate Debtor is sold as a “going concern”.

Ld. counsel for the Respondent claims that no evidence of material irregularity has been brought in by the Applicant to demonstrate any fraud or mischief committed by Resolution Professional in collusion with the Successful Resolution Applicant. He submits that though two more Applicants proposed to submit the resolution plan no one came forward with any resolution plan except the Successful Resolution Applicant, therefore it would be entirely wrong on the part of the Applicant to allege fraud or material irregularity in conducting CIRP without basis what so ever.

Ld. Counsel for the Respondent urged that this Adjudicating Authority may note the conduct of the Applicant. He submits that it is based on the Corporate Debtor’s application under Section 10 of the IBC, CIRP has been initiated, whereas now they are seeking liquidation and a resolution by intervening in the application filed for approval of the resolution plan of the Corporate Debtor.

He also submits that they have challenged the admission of the CIRP in writ Court under the pretext that the Corporate Debtor is a section 8 company under the Companies Act 2013 and therefore the Company cannot be put under CIRP and the matter is pending for disposal.

He submits that one who wanted admission under CIRP cannot seek liquidation just because he suspects the CIRP process was conducted without any material evidence or any basis to prove any material irregularity.

He further submits that the applicant has no locus standi to file this application. Therefore, he pleaded that the same is liable to be dismissed with heavy costs.

The rival contentions were noted and the decisions were considered.

Before getting into the merits of this case and the objections raised by the Applicant, we are inclined to examine whether a suspended member of the board, the applicant herein is aggrieved by the approval of the resolution plan by the CoC which is pending before this Adjudicating Authority.

It is not the case of the Applicant that the Corporate Debtor is solvent, and consequently if the Corporate Debtor is liquidated, he will get something from the liquidation estate after satisfying all the creditors under Section 53(1) of IBC.

It is also not the case of the Applicant that even under the Resolution plan he is entitled to the allocation of value when the plan value or even the liquidation value is not even sufficient to meet the financial and operational debts of the corporate debtor. Therefore, in no case he can be an aggrieved party to file this application.

The Ld. Counsel's contention that the plan value is less than the liquidation value and the distribution thereof would be examined by the Adjudicating Authority in light of section 30 (2) (b) of the I&B Code and the Regulations made thereunder. We are conscious of the legal position laid down by the Hon'ble Apex Court in the case of Maharashtra Seamless Ltd v. Padmanabhan Venkatesh reported in (2020) 11 SCC 467: MANU/SC/0066/2020 that the resolution plan value need not match the liquidation value.

His allegation of material irregularity fraud etc., is not substantiated by any evidence whatsoever. Therefore, merely on surmise and apprehensions plan cannot be challenged.

In view of the above we find that the Applicant has no locus standi to intervene and file this application challenging the approval of the resolution plan by the CoC. In this regard, we rely on the decision of the Hon'ble Supreme Court of India in the case of Adi Pherozshah Gandhi vs H.M Seevai reported in 1970 (2) SCC 484, wherein the Hon'ble Apex Court has held that grievance must be legal grievance; the applicant must not come merely saying “I do not like this thing to be done, it must be shown that it tends to his injury or to his damage, in the legal sense of the word.” One who feels disappointed with the order is not the person aggrieved. He must be disappointed by a benefit that he would have received if the order (plan in this case) had gone the other way. It is very clear that regardless of the plan value or its distribution, the Applicant is not entitled to anything and therefore cannot be an aggrieved party to come before us.

Therefore, we think that there is no necessity to deal with his objections regarding the amount of plan value or liquidation value being more than the plan value or the distribution of plan value.

In terms of the foregoing observations and findings, we are of the view that this application needs to be dismissed as not maintainable.

Accordingly, we are dismissing this application being I.A. (IB) No. 1733/KB/2023.

No costs.

These applications have been preferred under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, for brevity "I&B Code"/ "IBC" by Hari Vittal Mission (hereinafter called the "Applicant"/ "HVM") a company incorporated under the provisions of the Companies Act having its office in Kolkata, against Resolution Professional (hereinafter referred to as the "Respondent" or "RP") of the Corporate Debtor Suasth Health Care Foundation the "Corporate Debtor" (CD) herein.

The Corporate Debtor, Suasth Health Care Foundation was admitted into CIRP on 31.08.2021 by an order passed by this Adjudicating Authority pursuant to an application made by the Corporate Debtor under Section 10 of the I&B Code.

Consequent to the admission of the Corporate Debtor into CIRP, the Resolution Professional (RP) invited claims from the creditors of the Corporate Debtor.

Pursuant to the invitation for claims the Applicant submitted its claim of approximately Rs. 64 Crores.

Against the said claim of the Applicant a letter was sent by the Resolution Professional to the Applicant conveying that a portion of the claim has been admitted by him.

Applicant was initially allowed to participate in the CoC meetings but was later excluded on the ground that he was a "Related Party" to the Corporate Debtor. The challenge to the said decision made by the applicant vide IA No. 390 of 2022 before the Adjudicating Authority, met with a dismissal.

Aggrieved by the decision of the Adjudicating Authority, the Appellant preferred an appeal before the Hon'ble NCLAT which is still pending for consideration.

Meanwhile the Respondent filed an application bearing IA No. 1381 of 2022 for approval of the resolution plan to which the Applicant objected. The Applicant on the other hand filed an application in IA No. 1563 (KB) of 2022 to intervene in the said IA as the applicant was unaware of the proportion of the amount allotted to and seeking direction by the Adjudicating Authority to provide a copy or extracts of the relevant portion of resolution plan where allotment against its claim has been dealt with.

This IA was allowed by the Adjudicating Authority and consequently the Applicant was supplied with relevant extracts of the resolution plan wherein the Applicant was allotted NIL payment against the claim made. To justify this action Resolution Professional declared the Applicant as a “Related Party” of the corporate debtor and excluded it from the CoC meetings apart from treating the Applicant as an unsecured financial creditor.

To this as a response to the decision of the Resolution Professional, a supplementary affidavit to Application being I.A. (IB) No. 1563/KB/2022 was filed wherein it is stated that the successful resolution professional could not have discriminated against the applicant on the basis of “related party” and some fair amount had to be paid to the Applicant.

On 28.08.2023 the Applications filed by Applicant along with other IAs were decided by the Adjudicating Authority whereby the resolution plan was sent back to the committee of creditors with a direction that a balance should be stuck amongst all the stakeholders and review the distribution proposed in the resolution plan to see whether any provision can be made to the Applicant.

After a detailed discussion that took place during the 18th CoC meeting of the corporate debtor wherein the order of the Adjudicating Authority dated 28.08.2023 was discussed in detail and after discussion, the CoC concluded that Nil payment to the applicant would still meet the directions of the Adjudicating Authority’s order dated 28-8-2023.

The Present application has been filed by the Applicant, being aggrieved by the decision taken in the 18th CoC meeting to allot Nil payment to the Applicant despite specific directions for review of distribution and allocation of an amount by the Adjudicating Authority.

Learned Sr. Counsel for the Applicant submits that the decision taken in the 18th CoC meeting to allot NIL payment to the Applicant is against the directions of the Adjudicating Authority's order dated 28.08.2023.

Learned Sr. Counsel took us to Para 32, 33, 34 and 35 of the said order which is reproduced verbatim from Para 32:

The Learned Senior Counsel further submits that the liquidation value is approximately Rs. 191 Crore whereas the plan value is approximately Rs. 180 Crore. In fact, previous valuer has valued it for even more.

Further it is submitted that the order of Adjudicating Authority dated 28.08.2023 is very clear and gives directions to SRA and the CoC to review the distribution so as to balance the interest of all stakeholders as required in Section 30(2) Explanation 1 of I&B Code.

He further submits that Explanation 1 of Section 30(2) contemplates distribution on a fair and equitable basis to “such creditors” which would mean operational creditors and dissenting financial creditors like the Applicant.

It is further contended that the CoC and SRA have chosen to interpret the order of the Adjudicating Authority as per their convenience under the pretext that the liquidation value of the applicant would be nil and accordingly no amount needs to be paid as per the waterfall mechanism envisaged under Section 53(1) of I&B Code, the applicant being an unsecured financial creditor.

20. He further submits that the intention of the code which is to strike a balance of all stakeholders as well as the order of Adjudicating Authority dated 28.08.2023 have not been followed in the present case causing grave injustice to the Applicant.

21. Ld. Sr. Counsel claims that having not filed an appeal against the order of the Adjudicating Authority dated 28-8-2023, the said order has become final and not following the directions of the Adjudicating Authority is not only illegal but also amounts to contempt of court.

22. The Learned Sr. Counsel further relies upon the judgments of M/s SP Enterprises vs. M/s Electrosteel Steels Limited & Ors. being Civil Appeal No. 1133 of 2019 passed by the Hon'ble Apex Court and Hammond Power Solutions Private Limited vs. Sanjit Kumar Nayak and Others reported in 2020 SCC OnLine NCLAT 199 passed by the Hon'ble NCLAT cater to that the minutes of the meeting of committee should demonstrate that it has taken care of the interest of all stakeholders and the reasons for allocation of a particular amount against each claim to be recorded which is not the case here.

23. The Ld. Senior Counsel further relies upon the judgement of the Hon'ble High Court at Calcutta in the case of Indu Bhushan v. UOI in FMA 613 of 2008 that once an Order attains finality it matters little as to whether it is erroneous.

24. He further submits that a party aggrieved by an order should work out his remedies within the legal framework. If an issue is concluded upon a finding being rendered and if the finding remains unchallenged it is no longer open to the party to undo the effect, thereof at any subsequent stage.

25. Ld. Sr. Counsel further submits that the principle of finality or Res-Adjudicata is a matter of public policy and is one of the pillars on which the judicial system is founded. The principle applies both to an order from which an appeal lies or no appeal is preferred and to an order for which no appeal is provided.

In view of the above he submits that having not challenged the NCLT order dated 28.08.2023, respondents have no choice but to obey the directions of NCLT and review the distribution of plan value to allocate some reasonable amount to the Applicant.

He submits that Section 30(2)(b) and (4) as well as Section 53(1) of the Code should be read in the manner the legislative intended and the intention of the legislature was to give some amount of money to all the stake holders of the Corporate Debtor. No class or subclass of creditors can be paid NIL under the code.

He also relies upon the judgment rendered in the case of Sansar Texturisers vs Ravindra Kumar by the Hon'ble NCLAT to state that provision to operational creditors and not providing anything to the financial creditor is a breach of provision of law i.e., sequence of priority in payment if the dues to stakeholders as stated in Section 30(4) read with Section 53(1) of I&B Code.

He also relied on case laws of the Hon'ble Apex Court rendered in Prithvi Nath Ram vs. State of Jharkhand as well as in Ramchandra Rao v. Nagabushana to strengthen his argument that right or wrong, unchallenged order of this Authority dated 28-8-2023 will have to be obeyed.

The Learned Sr Counsel for the Respondent argued that the order of NCLT dated 28.08.2023 was discussed in detail in its 18th meeting of CoC for the purpose of implementation.

---1. 31. Ld. Sr. Counsel submits that every relevant aspect of the NCLT order was discussed and it was reiterated that nil payment has been allotted not on account of HVM being “related party” but being an unsecured financial creditor.

32. He also submits that as per the minutes of the CoC the differentiation on account of distribution is on the basis of nature of security held by the respective Financial Creditor and not based on HVM being “related party”.

33. It was also highlighted that even assuming that HVM was admitted in the CoC and have dissented from the resolution plan as a dissenting financial creditor, it would have been entitled receive such amount which shall not be less than amount to be paid to it in accordance with Section 53(1) in the event of liquidation of Corporate Debtor.

34. In the present instance the liquidation value is not sufficient to meet the obligations towards even the Secured Creditors and therefore the unsecured dissenting financial creditor HVM would have received NIL value and accordingly there was no infirmity in the resolution plan for providing NIL payment against its claim.

35. Relying extensively on the judgement of the Hon’ble Supreme Court in Essar Steel India Ltd Vs. Satish Kumar Gupta, reported in (2020) 8 SCC 531, Ld. Senior Counsel argued that the Supreme Court has been consistently holding that it is the commercial wisdom of CoC that is free to determine what amounts to be paid to different classes and sub-class of creditors under the provisions of the I&B Code and regulations made thereunder.

36. Ld. Senior Counsel further submits that the CoC in the meeting held to approve the plan have stated (as per the minutes of the meeting of CoC) that in the present case, the resolution plan has proposed nil payment to HVM which is on account of it being an unsecured financial creditor and which is in line with the provisions of the code and Supreme Court Judgements. Accordingly, the CoC decided not to interfere with the distribution of the plan value already proposed and approved by the CoC.

The Learned senior counsels relying on the judgement of the Hon’ble Supreme Court in the case of Essar Steel India Ltd Vs. Satish Kumar Gupta (supra) contended that the order of priority of payment of creditors mentioned in Section 53 (1) is not engrafted in sub-section (2) (b) as amended. Section 53(1) is only referred to so that a certain minimum figure be paid to different classes of operational and financial creditors. It is only for this purpose that Section 53(1) is to be looked at as it is clear that it is the “commercial wisdom” of the committee of creditors that is free to determine what amount is to be paid for different classes or sub-classes of creditors under the provisions of the I&B Code and Regulations made thereunder.

The Learned Senior Counsels brought to attention Para 129 of the judgement to state that Explanation 1 to Section 30(2)(b) has only been inserted so that the Adjudicating Authority and the Appellate Tribunal cannot enter into matters of the business decision taken with requisite majority of CoC.

Relying on the Essar Steel Judgement (supra) of the Hon’ble Supreme Court of India, and several other judgements which are part of the compilation of cases filed by them, the Learned Senior Counsel has contended that there is no residual equity jurisdiction in the Adjudicating Authority or the Appellate Tribunal to interfere in the merits of business decision taken by requisite majority of CoC provided that is otherwise in conformity with the provisions of the code and the regulations made thereunder.

The learned senior counsels further brought to our attention the judgement of Hon’ble Apex Court in the case of India Resurgence ARC Private Limited v. Amit Metaliks Limited reported in 2021 SCC Online SC 409, in para 17 of the judgement, the Hon’ble Supreme Court has held that what amount is to be paid to different classes or sub-classes of creditors is essentially the commercial wisdom of CoC and a dissenting financial creditor. cannot suggest a higher amount to be paid to it with reference to the value of Interest

The Learned Senior Counsels also brought to our attention that the Hon'ble Supreme Court in the case of Vallal RCK Vs. Siva Industries, reported in (2022) 9 SCC 803 where it was held that the decision taken by the committee of creditors is paramount and cannot be interfered with by the Adjudicating Authority or Appellate Authority.

He also brought to our attention BLRC report Para 5.3.3 to strengthen the argument that it is well within the rights of the successful resolution applicant and CoC to arrive at a distribution mechanism as long as it is not in contravention of Section 30(2)(b) of I&B Code.

The Learned Senior Counsels further submitted and relied on eight judgements by way of case law compilation and brought to our attention the relevant paras in those judgements which are reproduced herein.

The gist of case laws relied on by the Ld. Senior Counsel is produced in the table below:

which may be applied by the Committee of Creditors in arriving at a business decision as to acceptance or rejection of a resolution plan. For all these reasons therefore, it is difficult to hold that any of these provisions is constitutionally infirm.' iii.Indian Bank Vs Charu Desai [2022] SCC Online NCLAT 19019. 'The provision which has been incorporated by the Amendment Act 2019 by sub-clause (b) was substituted is about the payment of debts of Financial Creditors who do not vote in favour of the resolution plan. The amendment which has been introduced by the Amendment Act 2019 came to be considered by the Hon'ble Supreme Court in 'Committee of Creditors Essar Steel India Ltd Vs. Satish Kumar Gupta (2020) 8 SCC 531' In Paragraph 128 the following has been laid down: '128 When it comes to the validity of substitution of Section 30(2)(b) by Section 6 of the Amending Act 2019 it is clear that the substituted Section 30(2)(b) gives operational creditor something more than what was given earlier as it is the higher of the figures mentioned in sub-clauses (i) and (ii) of sub-clause (b) that is now to be paid as a minimum amount to operational Creditors. The same goes for the latter part of sub-clause (b) which refers to dissentient financial creditors Mrs. Madhavi Divan is correct in her argument that Section 30(2)(b) is in fact a beneficial provision to favour of operational creditors and dissentient financial creditors as they are now to be paid a certain minimum amount, the minimum in the case of operational creditors being the higher of the two figures calculated under sub-clauses (i) and (ii) of clause (b), and the minimum in the case of dissentient financial creditor being a minimum amount that was not payable earlier. As a matter of fact, pre-amendment, secured financial creditors may cramdown unsecured financial creditors, who are dissentient the majority vote of 66% voting to give them nothing or next to nothing for their dues. In the earlier regime it may have been possible to have done this but after the amendment such financial creditors are now to be paid the minimum amount mentioned in sub-section (2). 53 is not engrafted in sub-section (2)(b) as amended. Section 53 is only referred to in order that a certain minimum figure be paid to different classes of operational and financial creditors. It is only for this purpose that Section 53(1) is to be looked at as it is clear that it is the commercial wisdom of Committee of Creditors that is free to determine what amounts to be paid to different classes and sub-classes of creditors in accordance with the provisions of the Code and the Regulations made thereunder. iv.MK Rajagopalan Vs. Dr Periyasamy Palani Gounder & ANR [2023] SCC Online SC 574“201 However thereafter the Appellate Tribunal proceeded with the promoters as equity shareholders and then further made certain observations about discrimination between related party unsecured financial creditor and other unsecured financial creditors as also between related party operational creditor and other operational creditors. Such far-stretched observations of the Appellate Tribunal are difficult to be reconciled with the operation of the statutory provisions. 202 It has rightly been argued on behalf of the Appellants and had rightly been observed by the Adjudicating Authority (vide extraction in Paragraph 15.4.1 hereinabove) that there was no provision in the code which mandates that the related party should be paid in parity with the unrelated party. So long as the provisions of the Code and CIRP Regulations are met, any proposition of differential payment to different classes of creditors in the resolution plant is ultimately subject to the commercial wisdom of CoC and no fault can be attached on the resolution plan merely for not making provisions for related party” v.Vallal RCK Vs. Siva Industries and Holdings Ltd and Ors. [(2022) 9 SCC 803]“24 When 90% and more of the creditors, in their wisdom after the deliberations, find that is will be in the interest of all the stake holders to permit settlement and withdraw CIRP, in our view the adjudication authority or the appellate authority cannot sit in an appeal over the commercial wisdom of CoC. The interference would be warranted only when the adjudicating or appellate authority finds the decision of CoC to be wholly capricious, arbitrary, irrational and de hors the provisions of the statute or the rules.” vi.Ebix Singapore Private Ltd and Ors. Vs. Committee of Creditors of Edu comp Solutions Ltd and Ors. [(2022) 2 SCC 401]“115 While the above observations were made in the context of a scheme that has been sanctioned by the court, the Resolution Plan even prior to the approval of the adjudicating authority is binding inter se on the CoC and the successful resolution applicant.” vii.Kallinga Allied Industries India Pvt Ltd Vs. Hindustan Coils Ltd“20 With the aforesaid, we are of the view that when the application for approval of resolution plan is pending before the adjudicating authority at that time the [(2021) SCC Online NCLAT 51]adjudicating authority cannot entertain an application of a person who has not participated in CIRP even when such person is ready to pay more amount in comparison to the successful resolution applicant. If a resolution plan is considered beyond the time limit, then it will make a never-ending process. Thus, impugned order is not sustainable in law as well as in fact. The impugned order is hereby set aside. “21 The adjudicating authority is directed to proceed with the application filed by the RP for approval of resolution plan as per law”. viii.Chhattisgarh Distilleries Ltd Vs. Dushyant Dave [(2020) SCC Online NCLAT 1078]“17 However the adjudicating authority cannot direct the CoC to consider the second resolution plan submitted before the Authority although the second resolution applicant is ready to invest more amount in comparison to the first resolution applicant. Learned adjudicating authority has rightly held that the adjudicating authority cannot Suo motu direct the CoC to consider the new resolution plan and reconsider already approved resolution plan.”

Ld. Sr. Counsels also relied on the recent judgement of Hon’ble NCLAT rendered in the case of Paramveer Singh and Others to state that Tribunal does not have residual equity they have followed the right path of law as per the judgments laid down by the Hon’ble Apex Court and NCLAT which have become final and consequently submitted that the application of HVM is liable to be dismissed.

We have heard the learned senior counsels of the Applicant as well as the respondent at length.

In the case at hand, we need to examine whether an unsecured financial creditor can be paid the NIL amount in a resolution plan submitted by the successful resolution applicant which has been approved by a majority of members in the CoC meeting and is pending for approval before this adjudicating Authority.

In all the Judgements of the Hon’ble Supreme Court of India and the NCLAT referred to by the Respondent settles the legal position that approval of a resolution plan is done by the CoC based on its “commercial wisdom” and the Adjudicating authority has a limited role. All that the Adjudicating Authority is to see whether provision contained in Section 30(2)(b) of IBC and regulations 37, 38 and 39 of IBBI (Insolvency process of corporate persons) Regulations 2016 have been complied before approving the plan.

In other words, the Adjudicating Authority is required to see whether there is any violation of section 30(2)(b) of the I&B Code and the Regulations as referred to above.

The Honourable Supreme Court in the case of Committee of Creditors of Essar Steel vs. Satish Kumar Gupta (Supra) made detailed observations on the validity of the substitution of Section 30(2)(b) by stating that:

Keeping the above observations of the Hon’ble Apex Court, now we proceed to analyse Section 30(2)(b) of the I&B Code 2016.

As per Section 30(2) of the I&B Code the resolution professional shall examine each resolution plan received by him to confirm that each resolution plan-

On careful examination of Section 30(2)(b) of the I&B Code, 2016 in our view, two legal propositions emerge:

Reference to Section 53(1) of the I&B Code is only for the purpose of calculating the amount payable to operational creditors and dissenting financial creditors. Otherwise, there is no place for Section 53 (1) when it comes to the resolution of a corporate debtor under the CIR Process.

The provision of some amount should be made for operational creditors as well as dissenting financial creditors, and the amount so provided cannot be NIL.

This being a beneficial amendment as observed by the Hon'ble Apex Court, in our view code contemplates a scenario where a provision made to an operational creditor or dissenting financial creditor in a Resolution Plan could be lesser than what they would have got in the event of liquidation in terms liquidation value as per section 53(1). In such a situation the code provides for provision as per liquidation value.

In fact, in the case of operational creditors the code says that they will have to be paid as per the value provided to them as per the resolution plan, or liquidation value or the amount that would have been paid to them in the plan as if the resolution plan value had been distributed in accordance with the order of priority mentioned in sub-section (1) of Section 53 whichever is higher.

Therefore, we are of the view, that is the reason for the word "not less than" used in Section 30(2)(b). If the legislature wanted to restrict the amount payable to them to liquidation value at the most, then the words "not more than liquidation value" would have been used.

In view of the above analysis, we are of the view that the code contemplates mandatory allocation to dissenting financial creditors and to operational creditors and the allocation would be the amount provided in the plan or liquidation value whichever is higher and the contention that such creditors can be paid NIL value because liquidation value for them is NIL, would defeat the very purpose of the beneficial amendment made in Section 30(2) of the I&B Code. Such contention made by Ld. Senior Counsels, in our view, will not be correct proposition in a CIRP proceedings, though the same would be correct in a liquidation proceeding under Section 53(1) of the I&B Code.

Vide an order dated 30.01.23 this Adjudicating Authority sent the plan back to the Committee of Creditor (CoC) to see that a provision is made for the unsecured creditor Hari Vittal Mision (HVM). HVM was at first treated as an unsecured creditor and its claim was admitted by the Resolution Professional (RP). It was even allowed representation in the Committee of Creditors. Later it was treated as a related party and ousted from the Committee of Creditors (CoC). Finally, it was treated as an unsecured creditor and allotted NIL value under the plan, value whereof was Rs. 160 Crores.

This Adjudicating Authority, being of the opinion, that NIL payment to an unsecured creditor was unfair, passed an order, gist whereof would be thus:

That HVM has been treated as an unsecured creditor.

An unsecured creditor does not deserve 'NIL' value under the plan.

The plan is sent back to COC to "see" that a provision is made for HVM.

The revised distribution, if any ...

The plan application will be put back a board once the exercise is over.

The Order suffered from no ambiguity or ambivalence, as no clarification was sought for.

The aforesaid order was passed by this Tribunal upon detailed analysis of various decisions, as to whether an unsecured creditor does deserve any payment under the plan, whether the plan can be sent back to CoC for a revised distribution, etc. It was never challenged in the higher fora, instead, the CoC in its own wisdom sat on appeal and scrutinized it threadbare to examine and analyse whether as an Adjudicating Authority, this Tribunal was permitted to take such a course. The legal opinion was sought for, a dissection of the order was conducted and finally the CoC agreed at not revising the allocation of HVM.

In the Order dated 28.08.2023, we held at Para 34 that:

In terms of the order above, the CoC was required “to see” that a provision could be made for payment to the applicant from the proceeds.

Further, at Para 35 of the Order dated 28.08.2023, the direction was also given that the CoC will be at liberty to consider any other proposal including that of a resolution applicant based on its viability, feasibility, and merits. Accordingly, IA 1381/KB/2022 which deals with resolution plan approval was put back on board for considering it along with revised distribution if any.

The words “to see” in normal parlance would mean to perceive, discern, spot, and notice.

“To see” can never be construed to mean, convey, denote, or indicate “to consider” which requires deep thought, contemplation, an examination or scrutiny of something.

The Black’s Law Dictionary defines the term “consider” as to ponder, to study and to examine carefully. Hence “to see” that a provision is made cannot be construed to convey the meaning of “to consider whether a provision can be made”.

The CoC was not left with any choice to consider whether to give or not to give. What the CoC in this case, attempted is to examine the correctness, legality and propriety of the order passed by this Adjudicating Authority, and such power only an Appellate forum can exercise. The Committee of Creditors overstretched its authority to see whether it was required to act in terms of the order or it could act independently exploring its own ‘commercial wisdom’ and stretching it a bit too far to include its legal wisdom too.

69. The CoC could not have conducted itself as an appellate forum to exercise its authority and power to examine the correctness of an order passed by the Adjudicating Authority. If it was not satisfied or if it was aggrieved with the order, the law provides a recourse of appeal to the Appellant Forum.

70. While the commercial wisdom of the CoC must be held in primacy, this Tribunal cannot act as a mute spectator to endorse and put its seal of approval on whatever decision the COC takes in the name of exercising its “commercial wisdom”.

71. Be that as it may, when the intention of this Tribunal was loud and clear, as enumerated above, the manner and there was no challenge to the order the way the COC conducted itself to take a different view cannot and should not be encouraged.

72. It is a settled legal position that distribution of plan value including categorizing different classes of creditors and subclass of creditors based on security, the value of debt etc. should be left to the commercial wisdom of CoC and as long as the plan is not in violation of Section 30(2) the I&B Coe Code and the regulations made thereunder, the Adjudicating Authority will have to approve.

73. While we do see the violation of the said section of the code, we are conscious of the legal position that the Adjudicating Authority cannot direct the allocation of a particular amount to such creditor as the applicant. Therefore, we leave it upon the Committee of Creditors to take a pragmatic and holistic view to allocate a reasonable amount as per its “commercial wisdom”, against the claim of the applicant.

74. Accordingly, the applications are allowed and disposed of accordingly.

This Application has been preferred by the Resolution Professional of the Suasth Health Care Foundation under Section 60(5) of the I&B Code, 2016, seeking direction from us to put I.A. (IB) 1381/KB/2022 (Resolution Plan Application) back on the board for consideration.

Vide an Order dated August 28, 2023, we sent the Resolution Plan submitted by the consortium of “Nishkala Healthcare Private Limited” (CIN: U74999MH2019PTC321858) and “Ujin Pharma Chem” back to the CoC to review the distribution so as to balance the interest of all stakeholders as required in section 30(2) – Explanation 1, and see that a provision can be made for payment to the applicant from the proceeds to ensure fairness qua all the stakeholders.

Vide an Order dated October 05, 2023, we have allowed prayer 1 in this application (I.A. (IB) 1551/KB/2023) and directed the Registry to take necessary steps for the restoration of the Plan Application and to put it back on Board to be heard out along with this application.

It is evident from the said order that Hari Vitthal Mission, who is affected by the decisions of the CoC at its 18th meeting held on 07/08/2023, upon the review as was directed by this Adjudicating Authority vide its order dated 28/08/2023, is also allowed to be impleaded in I.A. (IB) No. 1551/KB.2023 and allowed to file its Reply Affidavit within one week with advance copy served on all concerned.

In terms of the foregoing discussion, in IVN.P (IBC)/37(KB)2023 and IVN.P (IBC)/34(KB)2023 and the order dated October 05, 2023, we dispose of this application being I.A. (IB) 1551/KB/2023.

Now, we proceed to consider the Resolution Plan filed before this Adjudicating Authority through I.A. (IB) No. 1381/KB/2022.

Heard the Learned Senior Counsel, Mr. Ramji Srinivasan, for the Applicant (Resolution Professional).

This instant application is filed under Section 30(6) read with Section 31 of the Insolvency and Bankruptcy Code, 2016, for brevity “I&B Code” by Mr. Ravi Sethia [Registration No. IBBI/IPA-001/IP-P01305/2018-2019/12052], the Resolution Professional of the Suasth Health Care Foundation, Corporate Debtor herein, seeking approval and final sanction from this Adjudicating authority of the Resolution Plan as approved by the Committee of Creditors, hereinafter referred to as “CoC”, in the matter of Corporate Insolvency Resolution Process of Suasth Health Care Foundation.

The Learned Senior Counsel for the Applicant that the “Resolution Plan” dated May 15, 2022, as amended and restated vide amendment dated September 03, 2022, along with the clarifications and annexures submitted by the consortium of “Nishkala Healthcare Private Limited” (CIN: U74999MH2019PTC321858) and “Ujin Pharma Chem”, hereinafter referred to as “Successful Resolution Applicant” for brevity “SRA”. The Resolution Plan was placed before the Committee of Creditors of the Suasth Health Care Foundation in its 15th Meeting, held on September 21, 2022.

It is further submitted that the Resolution Plan submitted by the SRA has been approved by 100% of the voting share of the CoC, vide the e-voting which concluded on October 06, 2022, at 6:00 P.M. The Copy of the Resolution Plan is annexed as Annexure “A” at Pages 53-133.

Further, it is contended that the Letter of Intent (“LoI”) was issued on October 07, 2022, by the Resolution Professional on behalf of the CoC of the Corporate Debtor, annexed at Pages 246-248 as Annexure “W” which was unconditionally accepted by the SRA and furnished the Performance Security of an amount of Rs. 20 Crore on 15.10.2022 and 17.10.2022 through RTGS under the terms of Request for Resolution Plan, for brevity “RFRP” issued by the RP on March 26, 2022, and to the satisfaction of the Committee of Creditors and the Resolution Professional. The Copy of the Bank statement evidencing the furnishing of Performance Security provided by the SRA is annexed at Page 249 as Annexure “X”.

Further, it is submitted that the Corporate Insolvency Resolution Process (for brevity “CIR Process”) was initiated and an Interim Resolution Professional (for brevity “IRP”) was appointed on August 31, 2021. The invitation for the Expression of Interest (“EoI”) was issued on January 03, 2022. The date of approval of the Resolution Plan by the CoC is October 06, 2022.

Suasth Health Care Foundation (Corporate Debtor herein) is a company within the meaning of the Companies Act, 2013, having Corporate Identification Number (CIN): U85100WB2008NPL130971, having its registered address at Plot No. X-1, 2 & 3, Block - EP Sector - V, Salt Lake City Kolkata West Bengal 700091. The Corporate Debtor is a company that offers comprehensive and integrated super-speciality services with experienced consultants of repute supported by a well-trained team of nurses, technicians and support staff. The Corporate Debtor owns and operates a 400-bed multi-speciality hospital in Kalamboli, Navi Mumbai.

Suasth Health Care Foundation filed an application under Section 10 of the I&B Code, 2016, before this Adjudicating Authority for the initiation of Corporate Insolvency Resolution Process (for brevity “CIR Process”/ “CIRP”) in respect of the Corporate Debtor and vide an Order dated August 31, 2021, this Adjudicating Authority has admitted the application and Mr. Arun Kumar Khandelia was appointed as an IRP of the Corporate Debtor.

The IRP made the publication of a public announcement in Form A dated September 03, 2021, published in newspapers on September 04 and 05, 2021, under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, for brevity “CIRP Regulation” read with Section 13(1)(b) of the I&B Code and under Section 15 of the I&B Code. The Public announcement was published in:

Financial Express (English-Kolkata)

Financial Express (English-Mumbai)

Aajkal (Bengali-Kolkata)

Lakshdeep (Marathi-Mumbai)

The IRP constituted the Committee of Creditors of the Corporate Debtor on September 24, 2021, which was re-constituted on January 11, 2022. The list of Financial Creditors of the Corporate Debtor being members of the Committee of Creditors and distribution of voting share among them is as under:

The Learned Senior Counsel, Mr. Srinivasan submits that in pursuance of the provisions of the Code, the Resolution Professional conducted his due diligence and from the documents and information available and as per the opinion obtained from the Legal Counsel, the Resolution Professional opined that “Srei Equipment Finance Ltd.” and “Hari Vittal Misson” are related party to the Corporate Debtor. The same was communicated by the RP vide an email dated January 11, 2022. It is further contended that considering the related party status of Srei Equipment Finance Ltd. and Hari Vittal Misson, in pursuance to the proviso to Section 21(2) of the I&B Code, 2016, they have no right to represent, participate and vote in the meetings of the Committee of Creditors of the Corporate Debtor. The List of Financial Creditors as per their claims as on April 06, 2022, is annexed at Page 134 as Annexure “B”.

It is further submitted that the on December 08, 2021, in 2nd CoC Meeting, by requisite majority, the Mr. Ravi Sethia was appointed as Resolution Professional, for brevity “RP” and this Adjudicating Authority allowed the same on November 15, 2023.

The Total number of meetings of CoC held is 16 on 15th CoC meeting held on September 21, 2022, the Resolution Plan submitted by the SRA has been approved by a vote of 100% of the voting share of the CoC, wherein the voting process ended on October 06, 2022. The list of CoC meetings that have been held during the CIR Process Period is as under:

The Ld. Senior Counsel for the RP submits that the amounts claimed and verified/admitted are summarised below:

The Learned Senior Counsel for Applicant contends that the IRP apprised the CoC Members that the RP is required to appoint two sets of valuers in terms of Regulation 27 of the CIRP Regulations, 2016 who will determine the liquidation value as per Regulation 35 of the CIRP Regulations, 2016 and the fair market value, as per Regulation 35(1) of the CIRP Regulations and submit it to the IRP. The IRP further apprised the CoC regarding the appointment of Gtech Valuers Pvt. Ltd. and k-Zen Advisors Pvt. Ltd. as the registered valuers of the Corporate Debtor on October 17, 2021.

It is further submitted that in terms of the provisions of Section 25(2)(h) of the I&B Code read with regulation 36A (1) of the Insolvency and Bankruptcy Board, (Insolvency Resolution Process for Corporate Person) Regulations, 2016, the RP has published the invitation of for Expression of Interest (“EoI”) i.e., “Form G” on 03.01.2022 in the following newspapers as under:

a. Financial Express (English – All India Edition)

b. Aajkal (Bengali – Kolkata)

c. Lakshdeep (Marathi – Mumbai)

It is submitted that the RP prepared the final list of eligible Prospective Resolution Applicants on February 18, 2022, and issued the invitation of the Resolution Plan on March 26, 2022. Further, it is submitted that the last date of submission of the Resolution Plan was fixed on May 15, 2022.

The Learned Senior Counsel further submits that the “Resolution Plan” dated May 15, 2022, as amended and restated vide amendment dated September 03, 2022, along with the clarifications and annexures submitted by “Nishkala Healthcare Private Limited” and “M/s. Ujin Pharma Chem” (“SRA”).

It is submitted that the Resolution Plan submitted by “Nishkala Healthcare Private Limited” and “Ujin Pharma Chem” was placed before the Committee of Creditors, in its 15th meeting dated 21.09.2022. It is contended that the RP has presented the fair value and liquidation value of the Corporate Debtor to the members of the CoC in accordance with Regulation 35 of the CIRP Regulations.

21. Further it is submitted that the RP has informed the CoC that the entire interim finance approved by the CoC had been drawn and utilized and therefore requested for an additional interim finance be provided.

22. It is further submitted that the RP has presented the list of deviations in the Resolution Plan from the provisions of the RFRP. Upon deliberation and negotiations on the Resolution Plan between the CoC and the Resolution Applicant, the Resolution Applicant has submitted certain clarifications to the Resolution Plan. The members of the CoC have thereafter deliberated upon the feasibility and viability of the Resolution Plan submitted by the Resolution Applicant and subsequently, the Resolution Plan along with the necessary clarifications was put for e-voting.

23. It is further contended that the distribution methodology was also proposed and subsequently voted upon by the CoC. Upon a request received from certain members of the CoC for the extension in the timeline for the last date for e-voting on the Resolution Plan, the last date for voting was extended to October 06, 2022, at 6:00 P.M.

24. It is further submitted pursuant to the e-voting that concluded on October 06, 2022, the CoC has approved the Resolution Plan submitted by “Nishkala Healthcare Private Limited” and “Ujin Pharma Chem” with 100% voting share of the CoC and declared “Nishkala Healthcare Private Limited” and “Ujin Pharma Chem” as the Successful Resolution Applicant for brevity “SRA”.

The Applicant has submitted that in terms of Regulation 39(4) of the Insolvency and Bankruptcy Code (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, she has filed a Compliance Certificate in prescribed form i.e., Form “H”, annexed at Page 250 to the Application as Annexure “Y”.

It is submitted that contended that the Resolution Applicant has met the criteria approved by the CoC having regard to the complexity and scale of operations of the business of the Corporate Debtor in terms of Section 25(h)(2) of the I&B Code.

Further is it submitted that the Resolution Applicant is eligible to submit a resolution plan in terms of Section 29A of the I&B Code and accordingly, an affidavit has also been furnished by the SRA.

It is further submitted that the Resolution Applicant has submitted an affidavit stating its eligibility in terms of Section 30(1) of the I&B Code, 2016.

Further, it is submitted that details of various compliances as envisaged within the I&B Code and the CIRP Regulations to which a Resolution Plan should adhere to, which is reproduced.

It is further submitted that in terms of Section 30(2) of the I&B Code, 2016, (as amended vide Amendment dated August 16, 2019) the Resolution Plan provides the compliance as under:

The Learned Senior Counsel for the Applicant submits that the Resolution Plan submitted by “Nishkala Healthcare Private Limited” and “Ujin Pharma Chem” (Successful Resolution Applicant) on May 15, 2022 and amended on September 03, 2022.

Clause 2.2 of Part I of the Resolution Plan (Page 15), provides the “Financial Proposal” of the Successful Resolution Applicant. Clause 2.2. (a) of Part I at Page 15 provides that the Resolution applicant proposed to pay an aggregate amount of Rs. 180 Crore hereinafter referred to as “Aggregated Resolution Amount” to settle all liabilities of the Corporate Debtor, by making the payments to various creditors of the Corporate Debtor, in the manner provided in the Detailed Resolution Plan in Part II. Clause 2.2. (b) of Part I (Page 15) of the Plan, the Resolution Applicant has provided the “Financial Proposal” in a tabular (Table 2) form as under:

It is submitted that in the event, that internal accruals of the Corporate Debtor are not sufficient to pay the CIRP Cost, the unpaid CIRP Cost of up to Rs. 10 Crore will be borne by the Resolution Applicant. In case the unpaid CIRP Cost is more than Rs. 10 Crore, the excess amount payable as CIRP Cost will be adjusted against the Aggregated Resolution Amount specified in Clause 2.2. (a) of Part I at Page 15 of the Plan.

Further, Clause 2.4. of Part I, provides the “Term of Resolution Plan” that shall begin on the NCLT Approval Date and shall end on the payment of the Secured Financial Creditors Amount (“Term”).

Further, Clause 2. at Part II of the Plan (Page 19) provides the detailed Financial Terms, Treatment of Stakeholders and Effect of the Plan.

Further, the Ld. Sr. Counsel through Additional Affidavit dated December 14, 2022 submits that in Part I, Clause 2.3 of the Plan, the SRA specifies that the proposed payments under the Plan will be sourced by way of promoter’s contribution, internal accruals and/or external debt by the SRA. The SRA has also provided the relevant term sheet dated July 04, 2022 from Hinduja Leyland Finance for raising external debt to the Resolution Professional, annexed at Annexure A to the said Additional Affidavit.

The Effective Date has been defined at Page 64 of the Plan as the date on which the control of the company shall be handed over to the Resolution Applicant upon payment of the Secured Financial Creditors Amount and which shall not be later than 45 days from the NCLT Approval Date.

NCLT Approval Date has been defined at Page 65 of the Plan as the date on which this Resolution Plan, as approved by the CoC, is approved by this Adjudicating Authority.

Clause 3. at Part II of the Plan (Page 46) deals with the “Acquisition as a Going Concern”. Clause 3. (a) provides on the Effective Date, the Resolution Applicant and/or its Affiliates/ Nominee (which entity shall be eligible under Section 29A of the I&B Code and such entity shall be identified and an undertaking in relation to its eligibility under Section 29A of the Code shall be submitted prior to the Effective Date) shall subscribe to One Crore equity shares of the Corporate Debtor of Rs. 10 each (“Upfront Equity Infusion”) such that they will hold 100% of the share capital of the Corporate Debtor and following the Capital Reduction, acquire control of the Corporate Debtor. The Resolution Applicant and/or its aforesaid Affiliates/ Nominees shall cause such infusion of funds as may be required by the Corporate Debtor and which shall be utilised for funding in the manner as specified in Clause 2.2. of Part I.

Clause 5. at Part II of the Plan (Page 49) deals with the Management of the Corporate Debtor after the NCLT Approval Date. Clause 5. (a) says that on the NCLT Approval Date, a committee shall be deemed to be constituted which shall have one nominee on behalf of the CoC, the Resolution Professional and one nominee of the Resolution Applicant (“Implementation and Monitoring Committee”). On and from the date of its constitution and till the Effective Date, the Management and affaires of the Corporate Debtor shall be managed by the Implementation and Monitoring Committee (in short “IMC”). The IMC shall stand dissolved on and from the Effective Date sans any further action or deed required from the Corporate Debtor.

Further, Clause 5. (g) of Part II provides that the Corporate Debtor will make necessary filing with the RoC and IBBI, as applicable and as required, regarding i. Implementation of the Resolution Plan; ii. vacation of office by the erstwhile directors of the Corporate Debtor; iii. deemed resignation/replacement of the statutory auditor by virtue of the Resolution Plan; and iv. such other filings as may be required to be made by the Corporate Debtor to give effect to the provisions of the Resolution Plan.

Further, Clause 5. (h) of Part II provides that the IMC shall supervise the implementation of the resolution Plan, comply with the provisions of this Plan related to its implementation and shall not take any actions that could impact the successful implementation of this Resolution Plan on a reasonable effort basis. The responsibilities of the IMC are mentioned in Clause 5. (h) (i) to 5. (h) (xv) of the Part II in the Resolution Plan.

Clause 7. (Part II) at Page 56-57 of the Resolution Plan caters to the provisions of “Regulatory Approvals and Implementation of Resolution Plan.”

Clause 7. (a) provides that the Resolution Applicant understands that there is no requirement to make an application to the Competition Commission of India for approval under Section 5 of the Competition Act, 2002 as the revenue threshold provided in Notification dated March 27, 2017 (amended on March 16, 2022) under the Competition Act, 2002, is not met and therefore, the exemption from is applicable.

Clause 7. (b) provides that neither the Resolution Applicant nor any of its Related Parties have failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past.

Clause 7. (c) provides that upon being declared as successful, Resolution Applicant shall pursuant to the approval granted to the Approved Resolution Plan, obtain the necessary approval required under any law for the time being in force in accordance with Section 31(4) of the Code within a period of one year from the NCLT Approval Date or within such period as provided for in such Applicable Law, whichever is later.

Clause 7. (d) provides that to the extent legally applicable under the provisions of Applicable Laws, The NCLT Approval, shall pursuant to the Code, be deemed to be adequate compliance with all relevant provisions of any Applicable Law, that would otherwise have become applicable in relation to the steps that comprise any part of the Resolution Plan. Further, Section 238 of the I&B Code, stipulates that to the extent of any inconsistency between the provisions of the Code and other laws, the former shall prevail. Accordingly, the NCLT Approval sanctioning this Resolution Plan will be final and binding on all stakeholders and third parties, and to the extent permitted under the applicable law, will not require compliance with procedural requirements under other laws including but not limited to those under Companies Act and contracts.

Clause 7. (e) caters to that the statutory auditors of the Corporate Debtor shall be deemed to have resigned from their position as the statutory auditors with effect from the Effective Date and the Resolution Applicant shall be entitled to appoint such suitable persons as the statutory auditors of the Corporate Debtor as deemed fit by them sans requiring any other approval or action save and except any shareholder approval after the Resolution Applicant and/or its nominees (provided each such nominee is eligible under Section 29A of the Code to be Resolution Applicant) have become the sole shareholders of the Corporate Debtor.

Clause 7. (f) provides an indicative timeline of events of implementation of the Resolution Plan in tabular form (Table 5 at Page 57 of the Plan).

The Reliefs and Waivers sought by the Resolution Applicant from the Adjudicating Authority are mentioned in Part V of the Resolution Plan for the successful implementation of the Resolution Plan and effective resolution of the Corporate Debtor, as under:

At the hearing, the submission made by the Learned Senior Counsel, Mr. Ramji Srinivasan appeared on behalf of the Resolution Professional of the Suasth Health Care Foundation, Corporate Debtor herein and perusing the record and/or documents placed before this Adjudicating Authority, we find that the Resolution Plan dated May 15, 2022, (as amended and restated vide amendment dated September 03, 2022, along with the clarifications and annexures), submitted by the consortium of “Nishkala Healthcare Private Limited” (CIN: U74999MH2019PTC321858) and “Ujin Pharma Chem” was placed before the Committee of Creditors of the Suasth Health Care Foundation in its 15^th Meeting, held on September 21, 2022, and has unanimously been approved by 100% of the voting share of the CoC, vide the e-voting which concluded on October 06, 2022, at 6:00 P.M and subsequently, “Nishkala Healthcare Private Limited” (CIN: U74999MH2019PTC321858) and “Ujin Pharma Chem” has been declared as the Successful Resolution Applicant (SRA). As per the CoC, the plan meets the requirement of being viable and feasible for the revival of the Corporate Debtor. Preponderantly, all the compliances have been done by the Resolution Applicant for making the plan effective after approval by this Adjudicating Authority.

In the course of the hearing, Ld. Sr. Counsel, Mr. Srinivasan, further submitted that the Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code, 2016, read with relevant Regulations of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and does not contravene any of the provisions of law for the time being in force.

Upon perusal of the documents on record and/or documents, we are satisfied that the Resolution Plan submitted by the consortium of “Nishkala Healthcare Private Limited” (CIN: U74999MH2019PTC321858) and “M/s. Ujin Pharma Chem”, is in accordance with sections 30 and 31 of the I&B Code, 2016 and also complies with regulations 38 and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

As far as the question of granting time to comply with the statutory obligations or seeking approvals from authorities is concerned, the Resolution Applicant is directed to do so within one year from the date of this order, as prescribed under section 31(4) of the I&B Code.

We have perused the reliefs, waivers and concessions as sought and as provided in Part V of the Resolution Plan. It is evident that some of the reliefs, waivers and concessions sought by the Resolution Applicant come within the ambit of the I&B Code and the Companies Act 2013, while many others fall under the power and jurisdiction of different government authorities/departments. This Adjudicating Authority has the power to grant reliefs, waivers and concessions only concerning the reliefs, waivers and concessions that are directly with the I&B Code and the Companies Act (within the powers of the NCLT). The reliefs, waivers and concessions that pertain to other governmental authorities/departments may be dealt with by the respective competent authorities/forums/offices, Government or Semi-Government of the State or Central Government concerning the respective reliefs, waivers and concession, whenever sought for. The competent authorities including the Appellate authorities may consider granting such reliefs, waivers and concessions keeping in view the spirit of the I&B Code, 2016 and the Companies Act, 2013.

It is almost trite and fairly well-settled that the Resolution Plan must be consistent with the extant law. The Resolution Applicant shall make necessary applications to the concerned regulatory or statutory authorities for the renewal of business permits and supply of essential services, if required, and all necessary forms along with filing fees etc. and such authority shall also consider the same keeping in mind the objectives of the Code, which is essentially the resolving the insolvency of the Corporate Debtor.

The reliefs sought for subsisting contracts/agreements can be granted, and no blanket orders can be granted in the absence of the parties to the contracts and agreements.

Concerning the waivers with regard to the extinguishment of claims which arose prior to the initiation of the CIR Process and which have not been claimed are granted in terms of the law laid down by the Hon'ble Apex Court in Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited reported in MANU/SC/0273/2021: (2021)9SCC657: [2021]13SCR737 that "once a resolution plan is duly approved by the Adjudicating Authority Under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan." (Emphasis Added)

Further, the relevant part of the Ghanshyam Mishra judgment (supra) in this regard is given below:

In this regard we also rely on the judgement of the Hon’ble High Court of Rajasthan in the matter of EMC v. State of Rajasthan, Civil Writ Petition No. 6048/2020 with 6204/2020 reported in (2023) ibclaw.in 42 HC, wherein it has been inter-alia held that:

Thus, on the date of approval of the resolution plan by the Adjudicating Authority, all such claims, that are not a part of the resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. The Hon’ble Supreme Court of India further laid down that all the dues including the statutory dues owed to the Central Govt, any State Govt or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period before the date on which the Adjudicating Authority grants its approval under Section 31 could be continued.

Concerning the waivers sought in relation to guarantors, the Hon’ble Apex Court held in Lalit Kumar Jain v. Union of India reported in MANU/SC/0352/2021: (2021) 9 SCC 321 that the sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor’s liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself.

For the reliefs and waivers sought for all inquiries, litigations, investigations and proceedings shall be granted strictly as per section 32A of the I&B Code, 2016 and the provisions of the law as may be applicable.

As far as the question of granting time to comply with the statutory obligations or seeking approvals from authorities is concerned, the Resolution Applicant is directed to do so within one year from the date of this order, as prescribed under section 31(4) of the Code.

In case of non-compliance with this order or withdrawal of the Resolution Plan, the payments already made by the Resolution Applicant shall be liable for forfeiture.

In terms of foregoing decisions made in the order for the intervention applications, we would infer that the Resolution plan filed in I.A. (IB) No. 1381/KB/2022 is approved subject to our direction for allocation of some amount to Hari Vitthal Mission (HVM) as being the unsecured financial creditor. We left it upon the CoC or IMC to take a pragmatic and holistic view regarding what amount will be allocated for HVM. Being the Adjudicating Authority, we are conscious of the legal position that we cannot direct the CoC to allocate a particular amount to HVM as the same has to be decided by the CoC in its “commercial wisdom”. No purpose is served in sending the plan for this purpose only to come back to us once again for approval. This will only delay the resolution further.

Subjected to the directions made above, the Resolution Plan dated May 15, 2022, (as amended and restated vide amendment dated September 03, 2022, along with the clarifications and annexures), submitted by the consortium of “Nishkala Healthcare Private Limited” (CIN: U74999MH2019PTC321858) and “M/s. Ujin Pharma Chem” is hereby APPROVED and FINALLY SANCTIONED by this Adjudicating Authority. The Resolution Plan shall form part of this Order and shall be read along with this order for implementation. The Resolution Plan thus approved shall be binding on the Corporate Debtor and other stakeholders involved in terms of section 31 of the Code, so that the revival of the Corporate Debtor Company shall come into force with immediate effect.

The Moratorium imposed under section 14 of the Code by virtue of the order dated May 25, 2022, shall cease to have effect from the date of this order.

The Resolution Professional shall submit the records collected during the commencement of the proceedings to the Insolvency & Bankruptcy Board of India for their record and also return them to the Resolution Applicant or New Promoters.

Liberty is hereby granted for moving any application if required in connection with the implementation of this Resolution Plan.

A copy of this Order is to be submitted to the Registrar of Companies, West Bengal by the RP.

The Resolution Professional shall stand discharged from his duties with effect from the date of this Order.

The Resolution Professional is further directed to hand over all records, premises/factories/documents to the Resolution Applicant to finalise the further line of action required for starting the operation. The Resolution Applicant shall have access to all the records/premises/factories/documents through the Resolution Professional to finalise the further line of action required for starting the operation.

The Registry of this Adjudicating Authority is directed to send e-mail copies of the order forthwith to all the parties and their Learned Senior Counsels/ Learned Counsels for information and for taking necessary steps.

In terms of the view above, the interlocutory application being I.A. (IB) No. 1381/KB/2022 in the main Company Petition being C.P. (IB) No. 204/KB/2023 shall stand disposed of accordingly.

Accordingly, I.A. (IB) No. 1733/KB/2023, IVN.P (IBC)/37(KB)2023, IVN.P (IBC)/34(KB)2023, I.A. (IB) No. 1551/KB/2023 and I.A. (IB) No. 1381/KB/2022 along with the main Company Petition being C.P. (IB) No. 204/KB/2021 are disposed of.

Certified copies of this order, if applied for with the Registry of this Adjudicating Authority, be supplied to the parties upon compliance with all requisite formalities.

File be consigned to the record.