Shri. Hari Babu Thota, Resolution Professional of V3 Engineers Private Limited

Per: Rajeswara Rao Vittanala, Member (J)

I.A. No. 394 of 2020 in C.P. (IB) No.315/BB/2019 is filed by Shri Hari Babu Thota, Resolution Professional of V3 Engineers Private Limited (hereinafter referred to as 'Applicant') u/s 30(6) of I&B Code, 2016, by seeking approval of the Resolution plan submitted by Mr. Sanjay Punglia along with co-applicants viz., Mr. Abhishek Balar and Mr. Sudeep Dasani, which was approved by the Committee of Creditors at their meeting held on 21.08.2020; to approve all the proposals stated in the resolution plan for revival of the corporate Debtor; to direct the statutory authorities for implementation of the Resolution plan for revival of the corporate debtor without any additional/further liability approved by the Hon'ble Tribunal etc.,.

Brief facts of the case, which are relevant to the issue in question, are as follows:

C.P. (IB) No.315/BB/2019 is filed by M/s. Manjushree Travels ('Petitioner') U/s 9 of I&B Code, 2016, was admitted by the Adjudicating Authority, vide Order dated (02^{\text{nd}}) March 2020 by initiating Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor i.e. M/s. V3 Engineers Private Limited, appointing the Applicant as IRP, imposing moratorium, etc.

In Pursuant to Section 15 of I & B Code, R/w Regulation 6 of the CIRP Regulations, 2016, the IRP made Public Announcement on (8^{\text{th}}) March 2020 in Form A published in Financial Express (English) in Samyuktha Karnataka (Kannada) intimating to the Creditors regarding initiation of CIRP and to receive the claims within the prescribed time limit as prescribed under the provisions of the code. Further pursuant to Section 21 (1) of the code, the Applicant constituted Committee of Creditors (COC) consisting 2 (two) Operational Creditors asunder:

The report certifying the constitution of COC was submitted to the Deputy Registrar of the Adjudicating Authority on 20.03.2020 under Regulation 17 of IBBI (Insolvency Resolution Process for Corporate Persons), Regulations 2016.

At the first COC meeting held on 01.04.2020 at 4.00 p.m, through Video Conference, the COC appointed the IRP as RP of the Corporate Debtor for monthly remuneration of Rs. 1,00,000/- excluding GST and the same was approved by the Adjudicating Authority on 29th July 2020 passed in I.A No. 230 of 2020.

The Second COC meeting was held on 20th May 2020 through video conferencing and at the meeting the members considered the following agendas:

As per Regulation 27 of the IBBI, Regulation 2016, the RP appointed 4 (four) registered valuers viz., Mr. Motappa Thimmarayaswamy for Plant and Machinery, Mr. Pulianda Chengappa Achaya for Plant and Machinery, Mr. Madhugiri Venkatarayappa Sudarshan for Securities or Financial Assets and Ms. Kusumadevi.R.H for Securities or Financial Assets to determine the fair market value and liquidation value of the Corporate Debtor. Further, as per Section 29 of the Code r/w Regulation 36 of IBBI (CIRP) Regulation 2016, the Applicant prepared Information Memorandum and the same was made available to the COC on 13th April 2020.

A publication seeking expression of Interest (EOI) in Form G was issued on 22nd May 2020 published in Financial Express (English newspaper) and in Samyuktha Karnataka (Kannada newspaper) stating the last date for submission of Expression of Interest was 6th July 2020 and also in the website of IBBI. Accordingly, Expression of Interest (EOI) was received from two Applicants viz., Mr. Sanjay Punglia on 2nd July 2020 and M/s. V3 Interiors Private Limited on 5th July 2020. The provisional list of two prospective resolution applicants was issued on 8th July 2020. Further 5 (five) days time was provided to raise any objections, however no objections was received by the Applicant, therefore the final list of two prospective resolution applicants viz., Mr. Sanjay Punglia and M/s. V3 Interiors Pvt. Limited., was issued on 15th July 2020. Subsequently, V3 Interiors Private Limited withdrawn the Expression of Interest and Mr. Sanjay Punglia along with co-applicants submitted the resolution plan for revival of the Corporate Debtor.

At the 3rd meeting of COC held on 21st August 2020 through Video Conferencing, the COC members perused the resolution plan and members constituting 100% of voting share approved the resolution plan submitted by Mr. Sanjay Punglia along with co-applicants viz., Mr. Abhishek Balar and Shri Sudeep Dasani for revival of the corporate Debtor.

It is stated that there was a significant difference between the valuation amount provided by Shri Pulianda Chengappa Achaya and Shri Motappa Thimmarayaswamy on Plant and Machinery, therefore, the RP appointed Shri Sudhindra Rao H.R, Registered Valuer-Plant and Machinery, Regn. No: IBBI/RV/02/2020/13140, No. 1662, East End A Main, 38^th Cross, Jayanagar 9^th Block, Bengaluru-69 as a third Registered Valuer in accordance with Regulation 35 (1) (b) of the IBBI (CIRP) Regulation, 2016. Further, as per regulation, the average of the two closest estimates of the value shall be considered to arrive the fair value (FV) or the liquidation value (LV). Accordingly the fair value and liquidation value of the Corporate Debtor as under:

The brief of the resolution plan approved by the COC is as under:

Mr. Sudeep Sampatmal Dasani (Applicant No.1) is a fellow member of the Institute of CA of India (ICAI) having more than 20 years of diverse professional experience. Mr. Sanjay Badrilal Punglia, (Applicant No.2) is a qualified CA having more than 14 years of experience in advising and consulting across different Manufacturing verticals both at corporate and operation level and Mr. Abhishek Achalchand Balar (Applicant No.3) is a Director in Pragya Textile Pvt. Limited and Jagprem Chemical Private Limited in Kuber shree Industries having over 21 years of experience in textile industry and is running business well know textile unit in Pali (Rajasthan).

Statutory Dues: Regarding the claim of PF Department of Rs. 5,44,236/-, the Resolution Applicants are providing an amount of Rs. 1,50,000/- towards full and final settlement of all statutory dues. The same shall be distributed amongst the various statutory dues, in the ratio of their claim admitted by the RP if any.

Operational Creditors: With regard to claim of the Operational Creditors the Resolution Applicants are providing an upfront payment of Rs. 0.50 lakh. Apart from upfront payment Resolution Applicants are providing contingent payment.

Infusion of funds by the Resolution Applicants: The Resolution Applicants proposes preferential issue and allotment of 45 lakhs (forty five lac shares only) equity share of Rs. 1 each to themselves along with PAC. The Resolution Applicants in addition to the above shares, propose to issue and allotment of 5,00,000 shares (five lakh share only) of Rs. 1 each, having differential voting rights (DVR) of 50 (fifty only) vote per share to themselves along with PAC.

Schedule of payment to various stakeholders:

Cost of scheme and source of funds:

CIRP Cost : 14 lakhs

Financial Creditors : 0.25 lakhs

Employees and Workmen dues : 0.25 lakhs

Operational Creditors (other than statutory dues) – 0.50 lakhs

Operational Creditors (statutory dues) – 1.50 lakhs

Payment to shareholders – 0.96 lakhs

For working capital of business – 33,50 lakhs

Total cost of scheme – 50.96 lakhs

Exemptions/Reliefs sought: any action with regard to the assets/claims/rights etc as mentioned in the balance sheet as well as off balance sheet items of the Corporate Debtor as on the effective date shall be assets/claims/rights of the Corporate Debtor and shall be dealt with by the Resolution Applicants at its sole discretion.

Amendment in the Capital Clause of the Memorandum of Association of the Corporate Debtor: The Capital Clause of the Corporate Debtor in Authorized Share Capital of the Corporate Debtor shall be amended pursuant to Section 61 read with Section 66 and other Applicable provisions, if any of the Companies Act, 2013, so as to issue shares as per Resolution Plan as mentioned below:

The existing authorized share capital of the Corporate Debtor comprising of 1,00,00,000/- Equity Shares of Rs.10/- each shall be subdivided into 10,00,00,000 Equity shares of Re.1/- each.

Extinguishment of all dues including taxes, duty, penalties, interest, fined, cess, charges, unpaid TDS/TCS (to the extent applicable), whether admitted or not, due or contingent, whether part of the above mentioned contingent liability schedule dues or not, whether claimed by the tax authorities or not, asserted or unasserted, crystallized or not crystallized, known or unknown, secured or unsecured, disputed or undisputed, present or future, in relation to any period prior to the acquisition of control by the Resolution Applicants and PAC over the Corporate Debtor pursuant to this Resolution Plan, except for which payment is specifically provided under this plan.

Heard Shri Hari Babu Thota, Learned Counsel for the Applicant/RP through Video Conference. We have carefully perused the pleadings of Party and extant provisions of the Code and the Rules made thereunder and the Law on the issue.

Shri Hari Babu Thota, the Applicant, while reiterating various averments made in the Application/Petition, has further submitted that the Resolution Plan has been approved by the CoC with requisite majority, and it satisfy all requisite conditions as per the provisions of the Code. Therefore, he urged the Adjudicating Authority to approve the Resolution Plan as prayed for.

In order to approve a Resolution Plan U/s 31(1) of the Code, Resolution Professional should examine each Resolution Plan as prescribed under Section 30(2) of the Code, as mentioned below:

In compliance with the said conditions, the Resolution Professional has submitted various documents and statements as per provisions of the Code and the Rules made there under. And these compliances are briefly pointed out as under:

The Resolution Professional examined the resolution plan received from the Resolution Applicant Mr. Sanjay Punglia along with co-applicants viz., Mr. Abhishek Balar and Mr. Sudeep Dasani and approved by the COC of V3 Engineers Private limited.

The RP certify that :

The list of Operational Creditors of the CD VS Engineers Private Limited being members of the COC and distribution of voting share among them is as under:

The Resolution Plan includes a statement under Regulation 38(1A) of the CIRP Regulations as to how it has dealt with the interests of all stakeholders in compliance with the Code and Regulations made thereunder.

The amounts provided for the stakeholders under the Resolution Plan is as under: (Amount in Rs. Lakh)

The interests of existing shareholders have been altered by the resolution Plan as under:

The above facts and circumstances clearly establish that the Resolution Plan, which was approved by the Committee of Creditors on 21.08.2020 for Mr. Sanjay Punglia Resolution Applicant along with co-applicants viz., Mr. Abhishek Balar and Mr. Sudeep Dasani, confirm all the requisite conditions and reasonably satisfy all the stake holders of Corporate Debtor and it was approved with requisite majority. Therefore, we are satisfied that the said Resolution Plan is a fit to be approved, under Section 31(1) of the IBC, 2016.

In the result, by exercising the powers conferred on this Adjudicating Authority, under Section 31(1) IBC, 2016 and the extant provisions of Rules made thereunder, both C.P.(IB)No.315/BB/2019 & I.A.No.394 of 2020 are disposed of with the following directions:

The Resolution Plan in question as submitted by Mr. Sanjay Punglia (Resolution Applicant) along with co-applicants viz., Mr. Abhishek Balar and Mr. Sudeep Dasani as approved by the Committee of Creditors at their 3rd meeting held on 21st August 2020 is hereby approved by declaring that the Resolution Plan will be binding on the Corporate Debtor (Applicant) and its employees, members, creditors including the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force, as authorities to whom statutory dues are owed, guarantors, and other stakeholders involved in the resolution plan.

The moratorium imposed vide Order dated 02.03.2020 passed in the CP shall cease to have effect from the date of communication of the order.

The Resolution Professional is directed to handover the management control of all the assets, documents/records in physical and/or digital form on an as is where is basis to the Resolution Applicant immediately, and the Resolution Professional will be ceased to be Resolution Professional.

The Resolution Professional shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the Board to be recorded on its database.

The Resolution Applicant shall pursuant to the Resolution Plan approved under sub-section (1) obtain the necessary approval required under any law for the time being in force within a period of the one year from the date of approval of the Resolution Plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, which is later:

The Resolution Applicant is at liberty to file miscellaneous Application seeking for clarification(s), if any requires, in the implementation of the terms and conditions to the Resolution Plan.

No order as to costs.