State Bank Of India vs M/s. Deepak Cables (India) Limited

Per: Rajeswara Rao Vittanala, Member (J)

I.A. No.270 of 2019 in C.P. (IB) No.154/BB/2017 is filed by Shri Ravi Sankar Devarakonda, Resolution Professional ('Applicant/RP') under Section 33(1) of the IBC, 2016, by inter alia seeking to pass an order liquidating the Corporate Debtor by appointing a Liquidator under Section 33(1) of the IBC, 2016, etc.

Brief facts of the case, as mentioned in the Application, are as follows:

(1) M/s. State Bank of India ('Petitioner/Financial Creditor') has filed the Petition under Section 7 of the IBC, 2016 for initiation of Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor namely M/s. Deepak Cables (India) Ltd., and the same was admitted by this Tribunal vide order dated 23.08.2018 and appointed Shri Ravi Sankar Devarakonda, the Applicant herein, as the Interim Resolution Professional (IRP).

(2) It is stated that certified copy of the order was received on 31.08.2018 and thus IRP caused a public announcement in 'The Hindu' (English Paper) and 'Udayavani' (Kannada Paper) on 02.09.2018.

(3) The Applicant was confirmed as Resolution Professional (RP) for carrying the CIRP in respect of M/s. Deepak Cables (India) Limited by Committee of Creditor (CoC) of Deepak Cables (India) Limited in its 1st Meeting held on 19.09.2018.

(4) The 2nd Meeting of the CoC was held on 31.10.2018, wherein, the following was appraised by the RP to the members. (a) Claims received (b) Bank Guarantee (c) Audit of Balance Sheets for the years ended March, 2015 and March, 2016 (d) Time Line and Process (e) Arbitration Proceedings (f) Approval of Form-G for Expression of Interest (g) Eligibility criteria for Resolution Applicants. Announcement for Expression of Interest in Form-G in 'Samyukta Karnataka' and 'Deccan Chronicle' was given on 03.11.2018, wherein, the last date for submission of Resolution Plans was given as 07.01.2019.

The 3rd Meeting of the CoC was held on 05.12.2018, wherein, the status of claims received and status of CIRP was discussed and approval was sought for extension of time for submission of Resolution Plans upto 21.01.2019. It is stated that the RP also informed the members that Power Grid Corporation of India Limited has filed four IAs in the Hon'ble Tribunal claiming certain privileges as Operational Creditors, for admitting their claims and for permission to attend the meetings of CoC. The status of pending Arbitration cases was also discussed in the meeting.

The 4th Meeting of the CoC was held on 25.01.2019. The status of the CIRP and the status of claims received was discussed. As regards the Resolution Plans, out of the 4 (Four) Companies, who had expressed their interest, 3 (Three) Companies have expressed their inability to submit a definitive plan and plan submitted by Mr.P.Venkateshwara Rao, Managing Director of M/s. Amrutha Constructions, who was eligible to submit the plan and was authorised by the Company to submit his Plan on 21.01.2019, the last date for submission. The RP informed the CoC that Mr.P.Venkateshwara Rao complied with the eligibility requirements as laid down by CoC and also Section 29A. The above Resolution Plan submitted in Form-G was discussed at length. The Committee had authorised State Bank of India to negotiate with the Resolution Applicant for suitable changes in the plan. The RP informed that in terms of Regulation 39(4) of the CIRP Regulations, the approved plan has to be submitted to the Adjudicating Authority 15 days prior to the last date for closure of CIRP which is 19.02.2019 and CIRP period can be extended once with the approval of 66% of voting power of CoC. The decision to seek extension of the CIRP period was deferred to the ensuing CoC meeting.

The 5th meeting of the members of CoC was held on 05.02.2019. The RP gave a presentation on the progress, status and future strategies, also with respect to the deliberations/Minutes of the 4th Meeting held on 25.01.2019. The RP informed the members that the claims filed by Power Grid Corporation of India were dismissed by the Hon'ble Tribunal. He also informed that, at the request of the Company, the Tribunal permitted continuance of the pending Arbitration cases with the respective Arbitration Tribunal. It is stated that the Resolution Applicant had submitted a Revised Plan with certain improvements. The salient features of the Revised Plan were explained to the Committee by Mr.N.S.Rao, the authorised representative of the Resolution Applicant. Since the financial proposals of the plan were not acceptable to the Committee, they requested the Resolution Applicant to present a Re-revised plan. The RP informed the members that the 180 days of CIRP period ends on 19.02.2019 and if there is any delay in taking a decision regarding the Resolution Plan, the CIRP period needs to be extended with the approval of CoC. Accordingly, it was unanimously resolved to seek extension of the CIRP period and authorize the RP to take necessary steps to seek extension of the CIRP period by a further period of 90 days.

The 6th Meeting of the CoC was held on 14.02.2019. The CoC considered the Revised Resolution Plan submitted by the Resolution Applicant. However, decision on the same was deferred, and the RA was requested to improve upon the Resolution Plan. The 7th Meeting of the CoC was held on 13.03.2019. At the meeting, M/s. IDBI Capital Market Securities Limited was appointed as the Process Advisor. The Valuation Reports and the Forensic Audit Reports were noted by the members of CoC.

The 8th Meeting of the CoC was held on 19.03.2019. Revised Form-G was approved during the meeting. The RP informed the members that Power Grid Corporation of India Ltd. has appealed with Hon'ble NCLAT against the orders of Hon'ble NCLT.

The 9th Meeting of the CoC was held on 22.04.2019. A Resolution Plan was received from Mr.P.V.Rao, the erstwhile Resolution Applicant on 04.04.2019 along with a draft for Rs.10Lakhs. The members noted that no other applicant applied.

The 10th Meeting of the CoC was held on 10.05.2019. The Final Resolution Plan dated 30.04.2019 received from the Resolution Applicant (RA) was discussed and the RA was advised to improve the Resolution Plan, so that the same can be put up for voting on 24.05.2019. The members also authorised the RP to apply for exclusion of 8 days from the CIRP period, being the period of delay in receipt of the order dated 23.08.2018 for initiation of CIRP, which was actually received on 31.08.2018. Accordingly, the RP filed IA No.247 of 2019 with the Tribunal on 20.05.2019 (being the 270th day of CIRP). Further, on 24.05.2019, the E-voting was conducted, wherein, the Resolution Plan, read with letter dated 10.05.2019 received from the RA was rejected, and the results were circulated to all the members and the Resolution Applicant on 25.05.2019.

It is stated that in the 11th Meeting of the CoC held on 28.05.2019, the members of the CoC further discussed the Final Resolution Plan with the Resolution Professional for modification to the Plan. Thereafter, with consensus of the members of the CoC, the RP sought further improvements on the Resolution Plan and simultaneously the CoC decided to put the Resolution Plan for E-Voting after the circulation of the Minutes of Meeting within 48 hours. The E-Voting was scheduled on 30.05.2019 from 05.00 PM onwards. The RP conveyed the views of the CoC for substantial improvement of the Resolution Plan to the Resolution Applicant, and the RA vide his letter dated 28.05.2019 modified the Resolution Plan, which was circulated by the RP to all the members of CoC, with a request to consider the Resolution Plan dated 30.04.2019 together with the letters dated 10.05.2019, 26.05.2019 and 28.05.2019. The RP also informed the members that Resolution Plan together with the aforesaid letters was in compliance with the requirements of IBC.

Accordingly, the following Resolutions were put to vote for the members of the CoC by remote E-Voting:

It is stated that the remote e-voting commenced on Thursday, 30^th May, 2019 (5:00 PM) till Friday, 31^st May, 2019 (5:00 PM). Out of the votes cast in respect of the Resolutions, 6.289% (by value) of the votes were cast in favour of the Resolution plan in question and 93.711% (by value) of the votes were cast against it. Therefore, Resolution Plan submitted by Mr.P.V.Rao, as per Section 30(4) of the Code, did not obtain the requisite majority of the CoC i.e.66 %. The RP informed the members of CoC of the outcome of the e-vote by its email dated 31.05.2019. The RP informed Mr.P.V.Rao, by way of email dated 31.05.2019 that the CoC rejected the Final Resolution Plan submitted by Mr.P.V.Rao, which was put up for E-voting.

In light of the above, since the maximum period permitted for the completion of the CIRP under Section 12 of IBC, 2016 has expired on 20.05.2019, and even after considering exclusion of 8 days, as prayed by the Resolution Professional in IA No.247 of 2019, and the Final Resolution Plan dated 30.04.2019 as amended by letters dated 10.05.2019, 26.05.2019 and 28.05.2019 submitted by Mr.P.V.Rao did not get requisite approval from the CoC, the RP could not submit an approved Resolution Plan with this Hon'ble Tribunal for its consideration under Section 30(6) of the Code.

The Resolution Plan submitted by the Resolution Applicant was discussed from the (4^{\text{th}}) CoC Meeting onwards where all the members of CoC were present. The RA was also present in 4 meetings of CoC, either by himself or through his authorised representative. The RA revised the Resolution Plan submitted by him several times, but still the same could not meet the expectations of the lenders. The CoC also appointed IDBI Capital as a Process Advisor. The Process Advisor discussed with over 50 prospective Resolution Applicants, but could not obtain any other Resolution Applicant, other than Mr.P.V.Rao.

Therefore, the Resolution Professional has filed IA No.270 of 2019 U/s 33(1)(a) of the Code, by seeking the reliefs as stated supra.

Heard Shri Ravi Sankar Devarakonda, learned Resolution Professional and perused all the material documents filed along with the application and also the extant provisions of the Code.

Shri Ravi Sankar Devarakonda, Resolution Professional, while reiterating the steps, he has taken during the process of CIRP, as briefly stated supra, has further submitted that after filing of the instant Application/Petition, the 12th CoC Meeting of the Corporate Debtor was held on 01.07.2019 at 03:00 PM, wherein and it was inter alia decided that since no Resolution Plan was approved by the Committee of Creditors during the period of CIRP, it is inevitable to pass an order for liquidation under Section 33(1) of the IBC, 2016. Since the RP was not recommended for appointment as Liquidator for the Corporate Debtor, Shri Ravindra Beleyur bearing IBBI Registration Number IBBI/IPA-001/IP-P00189/2017-18/10368, who is on the panel of State Bank of India and Bank of India, is recommended for appointment as Liquidator for the Corporate Debtor i.e. Deepak Cables (India) Limited. Accordingly, Shri Ravindra Beleyur also has filed his consent letter dated 28.06.2019, by inter alia stating that he would accept appointment as Liquidator if his appointment is confirmed by the Tribunal and stated he is currently qualified to practice as an Insolvency Professional and he is currently serving as Liquidator in M/s. Aegan Industries Private Limited in C.P. (IB) No.20/BB/2017 dated 08th November, 2017 and M/s. Aegan Batteries Limited in C.P. (IB) No.21/BB/2017 dated 08th November, 2017 and also declared that there are no disciplinary proceedings pending against him either with the IBBI or Indian Institute of Insolvency Professionals of ICAI.

The above facts and circumstances as mentioned above clearly establishes that the efforts of the learned Resolution Professional and the Committee of Creditors to revive the Company by way of Resolution Plan could not succeed and thus there is no other alternative for CoC except to recommend the Corporate Debtor to Liquidate in the manner as laid down in Chapter III of Code. As stated supra, Shri Ravindra Beleyur, who is qualified Resolution Professional, is provisionally eligible to be appointed as Liquidator.

In the result, the Adjudicating Authority, by exercising powers conferred under Section 33 of the I&B Code, 2016, I.A. No.270 of 2019 in C.P. (IB) No.154/BB/2017 is disposed of the with the following directions:

We hereby appointed Shri Ravindra Beleyur holding IBBI Regn. No.IBBI/IPA-001/IP-P00189/2017-18/10368 as Liquidator to liquidate the Corporate Debtor i.e. M/s. Deepak Cables (India) Limited in manner as laid down in CHAPTER III and relevant rules made thereon by the IBBI from time to time;

Shri Ravindra Beleyur is directed to issue public announcement stating that the Corporate Debtor is in liquidation, one in English language and one in Vernacular language, in terms of Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

The Liquidator is directed to take expedite steps to conclude the liquidation process without waiting statutory period of liquidation to lapse.

The Liquidator is directed to submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date as per Regulation 13 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

The Registry is directed to communicate this Order to the Registrar of Companies, Karnataka and to the Insolvency and Bankruptcy Board of India.