Swastik Coal Corporation Private Limited vs Srithik Ispat Private Limited

40C. Special provision relating to time-line

Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process.

(1)

That the period of lockdown ordered by the Central Government and the State Governments including the period as may be extended either in whole or part of the country, where the registered office of the Corporate Debtor may be located, shall be excluded for the purpose of counting of the period for ‘Resolution Process under Section 12 of the Insolvency and Bankruptcy Code, 2016, in all cases where ‘Corporate Insolvency Resolution Process’ has been initiated and pending before any Bench of the National Company Law Tribunal or in Appeal before this Appellate Tribunal.

(2)

It is further ordered that any interim order/ stay order passed by this Appellate Tribunal in anyone or the other Appeal under Insolvency and Bankruptcy Code, 2016 shall continue till next date of hearing, which may be notified later.

CONSTITUTION OF THE COC:

FAIR VALUE AND LIQUIDATION VALUE:

AMOUNT UNDER THE RESOLUTION PLAN:

TREATMENT OF CIRP COSTS:

CIRP costs to be paid in priority to any other creditor. Amount of Rs. 15,00,000/- (Rupees Twenty Lakhs Only) is estimated to be the CIRP cost and shall be paid in full from the realization of the Secured Financial Creditors of this plan.

TREATMENT OF SECURED FINANCIAL CREDITORS:

Sr. No.	Particulars of Claim	Admitted Amount (INR)	Settlement Amount (INR)	%
1.	Secured Financial Creditors	32,63,64,000	8,20,00,000	25%

Resolution Applicant proposes to pay the said amount to the secured Financial Creditor in order to settle the personal guarantee obligation towards the secured financial creditor.

The Resolution Applicant proposes to pay in the following schedule to the Secured Financial Creditor:

a. Rs. 15,00,000 as EMD with resolution plan in Escrow account.

b. Rs. 25,00,000 upfront payment with resolution plan within 30 days of approval of COC as performance guarantee in form of FDR for the said plan.

c. c. Rs. 7,55,00,000 upfront payment within 90 days of order from Hon'ble NCLT (including the fees of the Resolution Professional and CIRP cost).

d. Rs. 25,00,000 to be paid within 90 days of approval of Hon'ble NCLT of the resolution plan for release of Personal Guarantees and Corporate Guarantees.

TREATMENT OF OPERATIONAL CREDITORS:

Operational Creditors (Unrelated Parties including Statutory Authorities)	Admitted Amount	Total payment within 30 days	%
Commercial Tax including any other department claim	Rs.10,44,83,597	Rs.7,00,000	0.66%
GIDC (House tax & Lease rentals)	NIL	Rs.10,50,000	0.00%
Electricity Dues	NIL	Rs. 16,00,000	0.00%
Other Duties and Taxes and Licences regularization	NIL	Rs. 5,00,000	0.00%
Swastik Coal Corporation Private Limited	Rs.4,17,00,000	Rs.1,50,000	0.35%
TOTAL		Rs.40,00,000

TREATMENT OF EQUITY SHAREHOLDERS:

The Resolution Applicant proposes no changes in the Equity Shareholding of the Corporate Debtor.

s)

Following are the details of the Resolution Applicant:

Brief Profile:

Promoter is Mrs. Girija Agarwal of the company which is registered as Micro Small and Medium Enterprises. The Director has hands-on skills and experience to operate the said plant at the present operating levels.

Sector expertise and strength to Turnaround Sick Companies

The Key reason to turn the unit into a Sick Company was unviability of the operation due to increase in operating cost of the Company which involve transportation of RM from outside state. The burden to pay up incremental finance costs without attaining the optimal operational capacity further deteriorated the Company's condition.

Strength to turnaround the Company:

- Promoter Experience - Intensified Sponge Iron Demand - Change in Price scenario. Increase in Steel prices. - Better government policies for Steel sector - Expected change in regulatory framework - Investment of addition working capital at low interest rates - Reduced financial burden

- Incremental synergy from ancillary production unit

Financial Tie Up

The revised Resolution Plan proposes financial consideration as upfront payment in place of staggered payment over five year as proposed in previous plan. The RA has arranged the proposed resolution consideration from family and friends with an option to provide equity share against the unsecured loan, again reducing the interest burden.

t)

Hence, the Applicant prays as follows:

i.

To exclude the period of 183 days from the CIRP period owing to the Lockdown declared by the Government of India, State Government of Maharashtra, the Suo moto order passed by the Hon'ble NCLAT dated 30.03.2020 and the notification issued by the IBBI dated 29.03.2020.

ii.

Therefore, to grant an additional period of 183 or such number of days including the Lockdown period continued to be imposed in the State of Maharashtra, to the CIRP period on account of it being excluded from the CIRP period so far.

iii.

To allow the Applicant to withdraw the Liquidation Application being IA No. 241 of 2021 filed under section 33 on 09.10.2020 before this Tribunal.

iv.

Pass an order ratifying the 8th meeting of the CoC held on 26.02.2021 and the resolution passed therein; and

v.

Pass an order and approve the Resolution Plan proposed by the Resolution Applicant which has is been approved by the CoC and which shall be binding on the Corporate Debtor and its employees, members, including the Central Government, any State Government or any local authority.

vi.

Pass any further or other order which this Tribunal deems fit and appropriate in the interest of Justice.

a)

during the pendency of the present Resolution Plan before this Hon'ble Tribunal, the Hon'ble Apex Court in the matter of Sales Tax Officer v/s. Rainbow Papers Ltd. (CA 1661-2020) (hereinafter referred to as 'Rainbow Papers') decided the issue with respect to priority of charge and payout to the Sales Tax Department of Gujarat. It is in these circumstances the present Affidavit is filed to place on record that there is no impact of the said judgment in the present case and the values assigned in the resolution plan will not undergo any change as far as the present case is concerned.

b)

As far as the judgment is concerned, it will not have any retrospective effect on the matters which are already sanctioned. However, without prejudice to the same, there is no impact in the present case for the reasons set out herein below:

i.

In the present case, the Commercial Tax Department through the Commissioner of Commercial Tax had filed its claim vide a letter dated May 5, 2020.

ii.

In the said letter, the claim is made in respect of following dues:

a)

VAT dues;

b)

CST dues; and

c)

Entry Tax dues.

iii.

As far as VAT dues are concerned, the claim is for Rs.5.91 crores along with interest penalty aggregating to Rs.7.55 crores.

iv.

As far as CST dues is concerned, the claim is for Rs.1.61 crores along with interest penalty aggregating to Rs.1.83 crores.

v.

As far as Entry Tax dues is concerned, the claim is for Rs.73.24 lakhs along with interest penalty aggregating to Rs.1.04 crores.

vi.

As per the letter issued by the concerned Commissioner, these dues are to be recovered as per the provisions of:

a)

Goa Value Added Act, 2005

b)

Central Sales Tax Act, 1956

c)

Goa Tax on Entry of Goods Act, 2000.

vii.

The Hon'ble Apex Court in the case of Rainbow Papers (supra) was taking into consideration Section 48 of Gujarat Value Added Tax Act, 2003 (hereinafter referred to as "GVAT Act"). In the case of Rainbow Papers, the Hon'ble Apex Court has held that Section 48 of GVAT Act creates a priority first charge on the assets of the dealer and accordingly the department will have to be considered as a secured creditor. Therefore, the department will be entitled to the liquidation value treating it as a secured creditor and not as an operational creditor.

viii.

In order to consider this, Section 48 of the Gujarat Value Added Tax Act is reproduced herein below first:

“48.

Tax to be first charge on property. — Notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer, or as the case maybe, such person.”

ix.

Section 66 of the Goa Value Added Tax Act:

“66.

(1) Every dealer, who is liable to pay tax shall send a declaration in such form, within such period and to such authority as may be prescribed, stating therein the particulars of the Bank accounts operated by him in connection with his business and shall within the period prescribed, intimate to the authority the changes in the particulars in the declaration.

(2)

If the dealer fails to intimate to the authority the changes in the particulars in the declaration referred to sub-section (1), the Commissioner may, after giving an opportunity of being heard to such dealer, by order in writing, impose a penalty of a sum not exceeding rupees ten thousand.”

This provision is distinct from Section 48 of GVAT Act. GVAT Act creates a priority, similarly this Act also creates a priority. However, under the Goa Act, this priority is subject to provisions under the Central Act. In such a case, the provisions of any other Central Act will prevail. The Central Act, being Insolvency and Bankruptcy Code,2016, creates priority in favor of secured creditors and workers. The dues of Goa Value Added Tax will be subservient to the secured creditors and workers. Therefore, the treatment given in the present case to the Value Added Tax demand is concerned is appropriate and in accordance with law.

x.

Even in case of liquidation, the VAT dues will be subservient to the dues of secured creditors and workers as the section itself says that it is subject to provisions of Central Act. Accordingly, the plan is in compliance and in accordance with law.

xi.

The next provision which falls for consideration is of Central Sales Tax Act, Section 17(3), in fact the provision in this act provides that the other priority in case of liquidation are the other creditors having priority to be paid first. There is no other provision which the Deponent came across which creates priority for Central sales tax dues. The relevant part of Section 17(3) is reproduced herein below:

"17.

Company in liquidation. — ...

(3)

The liquidator shall not part with any of the assets of the company or the properties in his hands until he has been notified by the appropriate authority under sub-section (2) and on being so notified, shall set aside an amount equal to the amount notified and, until he so sets aside such amount, shall not part with any of the assets of the company or the properties in his hands: Provided that nothing contained in this sub-section shall debar the liquidator from parting with such assets or properties in compliance with any order of a court or for the purpose of the payment of the tax payable by the company under this Act or for making any payment to secured creditors whose debts are entitled under law to priority of payment over debts due to Government on the date of liquidation or for meeting such costs and expenses of the winding up of the company as are in the opinion of the appropriate authority reasonable.”

“19. Payment and recovery of tax. — ...

(2)

If default is made in making payment in accordance with sub-section (1), — (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the property of the person or persons liable to pay tax under this Act; ...”

FORM H COMPLIANCE CERTIFICATE

(Under Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

I, Mr. Raj Kumar Dad, an insolvency professional enrolled with Indian Institute of Insolvency Professionals of ICAI and registered with the Board with registration number IBBI/IPA-001/IP-P00537/2017-2018/10962, am the resolution professional for the corporate insolvency resolution process (CIRP) of M/s Srithik Ispat Private Limited.

2.

The details of the CIRP are as under:

Sr. No.	Particulars	Description
1	Name of the CD	M/s Srithik Ispat Private Limited.
2	Date of Initiation of CIRP	30/09/2019
3	Date of Appointment of IRP	02/10/2019
4	Date of Publication of Public Announcement	05/10/2019
5	Date of Constitution of CoC	18/10/2019
6	Date of First Meeting of CoC	24/10/2019
7	Date of Appointment of RP	24/10/2019
8	Date of Appointment of Registered Valuers	18/11/2019
9	Date of Issue of Invitation for EoI	16/12/2019
10	Date of Final List of Eligible Prospective Resolution Applicants	12/02/2020
11	Date of Invitation of Resolution Plan	08/02/2020
12	Last Date of Submission of Resolution Plan	09/03/2020
13	Date of Approval of Resolution Plan by CoC	06/03/2021
14	Date of Filing of Resolution Plan with Adjudicating Authority	19/03/2021

15	Date of Expiry of 180 days of CIRP	28/03/2020
16	Date of Order extending the period of CIRP	Due to COVID-19, lockdown was imposed on 25th March, 2020 by Government of India and subsequent to that IBBI issued instructions that period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process.” Accordingly, the period of Lockdown shall be excluded from the total period of CIRP.
17	Date of Expiry of Extended Period of CIRP	May 01,2021
18	Fair Value	Rs 11,62,29,995
19	Liquidation value	Rs 8,03,01,371

20

Number of Meetings of CoC held

8

Assuming Exclusion of period of Covid 19 will be sought from NCLT from March 25, 2020 till October 30,2021, thus the expiry of extended period of CIRP will be subject to NCLT approval

3.

I have examined the Resolution Plan received from Resolution Applicant Mrs.Girija Agarwal and approved by Committee of Creditors (CoC) of M/s Srithik Ispat Private Limited under Corporate Insolvency Resolution Process.

4.

I hereby certify that-

(i)

the said Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force.

(ii)

the Resolution Applicant Mrs. Girija Agarwal has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit resolution plan. The contents of the said affidavit are in order.

(iii)

the said Resolution Plan has been approved by the CoC in accordance with the provisions of the Code and the CIRP Regulations made thereunder. The Resolution Plan has been approved by 100% of voting share of financial creditors after considering its feasibility and viability and other requirements specified by the CIRP Regulations.

(iv)

the agenda was proposed to approve or reject the resolution plan tabled in the meeting of the CoC on February 26, 2021 where all the members of the CoC were present. I sought vote of members of the CoC by electronic voting system which was kept open from March 01,2021 and was concluded on March 06,2021 wherein the Resolution Plan was approved with 100% voting.

5.

The list of financial creditors of the CD M/s Srithik Ispat Private Limited under Corporate Insolvency Resolution Process being members of the CoC and distribution of voting share among them is as under:

Sr. No	Name of Creditor	Voting Share (%)	Voting for Resolution Plan (Voted for / Dissented / Abstained)
			For	Against	Abstain
1	CFM Assets Reconstruction Private Limited	100%	100%	-	-
	Total	100.00 %	100.00 %	0.00%	00.00%

6.

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.

Yes, the resolution plan provides a statement declaring that it has dealt with the interests of all stakeholders

7.

The amounts provided for the stakeholders under the Resolution Plan is as under:

(Amount in Rs.)

Sr. No.	Category of Stakeholder	Sub-Category of Stakeholder	Amount Claimed	Amount Admitted	Amount Provided under the Plan#	Amount Provided to the Amount Claimed (%)
(1)	(2)	(3)	(4)	(5)	(6)	(7)
1	Secured Financial Creditors	(a) Creditors not having a right to vote under sub-section (2) of section 21	1,29,90,874	1,29,90,874	NIL	0.00%
		(b) Other than (a) above: (i) who did not vote in favor of the resolution Plan (ii) who voted in favour of the resolution plan	NIL 32,63,64,000	32,63,64,000	8,20,00,000	25.00%

		Total (a) + (b)	33,93,54,874	33,93,54,874	8,20,00,000	24.16%
2	Unsecured Financial Creditors	(a) Creditors not having a right to vote under sub-section (2) of section 21	Not Applicable

		(b) Other than (a) above: (i) who did not vote in favor of the resolution Plan (ii) who voted in favor of the resolution plan
		Total[(a) + (b)]	NIL	NIL	NIL	NIL
3	Operational Creditors	(a) Related Party of Corporate Debtor	NIL	NIL	NIL	NIL
		(b) Other than (a) above: (i)Government (ii) Workmen (iii) Employees (iv) Other than above	10,44,83,597 NIL NIL 4,17,00,000	10,44,83,597 NIL NIL 4,17,00,000	7,00,000 NIL NIL 1,50,000	0.66% 0.35%
		Total[(a) + (b)]	14,61,83,597	14,61,83,597	8,50,000	0.581%
4	Other debts and dues	GIDC Electricity Dues and Cost of License regularization	NIL (Expected Compliance cost to re- start the operations)	NIL (Expected Compliance cost to re- start the operations)	31,50,000	0.00%

5	Amount attributed towards working Capital and Maintenance e Capex		NIL	NIL	10,00,000	0.00%
Grand Total			48,55,38,471	48,55,38,471	8,70,00,000	17.92

*If there are sub-categories in a category, please add rows for each sub-category.

12.

The Resolution Plan is not subject to any contingency. No

Or

The Resolution Plan is subject to the following contingencies (Elaborate the contingencies):

i...

ii...

13.

Following are the deviations / non-compliances of the provisions of the Insolvency and Bankruptcy Code, 2016, regulations made or circulars issued thereunder (If any deviation/ non- compliances were observed, please state the details and reasons for the same): Not Applicable

Sl. No.	Deviation/Non-compliance observed	Section of the Code / Regulation No. / Circular No.	Reasons	Whether rectified or not
Not Applicable

14.

The Resolution Plan is being filed 43days before the expiry of the period of CIRP provided in section 12 of the Code.

14A. Whether the resolution professional has, in accordance with regulation 35A,

a)

Applied to Adjudicating Authority on or before the one hundred and thirty-fifth day of the insolvency commencement date: No- as no reportable transactions under sections 43,45,50 or 66 as per the transaction auditor report.

b)

Filed form CIRP 8 with the Board on or before the one Hundred and fortieth day of the insolvency commencement date: Yes

15.

Provide details of section 66 or avoidance application filed / pending. Not Applicable

Sl. No.	Type of Transaction	Date of Filing with Adjudicating Authority	Date of Order of the Adjudicating Authority	Brief of the Order
1	Preferential transactions under section 43	Not Applicable
2	Undervalued transactions under section 45
3	Extortionate credit transactions under section 50
4	Fraudulent transactions under section 66

15A. The committee has approved a plan providing for contribution under regulation 39B as under:

a. Estimated liquidation cost: Rs. 10,69,800

b. Estimated liquid assets available: NIL

c. Contributions required to be made: Rs 10,69,800

d. Financial creditor wise contribution is as under:

Sl. No.	Name of financial creditor	Amount to be contributed (Rs.)
1	CFM Asset Reconstruction Private Limited	10,69,800
Total		10,69,800

15B. The committee has recommended under regulation 39C as under:

a. Sale of corporate debtor as a going concern: No

b. Sale of business of corporate debtor as a going concern: No

The details of recommendation are available with the resolution professional.

15C. The committee has fixed, in consultation with the resolution professional, the fee payable to the liquidator during the liquidation period under regulation 39D. YES

16.

I Raj Kumar Dad hereby certify that the contents of this certificate are true and correct to the best of my knowledge and belief, and nothing material has been concealed therefrom.

Raj Kumar Dad

Resolution Professional for Srithik Ispat Private Limited

IP Registration No: IBBI/IPA-001/IP-P00537/2017-2018/10962

Address as registered with the Board: 302 L Wing, Shree Sankeshwar Nagar Society, SV Road Ashok Van Dahisar East, Mumbai City, Maharashtra, 400068

Email id as registered with the Board: [email protected]

...

ORDER