Union Bank of India vs M/s. IP Construction Pvt Ltd

The present interlocutory application bearing IA No. 1642(PB) /2020 was moved on 24.02.2020 by Ms. Anju Agarwal, Resolution Professional (“RP”) of I.P. Construction Private Limited, under the provisions of Sections 30(6) and 31(1) of the Insolvency & Bankruptcy Code, 2016 (“the Code” or “IBC”) read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) for approval of the Resolution Plan of Manish Kumar Bansal &Ors in respect of I.P. Construction Private Limited (“Corporate Debtor”).

The Corporate Debtor is a company incorporated in 2005 and is engaged in the business of Real estate and construction. The Corporate Debtor is having the following the projects:

iii) Golden Tulip: The hotel & Suites is a contemporary full service business hotel and is located at C-5, Sector-18, Vasundhra, Ghaziabad, Uttar Pradesh – 201012. The hotel offers 162 guest rooms, including four suites with independent terrace. There are four banquet/ meeting halls varying 800 sq. ft. to 2500 sq. ft. And two restaurants inside the Hotel along with one multi-cuisine restaurant which is located on the 3rd floor with terrace having 116 covers and one bar cum grill restaurant with terrace (beside pool) with 78 covers. Further, the Hotel has separate entrance lobby and pastry shop on the ground floor. Banquets, restaurant and rooms are located from second floor onwards till the top floor. Swimming pool and bar is on terrace which is 12th floor. Hotel is operational with 96 rooms, four banquets, 3^rd floor restaurant, & terrace restaurant. Further more than 70 % work has been completed of the remaining 66 rooms.

The underlying Company Petition CP (IB) 593(PB)/2018 was filed by Union Bank of India (“Financial Creditor”), against I.P. Construction Private Limited (“Corporate Debtor”) under Section 7 of the Code for initiation of Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor. It was admitted by this Adjudicating Authority vide order dated 11.01.2019 (“Admission Order”) and Ms. Anju Agarwal was appointed as the Interim Resolution Professional (“IRP”) who was later confirmed as Resolution Professional in the COC meeting dated 11.02.2019.

The IRP made public announcement on 15.01.2019 in Financial Express (English) (NCR edition) and Jansatta (Hindi regional Language) (NCR edition) newspapers and called for proof of claims from the creditors of the Corporate Debtor and informed lenders to submit their claims as envisaged under the Code. Further COC was constituted on 11.02.2019.

The amounts claimed and admitted and their voting share are summarised below:

The RP submits that a total of 14 (Fourteen) CoC meetings have been held during the CIRP period, as follows:

The appointed registered valuers have submitted their reports providing the fair value of the corporate debtor as Rs. 60.655 crores and liquidation value of the Corporate Debtor as Rs.48.26 crores as per the valuation report:

The summary of the valuation reports is as under: -

The Applicant has filed a Compliance Certificate in prescribed form, i.e., revised 'Form 'H' in compliance with regulation 39(4) of the CIRP Regulations, 2016, which has been annexed to the application filed on 11.10.2023 as ANNEXURE "A-4".

The Applicant submits that in terms of the provisions of section 25(2)(h) of the Code read with regulation 36A(1) of the CIRP Regulations, 2016, invitation in Form 'G' for Expressions of Interest ("EoI") from potential resolution applicants was issued on 19.03.2019 and was again re-issued on 26.07.2019. The notice was also published on the website of the Insolvency and Bankruptcy Board of India ("IBBI").

The Applicant submits that in response to the invitation for Eol, upto the last date, i.e., 09.08.2021, 5 Eols were received which were as follows:

The Byke Hospitality Limited

JFC Finance (India) Limited

Shiva Consultants Pvt. Ltd.

Mr. Manish Kumar Bansal, Mr. Rajesh Gupta and Mr. Mukesh Chand Tyagi (Consortium)

Alchemist Asset Reconstruction Company Limited

The information memorandum, evaluation matrix and request for resolution plan was issued to all the prospective resolution applicants and the last date for submission of resolution plans was granted till 23.08.2019. Till the last date for submission of resolution plans, 3 Prospective Resolution Applicants (PRAs) had submitted their resolution plans i.e., The Byke Hospitality Limited, The Consortium of Mr. Manish Kumar Bansal, Mr. Rajesh Gupta and Mr. Mukesh Chand Tyagi and Alchemist Asset Reconstruction Company Limited.

The Resolution plan received were opened by the applicant and was placed before COC wherein the PRAs were asked to improve their financial offers and to submit the revised resolution plan by 03.10.2019, which was complied by the PRAs but COC found some shortcomings on the compliances in terms of financial proposals to be improved with upfront amount to be enhanced and term of the plan to be shortened, and advised them to resubmit the revised resolution plans till 15.10.2019 and subsequently till 08.11.2019.

In pursuance thereto, two PRAs namely Mr. Manish Bansal, Mr. Rajesh Gupta and Mr. Mukesh Chand Tyagi (Consortium) and Alchemist Asset Reconstruction Company Limited submitted their revised Resolution Plan and the Byke Hospitality Limited sent the email stating that they would not be revising further.

In the 12^th CoC meeting convened on 19.12.2019, the CoC decided that the Resolution Applicant should again submit revised Resolution Plans in view of an application filed by Commercial Space Buyers seeking execution of registered sale deeds.

Thereafter, Alchemist Asset Reconstruction Private Limited and Manish Bansal (Group of Individuals) (Resolution Applicants) submitted revised Resolution Plan on 16.12.2019 and Byke Hospitality Ltd. did not submit any resolution plan. Thereafter, all the Resolution Plans were sent for legal compliance wherein certain shortcomings were found and PRAs were asked to give undertakings.

In the 13^th meeting of CoC convened on 16.01.2020, the CoC decided to go for re-voting on the already submitted resolution plans and it was decided that all the three resolution plans submitted by the PRA would be put for e voting one after another on the basis of scores allotted to them according to Evaluation matrix used for the purpose of comparing plans, if the plan put for voting does not get approved with requisite voting share then the another plan will be placed for e voting. The final scores on the basis of evaluation matrix is as follows:

The CoC deliberated upon the viability and feasibility of the resolution plans submitted by all the three Resolution Applicants. For the resolution plan submitted by Alchemist Asset Reconstruction Company Limited, the voting commenced from 20.01.2020 till 22.01.2020 which was not approved with requisite majority voting share. The second round of e-voting was conducted for the resolution plan submitted by Manish Bansal (Group of individuals) and the same was approved by members having 87.49% voting share in the CoC and thereby was approved by the requisite majority as stipulated under the Code, thus the third round of e voting was not required as per the decision taken in 13^th COC meeting.

Therefore, the resolution Plan of Manish Bansal (Group of individuals) was approved with 87.49% of voting share and the voting was as follows:

Subsequent to the approval of the Resolution Plan by the CoC, the Applicant issued the Letter of Intent dated 03.02.2020 to the Successful Resolution Applicant and the same was accepted by the Successful Resolution Applicant, the copy of which is annexed as Annexure “A-39” of the application. The Successful Resolution Applicant thereafter submitted a performance bank guarantee for Rs. 10,00,00,000 (Rupees Ten Crores Only) dated 10.02.2020 issued by Bank of Baroda as performance security which has expired on 10.08.2020. A copy of the bank guarantee is annexed as Annexure “A-16” of the application. Subsequently the SRA has renewed the PBG which is now valid upto 07.12.2013. A copy of the bank guarantee is annexed as Annexure “A” of the clarification submitted on 21.09.2023. A Copy of the Resolution Plan of the Successful Resolution Applicant is annexed herewith to the I.A. and marked as Annexure “A-36”.

The Successful Resolution Applicant (SRA), Mr. Manish Kumar Bansal and Others is a Consortium of Individuals namely Mr. Manish Kumar Bansal, Mr. Rajesh Gupta and Mr. Mukesh Chand Tyagi who have extensive exposure and experience in business, finance and corporate and commercial laws, have the unique combination of management & financial capabilities, experience and expertise that makes them capable of successfully implementation of the Resolution Plan for the Corporate debtor.

The Resolution Applicant ascertained the cause of default to be the financial distress of the corporate debtor as the equity participation was very less and management had taken over-exposure basically due to change in project profile from commercial plus service apartment to commercial plus hotel. There is total conceptual mismatch and both the project profile/concept require different financial mix. The obligation to pay interest and shortage of equity infusion resulted in financial overburden which not only caused hindrance in operations but also resulted in financial defaults of the corporate debtor.

The SRA proposes to address the causes of default by developing, renovating, enhancing the outlook, modifying the room facilities, completing the structure and pending rooms and banquet, facilitating better food at restaurant and by adding value by way of completing and enhancing the structural composition by way of overall professional new management. The following broad steps would be taken in this regard:

a. Brand Positioning

b. Identifying key business segments and enhancement

c. SWOT Analysis to identify the opportunities and weakness

d. Product Improvement Plan

e. Repositioning / Rebranding/ Upgradation

Initially the Applicant submitted the relevant information with regard to the amount claimed, amount admitted and the amount proposed to be paid by the SRA, under the said Resolution plan which are tabulated below:

Offer includes relocation of existing space within the option of available space.

No guarantee to continue with the existing space. Kindly check for new model plan for commercial space. So far as it shall be possible & commercially feasible, existing space may also be offered.

Old Agreement/ Offer/ Possession Letter shall stand cancelled on NCLT approval date.

Subsequently during the pendency of the present application for approval of resolution plan, some applications were filed on behalf of Commercial Space Buyers i.e. IA No. 1763 of 2021, MA No. 02 of 2021, IA No. 1702 of 2021 and IA No. 4236 of 2022 .

These applications were filed by the commercial homebuyers in which the RP submitted that as per the approved Resolution Plan such Commercial Space Buyers were offered a refund of 50% of the Principal Amount or an Alternate Space with certain charges to be paid. However, during the pendency of the above Applications, the Resolution Applicant on 04.10.2023 gave the proposal of 100% of the refund of the Principal Amount to the Applicant in IA. No. 1763 of 2021, M.A. No. 02 of 2021 and I.A. No. 1702 of 2021 and further gave a proposal of 100% of the refund of the Principal Amount to the Applicant in I.A. No. 4236 of 2022 along with refund of amount paid as Stamp Duty which has been duly accepted by the above Applicants. In pursuance to the above the SRA has filed an affidavit dated 04.10.2023 affirming the same.

In view of the same IA No. 1763 of 2021, MA No. 02 of 2021, IA No. 1702 of 2021 and IA No. 4236 of 2022 stand disposed of and further the total outlay under the Resolution Plan stands revised as follows:

The Resolution Plan defines “Effective Date” to mean the date on which the SRA is given possession to the property and control over the management of the Corporate debtor in terms of Resolution Plan submitted (with or without modification, to which RA is agreed with) after approval by NCLT/NCLAT or Supreme Court.

The Applicant submits the details of various compliances as envisaged in the Code and the CIRP Regulations which a Resolution Plan is required to adhere to, which is reproduced hereunder:

The compliance of the Resolution Plan is as under:

The Resolution Applicant has proposed that on approval of the Resolution Plan, the Resolution Applicant shall constitute a board of the company and the reconstituted board and Monitoring Committee shall be responsible for the implementation of the Resolution Plan until the final payment is made under the plan.

Monitoring Committee shall comprise of:

1 Representative of Secured Financial Creditor

Resolution Professional

1 Representative of Resolution Applicant

The Applicant submits that the successful resolution applicant has submitted an affidavit in regard to its eligibility under section 29A of the Code, as required by Regulation 39(1)(a) of the CIRP Regulations. An undertaking has also been submitted by the Successful Resolution Applicant, as mandated in terms of regulation 39(1)(c) of the CIRP Regulations.

The Resolution Professional had filed an application (C.A. No. 1470 of 2019) under Section 43 and 44 of the IBC, 2016 seeking avoidance of certain transactions against the following parties: i. Sahyog Infrastructures Private Limited; Quantum m Rs. 2,16,75,000/- ii. Gem Marketing Private Limited;Quantum Rs. 5,00,000/- iii. Mr. Arvind Agarwal & : Quantum Rs. 1,11,05,000/- iv. Mrs. Vidushi Agarwal: Quantum Rs. 5,00,000/-

This Hon'ble Adjudicating Authority vide order dated 30.08.2022 allowed C.A. No. 1470 of 2019.It is further submitted that the order dated 30.08.2022 was challenged before the Hon'ble Appellate Tribunal by Gem Marketing Private Limited & Vidushi Agarwal by way of Company Appeal (AT) (Insolvency) No. 1370 of 2022 and by Sahyog Infrastructures Private Limited by way of Company Appeal (AT) (Insolvency) No. 1367 of 2022 before the Hon'ble Appellate Tribunal. The Hon'ble Appellate Tribunal vide common judgment dated 09.05.2023 was pleased to dismiss both Company Appeal (AT) (Insolvency) No. 1370 of 2022 as well as Company Appeal (AT) (Insolvency) No. 1367 of 2022, thereby upholding the order dated 30.08.2022 passed by this Hon'ble Adjudicating Authority.

It is submitted that to the best of the knowledge of the Applicant, no Appeal under Section 62 of the Code has been filed by the Appellants in Company Appeal (AT) (Insolvency) No. 1370 of 2022 as well as Company Appeal (AT) (Insolvency) No. 1367 of 2022 before the Hon'ble Supreme Court.

It is stated by the counsel for the SRA that as the Secured Financial Creditor has been paid 105.3% of the principal amount thus the proceeds of the avoidance transaction will go to the corporate debtor.

The SRA has proposed an amount of Rs. 67.78 Crores (now revised to Rs. 72.36 Crores) which shall be inducted partially as equity/ convertible shares and balance through loans. Further, the SRA has declared that they have their own resources to meet the financial obligations under the Resolution Plan. The proposed fresh equity participation up to Rs. 11 Crores shall be managed as follows: -

Apart from the above, the balance shall be introduced from own resources by way of unsecured loans, loans from NBFC, friends and relatives. If required, SRA may also raise secured loans.

Further, Mr. Pradeep Agrawalla, add-on investor, entered into an agreement with the SRA on 14.10.2019 to invest funds from his resources. He has liquid fund of Rs. 58.22 Crores to meet immediate commitment under the resolution plan offering for upfront payment of within 30 days of effective date.

Before considering the application for approval of Resolution Plan there are certain objections filed in form of interlocutory applications. These are as follows:

The Applicant namely, Nupur Garg being one of the commercial space buyers has sought the following reliefs in the present Application :-

In the present matter, there are 20 commercial space buyers and in so far as the Commercial Space Buyers who have an order from the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No. 350 of 2020 in Alok Sharma vs Anju Agarwal the following directions were passed:

Therefore, the SRA After making payment to the sole secured creditor i.e. Union Bank of India within a period of 90 days will obtain No Dues Certificate/No Objection from the Bank and thereafter, subject to compliance of direction by the Commercial Space Buyer, the SRA will execute the Sale Deed in favour of such Commercial Space Buyer as per the order passed by the Hon'ble Appellate Tribunal.

Further the revised treatment in the Resolution Plan for the all commercial space buyers is given by the SRA in which they will be paid 100% of their admitted amount within 90 days or an alternative option is also provided to opt for commercial space possession with registered sale deed in terms of new offer rate and adjustment of 100% of the paid principal.

In so far as the present applicant is concerned, they are not willing to accept the revised offer given by the SRA and contend to exclude commercial space/office No. SF-05 from the Resolution Plan.

It is a settled position of law that no unit or asset or project of the Corporate Debtor can be excluded from the CIRP proceedings as laid down by Hon'ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association &Ors. vs. NBCC (India) Limited &Ors 2022 1 SCC 401 wherein the Hon'ble Supreme held as follows:

Be that as it may. In the light of the foregoing detailed discussions and keeping in mind the surrounding facts and circumstances of the instant case, this Adjudicating Authority is of the view that applicant being a dissenting financial creditor is entitled to the minimum liquidation value. The SRA is willing to provide 100% of the principal amount or an alternative as stated in the Resolution Plan for all the commercial space buyers. Thus we find no substance in the grievance of the applicant and neither the applicant has been unfairly or inequitably treated in regard to the other commercial space buyers. Thus, the applicant has open ended option to accept the offer of the SRA as envisaged for the commercial space buyers in the Resolution Plan.

With the above direction, IA stands disposed of.

The Applicant namely, GT Investment BV has filed the present application under Sec 60(5) and has sought the following reliefs in the present Application :-

In the present application, the applicant has contended that he is pressing only prayer “d” and submitted that Franchise Agreement contained a Trade Mark License Agreement (TMLA) which was executed between the Applicant and the Corporate Debtor. Subsequent to the execution of the Agreements, the Corporate Debtor commenced use of the Applicant's 'Golden Tulip' mark at the Hotel but ceased making payment since 2018 and on 11.01.2019, the Corporate Debtor went into CIRP but the Corporate Debtor continued to use the mark “Golden Tulip” at hotel property and subsequent to initiation of CIRP also no payments were made by the RP.

Thereafter termination notices for agreement on 16.11.2021 and 26.07.2022 were sent by the applicant but then also the mark was continuously used by the hotel. Thus, the prayer that that the Corporate Debtor be permanently restrained from use of the Applicant's trademark 'Golden Tulip' and any other related marks/logos and prayer that no resolution plan to be approved which impacts applicant's intellectual property rights over which the corporate debtor no longer have any license right. It is further submitted that the approval of resolution Plan extinguishes the right of the SRA to use the trade mark.

It reply, it is submitted that the Franchise Agreement was arbitrarily terminated by the Applicant without taking due course of action as contained under the Franchise Agreement and further the same is also in breach of Moratorium as contained under Section 14 of the Code. It is submitted that the said trademark being used by the Corporate Debtor cannot be taken away or attempted to be taken away during the CIRP of the Corporate Debtor.

After hearing the the learned counsel for both the sides we would like to refer the judgment of NCLAT in the matter of Deccan Chronicle Marketeers Vs. Deccan Chronicle Holdings Ltd. (2022) ibclaw.in 675 NCLAT which has been upheld by the Hon’ble Supreme Court in which it is held

In the present matter it is admitted fact the corporate debtor is using the trademark of the applicant and the payment for the use of the mark has not been made by the RP even after initiation of CIRP. Therefore, it directed that the moment the CIRP has been terminated after the approval of the Resolution Plan, the right of the corporate debtor also extinguishes to use the mark of the applicant and further RP is directed to make payment of the amount due to the applicant for the CIRP period for the use of the trademark.

It is further directed that SRA cannot use the trademark in the Resolution Plan for any purpose as the contract will get terminated and if SRA wants the trademark to be used for the project then he can have a fresh negotiation with the applicants on fresh terms and conditions and can enter into a fresh contract.

With the above directions, the IA No. 4624/2022 stands disposed of.

The Applicants are the 13 Creditors in class of service apartment being the buyers of service apartments in the real estate projects developed by the corporate debtor and have sought the following reliefs in the present Application:

The Applicants are the two Creditors in class of service apartment being the buyers of service apartments in the real estate projects developed by the corporate debtor and have sought the following reliefs in the present Application:

The Applicant namely, Sudesh Narinder Malhotra, being one of the Creditor in class of service apartment being the buyer of service apartment in the real estate project developed by the corporate debtor has sought the following reliefs in the present Application:

All the above three applications are filed by the creditors of the service apartment and on perusal of the voting of the approved resolution plan it is found that the entire Class of Creditors of Service Apartment Buyers have assented to the Resolution Plan. As the Applicants being part of the Class of Service Apartment Buyers have assented to the Resolution Plan, they are thus bound by the same and cannot stand outside the class and cannot have grievances other than as a class.

Therefore, we find no substance in the grievance of the applicants and the applicants will be treated as per the Resolution Plan. Accordingly, IA No. 5813/2022, 544/2023 and 2869/2023 stand dismissed.

On hearing the submissions made by the Ld. Sr. Counsel and the Ld. Counsel for the Resolution Professional and the counsel for other parties and perusing the record, we find that the Resolution Plan has been approved by the CoC with 87.49% of the members voting in favour of the Resolution Plan. As per the CoC, the Plan meets the requirement of being a viable and feasible revival of the Corporate Debtor. By and large, there are provisions for making the Plan effective after approval by this Bench.

On perusal of the documents on record, we are satisfied that the Resolution Plan is in accordance with Sections 30 and 31 of the IBC and also complies with regulations 38 and 39 of the CIRP Regulations, 2016.

The SRA has prayed for certain reliefs, waivers and concessions as enumerated under the Resolution Plan approved by the CoC and stated that the Adjudicating Authority’s refusal to grant any relief or concession will not affect the terms or implementation of this Resolution Plan. Thus, it is ordered that the reliefs, concessions and waivers sought by the Successful Resolution Applicant will be dealt with strictly as per law.

As far as the question of granting time to comply with the statutory obligations/seeking sanctions from governmental authorities is concerned, the Resolution Applicant is directed to do the same within one year as prescribed under section 31(4) of the Code.

In case of non-compliance of this order or withdrawal of Resolution Plan within the stipulated time, in addition to other consequences which follow under law, the CoC shall forfeit the Performance Bank Security/Guarantee paid by the SRA.

Subject to the observations made in this Order, the Resolution Plan of Rs. 72,36,71,146/- ( Seventy Two Crores Thirty Six Lakhs Seventy One Thousand One Hundred and Forty Six Only) is hereby approved. The Resolution Plan shall form part of this Order.

The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that the revival of the Debtor Company shall come into force with immediate effect.

Further it is to be noted that Regulation 31A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 provides that a regulatory fee calculated at the rate of 0.25 per cent of the realisable value to creditors under the resolution plan approved under section 31, shall be payable to the Board, where such realisable value is more than the liquidation value: Provided that this sub-regulation shall be applicable where resolution plan is approved under section 31, on or after 1st October 2022.

Taking the provision into consideration, the SRA is directed to pay the Regulatory fee under Regulation 31A, an amount Rs. 18 lakh (i.e.0.25% of the resolution plan value) in addition to the plan value to be payable on passing the order of the Resolution Plan by this Adjudicating Authority.

The Moratorium imposed under section 14 of the Code 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 to the Resolution Applicant or New Promoters.

IA 1642/2020 filed for approval of Resolution Plan stands approved. IA No. 3524/2020 filed by commercial space buyers stands disposed of in terms of Para 11.7 of the order. IA No. 1763 of 2021, MA No. 02 of 2021, IA No. 1702 of 2021 and IA No. 4236 of 2022 stand disposed of in terms of Para 4.6 of the order. IA No.4624/2022 stands disposed of in terms of Para 12.6 and 12.7 of the order. IA No. 5813/2022, IA No. 544/2023 and IA No. 2869/2023 stand dismissed in terms of Para 13.4 and Para 13.5 of the order. These applications along with CP (IB) No. 875(PB) 2020 shall stand disposed of accordingly.

The liberty is hereby granted for moving any appropriate application, if required in connection with the implementation of this Resolution Plan.

A Certified copy of this Order shall be filed by the Resolution Professional with the Registrar of Companies, NCT of Delhi & Haryana.

The Resolution Professional shall stand discharged from his duties with effect from the date of this Order, save and except those duties that are enjoined upon him for implementation of the approved Resolution Plan.

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

The Registry is hereby directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

Certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities.

File be consigned to records.