Anish Niranjan Nanavaty vs Reliance Infratel Limited

,,,

This is an Application under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (the Code) by the Resolution Professional seeking",,,

approval of the Resolution Plan submitted by the Resolution Applicant, Reliance Projects & Property Management Services Limited (formerly known",,,

as Reliance Digital Platform & Project Services Limited).,,,

The facts leading to the Application are as under.,,,

i. Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor was initiated by this Bench by an order dated 15.05.2018 (Admission,,,

Order) and Manish Dhirajlal Kaneria was appointed as Interim Resolution Professional (IRP) on 18.05.2018. The IRP published a public,,,

announcement on 21.05.2018 inviting claims from the creditors of the Corporate Debtor.,,,

ii. Certain shareholders of the Corporate Debtor challenged the Admission Order before the Hon’ble National Company Law Appellate Tribunal,,,

(NCLAT) in CA (AT) (Insolvency) Nos. 255-256 & 257-258 & 259-260 of 2018, inter alia, Hon’ble NCLAT by an order dated 30.05.2018 inter",,,

alia stayed the Admission Order. However, in view of the subsequent developments, the Appellants withdrew the Appeal. The Hon’ble NCLAT",,,

by Order dated 30.04.2019, permitted the withdrawal of the Appeal and directed this Tribunal to proceed with the matter in accordance with law.",,,

iii. Accordingly, the CIRP of the Corporate Debtor was resumed and by order dated 07.05.2019 this Tribunal directed the IRP to proceed in the",,,

matter. The IRP issued a fresh public announcement on 07.05.2019 inviting claims from creditors. After receipt of claims the IRP constituted the,,,

Committee of Creditors (CoC) of the Corporate Debtor on 24.05.2019.,,,

iv. The CoC in its first meeting held on 30.05.2019 decided to replace the IRP with Anish Niranjan Nanavaty (the present Applicant) as the Resolution,,,

Professional (RP). This Tribunal by order dated 21.06.2019 confirmed the appointment of the Applicant as the RP.,,,

v. Thereafter, new claims/revision of claims were made by certain creditors. The RP upon verification of the same, reconstituted the CoC. The claims",,,

have been dealt with in accordance with the provisions of the Public Announcement and 7th May, 2019 has been considered as the cut-off date for",,,

claim verification.,,,

vi. The Applicant in compliance of the provisions of the Code and Rules framed there under conducted the CIRP of the Corporate Debtor.,,,

During the period of CIRP the RP issued Form-G on 15.07.2019 inviting expressions of interest (EOI) from prospective resolution applicants,,,

(PRAs). The Applicant received EOIs from 15 PRAs. Provisional list of eligible PRAs was issued to the CoC on 16.08.2019. Request for the,,,

resolution plan (RFRP) along with information memorandum, evaluation matrix was issued to the PRAs on 21.08.2019. The Applicant issued the final",,,

list of PRAs to the CoC on 31.08.2019. Further, with the consent of the CoC the last date for submission of resolution plan was extended till",,,

25.11.2019. The Applicant received resolution plans from the following prospective resolution applicants:,,,

a) Bharti Airtel Ltd.;,,,

b) Reliance Digital Platform & Project Services Limited, through its division Infrastructure Projects;",,,

c) VFSI Holdings Pte. Ltd.; and,,,

d) UV Asset Construction Company Ltd.,,,

The CoC (including advisors to the CoC and RP) in the meetings held between 02.01.2020 to 02.03.2020, discussed and actively engaged with the",,,

resolution applicants to make the resolution plans more robust and to improve the same from a legal and commercial perspective. Accordingly, the",,,

resolution applicants revised their resolution plans. At the 16th meeting of the CoC held on 09.01.2020 and reconvened on 13.01.2020, detailed",,,

deliberations and discussions were carried out on the resolution plans. The resolution plan submitted by Reliance Digital Platform & Project Services,,,

Limited (Resolution Applicant) was taken forward as the preferred resolution plan having regard to the feasibility and viability of the plan and its,,,

implementability. Pursuant thereto, the Resolution Applicant submitted the revised resolution plan on 13.01.2020. After due verification of the eligibility",,,

of the successful Resolution Applicant in terms of Section 29(A) of the Code, the CoC in its 19th meeting held on 02.03.2020 considered the revised",,,

and final Resolution Plan of Reliance Digital Platform & Project Services Limited and approved the Plan with the voting share of 100%. Accordingly,",,,

a Letter of Intent (LOI) dated 04.03.2020 was issued by the Applicant on behalf of the CoC to the Successful Resolution Applicant (RA) which was,,,

unconditionally accepted by the RA on 06.03.2020.,,,

It is worthwhile to mention that this Tribunal, in respect of the timelines of the CIRP of the Corporate Debtor, has passed following orders:",,,

i. The period of stay between 30.05.2018 and 30.04.2019 was excluded from the calculation of the CIRP vide order dated 09.05.2019.,,,

ii. Extension of 90 days was granted vide order dated 29.09.2019. The CIRP thus stood extended from 12.10.2019 to 10.01.2020.,,,

iii. Further exclusion of 24 days was granted from the CIRP period vide order dated 07.01.2020, owing to time spent in litigation from the date of",,,

approval of the Applicant as RP till the date of publication of order confirming the said appointment.,,,

iv. It was clarified by order dated 24.01.2020 that the RP and the CoC were at liberty to complete CIRP within 330 days, which was expiring on",,,

10.03.2020.,,,

The salient features of the Resolution Plan are as under:,,,

A. The Resolution Applicant is a part of the Reliance Industries Group. Reliance Industries Group has a robust and stable business portfolio ranging,,,

from energy to materials, retail to digital services and entertainment. Reliance Industries Limited (RIL) is the flagship company of the Reliance",,,

Industries Group and is India’s largest and most profitable private sector company. It has demonstrated exceptional performance in FY 2018-19,,,

including consolidated turnover of INR 6,22,809 crore, consolidated PAT of INR 39,588 crore and market capitalisation of INR 8,63,996 crore.",,,

B. Closing Action Notice and Effective Date:,,,

The Resolution Plan envisages that upon the fulfilment of the conditions precedent, set out therein, to the satisfaction of the monitoring committee and",,,

the communication of the fulfilment of the conditions precedent to the Resolution Applicant by the monitoring committee, the Resolution Applicant",,,

Particulars,Amount Admitted,Amount Proposed under the Plan,% of recovery under the Plan

CIRP Costs,-,"To be paid in priority in full.

[Refer Note 1]",100%

Workmen/Employees,"1,81,27,767/-","1,81,27,767/-",100%

Related Parties / potential Related Parties,"269,94,30,465/-",NIL,NIL

Statutory Creditors,"31,32,81,573/-","404,45,218/-",12.91% [Refer Note 2]

Operational Creditors (other   than Related

Parties, Statutory Creditors)","1,29,28,99,328/-","25,36,38,128/-",19.62% [Refer Note 2]

Other Creditors,"904,45,24,882/-","43,87,534/-",100% [Refer Note 3]

Financial Creditors,"41055,38,58,711/-","4235,77,87,067/- [Refer Note 4]",~10.32% [Refer Note 4]

Sr No.,Particulars,"Amount

(INR)",

1.,"Amount to be infused by Resolution Applicant

(Infused Resolution Amount)","3720,00,00,000/-",

2.,"Fund infusion from Effective Date to meet

working capital, capital expenditure

requirements and/or funding other

operational improvements of the Corporate

Debtor","450,00,00,000/-",

3.,"Upfront equity infusion against allotment of

equity shares of Corporate Debtor (Upfront

Equity Infusion)","5,00,00,000/-",

4.,"Payment to Financial Creditors from the

value realised from the preference shares in

Reliance Realty Limited (Refer Note 1)","800,00,00,000/-",

Total (Refer Note 2 & 3),,"49,75,00,00,000/-",

J. Performance Security:,,,

The Applicant submits that in terms of the Request for Resolution Plan (RFRP), the RA has, on 06.03.2020, submitted a performance bank guarantee",,,

of INR 90.4 crore.,,,

The Applicant submits that the Resolution Plan meets the requirement of Section 30 (2) of the Code in the following manner:,,,

A. Plan provides for the priority payment of CIRP costs in full from the fund to be infused by the Resolution Applicant.,,,

B. To pay the Operational Creditors of the Corporate Debtor in the manner indicated supra. It is submitted that the Liquidation Value of the Corporate,,,

Debtor is INR 4,339.58 Crores and Fair Market Value is INR 11,149.11 Crores. In view of the fact that the claim of Secured Financial Creditor is",,,

INR 48,091.85 Crores, the minimum Liquidation Value to the Operational Creditors would be NIL. However, a sum of INR 25.36 Crores is provided",,,

to all the Operational Creditors.,,,

The Resolution Applicant proposes to appoint suitably qualified and experienced persons, key personnel and other officer for operations of the",,,

Corporate Debtor in terms of Section 30(2)(c). The Plan also provides for implementation of provision of the Resolution Plan as stated above as per,,,

Section 30(2)(d). The Resolution Applicant has given a declaration that the Resolution Plan does not contravene any provisions of the law for the time,,,

being in force. The Resolution Plan is in compliance of the Regulation 38 of the Regulations in terms of Section 30(2)(f) as under:,,,

a) Payment to Operational Creditor will be made in priority over Financial Creditor (Regulation 38(1)(a)).,,,

b) Since the plan has been approved by 100% voting share of the CoC, provision of dissenting financial creditor does not arise. This is in compliance",,,

of Regulation 38(1)(b) of the Regulations.,,,

c) Declaration by the Resolution Applicant that the Resolution Plan has considered the interest of all the stakeholders of the Corporate Debtor,",,,

keeping in view the objectives of the Code (Regulation 38(1A)).,,,

d) Declaration by the Resolution Applicant that neither the Resolution Applicant nor any of his related party has either failed or contributed to the,,,

failure of the implementation of any other approved Resolution Plan.,,,

The Resolution Applicant has sought certain reliefs, concessions, waivers. We however are not inclined to grant such concessions or waivers. The",,,

Resolution Applicant needs to approach the authorities concerned for permits, if required, and same would be considered on merits by the concerned",,,

authorities in accordance with law. During the hearing the Ld. Counsel for RP and RA submitted that the Resolution Applicant has received approval,,,

from Competition Commission of India (CCI Approval) vide its Order and letter dated 18.09.2020, to the effect that the proposed combination under",,,

the Resolution Plan is not likely to have an appreciable adverse effect on competition in India.,,,

It is beneficial to refer to the observation of the Hon’ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish,,,

Kumar Gupta & Ors.: (2019) SCC OnLine SC 1478 as under:,,,

“67. …………..,,,

A successful resolution Applicant cannot suddenly be faced with ""undecided"" claims after the resolution plan submitted by him has been",,,

accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective,,,

resolution Applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the,,,

resolution professional so that a prospective resolution Applicant knows exactly what has to be paid in order that it may then take over and,,,

run the business of the corporate debtor. This the successful resolution Applicant does on a fresh slate, as has been pointed out by us",,,

hereinabove.â€​,,,

In view of the above ruling of the Apex Court, the Resolution Applicant takes over the Corporate Debtor with all its assets and liabilities as",,,

specified in the Resolution Plan subject to orders passed herein. As already indicated the Resolution Plan has been approved by the CoC in its meeting,,,

held on 02.03.2020 with 100% votes.,,,

In K. Sashidhar v. Indian Overseas Bank & Others: 2019 SCC Online SC 257 (= (2019) 12 SCC 150) the Hon’ble Apex Court held that if the,,,

CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution",,,

Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy",,,

itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon’ble Court observed that the role of,,,

the NCLT is ‘no more and no less’. The Hon’ble Court further held that the discretion of the Adjudicating Authority is circumscribed by,,,

Section 31 and is limited to scrutiny of the Resolution Plan “as approved†by the requisite percent of voting share of financial creditors. Even in,,,

that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when",,,

the Resolution Plan does not conform to the stated requirements.,,,

In CoC of Essar Steel (supra) the Hon’ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the,,,

Resolution Plan which the CoC in their commercial wisdom have approved. In para 42 Hon’ble Court observed as under:,,,

“Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the",,,

majority of the Committee of Creditors, has to be within the four corners of section 30(2) of the Code, insofar as the Adjudicating Authority",,,

is concerned, and section 32 read with section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such",,,

review having been clearly laid down in K. Sashidhar (supra).â€​,,,

In view of the discussions and the law thus settled, the instant Resolution Plan meets the requirements of Section 30(2) of the Code and",,,

Regulations 37, 38, 38(1A) and 39(4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the",,,

Code and is in accordance with law. The same needs to be approved.,,,

Doha Bank one of the Financial Creditors has filed IA No. 1960 of 2019 inter alia, challenging the admission of claims of few other Creditors and",,,

IA No. 3055 of 2019 impugning the decision of the Resolution Professional recognising the Indirect Lenders of the Corporate Debtor as Financial,,,

Creditors. The Applications are pending consideration. We are of the considered opinion that pendency of these and other Applications would not,,,

come in the way of approval or otherwise of the Resolution Plan. More so, when the Resolution Plan has been unanimously approved by the CoC.",,,

The distribution of the payments to the Creditors, Financial or Operational, as the case may be, shall be subject to orders to be passed in the respective",,,

Interim Applications within the ambit of the Code. We are thus inclined to dispose of this Application in the following terms. Hence ordered.,,,

ORDER,,,

i. The Application be and the same is allowed. The Resolution Plan submitted by Reliance Digital Platform & Project Services Limited through its,,,

division Infrastructure Projects annexed to the Application is hereby approved. It shall become effective from this date and shall form part of this,,,

order. It shall be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, any State Government or any",,,

local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force is due, guarantors and other",,,

stakeholders involved in the Resolution Plan.,,,

ii. The distribution of the payments to the Financial Creditors shall abide by and be subject to the orders passed in IA Nos. 1960 of 2019 and 3055 of,,,

2019 pending consideration of this Bench. The amount sought to be infused by the Resolution Applicant shall be kept in an interest bearing deposit in,,,

any Nationalised Bank till disposal of the said Applications.,,,

iii. The approval of the Resolution Plan shall not be construed as waiver of any statutory obligations of the Corporate Debtor and shall be dealt by the,,,

appropriate Authorities in accordance with law. Any waiver sought in the Resolution Plan, shall be subject to approval by the Authorities concerned.",,,

iv. The Memorandum of Association (MoA) and Articles of Association (AoA) shall accordingly be amended and filed with the Registrar of,,,

Companies (RoC), concerned for information and record. The Resolution Applicant, for effective implementation of the Plan, shall obtain all necessary",,,

approvals, under any law for the time being in force, within such period as may be prescribed.",,,

v. Henceforth, no creditors of the erstwhile Corporate Debtor can claim anything other than the liabilities referred to in Para 6 supra.",,,

vi. The moratorium under Section 14 of the Code shall cease to have effect from this date.,,,

vii. The Applicant and the Monitoring Committee shall supervise the implementation of the Resolution Plan and the Applicant shall file status of its,,,

implementation before this Authority from time to time, preferably every quarter.",,,

viii. The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with copy of this Order for,,,

information.,,,

ix. The Applicant shall forthwith send a copy of this Order to the CoC and the Resolution Applicant for necessary compliance.,,,