Mitcon Consultancy Engineering Services Limited vs Shetkari Sarkhar Karkhana (Chandrapuri) 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 i.e., Consortium of seven investors (Onkar Sakhar Karkhana Pvt Ltd, Babu",,,

Dadasaheb Botre, Rekha Babu Botre, Jitendra Bhaskarrav Malvadkar, Reise Enterprises through its partners, Prashant Dadasaheb Botre and Sagar",,,

Laxman Badhe) led by Onkar Sakhar Karkhana Private 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 14.01.2019 and Mr. Anil,,,

Seetaram Vaidya, the Applicant herein, was appointed as the Interim Resolution Professional (IRP) of the Corporate Debtor. The Committee of",,,

Creditors (CoC) has not made any application either to replace or to confirm the Applicant as Resolution Professional. Therefore, the Applicant in",,,

terms of Regulation 17(3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016",,,

(the Regulations) continues to perform the functions of the Resolution Professional (RP).,,,

ii. The Applicant published a public announcement on 17.01.2019 inviting claims from the creditors of the Corporate Debtor and after verification of,,,

the claims received, constituted the Committee of Creditors (CoC) comprising of four Financial Creditors viz. State Bank of India, Canara Bank,",,,

Solapur Janta Sahakari Bank and Axis Bank.,,,

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

The Applicant published Form-G on 30.03.2019 inviting Expression of Interest (EOI) from Prospective Resolution Applicants (PRAs) for,,,

submission of Resolution Plan for the Corporate Debtor. Accordingly, EOIs were received from two PRAs, however, no plan was submitted.",,,

As no Resolution Plan was received, the CoC in its 6th meeting held on 16.09.2019 unanimously passed a resolution to liquidate the Corporate",,,

Debtor and an Application bearing MA No. 1194 of 2019 was filed for initiation of liquidation process. However, at the time of hearing of liquidation",,,

Application on 26.11.2019, one of the interested parties intervened and represented that they were interested in submitting a Resolution Plan for the",,,

Corporate Debtor. Considering the request, this Tribunal directed the Applicant to hold a CoC meeting for taking appropriate decision.",,,

The Applicant then convened 7th CoC meeting on 03.12.2019 wherein the CoC decided to invite fresh EOI, subject to extension of time in CIRP",,,

period by the Adjudicating Authority. Fresh Form-G was issued on 05.12.2019, inviting EOI from PRAs for submission of Resolution Plan. In",,,

response to fresh Form-G, the Applicant received EOIs from three PRAs, out of which only one PRA, viz. Consortium of Investors led by Onkar",,,

Sakhar Karkhana Private Limited (the present Resolution Applicant/RA) emerged eligible to submit a Resolution Plan.,,,

The Applicant filed MA No. 4028 of 2019 seeking extension of CIRP period. This Tribunal by an Order dated 27.02.2020 extended the CIRP,,,

period till 25.04.2020 so that a resolution of the Corporate Debtor could be achieved.,,,

Thereafter, the Applicant issued Information Memorandum and Request for Resolution Plan (RFRP) to the RA and the RA was asked to submit",,,

the Resolution Plan on or before 20.03.2020. However, due to the restrictions imposed by the Government in view of Covid-19 pandemic, the RA was",,,

not able to submit the Resolution Plan in time and was hence allowed to submit the same before 25.03.2020. But, the Government declared nationwide",,,

lockdown on 24.03.2020 and the RA could not submit the Resolution Plan as directed.,,,

The Resolution Plan was belatedly submitted on 06.06.2020 and the RA also provided certain additional information on 18.06.2020. The said plan,,,

was discussed by the CoC in several meetings held between 24.06.2020 and 07.07.2020 and it was decided that the request of the RA to amend the,,,

performance guarantee clause of RFRP can be considered only on directions from the Tribunal. Accordingly, this Tribunal by an order dated",,,

18.08.2020 allowed IA No. 1072 of 2020 for reducing the amount of Bank Guarantee from RFRP and ordered that the “CoC may consider the,,,

Resolution Plan by accepting the bank performance guarantee of Rs.3.00 Crores as agreed to be provided by the Resolution Applicant.â€​,,,

The RA then submitted a fresh Resolution Plan in pursuance of the revised RFRP and the same was discussed by the CoC in its 15th meeting held,,,

on 02.09.2020 wherein the CoC suggested some changes in the Resolution Plan. The CoC also deliberated on the distribution of settlement amount,,,

offered to the secured and unsecured financial creditors in the Resolution Plan. In 16th CoC meeting held on 05.09.2020 the CoC discussed and,,,

deliberated on the Resolution Plan and found it to be feasible and viable subject to the condition that the RA gets a commitment letter from its lenders,,,

for sanction of the loan required for funding the Resolution Plan.,,,

The RA finally submitted a revised Resolution Plan dated 7th November 2020. The said revised plan was discussed and accepted by the CoC and,,,

was put for voting in the 17th CoC meeting held on the same day wherein the said plan was unanimously approved by the CoC.,,,

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

A. RESOLUTION APPLICANT:,,,

The Resolution Applicant is a consortium of 7 (seven) persons being led by M/s. Onkar Sakhar Karkhana Private Limited (OSKPL) a company,,,

incorporated under Companies Act, 2013 and engaged in the business of manufacturing and trading of sugar.",,,

B. TERM OF RESOLUTION PLAN:,,,

Term of the plan and its implementation schedule for payment to the financial creditors, operational creditor and statutory dues and other persons as",,,

envisaged under the plan shall commence from the “effective date†i.e., from the receipt of the order upon approval of the Resolution Plan by the",,,

Adjudicating Authority and end in 6 months only.,,,

C. CAPITAL REDUCTION & EQUITY INFUSION:,,,

Upon approval of the Resolution Plan by the Adjudicating Authority the existing paid up share capital of the Corporate Debtor shall stand cancelled,,,

and equity share capital of the Corporate Debtor shall be replaced with new equity share capital of Rs. 4,00,00,000/- in the name of Lead member",,,

only, with the fund to be infused by the Lead member or members of the consortium of Resolution Applicant.",,,

New Equity Shares of the Corporate Debtor shall be allotted as follows:,,,

Sr

No","Name of Equity

Shareholder","No. of

Equity

Shares of

Rs.

100/- each","Amount of

Face Value

of

Rs. 100/-

each

1,"Onkar Sakhar Karkhana

Private Limited (OSKPL)","3,99,994","3,99,99,400/-

2,"Rekha Baburao Botre

nominee member of (OSKPL)",1,100/-

3,"Babu Dadasaheb Botre

nominee member of (OSKPL)",1,100/-

4,"Jitendra Bhaskarrav

Malvadkar nominee member

of (OSKPL)",1,100/-

5,"Prashant Dadasaheb Botre

nominee member of (OSKPL)",1,100/-

6,"Mrs. Puja Subhash Salve

nominee member of (OSKPL)",1,100/-

7,"Sagar Laxman Badhe nominee

member of (OSKPL)",1,100/-

Total,,"4,00,000","4,00,00,000/-

1,"Corporate Insolvency

Resolution Process Cost","42,00,000/-","As per Part B of

Chapter 4 of Resolution

Plan

(Refer Note 1)

,Financial Creditors (FCs) (Refer Note 2),,

2,"Secured FCs (Voting

Ratio)","37,17,00,000/-","18,18,32,120/-

,"State Bank of India

(53.64%)","37,17,00,000/-","18,18,32,120/-

3,"Unsecured FCs (Voting

Ratio)","32,13,00,000/-","4,30,52,880/-

,"Axis Bank Limited

(5.37%)","3,72,00,000/-","49,85,460/-

,"Solapur Janata Sahakari

Bank Ltd (15.21%)","10,54,00,000/-","1,41,17,100/-

,Canara Bank (25.79%),"17,87,00,000/-","2,39,50,320/-

3,"Operational Creditors

(Refer Note 3)","1,61,94,000/-","8,10,000/-

,S. B. Pandhare,"3,50,000/-","18,000/-

,"Mitcon Consultancy &

Engineering Services Pvt

Ltd","50,44,000/-","2,52,000/-

,Sangram Cane Agro,"1,08,00,000/-","5,40,000/-

4,"Statutory Dues: (Refer

Note 4)

Deputy Commissioner of

Sales Tax, Govt. of

Maharashtra, Solapur","21,08,000/-","1,05,000/-

5,"Employees & Workmen

(Refer Note 5)",NIL,NIL

6,"Existing Shareholders of

Corporate Debtor",NIL,NIL

,TOTAL,"71,13,02,000","23,00,00,000

Sr. No.,Name,Designation,

1.,Babu Dadasaheb Botre,Managing Director,

2.,Rekha Babu Botre,Director,

3.,Jitendra Bhaskarrav Malvadkar,Director,

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/approvals, if required, and same would be considered on merits by the",,,

authorities concerned in accordance with law.,,,

The Resolution Applicant has also obtained an in-principle Sanction letter dated 20.10.2020 from Buldana Urban Co. Op. Credit Society for loan,,,

amount of Rs. 17,00,00,000/- for the purpose of implementation of the Resolution Plan.",,,

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 07.11.2020 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) of the Code. 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 the 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. Hence ordered.,,,

ORDER,,,

i. The Application be and the same is allowed. The Resolution Plan submitted by the Consortium led by Onkar Sakhar Karkhana Private Limited,,,

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 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.",,,

iii. 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.",,,

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

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

vi. The Applicant shall supervise the implementation of the Resolution Plan and shall file Status Report of its implementation before this Authority from,,,

time to time, preferably every quarter.",,,

vii. 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.,,,

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

Sd/-,,,

V. Nallasenapathy MEMBER (TECHNICAL),,,

Janab Mohammed Ajmal MEMBER (JUDICAL),,,

ORDER,,,

The matter is taken up on VC. Counsel for the RP and Professional for the Resolution Professional are present. Orders pronounced vide separate,,,

order. The Application is Allowed.,,,