18th January, 2024 Approval of Resolution Plan - Balaji Paper & Newsprint Private Limited [I.A. (IB) No. 1842-KB-2023 in Company Petition (IB) No. 1540-KB-2019] (251.67 KB)
IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA
I.A. (IB) No. 1842/KB/2023 In Company Petition (IB) No. 1540/KB/2019
An Application under Section 30(6) and 31(1) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of the Insolvency and Bankruptcy (Insolvency Resolution Process for Corporate Persons), 2016.
IN THE MATTER OF: Jai Kishore Gupta
… Operational Creditor.
Verses
Balaji Paper and Newsprint Private Limited
… Corporate Debtor.
And
IN THE MATTER OF:
Mrs. Rachna Jhunjhunwala,
Resolution Professional of Balaji Paper and Newsprint Private
Limited
… Applicant.
Date of Pronouncement: January 12, 2024.
CORAM:
SMT. BIDISHA BANERJEE, MEMBER (JUDICIAL)
SHRI D. ARVID, MEMBER (TECHNICAL)
APPEARANCE:
For the Resolution Professional:
Mr. Shaunak Mitra, Adv.
Mr. Pranay Agarwal, Adv.
Ms. Ankita Baid, Adv.
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In C.P. (IB) No. 1540/KB/2019
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ORDER
Per: Bidisha Banerjee, Member (Judicial)
1.
This Court assembled through a blended.
2.
Heard the Learned Counsel, Shri Saunak Mitra, appearing on
behalf of the Resolution Professional of Balaji Paper and Newsprint
Private Limited.
Prologue 3. This instant application has been preferred by the Resolution Professional of Balaji Paper and Newsprint Private Limited, Corporate Debtor, hereinafter referred to as “Applicant” under Section 30(6) and 31(1) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of the Insolvency and Bankruptcy (Insolvency Resolution Process for Corporate Persons), 2016 seeking the direction from this Adjudicating Authority to approve and final sanction of the Resolution Plan of the Corporate Debtor, as approved by the Committee of Creditors, hereinafter referred to as “CoC” in respect of the Corporate Insolvency Resolution Process of Balaji Paper and Newsprint Private Limited. 4. The Learned Counsel, Mr. Shaunak Mitra for the Applicant submits that the “Resolution Plan” dated July 12, 2023 (resubmission date September 19, 2023) submitted by PINAX PAPER MILLS PRIVATE LIMITED AND PINAX STEEL INDUSTRIES PRIVATE LIMITED, hereinafter referred to as Successful Resolution Applicant (for brevity “SRA”) was placed before the Committee of Creditors of the Balaji Paper and Newsprint Private Limited in its 13th Meeting, held on Sept 25,
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Page 3 of 34 2023, and the CoC with 100% voting share, with e-voting conducted from 26.09.2023 – 07.10.2023 approved the Resolution Plan submitted by Pinax Paper Mills Private Limited and Pinax Steel Industries Private Limited (SRA). 5. Further, it is contended that the Letter of Intent (“Lol”) was issued on October 07, 2023, by the Resolution Professional on behalf of the CoC of the Corporate Debtor, annexed at pages 134-138 as Annexure “O” which was unconditionally accepted by the SRA and furnished the Performance Security of an amount of Rs. 5,40,00,000/- on 13.10.2023 through RTGS under the terms of Request for Resolution Plan, for brevity “RFRP” issued by the RP, and to the satisfaction of the Committee of Creditors and the Resolution Professional. The Copy of the Bank statement evidencing the furnishing of performance Security provided by the SRA is annexed at page 137 as Annexure “O” to the Application seeking approval of the Resolution Plan.
Particulars of the Corporate Debtor 6. Balaji Paper and Newsprint Private Limited (Corporate Debtor herein) is a company within the meaning of the Companies Act, 2013, having its registered address at 23, Brabourne Road, Kolkata 700001. The Corporate Debtor is a company is engaged in manufacture of paper and paper products. The registered office of the Corporate Debtor is located at 23, Brabourne Road, Kolkata- 700001 and the Corporate Debtor at present has 84 acres of leasehold land the unit comprises about 40,000 sq. Ft double storied factory shed with entire plant and machinery along with 5
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Page 4 of 34 well- constructed double storied buildings used as official Guest House and Senior Staff & Supervisory Quarter.
Initiation of Corporate Insolvency Resolution Process of Balaji
Paper and Newsprint Private Limited
7.
Jai Kishore Gupta filed an application under Section 9 of the I&B
Code, 2016, before the Adjudicating Authority for the initiation of
Corporate Insolvency Resolution Process (for brevity “CIRP”) in
respect of the Corporate Debtor and vide an Order dated
06.05.2022, this Adjudicating Authority has admitted the
application and Mr. Bijay Murmuria was appointed as Interim
Resolution Professional (IRP). In the first meeting of the CoC
convened on 02/06/2022, the CoC unanimously decided to
appoint Mr. Murmuria as the Resolution Professional (RP) of the
Corporate Debtor.
8.
Further, on 9th CoC meeting held wherein the CoC with 100%
voting share resolve to replace the Resolution Professional with the
Applicant herein as the new Resolution Professional and vide an
Order dated 09.08.2023, this Adjudicating Authority allows Mrs.
Rachna Jhunjhunwala (Registration Number: IBBI/IPA-001/IP-
P00389/2017-18/10707) as the new RP of the Corporate Debtor.
Constitution of Committee of Creditors 9. The IRP made the publication of a public announcement in Form “A” and pursuant to the publication of Form “A”, inviting the claims from the creditors, the CoC was constituted having two Secured Financial Creditors being Indian Overseas bank having
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41.38% voting share and Indian Bank, having 58.62% voting share.
The First meeting of the CoC was held on 02/06/2022.
10. It is submitted that total number of meetings of CoC held is 13. In
the 13th CoC meeting held on 26.09.2023, the Resolution Plan
submitted by the SRA has been approved with a 100% voting share
in favour of the Plan.
11. The List of final position of the Financial Creditors reflecting the
amount of admitted claim, percentage of exposure in terms of
voting share in the CoC is here under:
SN Name of the Financial
Creditor
Amount
of
claim
admitted
Voting
shares
1.
Indian Bank
Rs. 34,76,98,014/-
58.62%
2.
Indian Overseas bank
Rs. 24,54,16,505/-
41.38%
Total Rs. 59,31,14,519/- 100%
Collations of Claims 12. The amount claimed and admitted are summarised below: SN Name of the Creditors Amount claimed Amount admitted Percenta ge of the Claim 1. Secured Financial Creditor
Indian Bank Rs. 34,83,98,014 Rs. 34,76,98,014 33.70%
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Indian
Overseas
Bank
Rs.
25,13,93,953
Rs.
24,54,16,505
23.79%
2.
Unsecure Financial
Creditor
Rs.
7,10,07,791
_
_
3.
Operational
Creditors
Rs.
49,89,18,914
Rs.
43,84,80,083
42.51%
4.
Employee
_
_
_
5.
Government Dues
_
_
_
6.
Other
than
Workmen,
Employee
and
Government Dues
_
_
_
6.
Other Creditors
_
_
_
7.
Other
than
Financial Creditors
and
Operational
Creditors
_
_
_
Corporate Insolvency Resolution Process and Compliance 13. The Learned Counsel for the RP submits that Form G inviting Expression of Interest (EoI) was first published on 16.07.2022 and till the last date to submit EoI i.e., 10.08.2022 (as extended from 31.07.2022), eleven (11) EoIs were received by the RP. The last date to submit plan was further extended and kept till 26.11.2022, as approved by the CoC and till such date only two resolution plans were received.
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14. Further, it is submitted that the CoC held various discussions and
deliberations with the two PRAs and advised them to revise their
plan outlay and remove the conditions in their plan. However, no
revised plan was received. As such the RP put forward the
resolution for liquidation of the CD in the 8th CoC meeting held
on 09.01.2023 with e voting concluded on 04.02.2023, but the
said resolution could not be passed with the required majority as
Indian Bank, having 58.62% voting share, voted against the
resolution for liquidation and Indian Overseas Bank, having 41.38 %
voting share, voted in favour of the resolution.
15. Further, it is submitted that the RP was also directed to publish
Form G for inviting fresh EOIs in the interest of the Corporate
Debtor as one EOI Applicant i.e., Nippon Ispat Pvt. Ltd. and
Madanco Trexim Pvt. Ltd. vide its application being IA
549/KB/2023 sought condonation of delay in submitting its plan.
16. It is further submitted that the RP published Second Form G on
23.05.2023 wherein till the last date to submit EoI, three valid
EoIs are received from Eco Tech Papers, Nippon Ispat Pvt. Ltd. &
Mandaco Trexim Pvt. Ltd. and Pinax Papers Mills Pvt. Ltd. & Pinax
Steel Industries. Later another EoI applicant, i.e., Bhagwati
Vintrade Pvt. Ltd. were allowed to submit its EoI.
17. It is further contended that upon allowing the extension of 104
days by this Adjudicating Authority, till the last date to submit
Plans, four Resolution Plans were received and placed in the 10th
CoC meeting held on 23.08.2023.
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Evaluation and Voting
18. It is further submitted that upon request of the Resolution
Applicant, in 11th CoC meeting, it was resolved to allow Nippon
Ispat Pvt. Ltd. & Mandaco Trexim Pvt. Ltd. to withdraw its Plan.
19. It is further submitted that the CoC, in its 13th meeting, held on
25.09.2023 evaluated the three plans to be feasible and viable as
per the evaluation matrix. The Voting line were remained opened
from 26.09.2023 at 7 P.M. to 07.10.2032 at 7 P.M. After evaluation
of the plans submitted, the CoC unanimously decided to approve
the Resolution Plan dated July 12, 2023 (Resubmission date”:
September 19, 2023) submitted by Pinax Papers Mills Pvt. Ltd. &
Pinax Steel Industries by 100% voting share.
Compliances of the Resolution Plan submitted by the SRA with
various provisions
20. The Applicant has submitted that in terms of Regulation 39(4) of
the Insolvency and Bankruptcy Code (Insolvency Resolution
Process for Corporate Persons) Regulations, 2016, she has filed a
Compliance Certificate in prescribed form i.e., Form “H”, annexed
at Page 259 to the Application as Annexure “T”.
21. It is submitted that the Resolution Applicant has met the criteria
approved by the CoC having regard to the complexity and scale of
operations of the business of the Corporate Debtor in terms of
Section 25(h)(2) of the I&B Code.
22. Further is it submitted that the Resolution Applicant is eligible to
submit a resolution plan in terms of Section 29A of the I&B Code
and accordingly, an affidavit has also been furnished by the SRA.
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23. It is further submitted that the Resolution Applicant has
submitted an affidavit stating its eligibility in terms of Section 30(1)
of the I&B Code, 2016.
24. Further, it is submitted that details of various compliances as
envisaged within the I&B Code and the CIRP Regulations to which
a Resolution Plan should adhere to, have been complied.
25. It is further submitted that in terms of Section 30(2) of the I&B
Code, 2016, (as amended vide Amendment dated August 16, 2019)
the Resolution Plan provides the compliance as under:
Section
of
the
Code
/Regulation
No.
Requirement
with
respect to Resolution
Plan
Clause
of
Resolution
Plan
Compliance
(Yes/ No)
25 (2)(h)
Whether the Resolution
Applicant
meets
the
criteria approved by the
CoC having regard to the
complexity and scale of
operations of business of
the CD?
Yes
Section 29 A Whether the Resolution
Applicant is eligible to
submit resolution plan as
per final list of Resolution
Professional or Order, if
any, of the Adjudicating
Authority?
Affidavit
annexed at
Page
247-
251 to the
application.
Yes
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Section
30
(1)
Whether the Resolution
Applicant has submitted
an affidavit stating that it
is eligible?
Yes
Section
30
(2)
Whether the Resolution
Plan –
(a) Provides
for
the
payment
of
insolvency
resolution process
costs?
(b) Provides
for
the
payment
to
the
operational
creditors?
(c) Provides
for
the
payment
to
the
financial
creditors
who did not vote in
favour
of
the
resolution plan?
(d) Provides
for
the
management of the
affairs
of
the
corporate debtor?
(e) Provides
for
the
implementation
Point 8.1
Point 8.4 and 8.5
Point 9
Yes
Yes
Yes
Yes
Yes
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Page 11 of 34 and supervision of the resolution plan? (f) Contravenes any of the provisions of the law for the time being in force?
Yes
Section
30
(4)
Whether the Resolution
Plan
(a) is
feasible
and
viable, according to
the Coc?
(b) Has been approved
by the CoC with
66% voting share?
At
Page
121-134 to
the
Application
(13th
CoC
Minutes)
Yes
As per CoC
Section
31(1)
Whether the Resolution
Plan has provisions for its
effective implementation
plan, according to the
CoC?
Point 9
Yes
Regulation
38(1)
Whether the amount due
to
the
operational
creditors
under
the
resolution plan has been
given priority in payment
over financial creditors?
Point
no.
8.3,8.4,9.2
& 9.3
Yes
Regulation
38 (1A)
Whether the resolution
plan includes a statement
Points: 8.1,
8.2,
8.4,
Yes
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Page 12 of 34 as to how it has dealt with the interests of all stakeholders? 8.5, 8.6 & 9.1, 9.2, 9.3 Regulation 38(1B) (i) Whether the Resolution Applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any resolution plan approved under the Code. (ii) If, so whether the Resolution Applicant has submitted the statement giving details of such non implementation?
No
NA Regulation 38(2) Whether the Resolution Plan Provides:
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(a) the term of the plan
and
its
implementation
schedule?
(b) For
the
management
and
control
of
the
business
of
the
corporate
debtor
during its term?
(c) adequate means for
supervising
its
implementation?
Point no 9
Point no 8 & 9
Point no 2
Yes
Yes
Yes
Regulation
38(3)
Whether the resolution
plan demonstrates that –
(a) it
addresses
the
cause of default?
(b) It is feasible and
viable?
(c) It has provisions for
its
effective
implementation?
(d) It has provisions for
approval
required
and the timeline for
the same?
Yes
Yes
Yes
Yes
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Page 14 of 34 (e) The resolution applicant has the capability to implement the resolution plan? Yes 39(2) Whether the RP has filed applications in respect of transactions observed, found or determined by him?
Yes Regulation 39 (4) Provide details of performance security received, as referred to in sub- regulation (4A) of regulation 36 B.
5.40 Crores
- It is contended in point 4.5 at page 16 of the Resolution Plan as approved by the CoC that the surplus cash and amounts as maybe recovered from the ex-promoters pursuant to the NCLT Orders on the Preferential transaction/ Avoidance application of the Resolution Professional shall be available to the committee of creditors and any recovery such transaction by the order of the NCLT shall accrue to Financial Creditors in proposition to the amount as proposed in the Resolution Plan. It is further clarified that any application pending on respect of such transaction maybe continued by the Financial Creditors or as may be decided by the Committee of Creditors and any legal expenditure or the
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Page 15 of 34 associated cost related to PUFF application, shall be borne by the said financial creditors or as may be decided by the CoC.
Details of the Financial Proposal and Payment Schedule in the
Resolution Plan
27. The summery of the proposed plan is given at page 14 and 34 of
the Resolution Plan submitted by the SRA, provide in nutshell her
under:
S
N
Categor
y
of
Stakehol
der
Sub-
Categor
y
of
Stakehol
der
Amount
Claimed
Amount
Admitted
Amount
provided
under the
Plan
Amount
provided/a
mount
admitted (%)
1
2
3
4
5
6
7
A
CIRP
COST
(unpaid
CIRP
cost to be
paid
at
actuals)
Rs. 1,27,45,51 5/-
Rs. 1,50,00,00 0/- 100% B Payment Towards Claims
Secured financial creditor
Rs. 59,97,91,9 67/- Rs. 59,31,14,5 19/- Rs. 52,40,00,0 00/- 88.35%
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Page 16 of 34 2 Unsecur ed financial creditor
Rs. 7,10,07,79 1/-
0% 3.
Operatio nal Creditors Employe e
4 Governm ent Dues
5
Other
than
Workme
n,
Employe
e & Govt.
Dues
Rs.
49,89,18,9
14/-
Rs.
43,84,80,0
83/-
Rs.
10,00,000/
0.23% 6
Other than FC & OC
0%
TOTAL (Rupees Fifty-Four Crores Only) Rs. 54,00,00,0 00/-
Working Capital Rs. 10,00,00,0 00/-
Capital Expenditure Rs. 10,00,00,0 00/-
Total Plan Amount
Rs.
74,00,00,0
00/-
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Reliefs and Waivers
SN
Clause Reliefs and Waivers
i.
10.1
Any stamp duty liabilities or tax liability which arise,
pursuant to the transactions contemplated under
this Resolution Plan shall be exempted or waived off.
ii
10.2
Hon’ble NCLT be pleased to give or issue necessary
directions and or instructions to all relevant
Governmental Authorities to provide all the license,
to the restricted Corporate Debtor to run the plant(s)
smoothly and successfully transfer the existing
License if any in the name of the Resolution
Applicant, if required, in the future. The RA shall file
any application, if the same is required to be done
for getting any such licenses.
iii
10.3
Hon’ble NCLT be pleased to give or issue necessary
directions and / or instructions to Income Tax
department to carry forward business loss, short
term capital loss, Unabsorbed Depreciation of the
Restructured Corporate Debtor.
iv.
10.4
Hon’ble NCLT be pleased to give or issue necessary
directions and / or instructions to all relevant
Governmental Authorities including the ROC that
the Restructured Corporate Debtor , its directions
and its key managerial personnel, officers and
employees appointed after the NCLT Approval Date
not be held liable in respect of all statutory /
regulatory non- compliances having occurred prior
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Page 18 of 34 to the NCLT Approval Date, including with respect to various provisions of Applicable Laws including but not limited to the Companies Act, 1956 and/ or Companies Act, 2013 and/ or the Taxation Laws and also of non-preparation and no approval of financial statements for any of the financial years prior to the Effective Date. To allow amendment in the Memorandum of Association and Article of Association without approaching the Central Government and grant exemption to the Restructure Corporate Debtor for holding Annual General Meeting of the members and other formalities. To provide for/ to be complied with the terms and conditions stipulated in this scheme without calling the General Meeting of shareholders the Corporate Debtor. v 10.5 Hon'ble NCLT be pleased to give or issue necessary directions, instructions to all relevant Governmental Authorities to waive off all penalties, charges, fees, etc. arising out of any non-compliances having occurred prior to the Effective Date with respect to various provisions of the Applicable Laws including but not limited to the property laws, labour laws i.e. the Employee State Insurance Act, the Provident Fund Act, the Industrial Disputes Act, the Payment of Bonus Act, the Contract Labour Act, the Minimum Wages Act, the Equal Remuneration Act, the
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Page 19 of 34 Factories Act, the Gratuity Act, etc. and to withdraw all/any pending Proceedings in case of such labour laws or property laws against the Restructured Corporate Debtor for any period prior to the Effective Date. v 10.6 Hon'ble NCLT be pleased to give or issue necessary directions, instructions to the effect that all proceedings, inquiries, investigations, orders, show causes, notices, suits, litigation etc. in respect of the Restructured Corporate Debtor, whether civil or criminal, pending before any authority, court, Tribunal or other forum prior to the Effective Date shall stand abated , withdrawn , settled and/or extinguished , and the restricted Corporate Debtor shall have no liability in respect of such proceedings, investigations, orders, show causes, notices, suits, litigation etc. relating to the period prior to the NCLT Approval Date. However, all proceedings, inquiries, investigations, orders, show causes, notices, suits, litigation etc. initiated by the Corporate Debtor in respect of claiming any amount shall remain outstanding, and the restructured Corporate Debtor shall be entitled to pursue the same for recovery of scu amounts claimed. vi 10.7 On and from the Effective Date, all accounts of the Restructured Corporate Debtor shall stand regularized, and their asset classification shall be
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Page 20 of 34 "standard" for the purposes of all Applicable Laws and the creditors shall issue necessary directions to the respective Credit Rating Agencies or any other agency for the time being to regularize and classify account as standard one. Secured Financial Creditor shall issue NOC (No objection certificate) for satisfaction of charge and sign relevant forms for satisfaction of charge registered with ROC. vii. 10.8. Hon’ble NCLT be pleased to allow:
10.8.1. Upon the approval of the plan by the NCLT under section 31 of the IBC, all violation or breach of any agreement(s) of the CD shall stand condoned or waived on the Corporate Debtor or the RA, and such agreements shall be treated as if no violation or breach has ever been committed, however director of the suspended board or existing promotors of the CD shall continue to remain liable for any such violation, breach or non-compliance.
10.8.2. On the NCLT Approval Date, the guarantors that have provided guarantees for and on behalf of Corporate Debtor and in order to secure the Debt availed by the Corporate Debtor, shall not be entitled to exercise any subordinate rights in respect of such guarantees.
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Page 21 of 34 10.8.3. On the NCLT Approval Date, all the outstanding negotiable instruments issued by the Corporate Debtor or by any Person acting on behalf of the Corporate Debtor including demand promissory notes, post-dated cheques and letter of credit shall stand terminated and the restructured Corporate Debtor's liability under such instruments shall stand extinguished.
10.8.4. On the NCLT Approval Date, the rights of any person (whether exercisable now or in the future and whether contingent or not) to call for the allotment, issue, sale, or transfer of shares or loan capital of the Corporate Debtor, whether on a change of control, or otherwise, shall stand unconditionally and irrevocably extinguished.
10.8.5. On the NCLT Approval Date, the right of any person or company claiming to be the owner of any land /plant and machinery at factories owned by Corporate Debtor and on any of the assets of the Corporate Debtor which as per information provided by the RP is in the name of the Corporate Debtor or, shall stand unconditionally and irrevocable extinguished.
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Page 22 of 34 10.8.6. That upon the approval of the plan by the NCLT under section 31 of the IBC, all pending proceedings relating to the following departments against the CD shall stand irrevocably and unconditionally abated in violation or breach of any agreement of the CD shall stand condoned or waived, and such agreements shall be treated as if no violation or breach has ever been committed by the Corporate Debtor, however director of the suspended board or existing promotors of the CD shall continue to remain liable for any such violation, breach or non-compliance.
Central Bureau of Investigation (CBI) cases if any against the corporate debtor.
Enforcement Directorate (ED) cases it any against the corporate debtor.
Recovery suitcases under Debt Recovery Tribunal (DRT) if any against the corporate debtor.
Employee State Insurance Corporation (ESI) suits if any against the corporate debtor.
Vigilance & Enforcement Department (Govt. of West Bengal) cases if any against the corporate debtor.
Pollution department cases if any against the corporate debtor.
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Labour department cases if any against the corporate debtor
Case for non-fulfilling of export obligation/ EPCG/ DEPB license by directorate of Revenue Intelligence against the corporate debtor.
Other Civil, criminal cases and local body taxes if any against the corporate debtor. viii 10.9 In order to revive and resume operations of Balaji Paper & Newsprint Private Limited, Hon'ble NCLT be pleased to provide the following additional Relief & Concessions:
10.9.1. To give the exemption to the restructured Corporate Debtor of 1 years from electricity duty from the effective date.
10.9.2. To waive minimum demand charges on electricity Restructured E Corporate Debtor for a period of 1 years from the effective date.
10.9.3. To extinguish all the past municipal taxes on the land on plant(s) of the Corporate Debtor is built that may be pending outstanding as of the date of approval of this Resolution Plan by the Hon'ble NCLT.
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Page 24 of 34 10.9.4. To extinguish any dues pending with Land Revenues in relation to the land on which the plant(s) of the Corporate Debtor are situated.
10.9.5. To provide all the essentials approvals and licences such as Fire NOC, Police Approvals for running the plant smoothly and efficiently, on application being made in this regard.
10.9.6. Apart from the relief and concessions mentioned above, Government of West Bengal may also consider providing from time to time such relief and concession of admissible to sick units for expeditious revival of the unit.
10.9.7. Waiver of valuation of pricing of shares by registered valuer: Approval for resolution plan by NCLT will be treated as waiver of the requirements of the valuation of pricing of shares by registered valuer to be computed for issuance of equity shares through preferential allotment applicant as well as any other financial investors. Request for such waiver is due to the fact that current valuation of the company basis book value on net asset value basis realizable valuation of assets adjust to the current liabilities discounted cash flow of the business will be negative, whereas
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Page 25 of 34 the applicant is paying premium over face value considering the future potential of the business.
10.9.8. Waiver exemption from requirement of no objection certificate: Approval of the resolution plan by NCLT will be treated as approval under section 281 of the Income Tax Act 1961 by the selling shareholders and provision of taking over predecessors' tax liability under section 170 of the Income Tax Act 1961 and specific order for treating such transactions as void under section 281 of the Income Tax payable by Act 1961 for any claims in respect of tax or any other sum the selling shareholders.
Our Inference 28. Upon hearing, the submission made by the Learned Counsel, Shri Shaunak Mitra appeared on behalf of the Resolution Professional of the Balaji Paper and Newsprint Private Limited, Corporate Debtor herein and perusing the record and/or documents placed before this Adjudicating Authority, we find that the “Resolution Plan” dated July 12, 2023 (resubmission date September 19, 2023) submitted by PINAX PAPER MILLS PRIVATE LIMITED AND PINAX STEEL INDUSTRIES PRIVATE LIMITED, Successful Resolution Applicant (for brevity “SRA”) was placed before the
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Committee of Creditors of the Balaji Paper and Newsprint Private
Limited in its 13th Meeting, held on Sept 25, 2023, and the CoC
with 100% voting share, with e-voting conducted from 26.09.2023
– 07.10.2023 approved the Resolution Plan. As per the CoC, the
plan meets the requirement of being viable and feasible for the
revival of the Corporate Debtor. Preponderantly, all the
compliances have been done by the Resolution Applicant for
making the plan effective after approval by this Adjudicating
Authority.
29. In the course of the hearing, Ld. Counsel, further submitted that
the Resolution Plan complies with all the provisions of the
Insolvency and Bankruptcy Code, 2016, read with relevant
Regulations of the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons) Regulations,
2016 and does not contravene any of the provisions of law for the
time being in force.
30. Upon perusal of the documents on record and/or documents, we
are satisfied that the Resolution Plan submitted by the consortium
of “PINAX PAPER MILLS PRIVATE LIMITED AND PINAX STEEL
INDUSTRIES PRIVATE LIMITED”, is in accordance with sections
30 and 31 of the I&B Code, 2016 and also complies with
regulations 38 and 39 of the IBBI (Insolvency Resolution Process
for Corporate Persons) Regulations, 2016.
31. As far as the question of granting time to comply with the statutory
obligations or seeking approvals from authorities is concerned, the
Resolution Applicant is directed to do so within one year from the
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Page 27 of 34 date of this order, as prescribed under section 31(4) of the I&B Code. 32. We have perused the reliefs, waivers and concessions as sought and as provided in the Resolution Plan. It is evident that some of the reliefs, waivers and concessions sought by the Resolution Applicant come within the ambit of the I&B Code and the Companies Act 2013, while many others fall under the power and jurisdiction of different government authorities/departments. This Adjudicating Authority has the power to grant reliefs, waivers and concessions only concerning the reliefs, waivers and concessions that are directly with the I&B Code and the Companies Act (within the powers of the NCLT). The reliefs, waivers and concessions that pertain to other governmental authorities/departments may be dealt with by the respective competent authorities/forums/offices, Government or Semi-Government of the State or Central Government concerning the respective reliefs, waivers and concession, whenever sought for. The competent authorities including the Appellate authorities may consider granting such reliefs, waivers and concessions keeping in view the spirit of the I&B Code, 2016 and the Companies Act, 2013. 33. It is almost trite and fairly well-settled that the Resolution Plan must be consistent with the extant law. The Resolution Applicant shall make necessary applications to the concerned regulatory or statutory authorities for the renewal of business permits and supply of essential services, if required, and all necessary forms along with filing fees etc. and such authority shall also consider
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Page 28 of 34 the same keeping in mind the objectives of the Code, which is essentially the resolving the insolvency of the Corporate Debtor. 34. The reliefs sought for subsisting contracts/agreements can be granted, and no blanket orders can be granted in the absence of the parties to the contracts and agreements. 35. Concerning the waivers with regard to the extinguishment of claims which arose prior to the initiation of the CIR Process and which have not been claimed are granted in terms of the law laid down by the Hon’ble Apex Court in Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited reported in MANU/SC/0273/2021: (2021)9SCC657: [2021]13SCR737 that “once a resolution plan is duly approved by the Adjudicating Authority Under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.” (Emphasis Added) 36. Further, the relevant part of the Ghanshyam Mishra judgment (supra) in this regard is given below: “61. All these details are required to be contained in the information memorandum so that the resolution applicant is aware, as to what are the liabilities, that he may have
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Page 29 of 34 to face and provide for a plan, which apart from satisfying a part of such liabilities would also ensure, that the Corporate Debtor is revived and made a running establishment. The legislative intent of making the resolution plan binding on all the stake-holders after it gets the seal of approval from the Adjudicating Authority upon its satisfaction, that the resolution plan approved by CoC meets the requirement as referred to in Sub-section (2) of Section 30 is, that after the approval of the resolution plan, no surprise claims should be flung on the successful resolution applicant. The dominant purpose is, that he should start with fresh slate on the basis of the resolution plan approved.’ “62. This aspect has been aptly explained by this Court in the case of Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra).’ “107. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan
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Page 30 of 34 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 would 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. For these reasons, NCLAT judgment must also be set aside on this count.” (Emphasis Added)
- In this regard we also rely on the judgement of the Hon’ble High
Court of Rajasthan in the matter of EMC v. State of Rajasthan,
Civil Writ Petition No. 6048/2020 with 6204/2020 reported in
(2023) ibclaw.in 42 HC, wherein it has been inter-alia held that:
“Law is well-settled that with the finalization of insolvency resolution plan and the approval thereof by the NCLT, all dues of creditors, Corporate, Statutory and others stand extinguished and no demand can be raised for the period prior to the specified date.” (Emphasis Added)
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Page 31 of 34
38. Thus, on the date of approval of the resolution plan by the
Adjudicating Authority, all such claims, that are not a part of the
resolution plan, shall stand extinguished and no person will be
entitled to initiate or continue any proceedings in respect to a
claim, which is not part of the resolution plan. The Hon’ble
Supreme Court of India further laid down that all the dues
including the statutory dues owed to the Central Govt, any State
Govt or any local authority, if not part of the resolution plan, shall
stand extinguished and no proceedings in respect of such dues for
the period before the date on which the Adjudicating Authority
grants its approval under Section 31 could be continued.
39. Concerning the waivers sought in relation to guarantors, the
Hon’ble Apex Court held in Lalit Kumar Jain v. Union of India
reported in MANU/SC/0352/2021: (2021) 9 SCC 321: (2021)
ibclaw.in 61 SC that the sanction of a resolution plan and finality
imparted to it by Section 31 does not per se operate as a discharge
of the guarantor's liability. As to the nature and extent of the liability,
much would depend on the terms of the guarantee itself.
40. Further, we would rely upon the judgment rendered by the NCLAT
in Roshan Lal Mittal v. Rishabh Jain reported in (2023)
ibclaw.in 803 NCLAT that:
“The Resolution Plan does not absolve the personal
guarantors from their guarantee. The law well settled by the
Hon’ble Supreme Court in the matter of “Lalit Kumar Jain vs.
Union of India & Ors. – (2021) 9 SCC 321), that by approval of
resolution plan the guarantees are not ipso facto discharged.”
(Emphasis Added)
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Page 32 of 34
- For the reliefs and waivers sought for all inquiries, litigations, investigations and proceedings shall be granted strictly as per section 32A of the I&B Code, 2016 and the provisions of the law as may be applicable.
- As far as the question of granting time to comply with the statutory obligations or seeking approvals from authorities is concerned, the Resolution Applicant is directed to do so within one year from the date of this order, as prescribed under section 31(4) of the Code.
- In case of non-compliance with this order or withdrawal of the Resolution Plan, the payments already made by the Resolution Applicant shall be liable for forfeiture.
- Subjected to the directions made above, the Resolution Plan dated May 15, 2022, (as amended and restated vide amendment dated September 03, 2022, along with the clarifications and annexures), submitted by the consortium of “PINAX PAPER MILLS PRIVATE LIMITED AND PINAX STEEL INDUSTRIES PRIVATE LIMITED” is hereby APPROVED and FINALLY SANCTIONED by this Adjudicating Authority. The Resolution Plan shall form part of this Order and shall be read along with this order for implementation. The Resolution Plan thus approved shall be binding on the Corporate Debtor and other stakeholders involved in terms of section 31 of the Code, so that the revival of the Corporate Debtor Company shall come into force with immediate effect.
- The Moratorium imposed under section 14 of the Code by virtue of the order dated May 25, 2022, shall cease to have effect from the date of this order.
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Page 33 of 34 46. 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 them to the Resolution Applicant or New Promoters. 47. Liberty is hereby granted for moving any application if required in connection with the implementation of this Resolution Plan. 48. A copy of this Order is to be submitted to the Registrar of Companies, West Bengal by the RP. 49. The Resolution Professional shall stand discharged from his duties with effect from the date of this Order. 50. The Resolution Professional is further directed to hand over all records, premises/factories/documents to the Resolution Applicant to finalise the further line of action required for starting the operation. The Resolution Applicant shall have access to all the records/premises/factories/documents through the Resolution Professional to finalise the further line of action required for starting the operation. 51. The Registry of this Adjudicating Authority is directed to send e-mail copies of the order forthwith to all the parties and their Learned Senior Counsels/ Learned Counsels for information and for taking necessary steps.
- In terms of the view above, the interlocutory application being I.A. (IB) No. 1842/KB/2023 in the main Company Petition being C.P. (IB) No. 1540/KB/2019 shall stand disposed of accordingly.
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Page 34 of 34 53. Certified copies of this order, if applied for with the Registry of this Adjudicating Authority, be supplied to the parties upon compliance with all requisite formalities. 54. File be consigned to the record.
D. Arvind
Bidisha Banerjee Member (Technical)
Member (Judicial)
This Order is signed on the 12th Day of January, 2024.
Bose, R. K. [LRA]/ Tiwari, V. [LRA]
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