10th September, 2024 Approval of Resolution Plan - Best News Company Private Limited [I.A. 07 & 1313-2024 in CP (IB) No.536- (PB)-2022] (370 KB)

I.A. 07/2024, I.A. 1313/2024 In CP (IB)- 536/2022

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IN THE NATIONAL COMPANY LAW TRIBUNAL PRINCIPAL BENCH, NEW DELHI I.A. 07/2024 I.A. 1313/2024 In CP (IB) No.536/ (PB)/2022

Under Section 30(6) of Insolvency and Bankruptcy Code, 2016 r/w Regulation 39(4) of The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

IN THE MATTER OF: CP (IB) No.536/ (PB)/2022

M/S SHARMA GANDHI HIRE PURCHASE LTD.
Financial Creditor
Versus M/S BEST NEWS COMPANY PRIVATE LIMITED

  Corporate Debtor 

&

I.A. 07/2024

IN THE MATTER OF:

Hemant Sharma
(Resolution Professional of Corporate Debtor) Best News Company Private Limited
IBBI/IPA-002/IP-N00015/2016-2017/10019 Add. C-10, LGF, Lajpat Nagar-III
New Delhi-110024 Email-id- hemant78sharma@yahoo.com

… Applicant

&

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I.A. 1313/2024 

IN THE MATTER OF: AKB Ventures Private Ltd. Address: Office No. 209 Part of Property No. 524
School Block, Shakarpur, Shahdara,
Delhi - 110092
Email id: akbventurespvtltd@gmail.com

…Applicant

Versus

I. Principal Commissioner of Income Tax
Income Tax Office
Address: HSIIDC Building, Shankar Chowk Road Phase-V, Udyog Vihar, Sector 19,
Gurugram, Haryana 122016
Mail Id: gurgaon.pcit.een@incometax.gov.in …Respondent No.1

2. Hemant Sharma
   (Resolution Professional of Corporate Debtor) Best News Company Private Limited
   IBBI/IPA-002/IP-N00015/2016-2017/10019 Add. C-10, LGF, Lajpat Nagar-III
   New Delhi-110024 Email-id- hemant78sharma@yahoo.com

      -cirp.bestnews@gmail.com 
   

…Respondent No.2

Order Pronounced On: 04.09.2024 CORAM:

CHIEF JUSTICE (RETD.) RAMALINGAM SUDHAKAR HON'BLE PRESIDENT

SHRI AVINASH K. SRIVASTAVA HON’BLE MEMBER (TECHNICAL)

Appearances: For the RP
: Ms. Divya Jagga, Adv. along with Mr. Hemant Sharma, RP For the Income Tax Department

: Ms. Urvashi Dhugga, Sr. Standing Counsel For the SRA
: Mr. Shivank Parashar, PCS, Mr. Abhishek Nahta, PCA, Mr. Rishabh Sachdeva, Adv.

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O R D E R

1. The present application (I.A. 07 of 2024) has been filed by Mr. Hemant Sharma,
   Resolution Professional (“Applicant/RP”) of M/s. Best News Company Private Limited, Corporate Debtor (“CD”) on 08.02.2024 under the provisions of Section 30(6) of the Insolvency & Bankruptcy Code, 2016 (“The Code”) read with Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) for approval of the Resolution Plan submitted by AKB Ventures Private Limited, Successful Resolution Applicant (“SRA”). The prayer in the present application is extracted below:

A. BE PLEASED to allow the present application; B. BE PLEASED to approve the Resolution Plan submitted by AKB Ventures Private Limited in case of Corporate Debtor, as approved by the Committee of Creditors under Section 30(4) of the IBC in their 6th meetings held on 08.01.2024 and 25.01.2024, in terms of Section 31 of IBC; C. BE PLEASED to pass such further and/or other order or orders which this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case.

At the outset, it is relevant to mention herein that the resolution plan submitted by the applicant suffered from certain inconsistencies, in view of which this Adjudicating Authority thought fit to issue a Clarification Order dated 20.08.2024. The applicant in compliance of the order dated 20.08.2024 filed a Clarification by way of an Affidavit dated 26.08.2024.

BRIEF FACTS

2. The Corporate Debtor was incorporated on 23.12.2011 as a company limited by shares having its registered office at Office 136-B, Pocket-C, Sidharth Extn. New Delhi, India, 110014. Further the authorized capital is Rs. 55,00,00,000/- and Paid Up capital is Rs. 29,00,00,000/-. It is involved in Motion picture, radio, television and other entertainment activities.

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3. Before dwelling into the issue, it is relevant to mention the brief facts of the case resulting into the present application. That M/s Sharma Gandhi Hire Purchase Ltd., (hereinafter referred to as Financial Creditor) filed a petition under section 7 of The Code for seeking initiation of CIRP against CD. That pursuant to order dated 17.05.2023, this adjudicating authority admitted CD into Corporate Insolvency Resolution Process (“CIRP”) and accordingly the Applicant was appointed as Interim Resolution Professional (“IRP”) in terms of Section 16 of the code. The Copy of order dated 17.05.2023 is annexed as Annexure A-3 of the application. The applicant was confirmed as RP in the 1st meeting of the COC held on 16.06.2023 with 100% vote share and consequently an I.A. bearing No. 3551/2023 was filed before this Adjudicating Authority under Section 22(3)(a) of the Code where this Adjudicating Authority vide order dated 11.07.2023 took on record the appointment of RP. Copy of order dated 11.07.2023 is annexed as Annexure A-6.

4. The applicant after being appointed as IRP issued public announcement in Form-A in terms of Regulation 6 of the CIRP Regulations, 2016 intimating the public about the commencement of CIRP against the CD and inviting the creditors to submit their claims. The announcement was published on 19.05.2023 in two newspapers namely Business Standard (English) and Jansatta (Hindi) specifying the last date for submission of claims as 31.05.2023. A copy of Form-A dated 19.05.2023 is annexed as Annexure A-4.

5. The applicant, in terms of Section 18(1)(b) read with Regulation 13(1) of CIRP Regulations, 2016, verified the claims of the creditors based on the documents and information submitted by creditors and after verifying the same prepared the list of creditors. List of creditors was filed before this Adjudicating Authority vide I.A.3227 of 2023 in compliance of Regulation 13(2)(d) of CIRP Regulation, 2016 which was taken on record vide order dated 13.06.2023. Copy of order dated 13.06.2023 is annexed as Annexure A-5. The applicant in term of Regulation 17(1) of CIRP Regulation, 2016 constituted Committee of Creditors

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(“COC”) on 06.06.2023 and filed its report certifying the constitution of COC vide I.A. 3239 of 2023 which was taken on record by this Adjudicating Authority vide order dated 13.06.2023. The list of creditors along with their claim and voting share are as follows:

Sr. No. Name of the Financial Creditor (Unsecured) Claim Amount (in INR) Claim Amount Admitted (in INR) Voting Percentage (%) 1.
Evergreen Natural Products Private Limited 2,03,98,525 2,03,98,525 56.85% 2. Satvik Natural Products Private Limited 1,50,98,049 1,50,98,049 42.07% 3. GJ Fragrance
and Aromatic Limited 3,87,876 3,87,876 1.08%

3,58,84,450/- 3,58,84,450/- 100%

6. The applicant further received claims from Unsecured Financial Creditor i.e. Sharma Gandhi Hire Purchase Ltd. and Umesh Kumar (related party) amounting to 65,86,68,936/- and from Operational Creditor i.e. Income Tax Dept. and CGST Dept. amounting to Rs. 4,60,28,991/- and from Workmen and Employees amounting to Rs. 1,93,923/- which was verified and admitted by the applicant. The summary of updated list of creditors is as follow:

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S. No. Creditors
Admitted Claims 1. Secured Financial Creditors, Unrelated, having voting rights NIL 2. Secured Financial Creditors, Related, having no voting rights NIL 3. Unsecured Financial Creditors, Unrelated, having voting rights 3,58,84,450/- 4. Unsecured Financial Creditors, Related not having voting rights 65,86,68,936/- 5. Workmen Dues NIL 6. Employees 1,93,923/- 5. Govt. Dues 4,60,28,991/- 6. Operational Creditors (other than Workmen and Employees and Govt. Dues) NIL 7. Others Creditors, if any (other than Financial creditors and Operational Creditors) NIL

74,07,76,300/-

Valuation of Corporate Debtor

7. The applicant on 10.07.2023 convened 2nd meeting of COC where the eligibility criteria for Prospective Resolution Applicant (“PRA”) in terms of Section 25(2)(h) of the code along with publication of Form-G in terms of Regulation 36 A of the CIRP Regulation, 2016 was deliberated and unanimously approved by members of COC. Further, in terms of Regulation 27 of the CIRP Regulations, 2016 the applicant appointed two registered valuers namely Mr. Arunesh Kumar Dubey and Mr. Jasin Jose to determine the liquidation as well as fair value. As per Form-H attached with the application, the Fair Value of the CD is Rs.1,70,06,837/- (Rupees One Crore Seventy Lakh Six Thousand Eight

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Hundred Thirty Seven Only) and the Liquidation Value of the CD is Rs.1,70,06,837/- (Rupees One Crore Seventy Lakh Six Thousand Eight Hundred Thirty Seven Only). The Applicant has filed a Compliance Certificate in prescribed form, i.e., Form ‘H’ in compliance with regulation 39(4) of the CIRP Regulations, 2016 which has been annexed to the application as ANNEXURE -18. Further Copy of Minutes of 2nd COC meeting along with Summary Records and Voting Results are annexed as Annexure A-7.

8. The Applicant published Form-G dated 16.07.2023 in newspaper namely Financial Express (English) and Jansatta (Hindi) respectively for Expression of Interest (“EOI”) wherein the last date to receive EOI from interested PRA was 31.07.2023 and to issue Provisional List of PRAs was 06.08.2023. Copy of Form-G dated 16.07.2023 is annexed as Annexure A-8. The applicant in lieu of Form –G received request from 9 PRA’s who showed their interest in submitting EOI for the Corporate Debtor, however some of them requested the applicant to extend timeline for submission of EOI which was considered by the applicant, and put before 3rd COC meeting on 05.08.2023.

9. The applicant in terms of Regulation 36A (4A) of the CIRP Regulation, 2016 proposed a resolution for re-publication of another Form-G before the members of COC in the said meeting, which was duly approved by the members with 100% voting share. In lieu of the same the applicant published revised Form-G dated 11.08.2023 wherein the last date to receive EOI was extended to 26.08.2023. Copy of minutes of 3rd COC meeting along with summary records, voting results and Form-G dated 11.08.2023 is annexed as Annexure A-9. The applicant pursuant to publication of revised Form-G received request from PRAs till 26.08.2023 out of which only 2 PRAs were found eligible upon preliminary assessment of such EOIs, therefore the applicant in terms of Regulation 36A (10) of the CIRP Regulation, 2016 issued provisional list of eligible PRAs on 05.09.2023. It is stated that no objections were received from the PRAs, the applicant in compliance of Regulation 36A(12) of the CIRP

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Regulation, 2016 issued final list of PRAs to COC members on 19.09.2023. Copy of Final list of PRAs dated 19.09.2023 is annexed as Annexure A-10.

The applicant further in terms of the Code, appointed M/s ANAA & Co. (Chartered Accountant) as Transaction Auditor to conduct transaction Audit of the accounts of CD to determine the transactions falling under Section 43, 45, 50 and 66 of the code. The appointment of the auditor along with his fees was confirmed by the COC members in the 3rd meeting of COC held on 05.08.2023. Based on the Transaction Audit Report, the applicant made a determination that none of the transactions of the CD falls under the ambit of PUFE Transaction. Further the Transaction Audit Report, was also shared with the members of COC in the 6th meeting of COC held on 25.01.2024.

11. The applicant in compliance of Regulation 36 of the CIRP Regulation, 2016 read with Section 25 (2)(g) of the Code and Section 29, prepared Information Memorandum (“IM”) based on the information available. The applicant shared the IM with the members of COC on 19.08.2023 in compliance of Regulation 36(4) of CIRP Regulations, 2016.

12. The applicant in compliance of Regulation 36B(1) of CIRP Regulation, 2016 shared IM, Evaluation Matrix and Request for Resolution Plan (“RFRP”) with the PRAs on 07.09.2023 wherein the last date to submit the Resolution Plan
    for all PRA’s was 10.10.2023. The applicant in the 4th meeting of COC held on 02.09.2023 proposed to include a format for Resolution Plan in the RFRP and the Evaluation Matrix which was duly approved by members of COC with 100% vote.

13. The applicant received request from one of the PRAs vide email-dated 08.10.2023 who requested to extend the timeline for submission of Resolution Plan by 15 days and further sought some more information with respect to CD which was provided by the Applicant. It is also stated that the applicant additionally received an EOI from new PRA vide email dated 07.10.2023 who expressed his interest to submit Resolution Plan but the same was not

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accepted by the Applicant as the timeline for submission of EOI by PRA had already come to an end on 26.08.2023 and the same can only be accepted with the approval of COC members as the said acceptance comes within the ambit of commercial wisdom of COC.

14. In lieu of this the applicant conducted 5th meeting of COC on 12.10.2023 wherein an agenda for re-publication of third Form-G with minimum timelines was proposed by the applicant, considering the objective of IBC ensuring fair opportunity or equal level playing field to all other interested parties in submitting Resolution Plan for the CD, which was duly by the COC with 100% vote share. Accordingly the applicant published third Form-G dated 16.10.2023 in the newspaper namely Financial Express (English) and Jansatta (Hindi) wherein the last date to submit EOI for PRAs is 31.10.2023. Copy of Minutes of 5th COC meeting along with summary records and voting results has been annexed as Annexure A-12.

15. Additionally, the applicant also put a resolution before the members of COC for seeking extension of 90 days in the CIRP period which was coming to end on 13.11.2023. The members of COC after considering the timeline for submission of Resolution Plan in view of publication of revised third Form-G, passed a resolution with 100% vote. Accordingly the Applicant filed an I.A. 6157/2023 before this adjudicating authority seeking extension of 90 days which was allowed by this adjudicating authority vide order dated 21.11.2023. Copy of order dated 21.11.2023 is annexed as Annexure A-13.

16. Pursuant to the publication of third Form-G dated 16.10.2023, the applicant received Resolution Plan (along with EMD of Rs. 5,00,000 as approved by COC members in 4th meeting) only from 3 PRAs being AKB Ventures Private Limited, Subhlaxmi Investment Advisory Private Limited, SPSS Infrastructure Private Limited (out of 6 PRA’s whose name are included in the Final List). List of Final PRA’s is annexed as Annexure A-14 and the same is reproduced below for ready reference.

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17. The resolution plan was de-sealed by the applicant in the presence of COC members in the meeting convened on 18.12.2023. With the permission of the COC members all the 3 PRAs were individually invited to present their respective plan before the COC members and to commercially negotiate on the terms and conditions of the Resolution Plan submitted by them. The COC members after due deliberation and discussion unanimously decided to grant equal opportunity to all the 3 PRAs to reconsider their financial proposal with a view to maximize the value for all stakeholders and re-submit their revised plans within 7-10 days.

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18. Subsequently, the applicant received three modified Resolution Plans from the said PRAs vide e-mail dated 18.01.2024 and the same were duly placed before COC members for perusal and consideration in the 6th adjourned meeting which was convened on 25.01.2024. The applicant informed the COC members that the modified Resolution Plan received from the said PRAs are compliant with the provisions of Code and the regulations thereunder and further re- affirmed to the COC members that the said PRA’ are also eligible to submit plan u/s 29A of the Code.

19. Thereafter, the COC members allowed each PRA to present its modified plan before them and after satisfying themselves with the feasibility and viability of each of Modified Resolution Plan submitted by PRA, requested the applicant to place requisite resolution for voting and approval of resolution plan. Accordingly, all the three plans were put to vote by the applicant in the 6th adjourned meeting on 25.01.2024 from 8:15 pm onwards which remained open till 28.01.2024 at 7:00pm. A copy of Lever Up Consultancy to conduct due- diligence of PRA under section 29A of the Code is annexed as Annexure-A-16.

20. It is stated that the COC in its wisdom approved the plan of AKB Ventures Private Limited with 100% vote share on 28.01.2024 in terms of Section 30(4) of the Code r/w regulation 39(3) of CIRP Regulation. The resolution passed at COC meeting is as under:

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21. Pursuant to the same the applicant issued a Letter of Intent (LOI) to SRA i.e. AKB Ventures Private Limited on 31.01.2024 intimating them that the resolution plan submitted by them has been approved. The said LOI was accepted by the SRA on the same day. Further it is stated by the applicant that in terms of RFRP document an amount of Rs. 23,00,000 which is 10% of the plan value has to be paid by SRA as Performance Security by way of bank guarantee to the Applicant and the same has been duly paid by said SRA on 07.02.2024. Copy of letter of Intent signed and acknowledged by the SRA along with Performance Security in the form of Bank Guarantee is annexed as Annexure A-17.

Details of Resolution Plan/Payment Schedule 22. The Successful Resolution Applicant, (SRA) M/s AKB Ventures Private Limited was incorporated on 17.04.1998 as a company limited by shares having its registered office at Office 209 Part of Property No. 524 School Block, Shakarpur, Shahdra, New Delhi-110092. Further the authorized capital is Rs. 1,80,00,000/- and Paid Up capital is Rs. 1,48,32,990/-. It is stated that the SRA has more than 7 years of experience in the industry of trade business. The

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main object of the company is trade and commerce in apparel, footwear, or any other allied product, whatsoever, on retail or wholesale basis in India or elsewhere. It is further stated that the SRA has participated in numerous insolvency business as bidder in past and possess skilled team with relevant industry experience who has successfully completed several ventures.

23. The Resolution Applicant has ascertained the cause of default to be: a. Decline in Print Advertising Company b. Decrease in Circulation c. Digital Disruption d. High Fixed Cost e. Debt Burden f. Management Issues g. Competition h. Economic Downturn i. Legal Regulatory Challenge j. Failure to innovate

24. The Clause 8 of the plan extensively deals with the financial proposal and the Resolution Applicant submits the relevant information with regard to the amount claimed, amount admitted and the amount proposed to be paid and settle with all the stakeholders of the Corporate Debtor including FC, OC and Statutory Authorities.

S.No. Particulars Amount Claimed Amount Admitted
Proposed
Payment Schedule of Payment
1. CIRP Cost

Rs. 15,00,000/- It is stated that as per the IM prepared by the RP, the CIRP cost stands at Rs. 53,100/-, however the RA estimates it to be

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Rs. 15,00,000 until the approval of the plan by NCLT. It is stated that the RA proposes to settle the CIRP cost until approval of plan by NCLT using the funds held in CIRP account of CD within 45 days from effective date. Further if the CIRP cost exceeds the estimated CIRP cost the same will be covered first from contingent fund and subsequently from payment designated to Unsecured Financial Creditor. 2. Secured Financial Creditor

Financial Creditor in class

Other Unsecured
Financial Creditor- Related Party Rs. 65,86,68, 936 Rs. 65,86,68,9 36 Rs. 10,000

The RA proposes to pay Rs. 10,000 amount as full and final settlement amount towards their debt within 45 days from Effective date. 5. Other Rs. Rs. Rs. The RA proposes to pay

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Unsecured
Financial Creditor- Non Related Party 3,58,84,4 50/- 3,58,84,45 0/- 1,90,00,000 Rs. 1,90,00,000 amount as full and final settlement amount towards their debt within 45 days from Effective date. 6. Operational Creditors- Suppliers of Goods and Services

Operational Creditors- Govt. Dues/Regul atory Dues
Rs. 4,60,28,9 91/- Rs. 4,60,28,99 1/- Rs. 3,00,000 The RA proposes to pay Rs. 3,00,000 amount as full and final settlement amount towards their debt within 45 days from Effective date. 8. Operational Creditors- Workmen and Employees Rs. 1,93,923 Rs. 1,93,923 Rs. 1,90,000 The RA proposes to pay Rs. 1,90,000 amount to Operational Creditors (Employees) as full and final settlement amount towards their debt within 45 days from Effective date. 9.
Contingent Fund

Rs. 20,00,000 The RA proposes to reserve Rs. 20,00,000 towards contingent fund to meet out the expenses of PF/ESI dues in future, any CIRP cost which

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overruns the estimated CIRP cost as proposed by RA in this Plan and the litigation cost to be incurred by the RA for the implementation of this plan, Further the remaining contingent fund upto the Settlement Date shall be provided to the Unsecured Financial Creditors (non-related party) of CD.

Rs.74,05, 82,377 Rs.74,05,8 2,377 Rs. 2,30,00,000

Note: A copy of the Resolution Plan of M/s AKB Ventures Private Limited as approved by the CoC is annexed and marked as ANNEXURE A-1 of IA- 07/2024.

25. The Resolution Plan defines “Effective Date” as being the date of receipt of copy of the order approving the Resolution Plan by the Hon’ble Adjudicating Authority. “Cut off Date” has been defined as the date being the date of completion of handover of the Corporate Debtor to Resolution Applicant which shall not be more than 45 days from the Effective Date. Further “Settlement Date” has been defined as the date on which debts of creditors are fully paid as per the terms of this Plan.

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Compliance of the successful resolution plan with various provisions:

Clause of Sec. 30(2) Requirement How dealt with in the Plan (a) Plan must provide for payment of CIRP cost in priority to repayment of other debts of CD in the manner specified by the Board.

1. Under the present Resolution Plan, subject to the terms of this plan, the Insolvency Resolution Process Cost shall be paid in full and in priority to the payment of other debts of the Corporate Debtor. As per the details furnished by the Resolution Professional (RP), the Corporate Debtor possesses a Fixed Deposit amounting to Rs. 1.46 Crore with a one-year maturity period, which has presently expired. Additionally, the RP has transferred Rs. 75 Lakh into current account for conducting CIRP of the CD, utilizing this sum towards the costs associated with the Corporate Insolvency Resolution Process (CIRP). The remaining amount of Rs. 71 Lakh is currently held in another account of the CD which is pending encashment by the RP.
2. As per the information provided by the RP, the CIRP cost outstanding as on date is 53,100/-. Additionally, the Resolution Applicant (RA) estimates the CIRP cost until the approval of the Resolution Plan by the National Company Law Tribunal (NCLT) to be Rs. 15,00,000/-. Consequently, the RA proposes settling the outstanding CIRP costs until NCLT approval using the funds held in the CIRP account of the Corporate Debtor within 45 days from the Effective date. The RA further proposes that if the incurred CIRP cost exceeds the estimated CIRP cost above, it will be covered first from the contingent

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fund and subsequently from the payments designated for Unsecured Financial Creditors. 3. The CIRP Costs shall be paid as per provision of Section 30 of the Code read with Regulation 33 and Regulation 34 of the IBBI (Insolvency Resolution for Corporate Persons) Regulations, 2016.
The CIRP Cost shall be paid only after the Resolution Plan is approved by Hon’ble NCLT. b) Proposal for Payment to OC (excluding workmen, employee and statutory dues.

As per Section 30 (2)(b) of the Code, the plan must provide for repayment of debts of OCs in such manner as may be specified by the Board which shall not be less than- a) the amount to be paid to such creditor in the event of liquidation of CD u/s 53;
or b) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, (whichever is higher) ; With reference to the provisions of Section 30(2)(b) of the Code, as per the estimate by the Resolution Applicant in relation to assets of the Corporate Debtor, the amount to be paid to Operational Creditors in the event of a Liquidation of the Corporate Debtor under Section 53 is NIL. As per the information received from the Resolution Professional under IM the claim for an amount of Rs. Nil has been admitted by the RP. Hence, the Resolution Applicant proposed that the Operational Creditors (excluding

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Proposal for Operational Creditor (Statutory Dues)

workmen, employee & Statutory dues) shall be paid Rs. Nil as full & final settlement of their respective claims.

As per the information received from the Resolution Professional under IM the claim for an amount of Rs. 4,60,28,991/- has been admitted by the RP. Hence, the Resolution Applicant proposed that the Operational Creditors (Statutory Dues) shall be paid Rs. 3,00,000/- as full & final settlement of their respective claims within 45 days from the Effective Date.

Proposal for Operational Creditor (Workmen, Employee)

As per the information received from the Resolution Professional under IM the claim for an amount of Rs. 1,93,923/- has been admitted by the RP. Hence, the Resolution Applicant proposed that the Operational Creditors (Employees) shall be paid Rs. 1,90,000/- within 45 days from the Effective Date. With reference to the provisions of Section 30(2)(b) of the Code, as per the estimate by the Resolution Applicant in relation to assets of the Corporate Debtor, the amount to be paid to Operational Creditors (Employees) in the event of a Liquidation of the Corporate Debtor under Section 53 is NIL. 3. However, the Resolution Applicant proposes the above treatment in relation to Employees Workmen: As per IM, we understand that Workmen outstanding is Nil. Hence, no payment is proposed.

Proposal to Secured Financial Creditor i. As per the information provided by the RP in the Information Memorandum, there are no such claim admitted by the RP under such category. Hence RA proposes to pay an amount of Rs. Nil

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payment to Secured Financial Creditors. ii. The financial Creditor shall release all security of Corporate Debtor mortgaged by it on full & final payment, as proposed in this Resolution Plan.

Note: Herein we observe that that there are no Secured Financial Creditor, hence question of release of security of Corporate Debtor, does not arise. In such facts and circumstances, clarification was sought from the Applicant vide order dated 20.08.2024, wherein the applicant has vide clarification date 26.08.2024 clarified that there are no claims received from Secured Financial Creditor and there are no subsisting charge standing against the CD, hence the question of release of security does not arise and the applicant states the same to be a typographical error and withdraws the clause from the plan vide Affidavit cum Undertaking dated 23.08.2024. Affidavit cum Undertaking dated 23.08.2024 is annexed with clarification as Annexure- C.

Proposal to Unsecured Financial Creditors a) Non related
b) Related A. Unsecured FC-Non-Related Party: i. The Unsecured Financial Creditors (non-related party) of the Corporate Debtor shall be paid an amount of Rs. 1,90,00,000/- (Rupees One Crore Ninety Lakh Only) as full & final settlement of their respective claims. ii. As per the details provided under Information Memorandum by the RP, a claim of Rs. 3,58,84,450/- has been admitted towards the claim of unsecured FC- non related party. iii. Based on information provided by the Resolution Professional (RP), the

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Corporate Debtor possesses a Fixed Deposit amounting to Rs. 1.46 Crore with a one- year maturity period, which has recently expired. Additionally, the RP has already converted Rs. 75 Lakh from this sum to cover expenses related to the Corporate Insolvency Resolution Process (CIRP). The remaining amount, derived from the Rs. 75 Lakh after CIRP costs and Rs. 71 Lakh currently held in another account of the Corporate Debtor, which is pending encashment by the RP will be used by the Resolution Applicant (RA) to fulfill the proposed payment to unsecured Financial Creditors (non-related parties) within 45 days from the Effective Date. The RA will cover any shortfall in the settlement amount for the proposed payment to unsecured financial Creditors (non- related parties), ensuring a complete and final payment to the Creditors as suggested. iv. Since the liquidation value is not sufficient to discharge the debts of the FC hence, RA proposes Rs. 1,90,00,000/- (Rupees One Crore Ninety Lakh Only) to Unsecured Financial Creditors (non-related parties) listed in the admitted claims as per their respective share in the List of Creditors prepared by RP. Further, this proposal aims to serve as full & final settlement of their respective claims, proportional to their admitted amounts, within 45 days from the Effective Date.
B. Unsecured Financial Creditor- Related Party The Unsecured Financial Creditors of the Corporate Debtor shall be paid an amount of Rs. 10,000/- as full & final

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settlement of their respective claims within 45 days from the Effective Date. i. As per the details provided under Information Memorandum by the RP a claim of Rs. 65,86,68,936/- have been admitted towards the claim received from unsecured FC-Related Party. Since the liquidation value is not sufficient to discharge the debts of the FC hence RA proposes 10,000/-, amount to the Unsecured Financial Creditors- Related Party, in the admitted claims list as per their share in the List of Creditors prepared by RP as full & final settlement of their respective claims in proportion to their claim being admitted by the RP.

Infusion Of Funds Applicant shall infuse funding via the following means: A. The RA proposes to infuse the funds in the form of equity/debt or quasi equity / debt.

The Resolution Applicant shall make payments as follows: The funds shall be infused by the Resolution Applicant in the Corporate Debtor by way of equity or debt as provided in this plan and further as may be decided by the Applicant at its sole discretion, in a manner which is tax compliant and tax efficient based on expert advice.

Note: The Applicant submitted through Brief of Plan filed by him that the RA will pay cash consideration as upfront payment of Rs. 1,86,50,000/- within 45 days from the date of approval of resolution plan from NCLT as proposed in Resolution Plan. However, the same has

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been clarified by the Applicant through the clarification dated 26.08.2024 that, the same has been inadvertently mentioned by the applicant and the same shall stand withdrawn by the Applicant. The payment would be made as per the Resolution Plan.

Statement as to how it has dealt with the interest of all stakeholders including FC, Employees, workers and OC of the CD A. Resolution Applicant confirms that it has considered interests of all stakeholders and has provided for payment / repayment / settlement schedule described above, keeping in view the objective of keeping the Corporate Debtor as a going concern, maximization of value and adhering to the requirements set out under the Code. B. The Resolution Plan does not contravene any of the provisions of the law for the time being in force.

C. The sources of funds will be from recovery from the receivables. The Balance Sheet of the Resolution Applicant and the funds committed by its members is sufficient enough to prove that it has the requisite means of making the payment.

Contingent Fund The RA proposes to reserve the amount of Rs. 20,00,000/-, towards the contingent fund to meet out the expenses of PF /ESI Dues in future, any CIRP cost which overruns the estimated CIRP cost as proposed by the RA in this Resolution Plan and the litigation cost to be incurred by the RA for implementation of this Resolution Plan. Further, the remaining contingent fund upto the Settlement Date shall be provided to the Unsecured Financial Creditors (non-related party) of the CD".

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Adjustment Of Performance Bank Guarantee

A. The total Performance Guarantee amount as stipulated under RFRP is 10% of the Resolution Plan amount. B. The RA proposes to provide such Performance Guarantee ("PG") of Rs. 23,00,000/- (Rupees Twenty- Three Lakh Only) through a fund transfer/Bank Guarantee/any other Mode. C. The RA proposes the release of PG within 45 days of the infusion of the Successful Resolution Application Contribution in accordance with the Clause 1.9.2. of the RFRP by the Plan Monitoring Committee.

26. Management of the affairs of the Corporate Debtor after approval of the Resolution Plan. A. Within 45 days from the Effective Date, the Resolution Applicant shall change the directors of the Corporate Debtor. The Board of Directors of the Corporate Debtor will be reconstituted, with resignation of existing directors (including independent directors, if any), and appointment of new directors nominated by the Resolution Applicant. These newly appointed directors will be experienced professionals, independent from the Corporate Debtor, and fully compliant with Section 29A of the Insolvency and Bankruptcy Code, 2016. B. Hence, the Resolution Applicant will take control and manage the affairs of the Corporate Debtor, and the business will be conducted by the new management appointed by the Resolution Applicant. Further the RA will continue the operations of the CD. C. However, until the Cut-Off Date, the Resolution Applicant assumes that the Chairman of Monitoring Committee will continue to run the affairs of the

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Corporate Debtor without any involvement from existing directors, promoters, or shareholders. D. The Resolution Applicant will appoint the statutory, internal, cost & secretarial auditors, as may be applicable of its choice, subject to compliance with the Applicable Laws. E. The Resolution Applicant or any of its nominee will become the new promoter
of the Corporate Debtor. Relevant applications will be made to the Ministry of Corporate Affairs (MCA) and other Departments and Authorities to declassify the existing promoters as promoters of the Corporate Debtor.

4.1 Control of Subsidiaries:

A. The Subsidiaries of the CD, if any, shall be under the control of new management of the CD appointed by the RA. RA may, post evaluation of the business potential of the subsidiaries, decide to liquidate / wind up / de-merge / sell or transfer the shares of such Subsidiaries and may change existing management of the Subsidiaries (exercising its shareholder rights over Subsidiaries), subject to Applicable Law.

Clause 4.2 of the plan states that the RP shall be released of his duties and
responsibilities and COC shall be dissolved w.e.f from Effective Date. Further Clause 4.3 states that the RA shall cause the CD to continue as going concern and operate in its course of business upon implementation, w.e.f from effective date the management of affairs of CD would be vested with restored Board appointed as new management by RA. However during the transitional period between Effective Date and Cut-off Date , the operations of the CD will be with Chairman of Monitoring Committee (MC), During this period the Chairman of MC will ensure for the proper handover of the CD to the RA, after due settlement of the payment proposed to Creditors. Further, Clause 4.7 read with Clause 6.3 of the plan specifies about the Restructured Capital of the CD.

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4.8 Other Infusion / Investments A. In addition to the amount stated above, notwithstanding anything contained in the Companies Act, 2013 read with rules made there under and / or such other provisions under any other applicable law, Resolution Applicant and/or its nominee(s) and/or Affiliate of the Resolution Applicant or its Associates shall infuse / arrange the required funds as per the requirements of this plan within committed time frame in a tax compliant structure in the form of unsecured subordinate loans / Equity / Preferred Equity as per its sole discretion. B. The aforesaid issuance of Equity / Preferred Equity shall not require the consent of any of the creditors of Corporate Debtor or approval of the shareholders of Corporate Debtor or any other authority, as the Resolution Plan upon being approved by the NCLT, Principal Bench, New Delhi, shall be binding on Corporate Debtor and its stakeholders (including its creditors and shareholders). The approval of this Resolution Plan by the Hon'ble Adjudicating Authority shall be deemed to be an approval for the purpose of issuance of said Equity / Preferred Equity under the applicable provisions of the Companies Act, 2013 read with rules made there under and / or such other provisions under any other applicable law. 27. Term of Resolution Plan and it’s Implementation and Supervision

From the Effective Date till the Settlement Date: A. From the Effective Date till the Settlement Date, a Monitoring Committee shall be constituted which, will comprise of One representative of the Resolution Applicant, whose remuneration shall be Nil, One representative of the unsecured Financial Creditors, whose remuneration shall be Nil and a Qualified Insolvency Professional / Resolution Professional who shall be entitled for a fee in consultation with the Resolution Applicant for monitoring and supervision of the implementation of the Resolution Plan. ("Plan Monitoring Committee"). B. The Plan Monitoring Committee shall be constituted within 5 (Five) days of the Effective Date. C. The qualified Insolvency Professional / Resolution Professional will be the Chairperson of the Plan Monitoring Committee. The Chairperson shall have the casting vote.

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D. The Plan Monitoring Committee shall supervise the implementation of the Resolution Plan. E. On and with from the Settlement Date, the Plan Monitoring Committee shall stand dissolved and all its powers shall cease to exist.

F. With effect from the Effective Date, the Board of Directors of the Corporate Debtor shall be reconstituted with the Resolution Applicant's Nominees, who shall be qualified persons in terms of the Companies Act, 2013 and eligible under Section 29A of the Code and necessary forms in this regard will be filed with the ROC within 30 days of the Effective Date. The new Board will be professionally managed by experienced persons. The existing Board of Directors/ Key Managerial Personnel (KMPs) / Resolution Applicant, as the case may be, shall be under the obligation and shall cooperate in filing of necessary e-forms & returns for the appointment of directors nominated by the Resolution Applicant on the reconstituted Board. G. Existing directors and the Key Managerial Personnel (KMP) of the Corporate Debtor shall deem to have ceased / resigned to be Directors / KMP, as the case may be from the Effective Date and necessary forms in this regard will be filed with the ROC within 30 days of the Effective Date. Further, whole-time key managerial personnel, if required, will be appointed as per the requirements of the Companies Act by the Corporate Debtor / Resolution Applicant. H. With effect from the Effective Date, the Corporate Debtor shall be managed by a reconstituted management / Board comprising of Directors nominated by the Resolution Applicant as mentioned aforesaid. The Resolution Applicant will appoint such number of directors on the board of the Corporate Debtor, including independent directors and KMPs, as may be necessitated, or required by the Applicable Law. The directors on the reconstituted Board shall be appointed, without any additional approval from the shareholders, and will be look after the day-to-day operations of the Corporate Debtor and shall be bound as per Applicable Law to protect and preserve the assets of the Corporate Debtor. I. The entire management control of the Corporate Debtor will vest with the Resolution Applicant, for the management of the day-to-day affairs. At the same

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time the Resolution Applicant realizes that given the complexities of the business like this, the Resolution Applicant will evaluate the need of human resource to revive the Corporate Debtor and at its option may use any existing employee / technical team member / management personnel for the same. However, until the Cut-Off Date, the Resolution Applicant assumes that the Chair man of Monitoring Committee will continue to run the affairs of the Corporate Debtor without any involvement from existing directors, promoters, or shareholders. J. The Resolution Applicant reserves its right to appoint the statutory, internal, cost and secretarial auditor, as may be applicable, of their choice, subject to Applicable Law. K. In order to successfully drive the operations of the Corporate Debtor, the team of experts of relevant field will work under the direct supervision and control of the new management. L. The Resolution Applicant/ its Affiliates / its Associates shall be the new promoter of the Corporate Debtor and relevant applications shall be made to all the relevant authorities, for declassification of existing Promoters as promoters of Corporate Debtor, if required. Existing Employees A. As per the information provided in the IM, the SRA understand that as on the current date, there are no workers and employees of the Corporate Debtor. However, on review of the information available, the Resolution Professional has received claims from erstwhile workers of Corporate Debtor, which will be settled in terms of Chapter 8 of this Resolution Plan.

28. Feasibility and Viability of Plan A. The Resolution Plan proposed by Resolution Applicant is in compliance with the Code and the Regulations made thereunder. Under this Resolution Plan, the Resolution Applicant has proposed to undertake and re-organize the business of the Corporate Debtor. Further the Resolution Plan also provides for the settlement of dues towards all the Creditors / Stakeholders in a manner which has been elaborated in detail in the Financial Proposal (forming part of this Resolution

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Plan). B. The Resolution Plan provides successful re-organization of the business of the Corporate Debtor and deals with discharge of all dues and claims of Financial Creditors, Operational Creditors, and other creditors (including the Statutory Authorities). This Resolution Plan provides for best realisation for all stakeholders in a viable and feasible manner. C. The Resolution Plan also states the process of its implementation and management to make it feasible and viable.

29. No Contravention of any Law A. The RA at clause 9.9 of the plan stated that this Plan is not in contravention of the provisions of any Applicable Law in India prevailing as on the date of this Resolution Plan.
    B. Further at Clause 9.6 of the plan, it is stated that the RA has capability to implement the plan and Clause 9.7 of the plan states that the RA is eligible under Section 29 A of the Code. C. Clause 9.8 of the plan, the RA has undertaken the veracity of the information provided under the present plan.

30. Statement of Failure of Implementation of Resolution Plan
    A. The Resolution Applicant at clause 9.10 of plan undertakes that neither the Resolution Applicant nor any of its related parties has failed to implement or contributed to the failure of the implementation of any resolution plan approved by the Adjudicating Authority at any time in the past.

31. Compliance of Regulation 37 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016

A. Transfer of all or part of the assets of the Corporate Debtor to one or more persons;

All the assets of the Corporate Debtor shall remain with the Corporate Debtor. None of the assets of the Corporate Debtor is proposed to be

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transferred in this Resolution Plan. B. Sale of all or part of the assets whether subject to any security interest or not;

All the assets of the Corporate Debtor whether subject to any security interest or not shall remain with the Corporate Debtor. None of the assets of the Corporate Debtor is proposed to be sold in this Resolution Plan. C. Restructuring of the Corporate Debtor, by way of merger, amalgamation and demerger;

No, as such restructuring of the Corporate Debtor, by way of merger, amalgamation and demerger has been proposed under this plan. D. The substantial acquisition of shares of the Corporate Debtor, or the merger or consolidation of the Corporate Debtor with one or more persons;

The existing equity shares of the Corporate Debtor will be extinguished in full and new equity shares will be issued to the Resolution Applicant in the manner mentioned in Chapter 4 of the Plan. E. Cancellation or delisting of any shares of the Corporate Debtor, if applicable;

Cancellation of shares of the Corporate Debtor has been provided in the Chapter 6 of the Plan. E. Satisfaction or modification of any security interest;

As mentioned, and detailed in Chapter 8 of the Plan, the security documents of the Corporate Debtor, as on the insolvency commencement date of the Corporate Debtor held with the Financial Creditors will be released from time to time, wherever required for the successful implementation of this Resolution Plan as per the provisions of the Code. No action whatsoever, shall be taken by the financial creditor against the

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Corporate Debtor unless there is any default in the payment terms as committed by the Resolution Applicant in this Resolution Plan. Note: Herein we observe that that there are no Secured Financial Creditor, hence question of release of security of Corporate Debtor, does not arise. In such facts and circumstances, clarification was sought from the Applicant vide order dated 20.08.2024, wherein the applicant has vide clarification date 26.08.2024 clarified that there are no claims received from Secured Financial Creditor and there are no subsisting charge standing against the CD, hence the question of release of security does not arise and the applicant states the same to be a typographical error and withdraws the clause from the plan vide Affidavit cum Undertaking dated 23.08.2024. Affidavit cum Undertaking dated 23.08.2024 is annexed with clarification as Annexure-C.

F. Curing or waiving of any breach of the terms of any debt due from the Corporate Debtor;

Not Applicable. G. Reduction in the amount payable to the creditors

The Resolution Applicant proposes for takeover of the Corporate Debtor as a going concern by paying the amount as specified in Chapter 8 of the Resolution Plan. H. Extension of a maturity date or a change in interest rate or other terms of a debt due from the Corporate Debtor;

Not Applicable. I. Amendment of the constitutional documents of the Corporate Debtor;

As per the terms under this plan. J. Issuance of securities of the Corporate Debtor, for cash, property, securities, or in exchange for claims or interests, or other appropriate

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purpose;

Not Applicable. K. Change in portfolio of goods or services produced or rendered by the Corporate Debtor;

The Resolution Applicant does not propose for any change in goods or services produces or rendered by the Corporate Debtor. L. Change in technology used by the Corporate Debtor

The Resolution applicant does not propose for any change in technology used by the Corporate Debtor as such under this plan. However, to ensure the running of business of the Corporate Debtor as going concern and for smooth running of its business operations, technology used by the Corporate Debtor may be upgraded from time to time. M. Obtaining necessary approvals from the Central and State Governments and other authorities. Regulation 37(l) of the CIRP Regulations provides that a resolution plan may provide for the measures required for implementing it, including but not limited to obtaining necessary approvals from the Central and State Governments and other Governmental Authorities.

32. Compliance of Section 79 of Income Tax Act, 1961 
    

It is stated in the Plan that prior to submitting the Resolution Plan for approval to the NCLT, RP shall send an intimation to the Jurisdictional Principal Commissioner or Commissioner of the Income Tax regarding the approval to the Resolution Plan by the COC which includes the Corporate Debtor's entitlement to carry forward Income Tax Losses and Unabsorbed Depreciation, irrespective of any changes in the Corporate Debtor's shareholding resulting from the approved Resolution Plan as per the provisions of Section 79(2)(c) of the IT Act, 1961.

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33. Objections

While considering the application for approval of Resolution Plan there is an interlocutory application i.e. IA NO.1313/2024 filed by the SRA i.e. M/s AKB Ventures Private Limited seeking impleadment of Income Tax Department as a party in plan approval application. The application was heard and allowed and the Income Tax Dept. appeared and filed its reply/objection to the plan I.A. 07/2024. The prayer in IA NO.1313/2024 is extracted below: a. Pass necessary direction(s)/order(s) impleading Principal Commissioner or Income Tax in IA 07/2024 pertaining to Application seeking approval of resolution plan; b. To pass any other order that this Hon'ble Tribunal may deem necessary and just in the facts of the present case.

34. It is stated by the dept. that as on date the outstanding demand of the Income Tax is Rs. 3,34,73,030/- .The stand of the Income Tax Dept. is that the applicant has offered only Rs. 3,00,000 to the dept. as proposed to Rs. 4,60,28,991/- being the claim amount of the operational creditors (statutory dues) being 0.65% of the total operational creditors. However, Rs. 1,90,00,000/- has been offered against the claim of the other unsecured financial creditor (non related party) of Rs. 3,58,84,450/- which is 52.9%. The counsel relies upon State Tax Office v. M/s Rainbow Paper Limited, Civil Appeal No. 1661 of 2020 to state that other financial creditor cannot secure their own dues at the cost of statutory dues.
35. Further it is stated, that as per the Resolution Plan the, RA is seeking requisite approval to carry forward losses and unabsorbed depreciation of Corporate Debtor to the tune of Rs. 73,03,16,497/- and Rs. 11,26,99,051/- as per provisions of Section 79(2) of the Act, which means that RA will be claiming tax exemption to the tune of Rs. 26,30,20,850/- (30% tax and cess on Rs.

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84,30,15,548 over a period of time , if the company after resolution earns profit in futures. Further it is stated that only a sum of Rs. 3,00,000 is being offered against Rs. 4,60,28,991/- and in addition the Dept. will have to forego a further amount of Rs. 26,30,20,850 in coming years on account of carried forward losses and unabsorbed depreciation, the amount offered is not at par with the statutory dues and is not in accordance with the spirit of express provisions of Income Tax Act, 1961. We have heard counsels on both sides.

Analysis & Findings

a. On hearing the submissions made by the Ld. Counsel for the Resolution Professional and perusing the record, we find that the Resolution Plan has been approved by the CoC with 100% 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. The objection raised by the Income Tax Dept. regarding payment of Rs. 3,00,000 as statutory dues cannot be sustained since Compliance of Section 30(2)(b) has been done.
b. However the relief and concession as sought for in the plan w.r.t carry forward of income tax losses and unabsorbed depreciation along with other relief as enumerated under clause 10 of the Resolution Plan shall be dealt by appropriate authorities strictly as per law. Thus, it is ordered that the reliefs, concessions and waivers as sought by the Successful Resolution Applicant will be dealt with strictly as per law. c. 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 IBBI (Insolvency Resolution Process for Corporate Persons) Regulations,2016.

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ORDER

1. Subject to the observations made in this Order, the Resolution Plan of Rs. 2,30,00,000/- (Rupees Two Crores and Thirty Lakhs Only) is hereby approved. The Resolution Plan shall form part of this Order.
2. 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.
3. The Moratorium imposed under section 14 of the Code shall cease to have effect from the date of this order.
4. 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.
5. Accordingly, IA No.07(PB)/2024 & IA No.1313(PB)/2024 filed for seeking approval of resolution plan and seeking impleadment of Income Tax Dept. is allowed.
6. The liberty is hereby granted for moving any appropriate application, if required in connection with the implementation of this Resolution Plan.
7. A Certified copy of this Order shall be filed by the Resolution Professional with the Registrar of Companies, NCT of Delhi.
8. 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.
9. 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.

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10. 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.

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

12. To summarise: a. IA-07/2024 filed for seeking approval of resolution plan is allowed and disposed of . b. IA-1313/2024 seeking impleadment of Income Tax Dept. is disposed of. c. CP (IB) No.-536 (PB)/2022 is disposed of in above terms. d. File be consigned to record storage (current).

               Sd/-  
    

(RAMALINGAM SUDHAKAR) PRESIDENT

Sd/- 

(AVINASH K. SRIVASTAVA)

MEMBER (TECHNICAL)