Allowed

In the matter of Vardhman Chemtech Limited Ca No. 490-2019 & lA No.42-2020 in Cp (lB) No. 2-Chd-CHD-2018

NCLT12 Jan 2021

Case brief

AI extract

What is this about?

The Tribunal approved the Resolution Plan of the Corporate Debtor, submitted by DPB Antibiotics, which had received 100% voting share from Financial Creditors. The Court held that issues regarding tax loss carry forwards are to be decided by tax authorities, not the Tribunal, and approved the plan subject to the plan being binding on stakeholders.

What did the court decide?

Order for approval of Resolution Plan approved by CoC; Moratorium lifted; Plan binding on all stakeholders.

In the matter of Vardhman Chemtech Limited Ca No… — Insolvency and Bankruptcy | NCLT (2021)

¶1

THE NATIONAL COMPANY LAW TRIBUNAL CHANDIGARH BENCH. CHANDIGARH

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(through web-based video conferencing platform)

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eA No. 49012019 & lA No.4212020 In

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CP (lB) No. 2/ChdlCHDl2018

¶5

Under $ections 31 of the Insolvency and Bankruptcy Code, 20'16 read with Regulation 39 of the Insolvency and Bankruptcy Board of lrrdia (lnsolvency Regulatiorr Process for Corporate Persons) Regulations, 201 6.

In the matter of:

Allahalrad Bank

Financial Creditor

Versus

M/s. Vardhman Chemtech Limited

¶11

. Corporate Debtor

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And^{in the mattel of CA No. 490/2919_:-}

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Committee of Creditors

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represented through Chairnran of Committee Hemanshu Jetley

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Resolution Professional in the matter of Vardhman Chemtech Limited (Corporate Debtor)

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(Undergoing Corporate Insoh/ency Resolution Process)

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. Applicant-Resolution Professional

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And in the matter of lA No. 42l&Q2Q:-

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Committee of Creditors

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represented through Chairman of Committee Hemanshu Jetley Resolution Professional in the matter of Vardhman Chemteclr Limited Corporate Debtor)

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ndergoing Corporate Insolvency lution Process)

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. .. Applicant-Resolution Professional

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No. 490/20'19 & lA No. 4212020 ln

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CP (lB) No. 2tchdlcuAza1g

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Orcler cleliverecl on: 12".01 "2021

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Coram: HON'BLE MR. AJAY KUMAR^{VATSAVAYI, MEMBER (JUDICIAL)} HOII'BLE MR. RAGHU NAYYAR, MEMBER^(TECHNICAL)

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Present throucth Video Gonferencinq:.

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Forthe ResolutionProfessional:	1.Mr. G.S. Sarin, PractisingCompany Secretary
	2. Mr. Krishan Vrind Jain,Chartered Accountant
FortheResolution Applicant	Ms. Pooja Mahajan, Advocate
FortheIncomeTaxDepartment:	Mr.YogeshPutney, SeniorStanding Counsel

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Per: Aiav Kumar V3tsAvqyi. Member^(Ju.diciatl

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ORDER

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!A^No.4212020.

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This application has been filed by the Resolution Professional for placing on record additional documents/ information in CA No. 490/2019. The same is taken on record and lA 421202A stands disposed of.

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CA No. 49012019

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The present application is filed by the Resolution Professional^(RP) under Section 31 of the Insolvency and Bankruptcy Code, 2016^(hereinafter referred to as tlre Code) read with Regulation 39 of the Insolvency and Bankruptcy Board of India (lnsolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred tooas the Regulatiorrs) seeking sanction of resolution ,zffip|andated15'06.2019a|ongwithaddendumsdated25.06.2019and1o.12.2019 l'r?!',^r,t'-o,,^7.." .^{as approved in the meeting of the CoC held on 20.06.2019.} / l,\ r:- .,.,.;,:,1!^'{. ,.,\ .'t-..it ,^{''t'i;;,';: ";} 'l-,\ f1 b^',,^{U tlii'';'*- ',.,.,-.',,:.:;} '- iiil t. ").. i. .l:.', s ./,i i: i! .. 4i,,^";"r .;.'i.,i't'/ ,', it ,,,,,f,.,r;j;,i;i.1/^{cA No' 4e0/20'1e& lA No42t2a20} '.+.._!rUt,?,2-- up (tB) No. 2tchdtu+Ut2ull

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Z. lt has been submitted that the^{insolverrcypetition was filed by the} Financial Creditor i.e. Allahabad^{Bank under Section 7 of the Code for initiationof} Corporate lnsolvency Resolution^{Process (CIRP)in the case of M/s Vardhaman} Chemtech Ltd.^(Corporate Debtor)^{and the samewas admittedvide order dated} 25.09.2018, initiating the CIRP of the Corporate^{Debtor, irnposingmoratorium} under Section 14 of the code and^appointirrg Mr.^{Manoj Sehgalas Interim} Resolution Professional (lRP). lt is subrnitted that within three^{days of the} appointment order, tlre IRP issued a^public announcement^{as per Regulation6 of} the Regulations read with Section 15 of the Code^{in Form A in two newspapersi.e.} Financial Express, an English newspaper and Punjabi Jagran, Punjabi edition^both dated 27 .09.2018 thereby inviting claims from the creditors of the Corporate Debtor as envisaged in the Code.

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lt is submitted that in pursuance of the public announcernent, claims were received from the Financial Creditors which were verified and after collation, the IRP constitr-rted the CoC as^per the^provisions of $ection 21^r>f the Code. It^is stated that the CoC was cohstituted with three secured Financial Creditors, the details of rvhich are as follows:-

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S.No.	Nameofthe Financial Creditor	Amount Claimed	Amount Aclmitted	Voting $hare%
.l I	Allahabad Bank	1,17,05,67,246	1,17,05,67,246	28.42%
	StateBank oflndia
z	StateBank ofPatiala	1,97,97 ,17,774.59	1,97,97 ,17,774.59
	StateBank of Hvderabad	31,25,31,51954	31,25,31,519.54	55.640/o
J	lDBlBank	65.64.79.144	65,64,79,144	15.94o/o

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CA No.490/2019 & lA No. 4212020 tn CP (lB) hlo. 2/Chd/CHD/2018

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lt is submitted that the IRP^{appointedtwo Valr:ers to determinetlte} liquidation value of the corporate debtor^{in accordancewith Regulation 35 of the} Regulations. Thereafter, a thircJ^{Valuerwas also appointeddue to substantial} difference in the reports^{presented by the Valuers earlier appointed and on the} basis of their reports, the fair value and licquidation^{valueas per Regulation 35 are} {23.38 crores and {.14.02 crores respectively.

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The CoC in its first meeting held on 29.10.2018 resolved to continue the IRP as Resolution Professional (RP) of the Corporate Debtor. Further, in the 2nd meeting of the CoC heid on 03.12.2018, the CoC approved the Eligibility Criteria along with the format of Evaluation Matrix and also gave its approval for publication of Form G for inviting Expression of Interest (EOl).

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lt is also stated that the Expression of Interest was called from eligible resolution applicants as prescribed in tlegulation 36,{ of the Regulations by publishing Form G in^"Amar Ujala" in Hindi, "l3usiness Standard" in English and "Punjabi. Jagran" in Punjabi datecl 05.12.2018.

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lt is submitted that after publication of Form G, the EOI have been received from only two Prospective Resolution Applicants and therefore, with a view to invite wider participation, the CoC in the 3rd meeting held on 08.01 .2019 decided to publish fresh Form G and tlre same was published on 19.02.2019 inviting EOI in the same newspapers as earlier and the last date for submission of the EOI was fixed as 11 .03.2019. Copy of publication of Form G on 20.02.2019 is ed as Annexure A-14.

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CA No.154 of 2019 was filed by the RP under Section 12(2) ot the lBC, for extension of the CIRP tinte period by a further period of 90 days and the

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same was allowerl vide order^{dated15.03.2019. A copy of the order is part of} document at Annexure A-13^{of tlre paper book.}

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g. lt is submittecl that in response^{to the publication of fresh Form G, six} participants submitted their {Ols and accordingly^{request for submissionof the} resolution^plan (RFRP) was sent to all tlre^{prospective resolution applicants. Also,} the last date for submission of resolution^{plan was extended to 23.04.2019 as was} approved by the CoC.

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, lt is submitted tlrat out of total 6 prospective resolution applicants, the RP received resolution^plan from 3^prospective resolution applicants in the^8th CoC meeting dated 02.05.2019 namely 1. KMG Industrial Traders Pvt. Ltd.2. Jatalia Global Venture Limited and 3. DPB Antibiotics Limited for consideration of the CoC. 11. lt is submitted that the resolution plans were opened and^presented to the CoC members in the 9thmeeting of CoC on20.A5.2019. The CoC members advised the resolution applicant DPB Arttibiotics Pvt. Ltd. to improvise and revise the resolution plan. Accordirrgily, the saicl resolution applicant subrnitted the revisecJ resolution plan and the same was presented to the CoC menrbers in its 1Oth meeting on 15.00.2019.

¶50

In the 11th meeting of the CoC members on 20.06.2019, the members principally agreed on tlre revised resolution plan of M/s. DPB Antobiotics Private Limited. The RP conducted the e-voting on 20.06.2019 and tlre revised resolution plan was approved by 100% voting by the members of CoC.

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lt is submitted that as the Resolution Plan was approved in the 11th -7fi1p::../(.ritmlrq,}'<sup>CoC meeting held on 20.A6.2019 and the period of 270 days expiredon ,,/.t,,.'_::-t ^,',\tel^i{ 6',Y9}1\ /ifLir'-i;'"',.;.l'$i").u tz.oo.zot9,^{an interim application bearingCA No.49112019was filed by the} ,,t,"rF ,,,,:f# U ii ,i ,-?', ,l'rlilii,^{{ j'A"rotrtion} Professional on J9.06.2019^{seeking to exclucle the time consumedin} ]:r:.^{-t. '';:i.li':.i.} ,. ,// . Pllrle^''".i:',// t\iggg}lz cA No.4e0l201ne No.4e0l201ne & tA No. 42/2020No. 42/202042/2020

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cA No.4e0l201ne No.4e0l201ne & tA No. 42/2020No. 42/202042/2020

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CP (lB) No. 2tChdtCHDl2Ols

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preparation of CA No.490/2019 for filing an^{application under Section 30 of the} Code for approval of the^{plan.CA No.490/2019 was filed on 28.06.2019.Vide order} dated 04.09.2019,^{passed in CA No.491 of 2019,tlre delay of seven days was} condoned.

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In terms of Section 30^(6), of the Code,^{readwith Regulation 39, of the} CIRP Regulations, 2016, the resolution^{professional has submittedthe Resolution} Plan dated 15.06.2019 along with addendum^{1 dateci25.06.2019and addendum} 2 dated 10.12.2019 for seekirrg an order^{under Section 31(1)of the Code, for} approval of the resolution^pldn,passed by the^{committeeof creditors under sub-} section (a) of Section 30 of the Code.

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lt is further stated tlrat revised affidavit of Mr. Devang Ajmera, authorised representative of DPB Antibiotics Private Limited, the resolution applicant regarding its eligibility under Section 29A read with Regulation 38 of lBC, 20'f G is at Annexure A-7 of Diary No. 781 datecj 28.0i.2020. Also tlte RP has filed compliance certificate in revised Fornr Fl (Annexure A-7 of Diary No. 781 dated 28.01.2020) as required under l&B Code (Amendment) Ordinance 2018 No.6 of 2018 dated 06.06.2018. lt is certified by the RP in^para 4 of revised Form H that the resolution plan complies with all the^provisions of the Code, CIRP Regulations and does not contravene any of tlre provision of law for the tirne being in force and that the resolution plan stands duly approved by the 100% of the voting share of the financial creditors.

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lt is submitted that the CoC while accepting the bid had taken care of all the provisions of the Code and the Regulations. lt is^prayed that the^application be allowed and the resolution^plan as approved by the CoCⁱⁿ the^{CIRP of the} te debtor be approved

¶59

We have carefully considered the^{submissions of the learnedcounsel} for the RP and the learned Senior^{Counsel for the resolution applicantand have} also^perused the record.^I

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The corporate debtor was incorporated on^{21.08.1996and as} discussed above, the CIRP^{proceedings were initiated by orderdeliveredon} 25.09.2018. The^present application is filed^{for approval} of^{the resolutionplan} submitted by M/s. DPB Antibiotics Private Limited.^{The approval has been sought} under the^provisions of Section 31 (1) of the Cocie.

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We may first of all state that after receipt, verification and collation of claims as discussed above, the IRP constituted the CoC as^per the^provisions of Section 21 of the Code. The details of the financial creditors, the distribution of voting share among them and the position of voting for the resolution^plan is as under (para no.4 of revised Form Fl - Annexure 4 Diary No. 781 dated 28.01.2020)'-

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st. IVo.	NamesfCreditor	Votittg $/rare (%)	VotingforResolutionPIan (VoteclforIDissentedI Abstained)
1	StateBankoflndia	55.64%	VotedForResolutionPlan
2	AllahabadBank	28.42%	VotedForResolutionPlan
J	lDBlBank	15.94%o	VotedForResolutionPlan
	Total	1AO%

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The details of stakeholders under the resolution^{plan given} in^para 7 of

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Form H (Annexure 4 Diary No. 781 dated 28.01.2020) is as follows:^-

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			Am	ountmRs.Crorcs
Sr. No.	Categoryof Stakeholder*	Amount Claimed	Acl Amoulrt \dmittecl	Amount Providedtothe ArnountClaimed
1	DissentingSecured Firrancial Creditors

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z	Other Secured Financial Creditors	411.93	411 93	27.54	6.6850/o
3	Dissenting UnsecuredFinancial Creditors
4	OtherUnsecured Financial Creditors	297.03
5	Operational Creclitors
	A.Statutory Authority
	PFAuthorityagainst Village NimbuaPlant	0.184	0.184	0.184	100%
	PFAuthorityagairtst D-6, IndustrialFocal pornt	0.17	a17	0.17	100%
	Other Statutory Authorities	307.00	307.00	0.68**	0.22o/o
	B.Workmen	0.19	0.18	0.18	100o/o
	C.Employees	0.89	0.87	0.86	96.63%
	D. Other Operational Creditors	13.78	13.78	0.20	1A5%
6	OtherDebtsanc Dues
	Total	403',t.174	734.114	29.814	2.89%

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*Vide Addendum dated 10.12.2019 the resolution applicant has proposed full payment for PF dues in respect of Nimbua Plant of the corporate debtor thereby increasing the antount of resolution amount t by said amount.

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*nAt the 10It' COC meeting held ort 15.A6.2019, the RP disclosed that Edelweiss ARC had filed its clainr against the corporate^{debtor which} was submitted after the expiry of last^date to subrnit^{clairns due to which} RP had requested thent to withdraw their^{claim relvinq ut)on Requlatiotr} 12 of the IBC (CIRP) Regulatiotrs, 2016).^{However,pursuant to the recent} judgments given by Principal Bench of NCLT stating that the above Regulation is directive in nature and the delay in suhmission^{of claint} shauld he condoncd and RP shoulcl accapt tha claim^{evan after 90 days} uf CIRP dale af|et wltith RP ltad^provided updated^{list of claimsto the}

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r,/.\ l!0. 4!u/lu lu & l/\ hJrJ^,lltlh)n n CP (lB) No. 2lChdlCHD/2018

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resolution applica,rt^{and the resolutio,,appticanthas agreed to settle the} claim subtnitted by^{EctalweissARCirr theirresolutionplan. Accordingly,} the resolution applicant^{proposed an amoutrfof Rs.O.03 crores to be} payahte to Edelweiss ARC in the resolution Stlan.^{Copy of minutesof the} 1}th eOC meeting is attached^{as AnnexureA19 of the application.}

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The compliance of the resolution^{plan has been given in paraNo.9 of}

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revised Form H (supra) as follows:

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Section ofthe CodeI Regulati ottNo.	Requirement with respecttoResolution Plan	CIauseand Relevant Pageof ResolutionPIan	AnnexureNo.of the Paperbook	Compliance(Yes/ No)
25(2)(h)	Whether the ResolutionApplicant rrreefstltecriteria approvedhytheCOC Iraving regardtotlte complexityandscale of operationsof IrusinessoftlteCD? Thecriterionforthe resolution applicantwas that theapplicantshoulcl have netv,rorthaf Rs.75 crores.Theresolution applicantmeefsthe criteriaandsubmitted certificateofnetworth along withrequestfor EOt.	Yes, asperEligibility criteriaatPagerrc. 16i6andntinutesof the sixtltCOC meetingatPagerro. 164-174 oftheinstant application.	Atrnexure414 andAnnexure A15oftheinstant a1:plication respectively.
Section 294	Whether the ResolutiottApplicant iseliqibletosubmit resalutiottplanasper finaltistofResolution ProfessionalorQrder, any, ot tlte Iicalirtg thoritY2	Yes,as peraffidavit onPagerto.l1B-1'19, Ellgll-tllliyulLatlual Pageno.166andas perthe finallistrtf PRAsatPageLu.	Annexure47, A14and416of llrc lttslattl application respectively.	I I

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o 49tl/2tJ19. & lA No. 42l2U2U In

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CP^(lB) No. 2tChdlCHDt2jlB

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(

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	r	Theresolutionapplicant lseligibletosubmit resolution^planas^per thecriteriafixedbythe COC.	175oftheinstant application.
	Section so(1)	Whether the ResolutionApplicant hassubrnittedan affidavitstatingthatit iseligible? The resolution applicants have submittedanaffidavit statingthattheyare eligibleto submit resolution^plan.	Yes,asperaffidavit onPage no.1,lB-119 of the instant application.	AnnexureA7 of the instant application.	Yes
	Secfion 3o(2)	Whether ResolutionPlan: tlte (a)providesforthe payment of insolvency resolutiort processcosts? Theresolutionplan providesfor theupfront Payment ofunpaidCIRP cosfas onthe date of approvalofplanifthe same couldnotbe paid from the cash flows of the company. "Theunpaid CIRPCtssl asproposedunder resolutionp/anisRs. 0.25 crores."	Yes,atPageno.3i andPageno.39-40o the instant application.	AnnexureA2of the instant application.	Yes
A;ff@ $""#+'i# 7*llf,,#'+ 1vu^{r" trlr'r1111}		<br>,r>6 ,. 'I q. :r. {$ N --#	(b)providesforthe paymentofthedebfs af operational creditors?	Yes,at Pageno.37 andPageno.44-46 uf IltY itrclattl application.	AnnexureA2of the instant appliuaLiutt.
,^-:;'Sq;6tff ",,,..i:r4i,;rr.,1,,,O,c,$		6r CA N	o.490/20'10 & lA No.'1212020 ln

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CP (lB) No. 2lChdlCHD/2018

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(

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1.1.

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	"Accordingto the
	provisiortsofSection30
	oftheIBCreadwith
	Regulation3Bofthe
	lnsolvency and BankruptcyBoardof
	lndia (lnsolvency
	Resolution Processfor
	CorporatePersons)
	Regulations,2016,the
	liquidationvaluedueto
	operationalcreditors shallbeprovidedbefore anypayment to financial creditor.
	lnthepresentcase,the
	Claimsofworkmen's
	andsecuredfinancial
	creditorsaremorethan
	fhe assessedliquidation
	value,hencethe
	liquidation value
	availabletoallother
	operationalcreditors- stakeholdershallbe "Nil".
	However,theresolution
	applicanthasproposed
	Rs.2.06Croresas
	paymenttoOperational Creditorswhichshall be paidupfront,inpriority over FinancialCreditors, within30days fromthe Effective Date.
	ThepaymentofRs.2.06
	croresis to be distributedasfollows-
fi t"i ,y'#'4	Rs.0.BOcroresis
+ ""	proposedtobepaidto
4$;;	theemployees, Rs.1.00
*$	croresisproposed tobe
;Fft	paidtothestatutory

¶84

CA No.490/2019 & lA No.^4212020 ln

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CP^(lB) Nlo. 2/Chd/GHn/?018

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(

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authoritiesandRs.0.20
croresis^proposedtobe paidtotheoperational creditorsbeingsuppliers ofgoods andservices.
(c)providesforthe managementofthe affairsof the Corporate debtor?	Yes,atPageNo5B- 60oftheinstant applrcauon.	AnnexureA2of the instant application. Yes
Onthedayofissuance of NewEquityS/iaresas mentionedaboveand simultaneouslywiththe issuance,theentire Equity Shares 30768603 ofthe Company,held by entireerstwhile13 shareholdersshallbe reducedto13equity shares. Postreduction these 13 equityshares shallbecompulsorily lransferredtoDPB AtttibioticsPvt.Ltd.at face valueofINR10ner share.
On andfromNCLT ApprovalDate,the ResolutionApplicant shalltakeoverthe management control of theCompany,including rlsbusinessactivities.
While the
itrtpletnentatiottofthe Resolutior"tPlanshall happeninparallel,thc boardofdirectorsofthe Companyshallbe reconstitutedanthe ClocingDatc andthoyt
all take upthe
*iltililie,srf lltt',
yto dayaffairsofthe

¶89

49012019 & lA No. 4212020 ln

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(lB) No. 2/Chd/CHD/2O18

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(

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	Company and manageit initsrcgularcourse. Erstwhile promoterswill notbe^'incontrolor promotersin the Companywitheffect fromNCLTApproval Date,althoughthe EquitySharesmightbe held bythem (13 shares outof100000 shares) The erstwhile Boardof Directorsof the Companyshallremain suspendedandthe ResolutionProfessional (withCommitteeof Creditors)shallcontinue tomanage the affairsof theCompanyuntilthe ClosingDate.Onand fronttheClosingDate, allthee*istingDirectors, shallvacatetheir respectiveoffices.On theClosingDate, anew BoardoftheCompany shallbeformedbythe Resolution Applicantsin themannerprovidedin ChapterVlof Resolution' PIan.
ir-'=- "ul'tri<br>ti,.;),'tf'.<br>.:7aH<br>ii, :, 's J*rI	(d)providesforthe implementationand superuisiortofthe resolution plan? lnordertoensurcthat theResolutionPlanis implemented in accordancehereofand that theohtiqations undeLtalenherein^are adlrercdto inletterand	Yes,atPageNo63- 6i7oftheinstant application.	AnnexureA2of the instant application.	Yes

¶94

(

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	spirit,an^aPProPriate monitoringagencY/entitY shallbeconstituted ("Monitoring AgencY")on theNCLT Approval^Date. ThemonitoringagencY shallcomprise^as follows- 1.Onerepresentative eachofthe3Financial Creditors. 2. TheResolution Professional, Mr.HemanshuJetleY, registeredlnsolvency Professional, membershipno. tBBt/tPA-001/lP- P00219/2017- 2018/10457. 3.Onerepresentative prcposedby the resolution applicant. Thetermofthe^"Plan" shallcommencefront effectivedate andshall continueuntilthe implementationofthe financialsettlementsof plan in'accordancewith Term specifiedinPlan i.e.120 daysfrom Effective Date.(ResolutionPlan: IMPLEMENTATION OF THEPLAN),
z!i.'it:,r ft,t'"',.,,,,' ;.;I-::t'r-# i;* \T 'ra t.'.1 '^"L?Y '.{,, }t1 \r-^(.7trr ,Jji:):\ L.r;,..^{r,il,.</sup> 't'<br>ii;:'^'i': l;ii.+ i::il'i i:;;'".,trii,",, ,^4 ^4'./l}	(e)contravenesanyof theprovisionsofthe Iawfor thetimebeing inforce? Resolution rcprasattls and waffanrsr/,dltu	ltu	NO,atPageno.61of the instant application.

¶97

CA I'to, 4e0/?0'1Q &^{lA Nn A?|?A?A} ln

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CP (lB) No. 2lchdlcHDtzll8

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¶100

(

¶101

	bestof the knowledgeof the Resolution Applicant,. the Resolution Plan isnotin contraventionofthe provisionsofApplicable Law and is in compliancewiththe CodeandtheCIRP Regulations. ResolutionProfessional hasreviewedtheplan andissatisfiedwiththe contentsoftheplanand confirmsthattheplan complieswiththe applicable laws. TheResolutionPlanhas been preparedinterms ofthe provisionsofthe Insolvency&Bankruptcy Code, 2016and amendmentsthereon and doesnotcontravene anyprovisionsof the Act. (ResolutionPlan Chapter-Vl,PointA, Clause1.4)
Section 30(4)	Whether Resolution Flan (a) fsfeasibleand viable,accordingto theCOC?	Yes,atPageNo.37- ?lJoftlteinstant application.	AttttexureA2of the instant application.
,ny{*r:-} 'ri;{' t'" !:-."{ t r.:rj;"t ,i.', .Ijitl.,;"^:.. .1,.)t;V #r'- -:1r,,- en'iai:s!	The Resolution Applicantp/oposesa Paymentof 30.03 .TheResolution thassufficient worth-Sourcesfo off theentire lnadditiontotheabove

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CA No. 490/2019 & lA No. 4212020 tn QP^(lB) Nn, ?/Clni/CHD/?O10

¶103

{

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¶105

theresolutionapplicant
willinfuseRs.10 crores asworking capitaland Rs.6croresforcaPital expansion.
Further,theResolutiott Applicant has experiencein the pharmac.eutical industry andhasformeda detailed strategyforits tevival.
(b) hasbeenapproved by theCOCwith66oh voting share?	Yes, atPageNo.135- 136oftheinstant application.	AnnexureAllof the instant application.
"RESOLVEDTHAT,thE	(minutesofthe1Itn
submittedbyDPB AntibioticsPvtLtdbe andisherebyapproved incompliancewiththe provisionsofsection 30(4)ofthelnsolvency andBankruptcyCode, 2016with100%ovoting rightsFurthertheCOC authorizes the ResolutionProfessional Mr.Hemanshu Jetleyto moveanapplication undersection31otj behatfoftheCOCfor approvalofrcsolution plan from the AdjudicatingAuthority".	coc) I
Whether the	Yes,atPageNo63-	AnnexureA2 of
ResolutionPIanhas provisionsforits effective implementationplarr, accordingto theCOC? lnordertoensurethat	67 oftheinstant application. (Minutesofthe11tt' COC meeting)	the instant application.

¶106

(;A No,490/2019 & lA No, 42/2020 ln' CP (lB) No. 2lchdlcllDlzol3

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(

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	theResolutionPlanis implementedin accordarlcehereofand that theobligatiot'ts undertakenhereinare adheredtoinletterand spirit,anappropriate monitoringagency/entity shallbeconstituted ("Monitoring Agency")on the NCLTApprovalDate.
/".("+i;it^ot, f{r'.",\11' i.x\r 'Z;.*<br>?t\|Themonitoringagency shallcompriseas follows- 1.Onerepresentative eachofthe3Financial Creditors. 2. TheResolution Professional,Mr. HemanshuJetley, rcgisteredlnsolvency Professional, membershipno. tBBt/tPA-001/tP- P00219/2017- 2018/10457. 3.Onerepresentative proposedby the resolution applicant. Thetermofthe^"Plan" shallcommencefrom effectivedateandshall continueuntilthe implementationofthe financial settlementsof planinaccordancewitlt Term specifiedinPlan i.e.120 daysfrom EffectiveDate.
Ft''ffi \t'?^t*# \fi};	Wheretheresolution profesionalmadea detenninationifthe corporatedebtorhas	Transactio report 10.05.20 received	nAudit dated 19was on	Yes

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CA No. 490/2019 & lA No. 42t2020 In fin (ln) llu, il/Clrrl/Cl'lL1il0tI

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¶112

beensubjectedtoany transactionofthe	20.05.2019.	AnnexureA12of the instant
nature coveredunder secficrns43,45,50or 66,beforetheone hundredandfifteenth dayoftheinsolvency commencementdate, underintimationtothe Board?	Atrpageno.159-160 of the instant application. (Minutesofthel}th COCnteeting)	application.
Onlyonepreferential
transaction wasreporied by theTransaction auditoramountingfoRs. 4.75lacs.
Mr. SuyogJain(member of thesuspendedboard of directoihas submitted with the RPa
chequeamountingto
Rs.4.75Lacsas contribution againstthe
above mentioned
prcferentialtransaction asperTransactionAudit Report.
tVootherqualifications
has been madeinthe
TransactionAudit
Repoft by the
TransactionAuditor
however,the RPand
committeewasofthe
view thatanapplication shouldbefiledonthe basisofavailablefacts whichraisessuspicion
nodocumentary
areavailableto
ve thebona-fide
of the
beyond doultt.

¶113

CA ltlo. 490/2019 & lA lrlo. 42/2020 ln.

¶114

CP (lB) No. 2lChdlCHA2alB

¶115

¶116

(

¶117

		Hence,RPhasidentified ceftainpreferential transactionsunder section 43 and fraudulenttransactions undersection66ofthe Codeinadditiontothe findings of the Transaction Auditor. RP has filedan applicationwithHon'ble NCLTto repoftthesaid transactionso/?11 December2019(Diary no.7028).
{t'-orr:rtt :';1.,,tfl1]6 t.,ttL' ,^.'.1,; s'\4; j ,,'i^li,i: "'^;':.,.1:, )r^',lf;,," ))' //.,,,:! //^/;.'" lJ ot LA{ -' l4\ fi, ':':^)1:t .{i:;	Regulati on 38⁽¹⁾ CAN ,tr'/	Whethertheamount duetotheoperational creditorsunderthe ResolutionPIanhas beengivenpriorityin payment overfinancial creditors? The Resolution Applicantproposesto pay anupfrontsum of //VR 1.04Crores, ("WorkmenPayment") within30days fromthe ClosingDate,towards fullandfinal amount and one time settlementofall workmen and employeesdues. Further, as sfafedinthe addendilmtotheplan dated10.12.2019the tasululiuttutrttrtliUattllrus undcrtakentoincrearc theamountofplanto pravideforadditianalPF duestnresPect^of hlimfun plant ti ff1ll1r1lntnilnhtnr n.49nl2019 & lANn4?l?A?0 Itl	Yes,at Pageno.44 45ofttteirrt"nit application.	AnnexureA2 of the instant application.	Yes

¶118

CP (lB) No. 2lChdlCHDI2olB

¶119

¶120

	Itisproposedthat^the claimsofthe OPerational Creditors Trade Payables(otherthan workmanandstatutorY liabilitiesandRelated Parties)shallbesettled at//VR0.20crores proportionatelyamong allsuchclaims.
	Further,as per Regulation 3B(1)ofthe CIRPRegulations,the amountduetothe OperationalCreditors shall be given^priorityin paymentoverthe Financial Creditors.
Regulati on sB(1A)	Whetherthercsolution plan includesa statenrerttastohowit has dealtwiththe interests of all stakeholders? 'fhePlanenvisagesa justifiable payouttothe different c/assof creditors.	Yos,atPageNo.52- 54 oftheinstant application.	AnnexureA2of the instant application.	Yes
lAr ,/1'1;'.,rpt-l. ffiyi,;,'fi ' .c,ij i.,.ii r-r l. i tlr ;,;l ,\Jr^;i.'' i'lil Regulati on sB(18) i'.N tlril;ir :l:i1 !-r :::( rJ)X :lil,tr, lil i"t^,',, ' ;rt"e,'lo;f,	(i)Whether the Resolution Applicantoranyof ilsrelatedparties has failedto implementor contributedtothe failure of il implementation of anyresolution^plan approved undertlte Code?	Yes,atPageNo.BB of the instant application. (Addendumtothe ResolutionPlan)	AnnexureA3of the instant application.	Yes
t'.t(r' rrai	(ii)lfso,whotherthc	/V.4.		/V,A

¶121

rjt\ N0, 4UU/;0'lU &^{lA hlr.t.42t202U} ln CP (lB) No. 2lChdlCHDl2j'lB

¶122

¶123

(

¶124

	I	Resolution Applicant has submitted the Statement^giving details ofsuchnon- implementation?
	Regulati on3B(2)	Whether Resolution provides'. the Plan (a)the termoftheplan anditsimplementatiott schedule? Theterm ofthe"Plan" shallcommencefrom effectivedateandshall continueuntilthe implementationofthe financial settlementsof planinaccordancewith Term specifiedinPlan i.e.120 daysfrom EffectiveDate. thedateofapprovalof resolutionplanbyNCLT. All the payments proposedunderthe resolutionplanshallbe paid within120 days of effectivedatei.e. approvalofplanfrom AdjudicatingAuth ority.	I Yes, atPageNo.63- 71oftheinstant application.	AnnexureA2of the instant application.	Yes
f.4:,1 $;i.,:lt,l.', :,.11 g I:-:l ,^At..,..,',1 \-fl;;		N "u<br>:i^*il 'or/	(b) for the ntanagementand controlof the business ofthe corporate debtor duringitsterm? Onthedayofissuance of NewEquitySharesas ntentionedaboveand	Yes,atPageNo.5B- 60 oftheinstant application.	AnttexureA2of the instant application.

¶125

No. 490/2019 & lA No. 42l202o hr CP (lB) No. 2/ChdtCHDt2018

¶126

¶127

simultaneouslywiththe
issuance,theentire
EquityShares 30768603
of theCompany, held by
entire^.erstwhile13
shareholdersshallbe
reducedto13equity
shares,Postreduction
these13 equityshares
shattbecomputso'rity
transferredtoDPB
AntibioticsPvt. Ltd.at
facevalueofINR10^per
share.
Onand fromNCLT
ApprovalDate,the
ResolutionApplicant
shall take overthe
management controlof
theCompany,including
ifsbusrnessactivities.
implementationofthe
ResolutionPIanshall
happeninparallel,the
boardofdirectorsofthe
Companyshallbe
reconstitutedonthe
ClosingDateandthey
shall takeupthe
responsibilitiesofthe
day today affairsofthe.
Company and manageit
initsregularcourse.
Erstwhile promoterswill
notbeincontrolor
promotersin the
Companywitheffect
frontNCLTApproval
Date,althougltthe
EquityShares mightbe
held by thent(13sharcs
autof100000 shares)
Theerstwhile Boardof
Directrtrsof tlrc

¶128

CA No, 490/2019 & lA No. 4212020 ln CP (lB) No. 2lChd/CHD/2018

¶129

(

¶130

¶131

	Companyshallremain suspendedandthe ResolutionProfessional (withCommitteeof Creditors)shallcontinue tomanage the affairsof theCompanyuntilthe ClosingDate.Onand fromtheClosingDate, all the existing Directors, shallvacatetheir respectiveoffices.On theClosingDate, a new BoardoiftheCompany shallbeformedbythe ResolutionApplicantsin themanner^providedin Chapter Vlofresolution plan.
/:tr'"'ta /,/4!',:.:tttl fili*,:,;'''.'u''i , is ::i \ ,:. l-ii ";r:i:'^'':i';i \o..ili	(c)adequatemeansfor superurstng implementatiott? ifs lnordertoensurethat theResolutionPlanis implementedin accordance hereofand that theobligations undeftakenhereinare adheredtoinletterand spirit,anappropriate monitoringagency/entity shallbeconstituted ("Monitoring Agency") on theNCLTApproval Datc, Themonitoringagency shallcompriseas follows- 1.Onerepresentative eachofthe3l:inancial Craditora 2. TlrcResulullatt Prafessional,	Yes,atPageNo63-6 of the instant application (resolutionplan). Also, atPageNo140- 14oftheinstant appIication.(Minutes of thel1thCOC rneeting)	AnnexureA2&A 11oftheinstant application.	Yes

¶132

r",ilI liil [qilitfilq,lr lA l(il 4t/2ntn

¶133

Ir r CP (lB) No. 2tChdtCHD/2l'tB

¶134

¶135

	Mr.HemanshuJetley,
	registeredInsolvencY Professional, membershipt1o. tBBt/tPA-001/lP- P00219/2017- 201B/10457. 3.Onerepresentative proposedby the resolution applicant. Thetermofthe^"Plan" shallcommencefrom efiectivedate andshall continueuntilthe implementationofthe financial settlementsof planinaccordancewith Term specifiedinPlan i.e.120 daysfrom Effective Date.
	Whethertheresolution plandemonstratesthat
.^.;',.' " ..(_r,/ ^^.;';',/,1 <sup>l;.-'/rr' ":::)	(a)itaddressesthe causeofdefault? AspertheAnalysis of the Resolution Applicant,themajor reasonfordeteriorated financial conditionofthe CorporateDebtorwas acquisitionofVLSPL havingPep-Gfac,ility locatedatCuddaldore, TamilNadufundedby wayofPromoters equity ofRs.135.21croresand TermdebtofRs.142 crores. Theproject couldnotget because ofreasonsbeyondthe controlofthecompany.	Yes,atPageNo.62- 63oftheinstant application.	AnnexureA2of the instant application.

¶136

UF^(lU) tlo. i.!/liltdlUl lU/IU1U

¶137

CA No.^490/20'19 &^{lA No. 4212020} ln

¶138

(

¶139

¶140

Allthe lendersassrErned
theirclebttoEdetweiss ARCforRs.144 crores in 2014-15. TheARCsoldthe^plant andmachineryofthe projectthroughopen bidding whenitfailedto find a resolution.
VardhmanChemtech Limitedinvestedan amountofRs.135.21 crores.towardsthe projectimplementation whichbecameadead investmentandledto cashflowcrisisand liquiditycrunchinthe company leadingtoits downfall.
(b)it isfeasibleand viable?	Yes,atPageNo.37- T39oftheinstant	AnnexureA2of the instant	Yes
The Resolution ApplicantProposesa PaymentofRs.30.03 crores. TheResolution applicanthassufficient	application.	application.
netwarlh-Sourcesto
pay off theentirc consideration.
lnadditionto theabove theresolutionapplicant willinfuseRs.10 Cras working capitalandRs.
6 Cr forcapital expansion.
a. TheResolution Applicantis already into the samebusiness and hasaset.channelof
networks/agentsall
overtheconsuming

¶141

Fir \ '' ti.i

¶142

CA No.490/2019 & lA No. 4212020 ln

¶143

oP^(lR) Nn ?/Chd/CHll/?01fl

¶144

¶145

	centrestomarkettheir production.
	b. TheResolution Applicantaimsto leveragetheexisting networks and relationships,tomarket the additional productionafter acquisitionof the company c. TheResolution Applicantisanexisting supplierofintermediate chemicalsto the VardhmanCherntech andtltisacquisitionwill beafonuardintegration for the Applicant. d.Thiswillinturn result in havingcost synergies forboththeCorporate Debtor and the ResolutionApplicant, whichwillhelpthe Companyinacquiring higher marketshares and boosting revenues.
	(e)ithasprovisions for itseffective implementation? lnordertoensurethat theResolutionPlanis implenrcntedin	Yes,atPage No.63- 67 oftheinstant application (resolutionplan).	AnrrexureA2&A 11oftheinstant application respectively.
#-$ iti'i^g r.7."';.1 ',-r''r:'ct.l;	accordanceherc ofand that theobligations underTakenhereinare to inletterand ', anappropriafe monitoringage ncy/entity shallbeconstituted ("Monitoring Agcncy") on	Also,atPageNo. 140-14oftheinstant application (Mlnutesuf tlrellllt COC meeting)

¶146

CP (lB) Nlo, 2/chd/CHD/2o18

¶147

CA No. 490/2019 & lA No.^4212020 ln

¶148

¶149

(

¶150

r	theNCLTApprcval Date. Thentonitoringagency shallcompriseas follows- 1.One.representative eachofthe3Financial Creditors. 2. TheResolution Professional,Mr. HemanshuJetley, registeredlnsolvency Professional, membershipno. tBBt/tPA-001/tP- P00219/2017- 2018/10457. 3.Onerepresentative proposedby the resolution applicant. The termofthe"plan" shallcommencefrom effectivedate andshall continueuntilthe implementationofthe financial settlementsof planinaccordancewith term specifiedinplani.e. 120days fromeffective date.
	(d)ithasprovisions forapprovalsrequired and thetimelineforthe same?	Yes,atPageNo.72' 77 of their"tunt application.	AnnexureA2of the instant application.	Yes
/-"oi+Y {r{"":i, H's)H ! .';- + Lj *i i%<br>i,-::,,;.i) fr${ z._ ir:lrri^+r ::w	TheLicensesand approvalsheldbythe lCompany,^whichshall t\pxpirepriortothe tl iplosing^{Dateorwithina} lperiodof 6months thereaftershallbe renewed/ extendedhy

¶151

CA No. 490/2019 & lA No. 4212020 ln

¶152

CP (lB) No. zlChdlCHDl2OlS

¶153

¶154

(

¶155

T	Ithe relevant IGovernmentat I IAuthorities.andthe I I^{Companyshallbe} I^permittedtocontinueto I I^{operateifs busrness and} I Iassefsinthemanner I Ioperated^priorto I Isubmissionof this I^{Resotution PIan untilthe} Irenewal /extensionof IIsuch/icensesand I^{approvats.Therelevant} IGovernmental I I^{Authoritieswillprovidea} LIreasonableneriodof I time, aftertheClosing Dateinorderforthe ResolutionApplicantto; i)assessthestatusof /icensesandapprovals requiredby the Company andtoprocure that theCompany appliesfor thesame; and i0regularizeanynon- compliancesunderthe Applicable Law (rndudtng non- registration, inadequate/non stampingofdocuments under as requiredunder Applicable Law)existing priortoClosingDate.
fiirii'.'t (/,,i!*',9t iF;^r-;"., Fl'i;^-: p!: ;t.'	.: \r'' \ ;). .n ,ilt'.o\ ,yta,ti\ li,f'-i. iirilr:n^i" ,:(L.r;l* ::],fii"'.,+ ina")r*), ,or,TDv'	(e) theresolution applicanthasthe capability to inrplement the geso/ufion^plan? Resolution Proposesa ymentof 30.03 crores. TheResolution applicantthroughhis	Yes,atPageNo.37- 39oftheinstant application.

¶156

CA No.49012019 & lA No. 4212020 l11 CP (lB) No. 2lChdlCHDl2)lB

¶157

¶158

(

¶159

	groupentitieshas sufficientnetworth- Sourcesto pay offthe entire consideration. Inadditiontotheabove theresolutionapplicant willinfuse Rs.10 Cras working capitalandRs. 6 Cr forcapital expansion. Further,theResolution Applicanthasrelevant experiencein the pharmaceuticals lndustryandhasformed a detailed strategyforits revival.
se(2) I t: llt ii' \t	I^{WhethertheRPhas} I^{filedapplicationsin} Iresrrecfoftransactions I^{ohserued,foundor} I^{detennined byhim?} I It^IOnlyonepreferential I I^{transactionwasreporled} I^{nV theTransaction} I^{auditor amounting /oRs.}	^+.rsu"s. t-- I^{Mr. SuyogJain(member} I^{ofthe suspended board} of directo)has submitted with the RPa chequeamountingto Rs.4.75Lacsas contributionagainstthe labove mentioned \ - tQreferentialtransaction i'fis^{perTransactionAudit} ,l- fi<epoft. u tVootherqualifications hasbeen madeinthe Transaction Audit	TransactionAudit report dated 10.05.2019was received on 20.05.2019. Atpageno.159-160 of the instant application.(Minutes of the10thCOC meeting)	AnnexureA12of the instant application.

¶160

cA No 490/2019 & lA No, 42l2tt2{) lrr CP (lB) No. ztchdlc\Dt2ll9

¶161

(

¶162

¶163

	Report TransactionAuditor however,the RPand committeewasofthe viewthatanapplication shouldbefiledonthe basisofavailablefacts whichraisessuspicion as nodocumentary proofsareavailableto provethelsona-fide intentionsof the managementbeyond reasonable doubt. Hence, RP hasidentified certainpreferential transactionsunder section 43 and fraudulenttransactions under section66ofthe Codeinadditiontothe' findings of the Transaction Auditor. RP has filedarl appticationwithHon'bte NCLTto report thesaid transactionson 11 December2019(Diary no.7028) the
Regulati on39(4) iffi,i i;';.:[.1:.11.,+ '*Fni.iS	Providedetailsof pertonnancesecurity received,asreferredto insub-regulation{4A) ofregulation 368 AdemandDraftora TerrpDepositfor10%of resolution plan, amountingtoINR3 00 crores shall bedeposited with theResolutiott	Yes, afPage no.39& 120-122of the instant application.	AnrtexureA2& ABoftheinstant application. Yes

¶164

CA No.490/2019 & lA No 42!?020 ln

¶165

CP (lB) No. 2lChdtCHDt2018

¶166

¶167

professional or with the COC on approval of resolution plan by COC.

¶168

The approval of the resolution plan has been sought under Section 31

¶169

(1) of the Code, reading as follows: -

¶170

lf the Adjudicating Authority is satisried that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall'be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan.

¶171

Provided that the Adjudicating Authotity shall, before passlrig an order for approval of resolution plan under fhis sub-section, satisfy that the resolution plan has provisions for its effective implementation.

¶172

The conditions provided for in Section 31(1) of the Code for approval

¶173

of resolution plan are therefore. -

¶174

(a) The Resolution Plan is approved by the CoC under Secfion 30(4) ot the Code,'

¶175

(b) The Resolution Plan so approved rneets the requiremenls as referred to in Section 30(2) of the Code,

¶176

¶177

The satisfaction of the conditions is discussed below.

¶178

It is submitted by'the RP that the resolution plan has been approved

¶179

by a vote of 100o/o of voting share of the financial creditor and therefore, the

¶180

conditions provided for by Section 30(a) of the Code are satisfied.

¶181

The provisions of Section 30(2) of the Code are as follows: -

¶182

The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan-

¶183

(a) prcvides for the payntent of insolvency resolution process cosfs rr a manner specified by tlte Board in priority to the repayment of other debts of the corporate debtor:

¶184

CA Nn /qn/?O1q & lA Nn 421?fi?n ln CP (lB) No. 2lChdlCHDl2OlB

¶185

¶186

(b) provides for the payntent of tlte clebts of operational creditors in such manner as may be specified by the Board which shall^{not be less than} the amount to be^paid to the operational creditors in^{the event of a} Iiquidation of,the corporate debtor under sectiott 53;

¶187

¶188

¶189

the implernentation and supervision of the resolution^plan;

¶190

(e) does not contravene any of the provisions of the law for the time being in force;

¶191

(f) confirms to suclt other requirements as nay be specified by the Board.

¶192

The compliance of Section 30(2) of the Code is given in para No.9 of

¶193

Form H (supra). The same is being further examined as under:

¶194

Section 30(2)(a): The resolution plan (page 39 of Dy. No.781 dated 28.01.2A20 and Chapter lV, Clause D of the Resoiution Plan) provides for the upfront payment of unpaid insolvency resolution process cost estimateo to the extent of {25,00,0001 within'OO O"yu fronr the clate of approval of resolLrtion plan by the Adjudicating Authority in priority to any othei^ dires. Further, any balance remaining frorn the CIRP cost allocated as such, shall be proportionately given to the Financial Creditors

¶195

Section 30(2Xb): The resolution plan (Page 44-46 of the Dy. 1.Jo.781 dated 28.41.202A and Chapter lV, Clause D of the Resolution Plan) states that the resolution applicant has committed to pay a total amount {68,00,000/-* out of tlre claimod and verified amount to tho statutory authorities {except PF authorities)

¶196

-,;;:$__:r /:,|ii^{r.lu,c;11,,):.ggainst their claims in full and fina.l settlement of the claim within 30 days from the} ,ti^{,,l :} ., ,',1'^{r' ,} u,,. ,.t ',jr"., ,i:r:.,. ,'i' ,. ii'1;,,t;^.; Qte of approval of resolution plan by the Adjudicating Authority ,i^i'' ' l, .,r,^t;,:,it,, is 1i i', :: i:,^- ::- il "The resolution plan provicted for^payntent of Rs. 3,00,000/- against the i,,ii 'i '.'l.,;- ' ,' ,0,:.- ,, i! '.,,^{-,'r:;]\ri't,} n.i"'/.," claim of an unsemtrerl Financial Creditors namely Fde/welss ARC. "a1g^r,;j!'' However, since lhe claim was rejected by the RP based on legal

¶197

C,\ t'lo. 400/2010 & l,n, i'lo. 421?010 ln CP (lB) No. 2lCndtCHDt2olS

¶198

opinion and thereafter the application filed by the Unsecured Financial Creditar challenging the decision of the RP was also rejected by the Hon'ble Adjudicating Authofity, vide order dated 17.10.2019; the amount proposed as above has been attributed to be paid to the statgtory authorities as suggesf ed by the resolution applicant vide their mail dated 17.10.2019 at page no. 165 of application lA no. 4212020.

¶199

Further, it is stated that the resolution plan provicles an amount of {35,42,3694/- for payment to Provident Fund authority against their claims within 30 days from the date of approval of resolr-rtion plan by the Adjudicating Authority providing for 100% satisfaction of their claims (by virtue of Chapter lV, Clause D of the Resolution Plan at page no. 45 read with addendum at page no. BB of the application lA no. 4212020)

¶200

Further, an amount of {20,00,000/- is proposed to be paid to the trade payables of the corporate debtor within 30 days fronr the date of approval of resolution plan by the Adjudicating Authority in full ancl final settlement of the claim (Page 45 of the application lA no.4212020 and Chapter lV, Clause D of the Resolution Plan). '

¶201

The resolution plan proposes payrnerrt of {1,04,00,000/- towarcJs other dues of old workmen and entployees (Page 44 of the application lA no. 4212020 and Chapter lV, Clause D of the Resolution Plan). lt is further stated that as the ims of the workmen's and secured financial creditors are more than the liquidation value, the amount to be distributed between operational in the event of liquidation, if distributed in order of priority in Section 53(1) of the Code would be NlL. Since there are no dissentinq financial creditors.

¶202

CA No. 490/20 19 & lA No. 4212020 ln CP (lB) No. 2tChdlCHDl2OlB

¶203

¶204

therefore, the liquidation valul payable to thern under Section 53(1) in the everrt of liquidation would be NlL. Hence, Section 30(2Xb) of the Act stands complied with.

¶205

Further it is submitted that there is no discrimination in the resolution plan in respect of class of creditors, as same treatment is provided to similarly situated class of creditors. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resotution plan, which may involve differential payment to different classes of creditors. Equitable treatment has been accorded to each creditor depending upon the class to which it belongs.

¶206

It is submitted tlaat two properties (land) are owrred lry one of the promoters of the Corporate Debtor and the receipt of clear title of the lands is imperative for the resolution plan to succeed. Since tlre lands are mortgaged to lenders of the Corporate Debtor, the Resolutiorr Applicant while relying upon the judgment in Sfafe Bank of lndia vs MQR Farnts Private Lintited, Company Petition (lB) No. 51/CHD/HRY/2017 has offered to pay {6,s0,00,000/- (included in the aforementioned amount of 727,54,00,000/-) as follows to the said banks: -

¶207

(a) Allahabad Bank: {2,90,00,0004 in respect of land at D-5, industrial Focal Point, Derabassi, in the name of Sh. Suyog Jain.

¶208

(b) State Bank of India. {3,60,00,000/- in respect of land at Village Nimbua, Derabassi, in the name of Sh. Suyog Jain. t

¶209

It is fufther submitted tlrat tlre prornoter has no objection to transfer the aforementioned land in the name of resolutiorr applicarrt post the approval of the resolution plan by this Hon'ble ArJjuclicating Authority and his affidavit along with Special Povrer of Attorrrey autlrorlzlng the RP to

¶210

CA No. 480i2010 & lA l.lo. 4212020 ill CP (lB) No. 2tchdtcHDt2ll8

¶211

execute the transfer documents in favor of successful Resolution Applicant is attached as Annexure A-5 of Dy. No. 781 dated 28.01.2020 and as Annexure 1 (Diary No. 00245/3 dated 09.09.2020)

¶212

The affidavits of the said banks are affirrning that the charge/mortgage over the land on which the plant of the Corporate Debtor stands will be relinquished by them post approval of the resolution plan by this Hon'ble Adjudicating Authority and that the banks shall have no objection on transfer of the said lands in favour of the successful Resolution Applicant arb placed at Annexure 4-6 of Dy. No. 781 dated 28.01.2020.

¶213

section 30(2)(c): In clause B of chapter 5 of the resolution plan (page 58 of the applicatidn lA no. 4212020) and as recorded in the minutes of the 1 1th CoC dated 20.06.2019 enclosed as Annexure- 411 in item no. 11.06 at page no. 140-141 of the application lA no. 4212020, it is stated that the erstwhile Board of directors of the company shall remain suspended ancJ on the closing date, a new board of the company shall be formed and management and control of the business of the Corporate Debtor frorn the effective date till the completion of the term of resoltttion plan shall he clone hy the Boarcl of Directors reconstituted by the Resolution Applicant replacing the existing board of directors and their constituted board will be performing its duties under the guidance of "Monitoring Committee" consisting of :-

¶214

One representative each of the 3 Financial Creditors.

¶215

The Resolution Professional, Mr. Hemanshu Jetley, Registered lnsolvency Professional, membership no. lBBl/lPA-001llPPAO21 I 12A17 -2A1 il 1 0457

¶216

CA No. 490/20'19 & lA No. 42/2O2O llr CP (lB) No. 2tChdtCHDl2018

¶217

¶218

One representative proposed by the resolution applicant.

¶219

Further, as'mentioned in Form H, on the Closing Date, 1,00,000 New Equity Shares of INR 10 face value will be issued by the Company to tlre Resolution Applicant and their nominees, free from any Encumbrance. On the day of issuance of New Equity Shares as mentioned and simultaneously with the issuance, the entire 3,07,68,603 Equity Shares of the Company, heid by entire erstwhile 13 shareholders shall be reduced to 13 equity shares. Post reduction these 13 equity shares shall be compulsorily transferred to DPB Antibiotics Pvt. Ltd. at face value of INR 10 per share.

¶220

The Resolution Applicant is acquiring New Equity Shares in the Company and the business of the Compatty will continue to be carried on as usual during the process of such acquisition. Erstwhiie promoters nright holcJ the Equity shares.

¶221

Section 30(2)(d): ): ln Clause B of Chapter Vl of tl"re Resolution Plan (Page 63-67 of the application lA no. 4212020), it is statecl that the Monitorirrg Comnrittee shall monitor and supervise the implementation of the PIan from the date of order of approval of Resolution Plan by the Adjudicating Autlrority

¶222

Section 30(2) (e): In Form H (supra) (para No.4), tlre RP has certified that the resolution plan complies with the provisions of the Code and Regulations ancl does not contravene any of the provisions of law for tlre tirne being in force. 27. We are now examining the compliance of the provisc to Section now examining the compliance of the provisc to Section the provisc to Section to Section 31(1)

¶223

We are now examining the compliance of the provisc to Section now examining the compliance of the provisc to Section the provisc to Section to Section 31(1) of the Code that the resolution plan has provisions for its effective implementation. The resolution plan states that urpon NCLT Approval Date, an lmplementation and

¶224

¶225

stated to be 4 months from the date of order of approval of Resolution Plan by the Adjudicating Authority. Apart from payrnent of <27,54,A0,000/- to the secured financial creditors including t15 lakhs advance cash deposit in tlre form of Earnest Money Deposit, the resolution applicant proposecl to infuse t1OCr as working capital and {6cr for capital expansion, in order to successfully implement the plan and to improve & stabilize the operations of the corporate debtor.

¶226

We have discussed above that the requirements uncler Section 31(1) of the Code are satisfied in the present case. In para No.4 of Form H (supra) the RP has certified that the resolution plan complies witli all the provisions of the Code and Regulations and does not contravene any of the provisions of the law for the time being in force. The RP has also certified that the resolution applicant DPB Antibiotics Pvt Ltd has submitted affidavit pursuant to Section 30(1)of the Code confirming its eligibility under Section 29A of the Code to submit the resolution plan and the contents of the said gffidavit are in orcler. l-he RP has subnritteci that the resolution plan has been approved by the CoC witlr 100% voting share in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering the feasibility anci viability and other requirements specified by the CIRP Regulations. lt has been held in para 42 of K. Sashidhar vs. Indian overseas Bank & ors. (civil Appeal No. 10673 of 2018 dated 05.02.2019) by the Hon'ble Sr"rpreme Cor-rrt inter alia that no corresponding provision has been envisaged by the legislature to empower the resolution professional, the Adjudicating Authority (NCLT) or for that rnatter the Appellate ,fr{ffu ibl\ /'jl]]lj,F.^{Authority (NCLAI-),} n,,rL^-:,., /rr^r na^{to reversethe "commercialdecision" of the CoC. lt was also} f//,..:'.^',!-,"A\Yi O,.^{IX</sup> ,':',,4:⁽ⁱⁱ ,,,,iibtt^' l-² $neld^{that from the legrslatrvehistory} there is contra irrdication that the commercial i/ .,.: i --" .:,"'::.-;jiiil'^'-d !\ ji .'. '':i::"''t? 'i. !l 1l :l \ '; i.',i,'!,,. l'i;i r i"ff} business cJecisions of the financial creclitors arre not open to any judicial review 'iV,,^'r. ,..t,;i.-... -^l! ' tl,-, i,r ::-:.^- -rry.// :_J15r,r,,,ro,*?iCo No. 4e0/20ls & lA l.,lo. 42t2020 ' art

¶227

cP ilts) No. ztct atcuotzorc

¶228

(38

¶229

by the adjudicating authority or the appeilate authority. In view of the above discussion, the decision taken by tlre financial creclitors falls within the ambit of its commercial and banking wisdom and is therefore, not being interfered with. In compliance of the Regulation 38 (3), the net wortl-r certificates of the resolution applicant has been placed on record at Annexure^g at page no. 123-129 of the application lA no. 421202A.

¶230

According to the Regulation 39(4), the resolution applicant has submitted Performance Secyrity of Rs.3,00,00,0001 which is being presenfly retained in the form of fixed deposit and is attached as Annexure A3 (Dy.. No.00245i3 dated 09.09.2020). lt is thereby subr,ritred that the requirements of performance security under Regulation 39(a) of the Reguiations read with 368(44) of the Regulations are complied with.

¶231

The resoh-rtion professional has placecl on recorcl the cclnrpliance certificate under Section30(2) of tlre Code and has confirmed that tire resolution plan submitted is in compliance with Section3O of the Code, rrw Regulation 38 ancj 39 of the Regulations. desolution Professional has also placed on record a copy of the resoiution plan as approved Fy coc, stated to have been signecl by the authorized representative of the resolut!on applicant.

¶232

: 31. The learned counsel foi the IRP subrnitted that as per revisecl Form H (Annexure 4 of lA No. 4212020 Diary No.781 daled zB.u.2a2q, ail the provisions of the Code and Regulations were complied with and that the approval of the resolution plan was made^py 100 % vcting share of the CoC in the meeting of the held on 20.06.2019 and therefore, resolution plan submitted by M/s DPB ics Pvt. Ltd be approved

¶233

¶234

With regard to the cornpliance undel Regulation 35A, it is stated tlrat the RP has filed an applicatiqn lA no. 17112020 (Dy No.7028 dated 11.12.2019) which is pending adjudication.

¶235

The case was reserved for orders on 10.09.2010 but during the course of examination, it was observed that subsequent to the approval of the resolution plan by COC on 20.06.2019 two addendums dated 25.06.2019 and 10.12.2019 were added but clarity regarding COC approval for the said addendums could not be traced out. Therefore, the matter was listed for relrearing on 26.10.2020 and the learned counsel was directed to file affidavit explaining its stand on said addendums. Accordingly, the learned counsel filed compliance affidavit of the successful resolution applicant (Diary No.24517 dated 02.11.2020) stating therein that as per the addendum dated 25.06.2019, the Resolution Applicant has sought an adcjitional relief from the'AcljucJicating Autlrority which lrowever, contains a typographical error and therefore, prays for withdrawal of the said addendunr. Further, with regard to second addendum dated 10 12.2019, the Resolution Applicant has undertaken to make the additional payr.nent of Rs" 3,28,064i- to the PF Department due to submission of revised claim by the PF department. Therefore, the claim of the PF Department will be paid by the Resolution Applicant in full. Also, the said amounts are over and above the said proposed resolution plan amount and no prejudice will be caused to any member of the COC pursuant to the disbursement of this additional amount to the PF Department. The resolution applicant has also provided an undertaking as per Regulation 3B(lB) of the and Bankruptcy poard of India (lnsolvency Resolution Process for #-t_.J__G\lnsolvency ;,'|/.,(,( ,.t.ijt\v-^r,, ;.:;$prporate^{Persons) Rcgrrlations,1,01(i Frrrtlrnr, HesnlrrtinrrApplicant lras prayecl} i,l ^l: i ;"^{-. I :'-,:,,11it..\} ii !;', " ' , ''1"iJ ?-^\i fi ti .. ',,i.i#. ::^.irll \¹ i,.l,i,j;li- ii Na^'" "';:.)":^*'"rg1 ,..ji \ *r-$ta-f" ;g4$f4^{4sot2oi,s& tA No. 42/2020} u 's-ai. .r-.cgfZcp (r B) No. r|)Lno, "^r,ro,

¶236

¶237

for directions from this Adjudicating Authority to direct DGFT for removal of name of the corporate debtor from the list of denied entities.

¶238

The Resolution Professional also filed an affidavit^(Diarv No. 24519 dated 02.11.2424) stating that both the addendums were sent to the COC Members vide e-mails dated 26.06.2019 and 14.12-.2019 (Annexure 1) but neither the COC Members have affirmed nor dissented to the said addendums till date. Iherefore, the addendum OatbO 25.06.2019 stands withdrawn. With respect to the second addendum dated 10.12.2019, the RA has undertaken that neither the applicant nor any of its reiated parties have failed to implement or contributed to the failure of implementation of any resolution plan approvecl under the CoCe Also, it is submitted that DGFT beirrg an operational creditor of the corporate debtor, their claim will be satisfied as per the resolution plan upon its approval and the same is binding on all stakeholders of the corporate debtor including DGFT, as per Sectiorr 31 of the Code.

¶239

Further, during tl-re course of examination, it is noticed that the resolution plan proposes for carry forward of all the losses of the Company in terms of SectionT9of thelncomeTTxAct, 1961 andaccordinglyopportunitywasgranted to Income Tax Department (lTD) to file its report. The ITD filed repcrt (Diary No. 793 cjated 29.A1.2A29), stating that no approval can be grantecl to the CD to carry forward the losses.

¶240

JO. . In support of their respective subrnissions, the learned counsel for the income tax department placed heavy reliance on a decision of tlre Hon'ble NCLAT -.1"'.1':if=,1i,;ii;,\titi^{:firlh.,CompanyAppealNo.467 of 2019cjated 04.12.2019 in JSl4/ Sfee/sLimited} ,/-/i',!:,,,,,,,rt'^{:' { t', ' "'1,' iltr,} ;ilr;l^{'j'ltll.ii,i,,' '.)r"tqgtAshok Kumar Gutta and Qthers and the learned counsel for the} iiir.'il^{'i1,;1'l'."',. kii}

¶241

\^:i. .;l.i-;:,,i^{Rcs{f ution Profcssionol andRceolutionApplicant have placedreliance on another} .+.:i,'''::,::;: 't\ ""',.,1, r,y ilr, 3-,^,.,,;t, . ,:.r,'//

¶242

' .,'t-_-tr$lEENKo.4su2ale & tA No. 42t202o

¶243

CP^(lB) No. 2lCllcllCHDl2OlB

¶244

¶245

decision of the Hon'ble NCLAT in Company Appeal No.957 of 2019 dated 17.02.2020 in JSW Sfee/ Lirnited Vercus Mahendet" Kumar Khandelwal and Others.

¶246

5t. In Ashok Kumar Gulla (supra), the Adjudicating Authority approved the Resolution Plan for the Corporate Debtor Vardhman lndustries Limited, with two conditions, one of which was pertaining to 'treatment of carry fonuard and set-off of /osses' under Section 79 of the Incorne Tax Act, 1961. When the order of tlre Adjudicating Authority in imposing such a condition while approving the plan was ultallertged, the Hon'ble NCLAT after considering Sectron /9 ot the Inconle^'l-ax Act, 1961, observed as under:-

¶247

"12. As to the determination of theissue of 'carry fonward /osses' of the 'corporate Debto/, in spite of notice to the lncome Tax Authority, no reply has been filed and no objection lras been raised.

¶248

However, taking into consideration the submissions ntade by the counsel for tlte Appellant- JSt4l Sfeel Limited' and taking into consicleration the provisions of the lnconte Tax AcL 1961, inclucling section 7g and the Rules and Regulations framed thereunder, we holcl that bottt the 'successfu! Resolution Applicant' and the lnconte Tax Deparltnettl urill be guidect by the lncome Tax Act, 1961 and the Rutes ancl Regutationsfranted thereunder. tf fhe successful Resolution Applicant' is entiilecl to 'carry forward /osses' under Secfioti 79 of the lncome Tax Act it ntay claim suclt benefit before the appropriate Authority, who will pass appropriate order in accordance with section 79 of the lncome Tax Act, 1go1 and the Rures ancl Requlations framed thereunder."

¶249

And accordingly, modified the order of the Adjudicating Arrthority to that

¶250

effect.

¶251

ln Mahender Kumar Khandelwal (supra), the Flon'ble NCLAT, while concidoring o botoh of appcolc filcd ogainst tlrc orcler of tlre Auljudiuatirrg AuLlruriLy

¶252

CP^(lB) No. 2lchdlcHDlzllB

¶253

¶254

I ZV. Section 1 .12 of the Resolution PIan deals witlt;

¶255

(i) List 'A': certain items forming an integrat part of the Resotution plan, wltich were deemed to have been granted by virtue of approval of the Resolution Plan by the Adjudicating Authority, as they are in the nature of standard and ordinary implications of any resolution plan approved by an Adjudicatory Authority which is bincting on stat<ehotders.

¶256

(ii) List 'B': reliefs, concessions and entiilements for which specific orders were sought front tlte Adjudicating Auilrctrity as patt of approval of the Resolution Plant

¶257

However, the imposition of conclition in para 128(g) of the impugneci order has created an anbiguity whether the same is intended to be limited to the retief s ancl concessions sef forlh in List 'B' of section 1 .12 of the Resolution Ptan or whether the aforesaid paragraph also reiates to the matters in List'A'of section 1.12 of the Reiotution ptan which constitute a mandatory part of the Resotution ptan.

¶258

while in para 121 of lhe inpugnecl order, the Adjudicating Autltority has separately cleatt wiilt List 'B' and has specificaily- observe'ct that it cannot grant various concessiorrs soug/rf under List'B', lrowever, an amb.iguity has crept in the concluding para tza1g1 where it is unctear if such paragraph relates to onty List'B' or whether it extends fo Lrsf ,A' also.

¶259

132 |t was submittecl that if para (g) of the impugnecr order also relates tct 'List A', such condition would also amoint to rnaterial modification of the Resolution plan, wiiltout the consertt of the Appeltant, which has othenaise been found fit for approval.

¶260

List A is the integrar part of the Resorution, therefore, the following orders shall be deenecl tcs ltave beeri granted by vhtue of approval of the Resolution^plan.

XXX

xxx

xxx

(iv) All penalties, inlerest, ctelayect payntent charges, any other liabilities for any non-compriance vtiilt statutory obligations including taxes, inctucriitg detays in filing returns or payinent of tax dues, against the Company ihail stand' settrcA in accordance with the provisions of this plan as approved by NCLT."

XXX

XXX

xxx

!48.. The impugned Juctgment crated sth september, 2019 passed 9y^{tl" Adiudicating Authoriiy approvingilte ptan subittittedby,JSW} steet Limited' is approved with aforesaid ntoctificatian/ ctarificatior.t as made above. The order of stay of impbmentatiori of the plan stantls vacatec. The approved plan be given effect immediatety in thre manner as orcJered b1..the Adiudicating Authority and modified/ clarified by iltis Appeilate Tribunal.

¶269

149

¶270

149 The appeal preferred by'JSW Steet Lintited, is allowed. The appeals preferred by 'Mr sanjay singal', 'Kalyani rrarlsco,,^,Jaldhi overseas Pte. Ltd.', 'Medi carrier pvt. Ltd.', 'cJ Darct Logistics Ltcl.' ancl 'Sfafe of Odisha & Ors. ' are dismissecl.

¶271

4901201s & lA No 47DA20 ln On (lD) l,lu. 2/ClrLl/Cl lD/20 l0

¶272

¶273

For the reasofrs aforesaid, tlte application for impleadntent of Mrs. Aarti Singal, equity shareholder and guarantor of the 'Corporate Debtor' is a/so reiected.

¶274

,t R-l However, the Judgntent passed by the Adjudicating Authority (National Company Law Tribwtal) and this Appellate Tribwtal vtill not conte in the way of the Directarate af Enforcement or the Serbus Fraucl tnvestigation,Office'orthe'Central Bureau of lnvestigatiort'to proceec) with investigation or to take any action in accordance witlt law against erstwhile promoters, officers and others of the 'Corlsorate Debtor'.lVo cosfs.

¶275

A careful perusal of the above decisions shows that the decision in Ashok Kumar Gulla (supra) is applicable to the facts of the present case and hence, it is ordered accordingly. This view is applicable to the issue of removal of name of the corporate debtor from the list of clenied entities, by DGFT also.

¶276

on the basis of discussion made above and in view of the provisions of Section 30(4) of the Code and subject to the observations made in Paras 33 to 39, we approve the resolution plan subnritted by DPB Antibiotics lrrivate Limited as approved by the CoC. The resolution plan so approved shall be binding on lre corporate debtor and its employees, members, creditors inch-rding the Central Governntent, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholclers involved in tlte resolution plan We may ar|:l that as ciiscussed $upra, the RP has stated that the total amount recovered by corporate clebtor c|-rring ClRp (after paymnnt of tllRP r:nit)'worrlcl hc clistrihr,ltncl nmongnt lrn r..,,?,:Ltf,:4 fil;rrr.;iirl creditors in proportion to their shares.

¶277