Applicant (Resolution Professional) seeks approval of resolution plan by NCLT. Bench notes CoC approval and compliance with Code. Approves plan and lifts moratorium.
Resolution Plan approved; Moratorium under Section 14 ceased; MOA/AoA to be amended.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH, C-IV
IA No. 3806 of 2022
IN
CP No. (IB) 754/ (MB)/ C-IV/ 2021
In the matter of Application under section 30(6) for approval of Resolution Plan under section 31(1) of the Insolvency and Bankruptcy Code, 2016.
In the matter of :
Mr. Mayur Rajendrakumar Popat
Resolution Professional
of the Corporate Debtor
In the matter of :
Shapoorji Pallonji Development Manager Private Limited
…Financial Creditor
Versus
Grand Vacation Private Limited
…Corporate Debtor
Order delivered on 21/03/2023
Coram:
Shri Prabhat Kumar Shri Kishore Vemulapalli
Hon’ble Member (Technical) Hon'ble Member (Judicial)
Appearances (via videoconferencing):
For the Applicant : Mr. Sarosh E. Bharocha for the Resolution Professional/ Applicant.
IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH, C-IV
IA No. 3806 of 2022 IN CP No. (IB) 754/ (MB)/ C-IV/ 2021
ORDER
Per: Prabhat Kumar, Member(Technical)
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(“ Information Memorandum ”) and subsequently provided the invitation for submission of the resolution plan/process note dated 6th August 2022 ( “RFRP” ) under the CIRP of the Corporate Debtor.
| Sr. | Details of |
Financial | Voting | Percentage |
|---|---|---|---|---|
| No. | Creditors | Preference | of Vote | |
| 1. | Shapoorji Development Private Limited |
Pallonji Managers |
Yes/Approved | 100% |
Accordingly, the Resolution Plan was approved by the CoC with 100% votes in its favour and the Prospective Resolution Applicant was declared as Successful Resolution Applicant.
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“PART IV: FINANCIAL PROPOSAL OF THE RESOLUTION APPLICANT
7.18. Summary of Financial Proposal
A synopsis of the financial proposal of the Resolution Applicant (subject to the terms and conditions of the Plan and in particular, this Part IV (Financial Proposal of the Resolution Applicant)) is provided below. For the avoidance of doubt, it is clarified that the provisions of the rest of this Part IV (Financial Proposal of the Resolution Applicant) shall prevail in case of any inconsistency with the synopsis below and for the purpose of any interpretation.
7.18.1. Sources of funds
7.18.1.1 The Resolution Applicant for the purposes of defraying the Total Outlay as provided for herein will raise funds from third parties by way of selling the Property and Assets of the Corporate Debtor and discharge of its obligations hereunder.
7.18.2. Total Outlay
7.18.2.1 An amount of Rs. 1,00,000/- (Rupees One Lakh only) shall be infused in the form of Equity/ Equity linked instrument and/or debt instrument as may be deemed fit by the Resolution Applicant in the Corporate Debtor for meeting the initial working capital requirements for the revival of the Corporate Debtor within a period of 30 (thirty days from the NCLT Approval Date).
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7.18.2.2. An amount of Rs.1,00,000/- (Rupees One Lakh only) shall be infused in the form of Equity/Equity linked instrument and/or debt instrument as may be deemed fit by the Resolution Applicant into the Corporate Debtor for acquiring the Assets and Property of the Corporate Debtor within a period of (thirty days from the NCLT Approval Date).
7.18.2.3. In order to successfully implement the Plan and meet the priority obligations set out in the Regulation 38(1) of the CIRP Regulations) and upon all the assumptions set out in Clause 6.4 being true and correct, the Resolution Applicant shall on and from the NCLT Approval Date shall from the funds raised from its own sources discharge its obligations towards repayment of CIRP cost at actuals.
7.18.2.4. In order to successfully implement the Plan and meet the priority obligations (set out in Regulation 38(1) of CIRP Regulations) and upon all the assumptions set out in Clause 6.4 being true and correct, the Resolution Applicant shall on and from the NCLT Approval Date shall utilize the funds raised from third parties by way of selling the Property and Assets of the Corporate Debtor to discharge its Obligations hereunder.
7.18.2.5 The Total Outlay shall be first utilized towards meeting all the assumptions set out in Clause 6.4 under this Plan and then shall be utilized towards the full and final discharge the Claim in relation to the Corporate Debtor under this CIRP. In no event or circumstances as part of this Resolution Plan shall the Resolution Applicant be obliged to infuse and/or arrange amounts exceeding Total Outlay. In no situation would the transfer of the shares/property to the Corporate Debtor be in any manner delayed and/or stalled and/or any
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encumbrance recognized in relation to the Property and/or the Resolution Applicant be required to pay any amounts over and above the Total Outlay.
7.18.3 Distribution of Total Outlay
7.18.3.1. The Total Outlay shall be distributed by the Corporate Debtor within the period provided for in Schedule 4 in the following order of priority:
SCHEDULE 4: IMPLEMENTATION PROVISIONS
The following steps shall take place as part of the Resolution Plan:
| S. No. | Activity | _Timeline_* |
|---|---|---|
| 1. | Receipt of certified true copy of the order approving the Resolution Plan by the Adjudicating Authority (NCLT) ('NCLT Approval Date') |
NCLT Approval Date (A) |
| 2. | Reconstitution of Board of Directors and appointment of Steering Committee. All other necessary corporate actions as may be required for compliance with various agencies concerned _including ROC. _ |
A + 1 Day |
| 3. | Subscription to Shares of the Corporate Debtor by the Resolution Applicant. |
A+ 7 Days |
| 4. | Issuance of New Equity Shares | A + 15 Days |
| 5. | Payment towards CIRP Costs (at actuals) (Upfront Payment Date) |
A + 60 days |
| 6. | Payment to the Operational Creditors and other creditors (Upfront Payment Date) |
A + 60 days |
| 7. | Order of Adjudicating Authority brought into full effect being Effective Date as defined in this Plan (completion of steps 6 and 7 below) |
Effective Date (E) |
| 8. | All Assumptions being true, correct and being met | E |
| 9. | Handover of the vacant and peaceful possession of Property to be constructed in terms of the resolutionplan |
E |
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| submitted for by the successful Resolution Applicant Ornate Spaces Private Limited |
||
|---|---|---|
| 10. | Payment to Secured Financial Creditor | E + 90 days |
| 11. | Closing Date | E + 90 days |
*This timeline is indicative, and the duration may be less or more. In case the aforementioned timelines are not met then the CoC and the Resolution Applicant will mutually decide the extended timeline for payment in terms of the Schedule 4 . This may also be subject to Business Day conventions.
7.18.3.2. Amount to Meet Certain Payment Obligations: An amount from the Total Outlay shall be applied to meet on priority the CIRP costs at actuals within 60 (sixty) days from the NCLT approval date and in priority in terms of Regulation 38 of CIRP Regulations (“ Mandatory Payment Funds ”). To fulfil this payment obligation, the Resolution Applicant/Corporate Debtor shall infuse equity/quasi equity into the Corporate Debtor.
7.18.3.3. Amount to be paid in respect of Operational Creditors and other
Creditors: The Resolution Applicant proposes to make payment of a sum of Rs. 10,000/- (Rupees Ten Thousand only) in respect of all the Claims of Operational Creditors and other creditors. The aforesaid sum of Rs.10,000/- (Rupees Ten Thousand Only) shall be utilized towards the verified amounts in respect of Claims of the Operational Creditors and other creditor on pro rata basis within 60 (sixty) days from the NCLT approval date. To fulfill this payment obligation, the Resolution Applicant/Corporate Debtor shall infused equity/quasi equity into the Corporate Debtor.
7.18.3.4 Amount to be paid in respect of Unsecured Financial Creditors: As per the Information Memorandum there are Related Party Unsecured Financial
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Creditors whose claim is under verification by the RP. No payments shall be made to any Related Party and all Claims of the Related Parties or any of them as against the Corporate Debtor shall stand extinguished, settled, abated and satisfied in perpetuity. In any event, since the value to be paid in full, the amount payable to the Unsecured Financial Creditors in the event of Liquidation will be at NIL. Therefore, without prejudice to what is stated hereinabove, the Unsecured Financial Creditors, whether Related Party or otherwise, shall be settled in entirely at NIL value.
7.18.3.5. Amount to be paid towards discharge of Obligations: The aggregate of (i) the Mandatory Payment Funds (as set out in Paragraph 7.18.3.3 of this Part IV) (“ the Obligations ”) shall be first applied from the Total Outlay towards discharge of the Obligations.
7.18.3.6. Amount to be paid to the Secured Financial Creditors: The Total Outlay shall be first utilized to meet the Obligations. The balance of the Total Outlay shall be utilized towards discharge of the verified Claims of the Secured Financial Creditors (“ SFC, in Outlay”) and the interest accruing thereon till the date of realization, in the manner set forth in Schedule 4 (Implementation Provisions).
7.18.3.7 Amount to be paid to the Dissenting Financial Creditors: As per the requirement of Section 30(2)(b) of the IBC, all the Financial Creditors who do not vote in favour of the Resolution Plan shall be paid such amount which shall be equal to the amount to be paid to such Financial Creditors in accordance with sub-section (1) of Section 53 of the IBC in the event of a liquidation of the Corporate Debtor. Such dissenting Financial Creditors will not be entitled to any other amount.
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7.18.3.8. Amount to be paid to the Existing Shareholders: All existing shareholders of the Corporate Debtor who are the members of the group of the Promoters shall be paid NIL amounts as a part of the selective capital reduction process set up in Step 3 of Schedule 4 (Implementation Provisions).
7.18.3.8.1 All other shareholders shall be paid an amount of Rs. Nil towards the shares held by them.
7.18.3.9 In relation to any other actual or potential third parties (including creditors, Promoters, non-public shareholders of the Corporate Debtor (equity and preference) related parties of the Corporate Debtor and/or other stakeholders) whose claims have not been covered in this Part VI (Financial Proposal of the Resolution Applicant) NIL payment has been proposed under the Resolution Plan towards payment to such creditors and/or stakeholders and no source has been identified for such payment under this Resolution Plan. In addition to the above, notwithstanding anything contained in this Plan, the Resolution Applicant shall under no circumstances be liable to make additional payments under the Transfer Documents to the Corporate Debtor and no such claimant shall be entitled to challenge the Transfer Documents in any manner whatsoever.
7.18.3.10. Treatment of amounts claimed by any other person: Except as specifically set forth in Part IV (Financial Proposal of the Resolution Applicant), no payment shall be made to any other Person since making payment to any such Person may not serve the best dividends of the other stakeholders including the Operational Creditors.
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7.18.3.10.1 All other claims (if any) in relation to the Corporate Debtor and/or its Property and/or Assets, arising out of inquiries, investigations, notices, causes of action, suits, claims, disputes, litigation, arbitration or other judicial, regulatory or administrative proceedings against the Corporate Debtor or the affairs of the Corporate Debtor pending or threatened, present or future and the civil proceedings shall based on the details provided by the Resolution Professional be settled at NIL value.
7.18.3.11. Amount due to Promoters: Notwithstanding anything contained in the plan (i) any Person who has provided Promoter Debt shall from the Total Outlay not be paid any amount if such claim has been admitted by the Resolution Professional. Based on the report made by the Resolution Professional and the certificates obtained by him from the relevant professionals engaged by him, the amounts payable to them are in the nature of unsecured debt, therefore, the amount payable to the promoters, if any, in respect of their admitted claims shall be NIL; and (ii) no person shall receive payment twice in respect of the same Claim. Any Person claiming not to be a part of the Promoter group will need to provide all the necessary documents requested by the Resolution Professional and satisfy the Resolution Professional and the determination by the Resolution Professional of the amounts owed to such Person shall be final and binding in this respect.
7.19. Payment Terms
7.19.1.1. A representative acting for the Financial Creditors shall on or prior to the NCLT approval date, provide to the Resolution Applicant and the Corporate Debtor, one consolidated list of designated bank accounts for each Financial Creditor into which any financial settlements to such Financial Creditor pursuant to this Plan shall be made. Any change to such information must be notified to
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IN THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH, C-IV
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the Resolution Applicant and the Corporate Debtor at least 5 (five) Business Days prior to any payment being made pursuant to the plan. It is clarified for the avoidance of doubt that the Resolution Applicant’s obligation to make payment of any portion of the Total Outlay to any Financial Creditor in accordance with this Plan shall stand fully discharged once payment of such portion has been initiated by the Resolution Applicant to the designated account of the relevant Financial Creditor.
7.19.1.2. In relation to any payments or settlements to be made by the Corporate Debtor directly to any class of creditors as provided for in this part IV (Financial Proposal of the Resolution Applicant), the Corporate Debtor shall from and out of the Total Outlay, make payments within any such class of creditors on the basis of the Verified Amounts.
7.19.1.3 No person shall be entitled to receive any settlement more than the proportion settlement payable to a similarly placed class of creditors or stakeholders, as stated in this Plan.
7.19.1.4 This plan has been prepared in accordance with Section 30 of the Code and on the basis of the Information Memorandum. Accordingly, any change in this information shall have no adverse impact on the settlements (whether individually or in aggregate) proposed to be paid by the Resolution Applicant under Part IV (Financial Proposal of the Resolution Applicant) and the aggregate pay out from the Resolution Applicant shall not exceed the amount set forth in Part IV (Financial Proposal of the Resolution Applicant). It is clarified that any claims of Financial Creditors, relating to the period prior to the Insolvency Commencement Date, which arise and/or are made and/or are admitted prior to approval of this Plan by the NCLT, shall not alter, in any manner whatsoever,
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the settlement amounts proposed to be paid to the Financial Creditors under this Plan and the Financial Creditors accept the SFC Outlay in full and final settlement of all their Claims whatsoever.
7.19.1.5 The effects of the Plan with respect to creditors not specifically mentioned in this Part IV (Financial Proposal of the Resolution Applicant) shall be as set out in Schedule 3 (Extinguishment of Claims/Entitlements).
7.19.1.6. Notwithstanding anything contained herein, upon the occurrence or subsistence of any Force Majeure event prior to the Closing Date, the Committee of Creditors or the Steering Committee (as the case may be) and the Resolution Applicant shall mutually discuss and agree on suitable modifications to the Plan and a suitable redressal method.”
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Rs.57,44,43,211 paid by the Corporate Debtor, in view of the fact that the Developer had undergone into CIRP and the claim of the Corporate Debtor was rejected by the RP of the Developer having been filed after approval of Resolution Plan by CoC in the case of developer even though the plan in case of developer is pending for approval before the adjudicating authority. The applicant/ Resolution Professional further stated that the CoC in its commercial wisdom has passed the resolution plan after considering value of such flats taken as zero .
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| Sr. No. |
Nature of Creditors |
Amount Claimed (In Lakhs) |
Amount Admitted (In Lakhs) |
Amount provided in the Plan (In Lakhs) |
Amount provided to the amount claimed (In Lakhs) |
|---|---|---|---|---|---|
| 1 | Secured Financial Creditor (who voted in favor of the Resolution Plan) |
53,48,42,502 | 53,48,42,502 | 53,48,42,502 | 53,48,42,502 |
| 2 | Unsecured Financial Creditor |
- | - | - | - |
| 3 | Operational Creditors |
1,07,156 | 1,07,156 | 1,07,156 | 1,07,156 |
| 4 | Other Creditors |
- | - | - | |
| 5 | Workmen and Employees |
- | - | - | |
| 6 | Statutory Dues |
- | - | - | |
| 7 | Other Debts and Dues |
- | - | - | |
| G | rand Total | 53,48,42,502 | 53,48,42,502 | 53,48,42,502 | 53,48,42,502 |
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the Resolution Plan with various provisions and regulations under the Code and CIRP Regulations and has declared that-
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has been received from any workmen or employees relating to Provident Fund, ESI or Gratuity. The Resolution plan meets the requirement of section 30(2) of the Code and deserve to be approved.
ORDER
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“95. (i) Once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of the resolution plan shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan;
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Sd/- Sd/PRABHAT KUMAR KISHORE VEMULAPALLI MEMBER (TECHNICAL) MEMBER (JUDICIAL) 21.03.2023
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2 issues framed by the court
Whether the resolution plan submitted by the successful resolution applicant required the approval of the Adjudicating Authority under Section 30(6) and Section 31 of the Code.
Whether the inter-commentary application regarding the approval of the resolution plan falls within the scope of Section 60(5) of the Code.
Colour shows how this judgement treated each authority
Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company LimitedReferred¶182
Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited
4 provisions across 1 enactments
Mr. Mayur Rajendrakumar Popat
Prabhat Kumar
Kishore Vemulapalli
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
