In re Vinod Agrawal RP For Mayfair leisures Ltd. (NCLT Ahmedabad)
Summary: Summary: The National Company Law Tribunal (NCLT), Ahmedabad Bench, approved the resolution plan submitted by GSEC Limited in consortium with Premjayanti Enterprises Private Limited for Mayfair Leisures Limited under Sections 30 and 31 of the Insolvency and Bankruptcy Code, 2016. The application was filed by Resolution Professional Vinod Agrawal in IA/542(AHM)/2022 arising from CP(IB) 213 of 2018. The corporate insolvency resolution process commenced on 2 June 2020 pursuant to proceedings initiated by Bank of India under Section 7 of the Code. Chandra Prakash Jain was initially appointed Interim Resolution Professional, and the Committee of Creditors, consisting solely of Bank of India, subsequently replaced him with Vinod Agrawal. The resolution plan received unanimous approval from the sole financial creditor through e-voting on 25 May 2022.
The insolvency proceedings involved repeated invitations for expressions of interest, extensions and litigation concerning the CIRP timeline. An initial proposal from Sankalp Organisers Private Limited was found defective, while a subsequent proposal from Khandwala Finstock Private Limited was rejected by the CoC. The Resolution Professional consequently sought liquidation. A major impediment was the attachment of the corporate debtor’s principal property, comprising land measuring 5,722 square metres and a commercial building at Atladara, Vadodara, by the Enforcement Directorate. The Central Bureau of Investigation had also investigated the matter but subsequently filed a closure report. After the NCLT refused a further exclusion of the CIRP period, the NCLAT, by order dated 16 February 2022, granted an additional 90-day exclusion to facilitate revival. The liquidation application was withdrawn, fresh resolution proposals were invited, and modified plans were received from Rohit Kumar Deorah and the GSEC–Premjayanti consortium. The latter secured 100% CoC approval.
The successful resolution applicant proposed approximately ₹54.90 crore, including ₹60 lakh towards CIRP costs and ₹10 lakh for operational creditors, including statutory authorities. Bank of India was allocated ₹54 crore against an admitted financial claim of approximately ₹95.07 crore. Of this, ₹18 crore was payable upfront, with the balance payable in two annual instalments of ₹18 crore each without interest on the deferred amount. The applicant additionally proposed unsecured redeemable bonds aggregating ₹100 crore, carrying a 0.001% coupon and having a 35-year maturity, with a contractual repurchase mechanism based on a 20% annual discount rate. The Tribunal recorded the corporate debtor’s fair value at ₹54,86,85,127 and liquidation value at ₹39,65,56,127. The order contains differing descriptions of the plan value, including ₹54.90 crore in the applicant’s submissions and ₹54.70 crore in the Tribunal’s discussion, while the creditor-distribution table records ₹54.30 crore inclusive of estimated non-cash components.
Regarding operational creditors, the Tribunal examined admitted claims of approximately ₹1.0015 crore against the proposed ₹10 lakh distribution. The allocation included ₹0.13 lakh against an admitted Employees’ State Insurance Corporation claim of ₹1.26 lakh, ₹0.06 lakh towards the Employees’ Provident Fund Organisation and ₹9.81 lakh for other operational creditors. The resolution applicant also proposed an additional ₹6,042 towards EPFO dues over and above the plan amount. Referring to the Supreme Court’s judgment in State Tax Officer v. Rainbow Papers Limited, the Tribunal distinguished ESIC contributions from statutory government dues capable of attracting secured-creditor treatment. It reasoned that ESI is a welfare scheme implemented by corporate employers for employees, with government machinery exercising supervisory functions. Accordingly, the Tribunal held that ESIC dues constitute operational debt rather than secured debt.
The resolution applicant requested extensive concessions concerning existing liabilities, guarantees, statutory permissions, taxation, pending investigations, attachment proceedings, stamp duty, regulatory approvals and the treatment of earlier assessments. Particular relief was sought for automatic release of assets attached by the Enforcement Directorate. However, following clarification sought by the Tribunal, the applicant filed an affidavit dated 4 November 2022 acknowledging that approval of the resolution plan would not automatically release the attached property. Instead, the applicant would approach the appropriate authority or judicial forum for relief in accordance with Section 32A of the Code. The Tribunal also considered the Supreme Court’s decision in Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited, recognising the protection afforded to successful resolution applicants against historical claims outside the approved plan. It nevertheless clarified that permits, licences, leases and other statutory rights would require engagement with the competent authorities under applicable laws.
The Tribunal separately examined compliance with Section 30(2) of the Code and Regulations 38 and 39 of the CIRP Regulations. It found that the plan provided priority payment of CIRP costs, appropriate treatment of operational creditors and dissenting financial creditors, arrangements for management and supervision, and provisions for implementation without contravention of applicable law. The proposed monitoring committee would comprise representatives of the financial creditor, the resolution applicant and the Resolution Professional. Following the trigger date, its role would be confined to monitoring deferred payments until completion. The Tribunal also considered the applicant’s eligibility under Section 29A, its financial capability, the identified causes of default involving liquidity constraints and project delays, and the proposed implementation timetable. It concluded that the statutory requirements for approval were satisfied.
By its order dated 13 December 2022, the NCLT allowed IA/542(AHM)/2022 and approved the GSEC Limited–Premjayanti Enterprises Private Limited resolution plan for Mayfair Leisures Limited. The approved plan became effective from the date of the order, and the moratorium imposed under Section 14 ceased to operate. The Tribunal directed the Resolution Professional to communicate the order to the participants and resolution applicants and forward the CIRP records and approved plan to the Insolvency and Bankruptcy Board of India. The decision permitted implementation of the resolution plan while preserving the need to obtain statutory permissions and pursue release of the Enforcement Directorate’s attachment through the appropriate legal process.
Cases Discussed
- State Tax Officer v. Rainbow Papers Limited (Supreme Court) — Distinguished while determining that ESIC dues are operational debt rather than secured debt.
- Ghanashyam Mishra and Sons Private Ltd. Vs Edelweiss Asset Reconstruction Company Ltd. (Supreme Court of India) — Relied upon concerning extinguishment of historical claims outside an approved resolution plan and the successful applicant’s clean-slate protection.
