NCLT approves Resolution Plan of D.S. Kulkarni Developers Limited

Bank of Maharashtra Vs D.S. Kulkarni Developers Limited (NCLT Mumbai)

Mumbai Bench-I of the National Company Law Tribunal (NCLT) has pronounced the order on 23.06.2023, approving the Resolution Plan submitted by Ashdan Properties Pvt. Ltd., Classic Promoters & Builders Pvt. Ltd. and Atul Builders- Consortium, i.e. Resolution Applicant, for the Corporate Insolvency Resolution of the D.S. Kulkarni Developers Limited under Section 31 of the IBC, 2016.

FULL TEXT OF THE NCLT JUDGMENT/ORDER

1. The present application is moved by Resolution Professional Mr. Manoj Kumar Agarwal (hereinafter called as “the Applicant”) under section 30 (6) of the Insolvency and Bankruptcy Code, 2016 (“code”) r/w Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 for seeking approval of the resolution plan of Ashdan Properties Private Limited (hereafter called as the “Successful Resolution Applicant/SRA”) under the provisions of Section 3 1(1) of the code, for the Corporate Debtor D.S. Kulkarni Developers (hereinafter called as the “Corporate Debtor”) and for passing order/appropriate direction that this Tribunal may deem fit in the present matter.

2. The CIRP was initiated against the Corporate debtor vide Order dated 26.09.2019 and the Applicant herein was appointed as the The Interim Resolution Professional (hereinafter referred to as the IRP) made a public announcement in Form A on 30.09.2019. The IRP constituted the Committee of Creditors (hereinafte referred to as the CoC) on 18.10.2019. Subsequently, the First CoC meeting took place on 25.10.2019 wherein the IRP was appointed as the Resolution Professional.

3. Thereafter, the Resolution Professional filed an application for extension under Section 12(3) seeking an extension of 90 days on 03.2020. The Applicant submits that due to Covid-19 pandemic the matter was delayed. Finally, the extension Application was heard and disposed off on 03.12.2020. The CIRP period was extended for a period of 90 days from the date of the Order.

4. The Applicant filed an exclusion Application in light of the Hon’ble Supreme Court and NCLAT Orders4. extending the timelines, this Tribunal granted an exclusion for a period from March 2020 to 14.03.2021. Accordingly, it is submitted that the CIRP stood extended from 15.03.2021 till 13.06.2021.

5. In the meantime, Form G was published in newspapers on 10.12.2019, 27.12.2019, 27.02.2019 and 16.03.2021. The last date for submitting the EOI was fixed on 22.04.2021 as per latest Form G published on 16.03.2021. However, pursuant to the requests of the prospective Resolution Applicants the CoC by a majority vote of 59.56% granted the PRA’s an extension till 22.05.2021.

6. The Applicant received Resolution Plans from 3 prospective Resolution Applicants:

i. Mantra Properties and Developers Pvt. Ltd.

ii. Ashdan Properties Pvt. Ltd., Classic Promoters and Builders Pvt. Ltd., Atul Builders-Consortium

iii. Hemendra D Shah, Kanhaiyalal H Matani and Ghanshyam J Sukhwani- Consortium.

7. The Applicant submits that in 2nd adjourned 25th CoC meeting the CoC resolved to approve the Resolution Plan of Ashdan Properties Pvt. Ltd., Classic Promoters and Builders Pvt. Ltd., Atul Builders-Consortium by majority vote of 83.37%. The minutes of the meeting and voting sheet is placed at page 70-84 of the Petition. The plan is approved by 83.37% of CoC members which exceeds the minimum threshold of 66% for approval of Resolution Plan as per Section 30(4).

8. The Applicant has annexed the summary of claims as on 08.2021 as Exhibit H. The average Liquidation value is Rs. 596.73 Crores.

9. The SRA proposes to make the following payments Amount in Crores.

10. The Applicant submits that the CIRP costs will be paid at actuals. Further clause 10.1.2.1 provides that a lumpsum amount of 30,12,00,000/- and CIRP cost shall be paid by the Resolution Applicant at actuals (the estimated CIRP Cost is Rs.5,23,80, 112/-) shall be paid upfront out of the total payment. Further, the payment schedule provides for payment to stakeholders in 8 different tranches. The said schedule is at page 267-268 of the Application.

11. The Applicant submits that he has received a Performance Bank Guarantee of Rs.25 Crores dated 21.08.2021.

Section 30(2) of the Code

12. In compliance of Section 30(2) of IBC, 2016, the Resolution Professional has examined the Resolution plan of the Successful Resolution Applicant and confirms that this Resolution Plan:

a) Provides for payment of Insolvency Resolution Process cost in a manner specified by the Board in the priority to the payment of other debts of the corporate debtor;

b) Provides for payment of debts of operational creditor in such manner as may be specified by the board which shall not be less than

(i) The amount to be paid to such creditors in the event of liquidation of the corporate debtor under Section 53; or

(ii) The amount that would have been paid to such creditors, if the amount to be distributed under the Resolution Plan had been distribute in accordance with sub-section (1) of Section 53 in the event of liquidation of the corporate debtor.

c) Provides for management of the affairs of the Corporate Debtor after approval of Resolution Plan;

d) The implementation and supervision of Resolution Plan;

e) Does not prima facie contravene any of the provisions of the law for time being in force,

f) Confirms to such other requirements as may be specified by the

(g) As per the Affidavit received from each of the three members of the consortium and the further documents submitted, the Resolution Applicants are not covered under 29A.

13. In compliance of Regulation 38 of CIRP Regulations, the Resolution Professional confirms that the Resolution plan provides that

a) The amount due to the Operational Creditors under resolution plan shall be given priority in payment over Financial Creditors.

(b) It has dealt with the interest of all Stakeholders including Financial Creditors and Operational Creditors of the CD.

c) A statement that neither the Resolution Applicants nor any related parties have failed to implement nor have contributed to the failure of implementation of any other Resolution Plan approved by the AA in the past.

d) The terms of the plan and its implementation schedule.

e) The management and control of the business of the CD during its term.

f) Adequate means of Supervising its implementation.

g) The Resolution Plan Demonstrate that it addresses

i. The cause of the Default

ii. It is feasible and viable

iii. Provision for effective implementation

iv. Provisions for approvals required and the time lines for the same.

v. Capabiity to Implement the Resolution Plan

14. The Resolution Professional has annexed Form H of the Application under Regulation 39(4) In FORM H of the CIRP Regulations to certify that the resolution plan as approved by the CoC meets all the requirements of the IBC and its Regulations.

FORM H
COMPLIANCE CERTIFICATE

(Under Regulation 39(4) of the Insolvency and Bankruptcy Board of
India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016

I, Manoj Kumar Agarwal, an Insolvency Professional enrolled with IIIPICAI and registered with the Board with registration number IBBI/IPA-001/IP-Poo714/2017- 18/11222, am the Resolution Professional for the Corporate Insolvency Resolution Process (CIRP) of D S Kulkarni Developers Limited (DSKDL).

2. The details of the CIRP are as under:

3. I have examined the Resolution Plan received from Resolution Applicant Ashdan Properties Pvt. Ltd. Classic Promoters & Builders Pvt. Ltd. and Atul Builders-Consortium and approved by Committee of Creditors (CoC) of D S Kulkarni Developers Limited.

4. I hereby certify that-

(i) the said Resolution Plan complies with all/, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force.

(ii) the Resolution Applicant M/s. Ashdan Properties Pvt. Ltd., Classic Promoters & Builders Pvt Ltd. and Atul Builders-Consortium has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit resolution plan. The contents of the said affidavit are in order.

(iii) the said Resolution Plan has been approved by the CoC in accordance with the provisions of the Code and the CIRP Regulations made there under. The Resolution Plan has been approved by 83.37% of voting share of financial creditors after considering its feasibility and viability and other requirements specified by the CIRP Regulations.

I sought vote of members of the CoC by electronic voting system which was kept open at least for 24 hours as per the regulation 26.

5. The list of financial creditors of the CD D S Kulkarni Developers Limited (DSKDL) being members of the CoC and distribution of voting share among them is as under:

6. The Resolution Plan includes a Statement under regulation 38(1A) of the CIRP Regulations as to how it has dealt with the interest of all stakeholders in compliance with the Code and regulations made there under.

7. The amounts provided for the stakeholders under the Resolution Plan is as under:

Amount in Rs. Lakh)

*An interest of 0.5% will be paid on the NCD’s issued which is over and above the amount offered to the secured financial creditor (except to the dissenting financial creditors) for the period from the date of issue till redemption

**Homebuyers will be given flats against their claim amount.

***The liquidation value for dissenting Unsecured Financial Creditors is NIL.

# Claim of Unsecure Financial Creditors namely Sangli Urban Co Operative Bank Ltd has not been admitted as they have withdrawn their claim of Rs. 323.27 lacs

8. The interest of existing shareholders have been altered by the Resolution Plan as under:

9. The com^pliance of the Resolution Plan is as under:

10. The CIRP has been conducted as ^per the timeline indicated as under:

11. The time frame ^pro^posed for obtainin^g relevant a^pprovals is as under:

12. The Resolution Plan is not subject to any contingency.

Or

The Resolution Plan is subject to the following contingencies (Elaborate the contingencies):

As per Annexure A herein

13. Following are the deviations! non-compliances of the provisions of the Insolvency and Bankruptcy Code, 2016, regulations made or circulars issued there under (If any deviation! non-compliances were observed, please state the details and reasons for the same):

14. The Resolution Plan is being filed on …….. which is within the extended CIRP period subject to the outcome of the Exclusion Application dated June 10, 2021.

15. Provide details of section 66 or avoidance a^pplication filed/ pending

1 5A. The committe4e has approved a plan providing for contribution under regulation 39B as under:

a. Estimated liquidation cost : 1.92 Crores

b. Estimated liquid assets available : NIL

c. Contributions required to be made : 1.92 Crores

d. Financial Creditor wise contribution is as under:

1 5B. The committee has recommended under regulation 39C as under:

a. Sale of Corporate Debtor as a going concern: Yes/No

b. Sale of business of corporate debtor as a going concer: Yes/No
The details of recommendation are available with the resolution professional.

1 5C. The committee has fixed, in consultation with the resolution professional, the fee payable to the liquidator during the liquidation period under regulation 39D. The RP has quoted a fee of 50% of the fees as per the Table under regulation 4 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016 subject to maximum of Rs. 5 Crores

`16. I, Manoj Kumar Agarwal here by certify that the contents of this certificate are true and correct to the best of my knowledge and belief, and nothing material has been concealed therefrom.

15. On perusal of the Resolution Plan, it is observed that the Resolution Plan provides for the following:

a) Payment of CIRP Cost as specified u/s 30(2)(a) of the Code.

b) Repayment of Debts of Operational Creditors as specified u/s 30(2)(b) of the Code.

c) For management of the affairs of the Corporate Debtor, after the approval of Resolution Plan, as specified U/s 30(2)(c) of the Code.

d) The implementation and supervision of Resolution Plan by the RP and the CoC as specified u/s 30(2)(d) of the Code.

16. The RP has complied with the requirement of the Code in terms of Section 30(2)(a) to 30(2)(f) and Regulations 38(1), 38(1)(a), 38(2)(a), 38(2)(b), 38(2)(c) & 38(3) of the Regulations.

17. The RP has filed Compliance Certificate in Form-H along with the Plan. On perusal the same is found to be in order. The Resolution Plan has been approved by the CoC in the 2^nd Adjourned 25^th meeting held on 13.08.2021 with 83.37% (Eighty Three point three seven percent).

18. In K Sashidhar v. Indian Overseas Bank & Others (in Civil Appeal No.10673/2018 decided on 05.02.2019) the Hon’ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 3 0(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon’ble Court observed that the role of the NCLT is ‘no more and no less’. The Hon’ble Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan “as approved” by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements.

18. In CoC of Essar Steel (Civil Appeal No. 8766-67 of 2019 decided on 11.2019) the Hon’ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. In para 42 Hon’ble Court observed as under:

“Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and section 32 read with section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar(supra).”

20. In view of the discussions and the law thus settled, the instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38 (1A) and 39 (4) of the The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The same needs to be approved. Hence ordered.

21. The Application IA No. 1950 of 2021 in CP No.1633 of 2019 is allowed. The Resolution Plan annexed to the Application is hereby approved. It shall become effective from this date and shall form part of this order.

i. It shall be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, 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 is due, guarantors and other stakeholders involved in the Resolution Plan.

ii. The approval of the Resolution Plan shall not be construed as waiver of any statutory obligations/liabilities of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law. Any waiver sought in the Resolution Plan, shall be subject to approval by the Authorities concerned.

iii. The Memorandum of Association (MoA) and Articles of Association (AoA) shall accordingly be amended and filed with the Registrar of Companies (RoC), Mumbai, Maharashtra for information and record. The Resolution Applicant, for effective implementation of the Plan, shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed.

iv. The moratorium under Section 14 of the Code shall cease to have effect from this date.

v. The Applicant shall supervise the implementation of the Resolution Plan and file status of its implementation before this Authority from time to time, preferably every quarter.

vi. The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with copy of this Order for information.

vii. The Applicant shall forthwith send a certified copy of this Order to the CoC and the Resolution Applicant, respectively for necessary compliance.