NCLT approves Resolution Plan of Jain Shoppers Private Limited

Ashok Kumar Jhunjhunwala Vs Jain Shoppers Private Limited (NCLT Kolkata)

1. This Court convened through video conferencing.

Preliminary

2. I. A. (IB) No. 1666/KB/2022 is an application under section 30(6) of the Insolvency and Bankruptcy Code, 2016, after approval of the resolution plan by the Committee of Creditors (CoC).

3. This application was filed by Mr. Sudipta Ghosh, Resolution Professional of Jain Shoppers Private Limited (CIN: U51909WB2010PTC154672), by invoking the provisions of section 30(6) of the Insolvency and Bankruptcy Code, 2016[³ 3h CHLI ‘ HG ³ IB&’L read with regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (³ CIRP Regulations‘) for approval of a Resolution Plan in respect of Jain Shoppers Private Limited (³ Corporate Debtor‘).

4. The underlying Company Petition in C.P. (IB) No. 1262/KB/2022 was filed by Ashok Kumar Jhunjhunwala against Jain Shoppers Private Limited, the Corporate Debtor, under section 9 of the Insolvency and Bankruptcy Code 2016, which was admitted vide order dated 17 February 2022.

5. Initially, Mr. Kamal Prakash Singh, the Applicant having IBBI Reg. No. IBBI/IPA-00 1/IP/P-0 1722/2019-2020/12653, was appointed as the Interim Resolution Professional (IRP). In the 1^st CoC meeting held on 15 March 2022, a resolution was passed to replace Mr. Kamal Prakash Singh and appoint Mr. Sudipto Ghosh having IBBI Reg. No. IBBI/IPA­001/IP-P00484/2017-18/10872 as the Resolution Professional and an

Constitution of CoC

6. The IRP made public announcement on 19 February 2022 in newspapers regarding initiation of Corporate Insolvency Resolution Process (CIRP) and called proof of claims from the financial and operational creditors, workers and employees of the corporate debtor in the specified forms. Form A was also published in the website of the IBBI.

7. The CoC was constituted with two Financial Creditors Apex Tradexim Private Limited having 97.78% voting share and Epson Electronics Private Limited having 2.22% voting share. A report of the constitution of the CoC, was filed before the Adjudicating Authority on 09 March 2022.

8. The Applicant states that a total of eight CoC meetings have been held during CIRP period, as follows:

Collation of claims

9. The amounts claimed and admitted are summarised below:

(in lakh)

CIRP and compliances

10. The Applicant submits that in terms of the provisions of section 25(2)(h) of the Code read with regulation 36A(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, invitations in Form ‘G’ for Expressions of Interest (EoI) from potential resolution applicants was issued on 12 May 2022 in Business Standard, (English) Kolkata edition and Ekdin (Bengali) Kolkata edition newspapers. The last date for receipt of EoI was 27 May 2022.

11. The notice was also published on the website of the Insolvency and Bankruptcy Board of India (IBBI).

12. The Applicant submits that in response to the invitation for EoI published on 12 May 2022, the RP received one EoI.

13. The RP then shared the Information Memorandum, Evaluation Matrix and Request for Resolution Plan (RFRP) with the Prospective Resolution Applicants.

14. The last date for submission of Resolution Plan was 11 July 2022, which was extended till 01 August 2022.

15. Vide order dated 13 October 2022, extension of CIRP period was extended for a period of 90 days.

Evaluation and voting

16. The Resolution Plan of Infinite Sharp Private Limited (CIN:U50401WB2019PTC233292) was received on 01 August 2022. The Resolution Plan was opened before the CoC in its 6^th CoC meeting held on 07 August 2022. The Resolution Plan was discussed by the CoC in its 7^th CoC meeting held on 27 September 2022 and the CoC requested the Resolution Applicant for further revision in the Resolution Plan.

17. The Resolution Applicant submitted the revised Resolution Plan on 28 October 2022. The revised Resolution Plan was discussed in the 8th CoC meeting held on 01 November 2022.

18. The Resolution Plan submitted by Infinite Sharp Private Limited was approved with 100% voting share. The Resolution Professional issued the letter of Intent on 09 November 2022.

19. In accordance with regulation 36B(4A) of the CIRP Regulations, the Successful Resolution Applicant submitted Performance Bank Guarantee of Rs.2,00,000 (Rupees Two Lakh only) being 10% of the resolution amount issued by IDFC First Bank dated 02 March 2023¹.

Compliance of the approved Resolution Plan with various provisions

20. The Applicant has filed a Compliance Certificate in prescribed form, e., Form ‘H’ dated 31 October 2022 in compliance with regulation 39(4) of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.²

21. The Applicant has submitted details of various compliances as envisaged within the Code and the CIRP Regulations which a Resolution Plan should adhere to, which is reproduced hereunder:

I. Submission of Resolution Plan in terms of sub-section (2) of section 30 of the Code (as amended vide Amendment dated 16 August 2019):

–

–

II. Measures required for implementation of the Resolution Plan in terms of regulation 37 of CIRP Regulations:

–

III. Mandatory contents of Resolution Plan in terms of regulation 38 of CIRP Regulations:

–

22. The Resolution Applicant has submitted affidavit of eligibility under section 29A of the Code, affirmed on 17 May 2022³.

Details of Resolution Plan/Payment Schedule

23.The Applicant submits that the Resolution Applicant had filed a Resolution Plan on August 2022 which was further amended on October

24. The relevant information with regard to the amount claimed, amount admitted and the amount proposed to be paid by the Resolution Applicant, i.e., Infinite Sharp Private Limited under the said Resolution Plan is tabulated as under:

(in lakh)

25. The proposed treatment is given hereunder:

26. The Resolution Plan defines “Effective Date” as date of Order of the Adjudicating Authority of approval of Resolution Plan.

Details on Management/Implementation and Reliefs as per the Resolution  Plan – Salient Features

27. The Resolution Plan also provides for –

a. Management of company after resolution in Section 9 of Resolution

b. Term of the resolution plan in Section 8 of Resolution Plan.

c. Implementation and Supervision of the resolution plan in Section 10 of the Resolution Plan.

Relinquishment/Waiver of liabilities and Approvals

28. The Reliefs, Exemptions and Waivers sought by the Resolution Applicant from the Adjudicating Authority are set out below for the successful implementation of the Resolution Plan. The orders thereon are indicated against each.

Orders

29. On hearing the submissions made by the Resolution Professional, and perusing the record, we find that the Resolution Plan filed by Infinite Sharp private Limited has been approved with 100% voting share. As per the CoC, the plan meets the requirement of being viable and feasible for revival of the Corporate Debtor. By and large, all the compliances have been done by the Resolution Professional and the Resolution Applicant for making the plan effective after approval by this Bench.

30. On perusal of the documents on record, we are satisfied that the Resolution Plan is in accordance with sections 30 and 31 of the IBC and also complies with regulations 38 and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

31. As far as the question of granting time to comply with the statutory obligations or seeking approvals from authorities is concerned, the Resolution Applicant is directed to do so within one year from the date of this order, as prescribed under section 31(4) of the Code.

32. We have perused the reliefs, waivers and concessions as sought and as given in Clauses 5.3 of Section 5 at Pages 45 to 56 of the Resolution While some of the reliefs, waivers and concessions sought by the Resolution Applicant come within the purview of the Code while many others fall under the power and jurisdiction of different government authorities/departments This Adjudicating Authority has power to grant reliefs, waivers and concessions only in relation to the Code and the Companies Act 2013 (within the powers of the NCLT) for achieving the objective of the Code. No reliefs, waivers and concessions that fall within the domain of other government department/authorities are granted. The reliefs, waivers and concessions that pertain to other governmental authorities/departments shall be dealt with the respective competent authorities/forums/offices, Government or Semi Government of the State or Central Government with regard to the respective reliefs, waivers and concessions. The competent authorities including the Appellate authorities may consider grant such reliefs, waivers and concessions keeping in view the spirit of the Code.

33. The Resolution Plan has to be consistent with extant law. The Resolution Applicant shall make necessary applications to the concerned regulatory or statutory authorities for renewal of business permits and supply of essential services,if required, and all necessary forms along with filing fees etc. and such authority shall also consider the same keeping in mind the objectives of the Code, which is essentially the resolving of the insolvency of the Corporate Debtor.

34. The reliefs sought with respect to subsisting contracts/agreements can be granted, and no blanket orders can be granted in the absence of the parties to the contracts and agreements.

With respect to the waivers with regard to extinguishment of claims which arose Pre-CIRP and which have not been claimed are granted in terms of Ghanashyam Mishra and Sons Pvt Ltd v Edelweiss Asset Reconstruction Company Ltd,⁴ wherein the Hon’ble Supreme Court has held that 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 Govt, any State Govt or any local authority, guarantors and other stakeholders. We place reliance on the recent judgement of Hon’ble High Court of Rajasthan in the matter of EMC v. State of Rajasthan wherein it has been inter-alia held that :

“Law is well-settled that with the finalization of insolvency resolution plan and the approval thereof by the NCLT, all dues of creditors, Corporate, Statutory and others stand extinguished and no demand can be raised for the period prior to the specified date ”

On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of 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. The Hon’ble Supreme Court also held that all the dues including the statutory dues owed to the Central Govt, any State Govt or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under section 31 could be continued.

35. With respect to the waivers sought in relation to guarantors, the judgment of Lalit Kumar Jain v Union of India & ors,⁵ wherein the Hon’ble Supreme Court held in para 133 that sanction of a resolution plan and finality imparted to it by section 31 does not per se operate as a discharge of the guarantor’s liability shall apply.

36. With respect to the reliefs and waivers sought for all inquiries, litigations, investigations and proceedings shall be granted strictly as per the section 32A of the Code.

37. In case of non-compliance of this order or withdrawal of Resolution Plan, the payments already made by the Resolution Applicant shall be liable for forfeiture.

38. Subject to the observations made in this Order, the Resolution Plan prepared on August 2022 and revised on October 2022, is hereby APPROVED by this Bench. The Resolution Plan shall form part of this Order and shall be read along with this order for The Resolution Plan thus approved shall be binding on the Corporate Debtor and other stakeholders involved in terms of section 31 of the Code, so that revival of the Debtor Company shall come into force with immediate effect.

39.  The Moratorium imposed under section 14 of the Code shall cease to have effect from the date of this order.

40. The Resolution Professional shall submit copies of the records collected during the commencement of the proceedings to the Insolvency & Bankruptcy Board of India for their record and also return to the Resolution Applicant or New Promoters.

41. Liberty is hereby granted for moving any application if required in connection with implementation of this Resolution Plan.

42. A copy of this Order is to be submitted to the Registrar of Companies, West Bengal.

43. The Resolution Professional shall stand discharged from his duties with effect from the date of this Order, save and except the duties envisaged in the Resolution Plan.

44. The Resolution Professional is further directed to handover all records, premises/factories/documents to the Resolution Applicant to finalise the further line of action required for starting of the operation. The Resolution Applicant shall have access to all the records and premises of the corporate debtor through the Resolution Professional to finalise the further line of action required for starting of the operation. Section 9 of the Resolution Plan envisages that a committee comprising of one representative of Resolution Applicant and Mr. Sudipta Ghosh, Insolvency Professional are proposed to be appointed as members of the Monitoring Committee as per provisions of IBC,2016. The monitoring agency shall monitor the day-to-day operations of the Company and provide regular updates to the Financial Creditors till all the approvals necessary for implementation of the plan are in place and a professionally managed Board is appointed by the Resolution Applicant. The Monitoring Agency would also supervise the implementation of the Resolution Plan. Further Section 10 envisages that the Resolution Applicant shall appoint Mr. Sudipta Ghosh, Insolvency Professional to ensure disbursement of dues to Financial and Operational Creditors as per the approved Plan.

45. In view of the above the A. (IB) No. 1666/KB/2022 along with the main Company Petition, i.e., C.P. (IB) No. 1262/KB/2019 shall stand disposed of accordingly.

46. The Registry is directed to send e-mail copies of the order forthwith to all the parties for information and for taking necessary steps.

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