Approval of Resolution Plan - Marappar Textiles Private Limited

IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH – II, CHENNAI IA(IBC)/Plan/02/(CHE)/2024 In CP(IB)/244(CHE)/ 2022 (filed under Section 30(6) of the Insolvency & Bankruptcy Code, 2016 read with Regulation 39(4) of Insolvency & Bankruptcy Board of India Regulations, 2016) (In the matter of Marappar Textiles Private Limited)

S.PRABHU RP OF M/S MARAPPAR TEXTILES PVT LTD M/S SPP INSOLVENCY PROFESSIONALS LLP, 2ND FLOOR, CODISSIA G.D. NAIDU TOWERS, HUZUR ROAD, COIMBATORE-641018. … Applicant/Resolution Professional

In the matter of M/S TCP LIMITED …Petitioner/Operational Creditor -Versus- M/S. MARAPPAR TEXTILES PRIVATE LIMITED … Respondent/Corporate Debtor

Order Pronounced on 12th July 2024

CORAM SHRI JYOTI KUMAR TRIPATHI, MEMBER (JUDICIAL) SHRI RAVICHANDRAN RAMASAMY,MEMBER (TECHNICAL) Appearance: For Applicant : A.G.Sathyanarayana ORDER 1. IA(IBC)/Plan/02/(CHE)/2024 is an application filed on 11.04.2024 by the Resolution Professional of the Corporate Debtor Viz., M/s. Marappar Textiles Private Limited under Section 30(6) of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 1 of 29 (‚the Code‛)) read with Regulation 39(4) of the Insolvency & Bankruptcy Board of India Regulations, 2016 seeking reliefs as follows: a) To pass an order confirming the Coc decision taken in 9th Coc meeting held on 28.03.2024 in approval of resolution plan submitted by Mr M Shanmugan 2. The Corporate Debtor has been engaged in the business of manufacturing, buying, selling, importing, and exporting of cotton, silk, rayon, nylon, fibre materials and Importing, exporting, distribution of readymade garments, coverings and manufacturing of various garments. The executive summary of the Corporate Debtor is as hereunder, Name of the Corporate Marappar Textiles Private Debtor Limited CIN U17111TZ2014PTC020436 Date of Incorporation 09.05.2014

3. CORPORATE INSOLVENCY RESOLUTION PROCESS OF MARAPPAR TEXTILE PRIVATE LIMITED The Corporate Insolvency Resolution Process in respect of the Corporate Debtor viz., Marappar Textiles Private Limited was initiated by this Adjudicating Authority vide its order dated 12.06.2023 based on an application moved by M/s TCP Limited, in the capacity of Operational creditor under Section 9 of the code in CP(IB)244/2022, Mr. Ramji Mahadevan was appointed as the ‘Interim Resolution Professional’. Thereafter, based on an application moved under Section 22(3)(b) of the code, the applicant herein Mr. S.Prabhu was appointed as the Resolution Professional vide order dated 16.10.2023. The key dates and events during the IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 2 of 29

Corporate Insolvency Resolution Process period are tabulated as hereunder,

S.NO. DATE EVENTS 1. 26.06.2023 Public Announcement regarding initiation of Corporate Insolvency Resolution Process. 2. 20.07.2023 The Committee of Creditors was constituted by the IRP based on the claims received. 3. 27.07.2023 1st CoC Meeting –Discussion was done about the corporate debtor’s operation. 4. 08.08.2023 2nd Coc Meeting- Resolution passed for replacement of Resolution professional. 5. 16.10.2023 Order appointing Mr. S.Prabhu as the RP was passed. 6. 27.10.2023 Appointment of Registered Valuers. 7. 09.12.2023 End of 180 days of Corporate Insolvency Resolution Process Period. 8. 11.12.2023 Corporate Insolvency Resolution Process Period was extended for 90 days by order of this Adjudicating Authority, until 08.03.2024. 9. 26.03.2024 A Resolution Plan was approved by the CoC and the same was filed before this Adjudicating Authority for approval. 10. 08.04.2024 Date of Filing of resolution plan with adjudicating authority. 11. 30.10.2023 Form G (Expression of Interest (EoI)) was published. 12. 31.12.2023 Last date of submission of Resolution Plan. 13. 30.12.2023 Performance Security to the tune of Rs 1 crore was deposited by the SRA. 14. 14.03.2024 CIRP Period was further extended for period of 60 days, expiring on 08.05.2024. 15. 08.05.2024 E x p i r y o f e x tended CIRP Period.

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4. DELIBERATION OF THE COC ON THE FEASIBILITY OF THE PLAN During the 9th CoC Meeting held on 26.03.2024 deliberations were made by the members of the CoC on the Resolution Plan submitted by the SRA. Accordingly, the Resolution Plan was approved unanimously by ballot sheet voting. The resolution is as hereunder, "RESOLVED THAT The Final Revised Resolution Plan dt: 01.03.2024 submitted by M.Shanmugham for acquisition of assets of the Corporate Debtor is hereby approved and confirmed by this committee u/s. 30(4) of the Insolvency and Bankruptcy Code, 2016 and the RP is directed to take necessary steps for obtaining the approval of the Adjudicating Authority under the provisions of IBC.‛

5. DETAILS OF THE SUCCESSFUL RESOLUTION APPLICANT

NAME CATEGORY Mr. M. Shanmugham Individual Promoter Director of Corporate Debtor

It is submitted that the corporate debtor is MSME which is within the meaning of MSME act 2006, in view of section 240A amendment to the code, existing promoter/ principal shareholders are entitle to participate as ‚Resolution Applicant‛, On such participation the SRA is eligible to be ‚Resolution applicant‛. It is submitted that the RA has not been declared as ‚wilful defaulter‛ as per law. Affidavit is submitted to the effect of section 29A is filed in pages 646-648 of the Application. It is submitted that son of IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 4 of 29

SRA Mr. Prithivraj is software engineer worked in multinationals and gained administration skill for past 20 years. He also has exposure in textile field for almost 10 years. He will join with the promoter for effective implementation.

6. SOURCE OF FUND 6.1 On a perusal of page 780-784 of the application filed, the Successful Resolution Applicant has Bank Guarantee for 1,40,00,000/- and Rs 5,00,000/- deposited as cash to CD’s account. 6.2 On perusal of the application Letter of consent from Ramalingam Constructuion company for financial assistance of Rs 2.0 crores on approval of plan is found in page 654 of the application. 6.3 It is submitted that P&C Projects ltd has undertaken to invest Rs 3.0 crores letter of consent for that effect is filed in Page 679 of the application. 6.4 It is submitted that Ultra Readymix Concrete Private limited is interested to extend financial assistance to extent of 2.0 crores the letter of consent is filed in page 701 of the application. 6.5 Promoter Mr M.Shanmugham has undertaken to invest Rs 1.0 crore for the period of two years letter of comfort is filed in page 731 of the application. 6.6 Mr S pushparaj has agreed to provide financial assistance for Rs 1 core against allotment of share the letter of consent is placed in page 733 of the application.

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6.7 On perusal of Resolution Plan, clause 5.6 of the plan sets out details of source of fund to meet the obligation under the Resolution plan along with schedule for such payment is as tabulated, the same is as follows,

6.8 Source of Fund, S.No. Name Amount 1. Own Source by Resolution applicant 2.90 Crore Unsecure Loan 2. Friends and relatives 70 Lakhs 3. Investment by Sai Textile 2 crores 4. Loans from Financial institution 8.90 crores Total 14.50 crores

Vide order dated 28.06.2024 this tribunal had sought for detailing the source of funds, the compliance is filed and clarified on source of funds as S.No.s source Committed Amount 1 Ramalingam Construction 2.00 Crores Company Ltd 2 P&C Projects Pvt Ltd 3.00 Crores 3 Ultra Ready mix Concrete 2.00 Crores Private Limted 4 Damodharan Gurumoorthy 1.00 Crores 5 S. Pushparaj 1.00 Crores 6 A.Arulsamy Amount not specified

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6.9 Application of Funds,

S.no: Payment schedule Payment allocation Amount Total (In Lakhs) 1 At the time of Earnest Deposit Money. 1,45,00,000 1,45,00,000 submitting Binding The amount has to be Resolution Plan adjusted on NCLT Approval to secured financial creditor 2 Within 30 days from Performance Guarantee, 1,45,00,000 the date of Approval The amount has to be of the Resolution Plan adjusted NCLT Approval. by COC

3 Within 30 days from The Following amount the date of Approval has to be adjusted from of the Resolution Plan performance guarantee of by adjucating Rs.1,45,00,000 on NCLT authority Approval  Payment of CIRP Cost 15,00,000  Payment of 46,50,000 Operational Creditors in priority as per code and to unsecured financial creditor.  Payment of Secured 75,00,000 Financial Creditor  Working Capital, Contingency 8,50,000 provision and Restart Expenses 4 Within 75 days from 2,70,00,000 2,70,00,000 the date of Approval of the Resolution Plan by Adjudicating Authority 5 Within 90 days or 120 Payment of Balance 8,90,00,000 8,90,00,000 days (90 days without amount to secured interest + 30 days with financial creditor as per Interest) from the date the Plan of Approval of the Resolution by IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 7 of 29

Adjudicating Authority TOTAL 14,50,00,000 14,50,00,000

Note: *CIRP Costs are estimated and may vary based on actuals. ** The Amount required for Capital expenditure and Working Capital shall be brought in by the Resolution Applicant through Unsecured Loans and as and when required.

7. SALIENT FEATURES OF THE RESOLUTION PLAN The SRA contends that they can run the unit by infusing additional working capital of Rs 20 lakhs and aim to reconstitute the management team and major investors nominees and RA would become director of the company. Rs 25,00,000/- is expected to be generated out the operations of Corporate Debtor, as Corporate Debtor is still operating and all the CIRP expenses is being met by the revenue generated by CD, In case internal generation does not materialize resolution applicant has undertaken to get funds from his own source.

8. PAY-OUT TO STAKEHOLDERS AS PROPOSED IN THE PLAN

Sl.No Category of Amount Amount Amount Amount Stakeholder Claimed Admitted Provided Provide under Plan d to the Amount Claimed % 1 Secured Financial Creditors Indian Overseas 25,33,14,794 25,33,14,794 13,80,00,000 54.47 % Bank Total 25,33,14,794 25,33,14,794 13,80,00,000 2 Unsecured Financial Creditor Goseree Finance 64,53,988 64,53,988 3,22,700 5 % Limited IndusInd Bank 2,01,17,464 2,01,17,464 10,05,800 5% Limited Total 2,65,71,452 2,65,71,452 13,28,500

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3 Operational Creditors TCP Limited 3,39,14,042 3,39,14,042 16,97,247 5% Navin Cotex 10,00,000 10,00,000 50,000 5% Sai Textiles 1,44,71,204 1,44,71,204 7,23,560 5% Coimbatore Sun Enterprises 3,85,125 3,85,125 19,256 5% Diwaraka Papers Coimbatore Unicone, 8,74,697 8,74,697 43,735 5% Sanakaran Koil Venkateswara 48,116 48,116 2,406 5% Cone Mahabali Cotton, 48,11,586 48,11,586 2,40,579 5% Georai Sunshine 9,30,471 9,30,471 46,524 5% Impex,Raichure Shree Vedanth 8,47,742 8,47,742 42,387 5% Marketing Raichur PNP Eneterprises- 24,10,458 21,06,160 1,05,308 5% Nishanth Dalal PNP Cotton- 25,51,905 25,51,905 1,27,595 5% Nishanth Dalal Sri Siddeshwar 52,83,043 44,58,046 2,22,902 5% Ginning and Pressing Pvt Ltd Total 6,75,28,389 6,63,99,094 33,21,500 4 Other debts and NIL NIL NIL dues Grand Total 34,73,14,635 34,62,85,340 14,26,50,000 5 Towards Expenses Restart Expenses 8,50,000 CIRP Cost 15,00,000 Grand Total 14,50,00,000

9. IMPLEMENTATION & MONITORING COMMITTEE (IMC) 9.1 Implementation & Monitoring Committee shall be constituted to monitor the implementation of the Plan. The members shall comprise –

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The Resolution Professional (Chairman of the Committee) One Representative of the CoC One Representative of the Resolution Applicant

9.2 The IMC shall continue till all payments under the Resolution plan are made. 9.3 The Monitoring Committee shall be responsible for monitoring the implementation and execution of the Plan including smooth transition of the Management of the Corporate Debtor. The Monitoring Committee shall also handover to the Resolution Applicant, the original/duly certified copies of title deeds of the land owned by the Corporate Debtor on payment of the final instalment of the final instalment of the Resolution Amount. 9.4 The Monitoring Committee shall further be responsible for the distribution of the proceeds received from the Resolution Applicant under the Plan. For the said purpose, the Chairman of the Monitoring Committee shall be paid a fee of Rs.2,00,000/- (Rupees Two lakhs Only) plus applicable GST per month along with out-of-pocket expenses on actuals from the date of approval of the Resolution Plan to till the period Monitoring Committee dissolves.

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10. MANAGEMENT OF THE CORPORATE DEBTOR 10.1 Board of Directors and Management team: The board of directors of the Corporate Debtor on approval of the proposed Resolution Plan as mentioned in clause 5.4 of the Resolution Plan states suspended board has Resolution applicant as the only director and new board will be constituted along with nominees, shareholders and directors. It is submitted that Mr Arulsamy an executive director of National Textiles Corporation Private Limited will be joining the company on full time basis to revive the company. 10.2 As per clause 5.61 capital structure of The company is restructured as follows, CAPITAL EXISTING % AFTER PLAN HOLDING STRUCTURE HOLDING IMPLEMENTATION % PROMOTERS 3,49,400 76.06% 10,000 2.14% M.S 48,960 10.66% NIL NIL WINDMILL OTHERS 61,040 13.29% 49,400 10.76% FRESH ISSUE 4,00,000 87.07% TO INVESTORS TOTAL 4,59,400 100.00% 4,59,400 100.00%

11. MANDATORY COMPLIANCE UNDER IBC & REGULATIONS From the averments made in the application as well as on perusal of Form -H, as filed by the Resolution Professional in relation to the procedural aspects, the same seems to have been duly complied with for which the Resolution Professional has issued a certificate and it is not necessary for this Authority to go into the same. However, this Authority is duty bound to examine the Resolution Plan within the contours of Section 30 (2) of the IBC, 2016.

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MANDATORY COMPLIANCE COMPLIANCE UNDER UNDER IBC, 2016 RESOLUTION PLAN S. 30(1) - Resolution Applicant to Resolution Applicant filed an submit an affidavit stating that he Undertaking at page 646 of the is eligible under Sec.29A of the application Code, 2016 S.30(2)(a)- Payment of Insolvency Clause 5.5.1 A of the Resolution and Resolution cost in the manner Plan provides for the payment of specified by the Board CIRP costs in priority. S.30(2)(b) -Payment of debts of Clause 5.5.1 B of the Resolution Operational Creditors in such Plan provides for the discharge of manner as may be specified by the Operational Creditor claims. Board, which shall not be less than the amount to be paid to the Operational Creditors in the event of a liquidation of the Corporate Debtor under Sec. 53. S. 30(2)(c)– Management of the Clause 6.26 of the Resolution Plan affairs of the Corporate Debtor provides for Management and after approval of the Resolution control of the operations of the Plan. Corporate Debtor. S.30(2)(d)– Implementation and Clause 6.2 of the Plan provides for Supervision of the Resolution Plan. implementation & supervision of the plan. S. 30(2)(e)– The plan does not Clause 6.2 of the plan expresses contravene any of the provisions of that the plan does not contravene the law for the time being in force. any provisions of the law for the time being in force. S.30(4) - Committee of Creditors The CoC, in its 9TH meeting, has approve the Resolution Plan by unanimously approved the not less than 66% of the voting Resolution Plan. share of Financial Creditors, after considering its feasibility, viability and such other requirement as specified by the Board

A Comparison vis-à-vis with the Mandatory compliance under the IBC and the Compliance made under the Resolution Plan.

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MANDATORY CONTENTS OF THE RESOLUTION PLAN IN TERMS OF REGULATION 38 OF CIRP REGULATIONS.

MANDATORY COMPLIANCE UNDER COMPLIANCE UNDER CIRP REGULATION RESOLUTION PLAN 38(1) The amount due to the Operational Clause 5.5.1 B of the Creditor under Resolution Plan shall be Plan given priority in payment over Financial Creditor. 38(1A) A Resolution Plan shall include a Clause 5.5.1B of the statements as to how it has dealt with Plan the interest of all stakeholders, including Financial Creditors and Operational Creditors of the Corporate Debtor. 38(1B) A Resolution Plan shall include a Clause 5.9 of the statement giving details if the Plan Resolution Applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past. a) term of the plan and its Clause 6.2 of the implementation schedule Plan b) management and control of the Clause 6.2.6 of the 38(2) business of the Corporate Debtor during Plan its term; c) adequate means for supervising its Clause 6.2.6 of the implementation Plan a) it address the cause of default; Clause 3.4 of the Plan b) it is feasible and viable Clause 4 of the plan c) it has provisions for effective Clause 6 of the Plan implementation d) it has provisions for approval Clause 9 of the plan 38(3) required and the timeline for the same; and e) the resolution applicant has the Clause 4 of the Plan capability to implement the Resolution Plan.

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12. JUDICIAL PRONOUNCEMENTS OF THE HON’BLE SUPREME COURT IN RELATION TO APPROVAL OF A RESOLUTION PLAN

12.1 In so far as the approval of the Resolution Plan is concerned, this Authority is not sitting in appeal against the decision of the Committee of Creditors and this Authority is duty bound to follow the Judgment of the Hon’ble Supreme Court in the matter of K. Sashidhar –Vs– Indian Overseas Bank (2019) 12 SCC 150, decided on 05.02.2019 wherein in para 19 and 62 it is held as under;

‚19…….In the present case, however, our focus must be on the dispensation governing the process of approval or rejection of resolution plan by the CoC. The CoC is called upon to consider the resolution plan under Section 30(4) of the I&B Code after it is verified and vetted by the resolution professional as being compliant with all the statutory requirements specified in Section 30(2). 62. ………In the present case, however, we are concerned with the provisions of I&B Code dealing with the resolution process. The dispensation provided in the I&B Code is entirely different. In terms of Section 30 of the I&B Code, the decision is taken collectively after due negotiations between the financial creditors who are constituents of the CoC and they express their opinion on the proposed resolution plan in the form of votes, as per their voting share. In the meeting of the CoC, the proposed resolution plan is placed for discussion and after full interaction in the presence of all concerned and the Resolution Professional, the constituents of the CoC finally proceed to exercise their option (business/commercial decision) to approve or not to approve the proposed resolution plan. In such a case, non-recording of reasons would not per-se vitiate the collective decision of the financial creditors. The legislature has not envisaged challenge to the ‚commercial/business decision‛ of the financial creditors taken collectively or for that matter their individual opinion, as the case may be, on this count.‛

12.2 Further the Hon’ble Supreme Court in the matter of K. Sashidhar v. Indian Overseas Bank and Ors. (2019) 12 SCC 150 decided on 05.02.2019 has lucidly delineated the scope

IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 14 of 29 and interference of the Adjudicating Authority in the process of approval of the Resolution Plan and held as under; ‚55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan ‚as approved‛ by the requisite per cent 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. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides: (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board.

The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code.

58. Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with Section 31(1) of the I&B Code. No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (NCLAT) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters ‚other than‛ enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed

IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 15 of 29 authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I&B Code and not to act as a court of equity or exercise plenary powers.‛ (emphasis supplied) 12.3 The Hon’ble Supreme Court of India in the matter of Committee of Creditors of Essar Steels –Vs– Satish Kumar Gupta & Ors. in Civil Appeal No. 8766 – 67 of 2019 decided on 15.11.2019 at para 42 has held as under; 42. ………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).

12.4 Also the Hon’ble Supreme Court of India in the matter of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors. (2020) 8 SCC 531 decided on 15.11.2019 after referring to the decision in K. Sashidhar (supra) has held as under; ‚73. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or sub-class of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximizing the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact that the corporate debtor needs to keep going as a IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 16 of 29 going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters. The reasons given by the Committee of Creditors while approving a resolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key features, it must then pass the resolution plan, other things being equal.‛ (emphasis supplied)

12.5 The Hon’ble Supreme Court in its recent decision in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. –Vs- NBCC (India) Ltd. & Ors in Civil Appeal no. 3395 of 2020 decided 24.03.2021 has held as under;

76. The expositions aforesaid make it clear that the decision as to whether corporate debtor should continue as a going concern or should be liquidated is essentially a business decision; and in the scheme of IBC, this decision has been left to the Committee of Creditors, comprising of the financial creditors. Differently put, in regard to the insolvency resolution, the decision as to whether a particular resolution plan is to be accepted or not is ultimately in the hands of the Committee of Creditors; and even in such a decision-making process, a resolution plan cannot be taken as approved if the same is not approved by votes of at least 66% of the voting share of financial creditors. Thus, broadly put, a resolution plan is approved only when the collective commercial wisdom of the financial creditors, having at least 2/3rd majority of voting share in the Committee of Creditors, stands in its favour.

77. In the scheme of IBC, where approval of resolution plan is exclusively in the domain of the commercial wisdom of CoC, the scope of judicial review is correspondingly circumscribed by the provisions contained in Section 31 as regards approval of the Adjudicating Authority and in Section 32 read with Section 61 as regards the scope of appeal against the order of approval.

77.1. Such limitations on judicial review have been duly underscored by this Court in the decisions above-referred, where it has been laid

IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 17 of 29 down in explicit terms that the powers of the Adjudicating Authority dealing with the resolution plan do not extend to examine the correctness or otherwise of the commercial wisdom exercised by the CoC. The limited judicial review available to Adjudicating Authority lies within the four corners of Section 30(2) of the Code, which would essentially be to examine that the resolution plan does not contravene any of the provisions of law for the time being in force, it conforms to such other requirements as may be specified by the Board, and it provides for: (a) payment of insolvency resolution process costs in priority; (b) payment of debts of operational creditors; (c) payment of debts of dissenting financial creditors; (d) for management of affairs of corporate debtor after approval of the resolution plan; and (e) implementation and supervision of the resolution plan.

77.2. The limitations on the scope of judicial review are reinforced by the limited ground provided for an appeal against an order approving a resolution plan, namely, if the plan is in contravention of the provisions of any law for the time being in force; or there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period; or the debts owed to the operational creditors have not been provided for; or the insolvency resolution process costs have not been provided for repayment in priority; or the resolution plan does not comply with any other criteria specified by the Board

77.6.1. The assessment about maximization of the value of assets, in the scheme of the Code, would always be subjective in nature and the question, as to whether a particular resolution plan and its propositions are leading to maximization of value of assets or not, would be the matter of enquiry and assessment of the Committee of Creditors alone. When the Committee of Creditors takes the decision in its commercial wisdom and by the requisite majority; and there is no valid reason in law to question the decision so taken by the Committee of Creditors, the adjudicatory process, whether by the Adjudicating Authority or the Appellate Authority, cannot enter into any quantitative analysis to adjudge as to whether the prescription of the resolution plan results in maximization of the value of assets or not. The generalised submissions and objections made in relation to this aspect of value maximisation do not, by themselves, make out a case of interference in the decision taken by the Committee of Creditors in its commercial wisdom

78. To put in a nutshell, the Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is well defined and circumscribed by Sections 30(2) and 31 of the Code read with the parameters delineated by this Court in the decisions above referred. The jurisdiction of the Appellate Authority is also IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 18 of 29 circumscribed by the limited grounds of appeal provided in Section 61 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the CoC. Within its limited jurisdiction, if the Adjudicating Authority or the Appellate Authority, as the case may be, would find any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by Code and exposited by this Court.

12.6 The Hon’ble Supreme Court in its recent decision in Paschimanchal Vidyut Vitran Nigam Ltd. Verus Raman Ispat Private Limited & Ors. In Civil Appeal no. 7976 of 2029 decided 17.07.2023 has held as under; 49. Rainbow Papers (Supra) did not notice the ‘waterfall mechanism’ under Section 53 – the provision had not been adverted to or extracted in the Judgement. Furthermore, Rainbow Papers (Supra) was in the context of a resolution process and not during liquidation. Section 53, as held earlier, enacts the waterfall mechanism providing for the hierarchy or priority of claims of various classes of creditors. The careful design of Section 53, locates amounts payable to secured creditors and workmen at the second place, after the costs & expenses of the liquidator payable during the liquidation proceedings. However, the dues payable to the government are placed much below those of secured creditors and even unsecured creditors. This design was either not brought to the notice of the Court in Rainbow Papers (supra) or was missed altogether. In any event, the Judgment has not taken note of the provisions of the IBC which treat the dues payable to secured creditors at a higher footing than dues payable to central or state Government. (emphasis supplied)

12.7 Thus, from the catena of judgments rendered by the Hon’ble Supreme Court on the scope of approval of the Resolution Plan, it is crystal clear that only limited judicial review is available for the Adjudicating Authority under Section 30(2) and Section 31 of IBC, 2016 and this Adjudicating Authority

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13. RELIEF & CONCESSIONS:

The Resolution Applicant has sought for various waivers and Concessions in Clause 9 of the Resolution Plan, which are as follows, SL. RELIEF / CONCESSIONS SOUGHT FROM ORDERS NO. FINANCIAL CREDITORS THEREON 1. On receipt of the payment of their entire dues as per this plan, the banks shall release their Granted, charge over all the assets of corporate debtor as subject to the forming part of Plan, which have been provided provisions of as security against the facilities availed from the IBC, 2016 and financial lenders and no amount of any nature other shall be payable either by the Resolution Applicable Applicants or by the corporate debtor, having laws new management / directors, except as provided for in the resolution plan. 2. The Financial Creditors shall withdraw any Granted suits/ applications related to recovery or any subject to HC other nature filed against corporate debtor case and whatsoever pending in any court of law and any provisions of effect of suits/applications decided thereafter IBC and other and related to past events (pre CIRP date) will applicable stand infructuous after the approval of the plan. laws 3. The Resolution Applicant will have the option Appropriate to pre pay the dues of the Financial Creditors, authorities to without any additional levies consider keeping in view the object of IBC, 2016. 4. After the approval of the Resolution Plan, all Appropriate fixed assets and current assets as specifically authorities to provided for in the plan or any other asset consider having ownership of the corporate debtor will keeping in solely remain under the ownership and right of view the corporate debtor and no other person will have object of IBC, right on these assets in future 2016. 5. Financial Creditors will issue No Objection Appropriate

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Certificate to the Resolution Applicants at their authorities to request, to the effect that Resolution Applicants consider may sell the assets acquired (if required) by the keeping in resolution Applicants after the term of the view the proposed resolution plan, having met with all object of IBC, the payment obligations under this resolution 2016. plan.

SL. RELIEF / CONCESSIONS SOUGHT FROM ORDERS NO. CENTRAL BOARD OF DIRECT TAXES THEREON 1. All pending litigation, notices, past and ongoing Appropriate assessments, past and ongoing investigations, authorities to tax demands under all Direct and Indirect tax consider statues towards the company would be treated keeping in as closed and no further action would be taken view the for any action/ transaction carried out before the object of IBC, effective date 2016. 2. To not levy any Tax (including minimum alternate tax) arising because of giving effect to, or otherwise in relation to, the Plan, in the hands Appropriate of CD or the RA. The Central Board of Excise authorities to and Customs not to void or take any other consider actions with respect to the transactions keeping in contemplated under this Plan (including the sale view the of Collateral or any other act) and not to impose object of IBC, any successor liability on the Resolution 2016. Applicant and the CD Company shall be entitled to carry forward the accumulated input tax credit balances under the Indirect Tax Laws and to utilized such amounts to set off against tax liability arising in future in accordance with the applicable laws. 3 All benefits, exemptions, deductions, rebates, Appropriate reliefs, credits etc. under any tax laws in India authorities to available to the Company shall not lapse consider pursuant to the Resolution Plan and shall be keeping in available post implementation date view the object of IBC, 2016.

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SL. RELIEF / CONCESSIONS SOUGHT UNDER ORDERS NO. COMPANIES ACT 2013 THEREON 1 The Registrar of Companies to take on record Granted, upon approval of Resolution Plan from Hon'ble subject to the NCLT, without further compliances provisions of IBC, 2016 and other Applicable laws 2 Waiver/Approval for any past liabilities, Granted, penalties, and any form of payment by way of subject to the Late Fees, damages, prosecution etc. which provisions of occurred or become due because of any non- IBC, 2016 and compliance related to Companies Act and Rules other till effective date. Waiver to maintain/ Applicable reconstruct past records of the Corporate laws Debtor, if any, till the approval of plan by NCLT

SL. RELIEF / CONCESSIONS SOUGHT FROM STATE ORDERS NO. GOVERNMENT THEREON 1 Liberty to change the name of the company and Appropriate the approval of the State/Centre Government authorities to without any tax implications. consider keeping in view the object of IBC, 2016. 2 Coverage under the incentives offered by State Appropriate Government for sick industrial units or any authorities to other incentives consider keeping in view the object of IBC, 2016 3 Time period of twelve months from the effective Appropriate date to ensure compliance in relation to non-authorities to compliance of Applicable laws by the Corporate consider Debtor to any period up to effective date keeping in without any additional interest and penalty. view the object of IBC, 2016 4 The relevant Government/ Statutory authorities Appropriate shall not initiate any investigation, action or authorities to proceeding against the Resolution Applicant or consider the new management (upon acquisition of keeping in IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 22 of 29

Corporate Debtor) including the Board of view the Directors, in relation to any non-compliance object of IBC, with Applicable laws by the Corporate Debtor 2016 pertaining to any period up to effective date. 5 All Government authorities that have issued or Appropriate granted business permits to provide reasonable authorities to time of at least twelve months after the effective consider date to the Resolution Applicant to assess the keeping in status of business permits and applicable laws view the without initiating any investigation, action or object of IBC, proceeding in relation to non-compliance, and 2016 to permit the Resolution Applicant to continue to operate the business of the corporate debtor as carried out prior to effective date. 6. No amount shall be payable for any liability of Appropriate the Corporate Debtor towards any creditor other authorities to than as already provided under the Resolution consider Plan keeping in view the object of IBC, 2016 7. All concerned revenue or stamp authorities to Appropriate waive penalties for non-registration and authorities to inadequate or non-stamping of documents consider executed by the Company up to the effective keeping in date. view the object of IBC, 2016

SL. RELIEF / CONCESSIONS SOUGHT FROM ORDERS NO. DIRECTOR GENERAL OF FOREIGN TRADE THEREON 1 The Corporate Debtor M/s Marappar Textiles Private Limited had export obligation vide Appropriate EPCG Authorisation Number: 320021797 dated authorities to 5.2.2015 for Rs.2,74,63,861 /-and the export consider obligation period expired on 5.2.2023. In this keeping in regard Director General of Foreign Trade, view the Ministry of Commerce and Industry, object of IBC, Department of Commerce, Vide public Notice 2016 No.2/2023 dated 01.04.2023 Policy Circular No.02/2023-24 dt 23.06.2023 and Public Notice No.20/2023 dt 30.06.2023 announced amnesty scheme and timeline has been extended upto 31.012.2023 to register under this scheme and IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 23 of 29 make the payment of customs duty plus interest by 31.03.2024. Since the CIRP of the CD commenced on 12.06.2023, the suspended Director could not avail the benefit of this amnesty scheme. Hence specific relief is sought for waiver of export obligation through the resolution plan

SL. OTHER RELIEFS ORDERS NO. THEREON 1 There shall be no Stamp Duty implications and any Appropriate other levies for transfer of assets or otherwise and authorities the state Government shall not object to such. to consider keeping in view the object of IBC, 2016. 2 On approval of the Resolution Plan by the Hon'ble Granted, NCLT, all the litigations, proceedings of whatever subject to nature, including those relating to direct or indirect the taxation, or of any other nature, in respect of the provisions issues, claims, etc., pertaining to the period prior to of IBC, 2016 the date of approval of the Resolution Plan by the and other Adjudicating Authority, shall stand closed Applicable immediately and the Corporate Debtor and laws Resolution Applicants, shall not be liable for any civil or any other consequence including penalty arising therefrom. 3 To extinguish all the contingent liability as may Granted, arise after the approval of the resolution plan and subject to pertaining to the period prior to CIRP and which are the not captured related to period before approval of provisions Resolution Plan. of IBC, 2016 and other Applicable laws 4 The Resolution applicant shall be responsible only Granted, for the liabilities specifically mentioned and subject to undertaken by it in the Resolution Plan.

To clarify, the the Applicant shall not be responsible for the provisions liabilities not mentioned/undertaken in the of IBC, 2016 Resolution Plan. and other Applicable laws 5 Amend the constitutional documents of the Granted, corporate debtor subject to IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 24 of 29 the provisions of IBC, 2016 and other Applicable laws 6 Cost cutting measures including but not limited to Granted, rationalization/ optimization of manpower subject to the provisions of IBC, 2016 and other Applicable laws 7 Liberty to change the name of the company and the Granted, State Government shall approve the same without subject to any charges/fees the provisions of IBC, 2016 and other Applicable laws 8. Coverage under the incentives offered by State Appropriate Government for sick industrial units. authorities to consider keeping in view the object of IBC, 2016 9. All obligations, liabilities (whether contingent or Granted crystallized) claims and proceedings in relation to subject to any corporate guarantees, indemnities and all other HC order forms of credit support provided by the Corporate and Debtor prior to the Effective Date and all contingent provisions liabilities disclosed / undisclosed in the annual of IBC and audited financial statements as well as financial other statement as on CIRP Commencement Date of the applicable Corporate Debtor and liabilities which are not in laws notice of Corporate Debtor or not acknowledged by the Corporate Debtor shall stand extinguished and discharged on and with effect from the Effective Date 10. All enquiries, investigations, notices, causes of Appropriate action, suits, claims, liabilities, demand, obligations, authorities penalties, disputes, litigations, arbitrations or other to consider judicial, regulatory or administrative proceedings keeping in IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 25 of 29 against the CD or the affairs of the CD, pending or view the threatened, present or future, (including without object of limitation, any investigation by Central Bureau of IBC, 2016 Investigation or the Serious Fraud Investigation Office), whether or not on account of acts or omissions in breach of Applicable Law (including but not limited to environmental laws, foreign exchange laws and regulations, labour and employment laws, and laws relating to anti-corruption and prevention of money laundering) and including but not limited to the proceedings specifically under this Plan in relation to any period prior to the Effective Date shall stand extinguished and accordingly, all such proceedings, inquires, investigations, etc. shall be disposed of and all liabilities or obligations in relation thereto, whether or not set out in the Provisional Balance Sheet, the balance sheet of the CD or the profit and loss account statements of the CD or the List of Creditors, shall, in accordance with Regulation 37 of the CIRP Regulations, be deemed to have been written off in full and permanently extinguished by virtue of the order of NCLT approving this Plan and the RA, shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto.

By virtue of the order of the NCLT approving this Resolution Plan, all new inquiries, investigations, notices, suits, claims, disputes, litigations, arbitration or other judicial, regulatory or administrative proceedings will not be initiated or admitted if these relate to any period prior to the Effective Date or on account of the acquisition of control by RA over the CD pursuant to this Resolution Plan, against the CD or any of its employees or directors who are appointed or who remain in employment or directorship after the Effective Date or pursuant to the implementation of the Resolution plan 11. Upon approval of this Plan by the NCLT, all dues under the provisions of all the indirect Taxes, Appropriate including but not limited to, the Central Excise Act, authorities 1944, the Finance Act, 1994 (service Tax), the to consider Customs Act, 1962, the Central Sales Tax Act, 1956, keeping in the Goods and Services Tax Act, 2017, property tax, view the the various states' value added tax acts and any object of other indirect Tax laws, including Taxes, duty, IBC, 2016

IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 26 of 29 penalties, interest, fines,charges, unpaid Tax deducted at source/ Tax collected at source (to the extent applicable), whether admitted or not, due or contingent, whether part of the above mentioned contingent liability schedule dues or not, whether claimed by the Tax authorities or not, asserted or unasserted, crystallised or uncrystallised, known or unknown, secured or unsecured, disputed or undisputed, present or future, in relation to any period prior to the Effective Date, shall stand extinguished and the Corporate Debtor will not be liable to pay any amount against such demand 12. After acquisition, there may be receipts by the Granted, Resolution Applicant over and above those recorded subject to in books. Such receipts will solely be under the the right/control/ownership of resolution Applicants provisions and others will not have any right on such receipts of IBC, 2016 except that of Avoidance Applications, which shall and other be distributed in terms of Section 53 of IBC, 2016. Applicable laws

14. The Applicant has filed Form -H in accordance with the IBBI (CIRP Regulations, 2016) along with this Application and the same is placed along with the application. Further, it is observed from Form-H that the amount proposed in the plan is much higher than the Liquidation Value of the Corporate Debtor. The fair value and the Liquidation Value as mentioned in Form-H is as hereunder,

1. Fair Value Rs. 16.95 Crore 2. Liquidation Value Rs. 13.56 Crore 3. Plan Value Rs. 14.50 Crore

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15. It is submitted in from Form-H, that there are no avoidance application filed/pending against the corporate debtor. 16. It is seen that the resolution plan has been approved with 100% voting share. As per the CoC, the plan meets the requirement of being viable and feasible for the revival of the Corporate Debtor. By and large, all the compliances have been made by the RP and the Resolution Applicant for making the plan effective after approval by this Authority. On perusal of the documents on record, we are satisfied that the Resolution Plan is in accordance with Section 30 & 31 of the IBC and also in compliance with regulations 38 & 39 of the IBBI (CIRP) Regulations, 2016. 17. In the light of the aforesaid, it is hereby ordered that the payment to the members of the Monitoring Committee shall be made by the Corporate Debtor on such terms and conditions agreed between the parties for the entire period of implementation as mentioned in this resolution plan. 18. In case of non-compliance/non-implementation/ failure during implementation of this order or withdrawal of the Resolution Plan by the Successful Resolution Applicant, the RP shall forfeit the EMD/Performance Guarantee or any further amount paid as per the terms of the resolution plan without any recourse to this Authority. 19. Subject to the observations made in this Order, the Resolution Plan is hereby APPROVED by this Adjudicating Authority. The Resolution Plan shall form part of this Order. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that the revival of the Debtor Company shall come into force with immediate effect. The IA(IBC)/02/(CHE)/2024 in CP(IB)244(CHE)2022 In the matter M/s. Marappar Textiles Private Limited 28 of 29

Moratorium Imposed under section 14 shall cease to have effect from the date of this Order. 20. The Resolution Professional shall submit the records collected during the commencement of the proceedings to the Insolvency & Bankruptcy Board of India for its record and also return to the Resolution Applicant. The Resolution Professional is further directed to hand over all records/premises/factories/documents to the Resolution Applicant to finalize the further line of action required for starting the operation of the Corporate Debtor under the control of the Resolution Applicant. 21. Certified copy of this Order be issued on demand to the concerned parties, upon due compliance. 22. Liberty is granted for moving any Application if required in connection with the implementation of this Resolution Plan. 23. A copy of this Order be submitted to the Office of the concerned Registrar of Companies. 24. The Resolution Professional shall stand discharged from his duties with effect from the date of this Order. 25. IA (IBC)/Plan/02/CHE/2024 stands disposed of accordingly. 26. The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Learned Counsel for information and for taking necessary steps. 27. File be consigned to the record room.

-SD- -SD- RAVICHANDRAN RAMASAMY JYOTI KUMAR TRIPATHI MEMBER (TECHNICAL) MEMBER (JUDICIAL)

Rannika

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