Landmark Judgments by the Hon’ble NCLAT from 16th to 31st January, 2023.
Jindal Stainless Ltd. Vs. Mr. Shailendra Ajmera, RP of Mittal Corp Ltd. & Ors. (D.O.J. 18-01-2023)
In the instant case, the IRP had received six Resolution Plans for the CD including plans from Jindal Stainless Ltd. and Shyam Sel and Power Ltd. The Resolution Applicants were communicated the rules of Swiss Challenge Process, who then gave their unconditional acceptance to the same. On 15.07.2022 the Challenge Process was conducted and continued for seven rounds, until only one competing Resolution Applicant remained in the Challenge Process. All the Resolution Applicants were notified that the signed and compliance Resolution Plan must be submitted by 18.07.2022. Jindal Stainless Ltd, Shyam Sel and Power Ltd. along with two other resolution applicants submitted their amended Resolution Plans by 18.07.2022. Thereafter, on 19.07.2022, Shyam Sel and Power Ltd. addressed an e-mail to the RP, stating its willingness to submit the entire NPV offered as upfront payment within 30 days. Further, Shyam Sel and Power Ltd. also filed an application before the AA, seeking direction to the RP to consider the offer dated 19.07.2022 and place the same before the CoC. The AA vide an order dated 11.08.2022, directed the CoC to consider the revised resolution plan of Shyam Sel and Power Ltd. and take an informed decision. In pursuance of the said Order, the RP stopped the voting process which was underway. Jindal Stainless Ltd. filed an appeal before NCLAT against the Order dated 11.08.2022.
The issue that arose consideration before the Hon’ble NCLAT was whether after closure of Challenge Process on 15.07.2022 and consequent receipt of Resolution Plan by 18.07.2022, the AA could have directed for consideration of the revised plan submitted by Shyam Sel and Power Ltd. thereafter? The Hon’ble NCLAT held that after adoption of the Swiss Challenge Method to find out the best plan, one Resolution Applicant cannot be allowed to submit a revised plan. Reliance was placed on the judgment of the Hon’ble Supreme Court in Ngaitlang Dhar vs. Panna Pragati Infrastructure Private Limited & Ors . The Bench further observed that the decision of CoC to vote on the Resolution Plan after completion of Challenge Process and not to further accept any modification of the plan, should not be interfered with.
State Bank of India Vs. Bhuvee Stenovate Pvt. Ltd. & Ors. (D.O.J 25.01.2023)
In the instant case, the Liquidator made announcement for auction of the assets of the Corporate Debtor. Laser Solar LLP had given an offer of Rs. 50.05 Crores to the liquidator to acquire assets by the way of private sale. The same was rejected by the liquidator and thereafter Laser Solar LLP filed an Application before the Hon’ble AA. The AA directed both Laser Solar LLP and M/s Jindal Stainless Limited (Intervenor) to submit their respective bids under the sealed envelope before the AA. The bids were received and opened in the open court. Laser Solar LLP has submitted a bid of Rs 61.05 Crores where as M/s Jindal Stainless Limited has submitted a bid of Rs 52.50 Crores. The AA confirmed the sale by private treaty in favour of the highest bidder i.e Laser Solar LLP. Aggreived by the same, the Appellant who, a Financial Creditor of the Corporate Debtor and also 36% shareholder in the SCC preferred an Appeal challenging the order.
The Hon’ble NCLAT had set aside the order of the AA. Further, it was observed that the AA by adopting a process of taking two bids could not have concluded the sale of the CD without giving an opportunity to the liquidator to take steps for private sale. That the process adopted by the Adjudicating Authority is not the proper procedure for maximisation of the assets of the Corporate Debtor. That an opportunity has to be given to the Liquidator to explore the possibility of conducting a private sale to elicit any higher offer for the assets of the Corporate Debtor than to one given by Laser Solar LLP.
Link: https://ibclaw.in/state-bank-of-india-vs-bhuvee-stenovate-pvt-ltd-ors-nclat-new-delhi/
Vinay Gupta Vs. Ashika Credit Capital Ltd. & Anr (D.O.J. 27.01.2023)
In the instant case a Company Petition was filed under Section 7 of the code. In the meantime, the parties had arrived at settlement. Accordingly, an Application was filed by the Petitioner / Financial Creditor for withdrawal of the said Petition wherein it was also prayed for revival of the Company Petition on failure of the Respondent to meet the settlement terms. The same was allowed. Thereafter, the settlement agreement was not complied with and default was committed in making payment as was promised by the Corporate Debtor. Accordingly, an application for restoration of the Company petition was filed by the Financial Creditor and the same was admitted and CIRP was thereby initiated. Aggrieved by the admission of the said Petition, an appeal was preferred before the Hon’ble NCLAT contending that any debt which is due for breach of settlement cannot be a financial debt. Further, there was no disbursement against the time value of money when there was settlement agreement, hence, the application ought not to have been admitted.
The Hon’ble NCLAT held that it cannot be said that what is to be considered was only the default under the settlement agreement. Default in settlement agreement is only a byproduct which has permitted revival of Section 7 application but in no manner affect the claim in the original application which is financial debt under Section 7 application. The order of admission of Sec 7 petition was upheld.
Link: https://ibclaw.in/vinay-gupta-vs-ashika-credit-capital-ltd-anr-nclat-new-delhi/
Vishal Agarwal Erstwhile Director of Gagan I-Land Township Pvt. Ltd. Vs. ICICI Prudential Real Estate AIF-I & Anr. (D.O.J. 23, January,2023)
In the present case an appeal was filed against the order of the AA by which application filed under section 7 of the Code, 2016 by the Financial Creditor was admitted. The Counsel for the Appellant stated that the application was not maintainable since the date of default for repayment occurs on 31.08.2020, which was during the prohibitory period under section 10A of the Code, 2016. The learned counsel for the Respondent on the other hand contends that the default was on quarter ending September 2019 and December 2019.
The Hon’ble NCLAT held that the submission of the learned counsel for the Appellant that the date of repayment of installment is 31.08.2020 only and is not acceptable. As the clear admission of default in payment of interest for quarter ending September 2019 and December 2019. Therefore the application being barred by Section 10A, benefit under Section 10A can be claimed by the appellant only when there is clear default during the prohibited period. The said benefit cannot be claimed by the appellant by ignoring the admission of default which was prior to 25.03.2020. Therefore, there is no merit in the Appeal. Hence, the Appeal is dismissed.