Rplan-ISMW-Withdrawal-Resolution Plan Withdrawal

NCLAT upholds decision of NCLT on fresh invitation of Expression of Interest (EoI) in Athena Demwe Power Ltd. matter – Sikkim Power Investment Corporation Ltd. Vs. Mr. Umesh Garg, RP of Athena Demwe Power Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) The present is a case where CoC is not withdrawing the Resolution Plan which was approved by it whereas the Adjudicating Authority rejected the application for approval of the Resolution Plan on the ground that Applicant failed to deposit the Performance Bank Guarantee despite several reminders in period of five years. The judgment of the Hon’ble Supreme Court in Ebix Singapore Pvt. Ltd. (2021) ibclaw.in 153 SC has no application in the facts of the present case.
(ii) Present is not a case that the State of Arunachal Pradesh and the THDC who were not part of the CIRP are permitted to file Resolution Plan rather their Resolution Plans required to be submitted in pursuance of the fresh Form-G which was to be issued under the directions of the Adjudicating Authority in the impugned order.

NCLAT upholds decision of NCLT on fresh invitation of Expression of Interest (EoI) in Athena Demwe Power Ltd. matter – Sikkim Power Investment Corporation Ltd. Vs. Mr. Umesh Garg, RP of Athena Demwe Power Ltd. and Ors. – NCLAT New Delhi Read Post »

SRA cannot withdraw Resolution Plan on the ground that lapse of more than five years and the deterioration of the financial status of the Corporate Debtor, the Resolution Plan is no more implementable – EBIX Singapore Pte. Limited Vs. Mr. Mahendra Singh Khandelwal RP of Educomp Solutions Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that:
(i) As per Section 30(2)(d) and Section 31(1) proviso, what is significant is that Resolution Professional has to look into and examine that Resolution Plan provides for implementation and supervision of the Plan. The requirement of the law is that the Plan contains provision for effective implementation. It is not the case before us that Plan does not contain effective provision for implementation. The Adjudicating Authority in the impugned order specifically noticed the provisions of the Resolution Plan, which provides for implementation. It is not the case before us that there are no provisions in Resolution Plan for effective implementation.
(ii) The submission of the Appellant that in view of lapse of more than five years and the deterioration of the financial status of the Corporate Debtor, the Plan is no more implementable, cannot be accepted as a ground to withdraw from the Resolution Plan.
(iii) No valid grounds are raised by the Appellant, before the Adjudicating Authority to reject the Application filed by the RP for approval of the Resolution Plan in IA No. 195 of 2018.

SRA cannot withdraw Resolution Plan on the ground that lapse of more than five years and the deterioration of the financial status of the Corporate Debtor, the Resolution Plan is no more implementable – EBIX Singapore Pte. Limited Vs. Mr. Mahendra Singh Khandelwal RP of Educomp Solutions Ltd. and Anr. – NCLAT New Delhi Read Post »

In case Sale of Resolution Plan approved by CoC to third party as transferring shareholding of Successful Resolution Applicant against terms and conditions of Rplan, CoC can withdraw Rplan which is pending for NCLT approval and forfeit EMD/PBG | CIRP Regulation 36B(4A) does not exclude forfeiture of performance security as per conditions in RFRP – Jubilee Metal Pvt. Ltd. v. Mr. Surendra Raj Gang RP of Metenere Ltd. and Anr. – NCLAT New Delhi

In this case, shareholding of the Successful Resolution Applicant has been changed while Resolution Plan is pending before NCLT for approval.
On IA, NCLT allow withdrawal of Rplan and forfeiture PGB and extended the CIRP time period.
Hon’ble NCLAT has upheld the decision of NCLT Principal Bench, holding that:
(i) The law is well settled and clear that even CoC cannot go back and pray for withdrawal of the Resolution Plan since the plan is clearly binding on the CoC but the above legal position and situation may not apply in a case where after approval of the Resolution Plan by the CoC, the Resolution Applicant himself has breached the terms and conditions and undertaking which was given by him as in the present case.
(ii) Present is a case where in essence we may say it is a case of sale of Resolution Plan approved by the CoC to third party. CoC approves the Resolution Plan looking to the credentials of the Resolution Applicant and its credibility and finances. When very basis of Resolution Applicant is knocked out and it changes its constitution substantially the CoC cannot be faulted in view of breach of the conditions by the Resolution Applicant, application for approval of the Resolution Plan be withdrawn.
(iii) CIRP Regulation 36B(4A) only contemplate one contingency that where performance security shall stand forfeited but the said provision does not exclude forfeiture of performance security in other conditions as contemplated in RFRP.

In case Sale of Resolution Plan approved by CoC to third party as transferring shareholding of Successful Resolution Applicant against terms and conditions of Rplan, CoC can withdraw Rplan which is pending for NCLT approval and forfeit EMD/PBG | CIRP Regulation 36B(4A) does not exclude forfeiture of performance security as per conditions in RFRP – Jubilee Metal Pvt. Ltd. v. Mr. Surendra Raj Gang RP of Metenere Ltd. and Anr. – NCLAT New Delhi Read Post »

Resolution Plan approved by CoC is binding on CoC and it cannot have reviewed its own decision or pray for review of its opinion | Resolution Plan cannot be remitted/sent back by Adjudicating Authority to CoC for re-consideration except when there is violation of Section 30(2) of IBC – Nivaya Resources Pvt. Ltd. v. Asset Reconstruction Company (India) Ltd. and Anr. – NCLAT New Delhi

In this landmark judgment, Hon’ble NCLAT has settled the issue on send back the Resolution Plan to CoC for re-consideration.
The Hon’ble Bench comprising of Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) has held that the Resolution Plan approved by the CoC is binding on the CoC and it cannot have reviewed its own decision or pray for review of its opinion. Even prior to the approval of the Adjudicating Authority, Resolution Plan is binding inter se between the CoC and the Successful Resolution Applicant.
However, the Bench referring Hon’ble Supreme Court judgment in K. Sashidhar v. Indian Overseas Bank and Ors. [2019] ibclaw.in 08 SC and giving paramount status to the commercial wisdom of the CoC held that the law is well settled that the Adjudicating Authority has ample power to remit the Resolution Plan for reconsideration by the CoC when there is violation of Section 30(2).
The Bench concludes that there can be no quarrel to the proposition that if the Resolution Plan submitted by the Resolution Applicant is not in accord with Section 30(2), it can be sent back to the CoC.
The Bench has also added other circumstances under which Resolution Plan can be remitted by the Adjudicating Authority, where the Resolution Applicant acquires any ineligibility subsequent to the approval of the Resolution Plan or there is breach of any condition of the Resolution Plan which make Resolution Applicant does not entitle to implement the plan.

Resolution Plan approved by CoC is binding on CoC and it cannot have reviewed its own decision or pray for review of its opinion | Resolution Plan cannot be remitted/sent back by Adjudicating Authority to CoC for re-consideration except when there is violation of Section 30(2) of IBC – Nivaya Resources Pvt. Ltd. v. Asset Reconstruction Company (India) Ltd. and Anr. – NCLAT New Delhi Read Post »

Treatment of the rights of a Secured Creditor who would not fall under the category of Financial Creditors or Operational Creditors as per the IBC – M/s. Vistra ITCL (India) Ltd. & Ors. Vs. Mr. Dinkar Venkatasubramanian & Anr. – Supreme Court

Under various agreements KKR India Financial Services and L&T Finance had extended financial assistance in the form of short term loans to WLD Investments Pvt. Ltd. and BRASSCO Engineering Ltd. The Corporate Debtor had created a first ranking exclusive pledge, vide Pledge Agreement in favour of Vistra ITCL (India) Ltd. over equity shares of JMT Auto Limited, held by the Corporate Debtor. Claim filed by Vistra ITCL (India) Ltd. claiming the right on the basis of the pledged shares has been rejected by RP.
Hon’ble Supreme Court held that (i) the person is whose favour the security interest is created need not be the creditor who avails the credit facility, and can be a third person. Security interest can be created for credit facilities/loan advanced to another person. It is accepted and admitted that the Vistra has security interest in the pledged shares.
(ii) In terms of the decision of this Court in Anuj Jain (supra) and Phoenix ARC (supra), Vistra is to be treated as a secured creditor, but would not fall under the category of financial creditors or operational creditors. A very odd and a peculiar situation is created where a secured creditor is denied the benefit of the secured interest i.e., the right to exercise the sale of the secured interest, yet not be treated as either a financial creditor or an operational creditor.
(iii) Intent of the amended Section 30(2) read with Section 31 of the Code recognises and protects the interests of other creditors who are outside the purview of the CoC.
(iv) First is to treat the secured creditor as a financial creditor of the Corporate Debtor to the extent of the estimated value of the pledged share on the date of commencement of the CIRP. This would make it a member of the CoC and give it voting rights, equivalent to the estimated value of the pledged shares. However, this may require re-consideration of the dictum and ratio of Anuj Jain (supra) and Phoenix ARC (supra), which would entail reference to a larger bench. The second recourse available, would be almost equivalent in monetary terms for the Vistra, who is treated it as a secured creditor and is held entitled to all rights and obligations as applicable to a secured creditor under Section 52 and 53 of the Code. This to our mind would be a fair and just solution to the legal conundrum and issue highlighted before us.

Treatment of the rights of a Secured Creditor who would not fall under the category of Financial Creditors or Operational Creditors as per the IBC – M/s. Vistra ITCL (India) Ltd. & Ors. Vs. Mr. Dinkar Venkatasubramanian & Anr. – Supreme Court Read Post »

Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC – Shraddha Buildcon Pvt. Ltd. Vs. The Dhar Textile Mills Ltd. – NCLAT New Delhi

In event the submission of the Appellant is accepted that due to financial difficulty he is unable to implement the plan and he be permitting to go back from the commitments made in the Resolution Plan, it shall have disastrous effect on the entire process undertaken. The IBC is process consists of different steps with a ultimate object of reviving the Corporate Debtor. Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC. On the submission made by Counsel for the Appellant that since he had no financial capacity to implement the plan he should have been allowed to withdraw, the Adjudicating Authority has rightly rejected his application.

It is further submitted that financial in-capacity of the Appellant was due to no fault of the Appellant and it was due to subsequent developments. The above argument also cannot entitle the Appellant to withdraw from an approved Resolution Plan.

Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC – Shraddha Buildcon Pvt. Ltd. Vs. The Dhar Textile Mills Ltd. – NCLAT New Delhi Read Post »

Scroll to Top