|Case Name||:||Arcelormittal India Private Limited Vs. Satish Kumar Gupta & Ors.|
|Appeal No.||:||Civil Appeal Nos.9402-9405 Of 2018 & Civil Appeal No.9582 Of 2018|
|Appellant(s)||:||Arcelormittal India Private Limited|
|Respondent(s)||:||Satish Kumar Gupta & Ors.|
|Date of Judgment||:||04-Oct-18|
|Tribunal/Court||:||Supreme Court of India|
Analysis of the Judgment:
A. Outline of the Case:
The facts of the present case revolve around the ineligibility of resolution applicants to submit resolution plans after the introduction of Section 29A into the Insolvency and Bankruptcy Code, 2016, with effect from 23.11.2017.
ArcelorMittal & Numetal submitted an expression of interest for Essar Steel. Resolution Professional found both AMIPL and Numetal to be ineligible under Section 29A. AM Netherlands is related party of ArcelorMittal India & was the promoter of Uttam Galva whose account was classified as NPA. LN Mittal/AMSA is promoter in management & control of ArcelorMittal India, KSS Global BV and KSS Petron(100% subs. of KSS Global BV). KSS Petron has a NPA for more than 1 yr. Numetal is newly incorporated JV. Ravi Ruia (who Rewant Ruia is deemed to be acting in concert with) was the promoter of ESIL whose account was classified as an NPA. Rewant Ruia (who is acting jointly with the other shareholders of Numetal for the purposes of submission of the Resolution Plan) is ineligible u/s 29A.
Parties of the Case:
|State Bank of India and the Standard Chartered Bank||Financial Creditors|
|Essar Steel India Limited||Corporate Debtor|
|ArcelorMittal India Private Limited(AMIPL)||Resolution Applicant(1)|
|Numetal Limited (“Numetal”)||Resolution Applicant(2)|
Time Line of the Case:
|02.08.2017||NCLT, Ahmedabad Bench, passed an order u/s 7 at the behest of financial creditors, being the State Bank of India and the Standard Chartered Bank, admitting a petition filed under the Code for financial debts owed to them by the corporate debtor Essar Steel India Limited (hereinafter referred to as “ESIL”), in the sum of roughly Rs.45,000 Crores.|
|04.09.2017||Appointed the Interim Resolution Professional.|
|06.10.2017||Seek expression of interest|
|11.10.2017||ArcelorMittal India Private Limited(AMIPL) submitted an expression of interest|
|20.10.2017||Numetal Limited (“Numetal”) submitted an expression of interest|
|23.10.2017||Last date for submission of an expression of Interest|
|29.01.2018||Last date for submission of resolution plans NCLT extended the duration of the CIRP by 90 days beyond the initial period of 180 days, i.e., upto 29.4.2018.|
|12.02.2018||Extended the date for submission of resolution plans to 12.2.2018.|
|23.03.2018||Declared AMIPL and Numetal to be ineligible under Section 29A.|
|26.03.2018||AMIPL filed I.A. No. 110 of 2018 before the Adjudicating Authority, challenging “the order” of the Resolution Professional dated 23.03.2018.|
|02.04.2018||Pursuant to the Resolution Professional’s invitation, fresh resolution plans were submitted by AMIPL, Numetal, and one other entity, namely ‘Vedanta Resources Ltd.’.|
|19.04.2018||NCLT passed its order-ordered that RP is right.|
|26.04.2018||Appeals were filed by Numetal|
|27.04.2018||Appeals were filed by AMIPL|
|08.05.2018||Committee of Creditors disqualified AMIPL & Numetal|
|04.10.2018||Supreme Court Order|
B. Reason of Ineligibility:
ArcelorMittal India Ltd.:
‘AM Netherlands’ is related party of ‘AM India Ltd.’. ‘AM Netherlands’ was the promoter of ‘Uttam Galva’ on the date when the ‘Uttam Galva’ classified as NPA in accordance with the guidelines of Reserve Bank of India. AM Netherlands’ is 100% subsidiary of ‘AMSA’ which is a listed company incorporated in Luxemburg. ‘AM India Ltd.’ is also a subsidiary of ‘AMSA’ having 99.99% shareholding in it. Accordingly, ‘AMSA’ is also a promoter, in the management and in control of ‘AM India Ltd.’. ‘Fraseli’ is a company owned and controlled by a company called by ‘Mittal Investments’ acquired about one third of the share capital of ‘KSS Global BV’. Pursuant to such acquisition, ‘Fraseli’ acquired control over ‘KSS Global BV’ which in turn controls ‘KSS Petron’ and ‘Petron Engineering’. ‘Mittal Investments’ is owned and controlled by LN Mittal Group, the promoters of the ‘AM India Pvt. Ltd’. AM India Ltd.’ divested its shareholding in ‘KSS
Global BV’ which is 100% owner of ‘KSS Petron’ (a Company whose account has been declared as NPA).
Numetal was incorporated 7 days before submission of the EOI; and Numetal is a newly incorporated joint venture between Aurora Enterprises Limited, Crinium Bay, Indo International Limited and Tyazhpromexport. (Numetal Mauritius is a joint venture between Russia’s VTB Bank and Rewant Ruia, the son of Ravi Ruia, one of the promoters of Essar Steel.)
Since Numetal has at all stages relied on its shareholders to comply with the eligibility requirements relating to submission of a resolution plan in respect of ESIL, for the purposes of ensuring compliance with Section 29A of the Insolvency and Bankruptcy Code, 2016 (IBC), Resolution Professional have considered each of the shareholders of Numetal as joint venture partners to be acting jointly for the purposes of submission of the Resolution Plan.
(a) In relation to the Resolution Plan in respect of ESIL (which contemplates the acquisition of ESIL by Numetal by way of a merger of ESIL with a wholly owned subsidiary of Numetal), Rewant Ruia is deemed to be acting in concert with his father Ravi Ruia.
Ravi Ruia (who Rewant Ruia is deemed to be acting in concert with) was the promoter of ESIL whose account was classified as an NPA for more than 1 year, prior to the commencement of corporate-insolvency resolution process (CIRP) of ESIL on 2 August 2017; and
(b) Ravi Ruia (who Rewant Ruia is deemed to be acting in concert with) has executed a guarantee in favour of SBI (for itself and a consortium of lenders) and the CIRP application filed by SBI has been admitted by the National Company Law Tribunal on 2 August 2017.
In light of the above, Rewant Ruia (who is acting jointly with the other shareholders of Numetal for the purposes of submission of the Resolution Plan) is ineligible under Section 29A of the IBC.
Share holding of Numetal:
a. Resolution Plan submitted by the ‘Numetal Ltd.’ On 12 th February, 2018
As on 12th February, 2018, when the 1st Resolution Plan was submitted by ‘Numetal Ltd.’, it had four shareholders.
(i) ‘Crinium Bay’ : 40%
(ii) ‘Indo’ : 25.1%
(iii) ‘TPE’ : 9.9%
(iv) ‘AEL’ : 25%
Admittedly, Mr. Rewant is 100% shareholder of ‘AEL’ and ‘AEL’ held 25% in ‘Numetal Ltd.’ even as on 12th February, 2018, Mr. Rewant being son of Mr. Ravi, who is the promoter of the ‘Corporate Debtor’, we hold that ‘AEL’ is a related party and comes within the meaning of ‘person in concert’ in terms of Regulation 2(1)(q).
b. Position of ‘Numetal Ltd.’ as on 29 th March, 2018 when the subsequent ‘Resolution Plan’ was submitted by ‘Numetal Ltd.’.
The ‘Committee of Creditors’ had extended the period for submitted a fresh ‘Resolution Plan’ by 2nd April, 2018. ‘Numetal Ltd.’ filed fresh ‘Resolution Plan’ on 29th March, 2018. On the said date the ‘Numetal Ltd.’ consisted of the three shareholders: –
(a) ‘Crinium Bay’ (‘VTB’) : 40%
(b) ‘Indo’ : 34.1%
(c) ‘TPE’ : 25.9%
AND the Resolution Plan of both parties is hereby rejected and will not be placed before the Committee of Creditors.
C. NCLT verdict:
On 19.4.2018 NCLT passed its order in all the I.A.s, in which it first held:
The RP under the provision of the Code it is expected to make scrutiny of a resolution plan in conformity with the law of the land and to take such a prudent decision which a common man in normal course may arrive and think just and proper. This court being the Adjudicating Authority under the Code is not expected to substitute its view upon the discretion and wisdom of the RP and CoC to opt for only which a particular view until and unless it is the case of patent illegality or arbitrariness.
Therefore, for the aforesaid reason in our prima facie view we do not find any patent illegality in the decision of the RP for declaring ineligible to applicants which is a prudent decision where there is possibility of more than one legal view then this court at this stage is not expected to substitute its view and to interfere with the conclusion of the RP.
Thus, the date on which a person stands disqualified would be the date of commencement of the Corporate Insolvency Resolution Process of the Corporate Debtor, i.e., ESIL. This date is 02.08.2017 on which date, ArcelorMittal India Pvt. Ltd., is disqualified. in view of the fact that its connected persons of AM Netherland and L.N. Mittal are disqualified as they have an account or an account of the corporate debtor under their management and control or of whom they are a promoter classified as NPA under the guidelines of the Reserve Bank of India and at least a period of one year has lapsed from the date of such classification till the date of commencement of corporate insolvency resolution process of the corporate debtor. The said disqualification starts from 02.08.2017 can only be remedied in the manner provided in the proviso to clause (c) of section 29A read with section 30(4) proviso and in no other manner. The disqualification commenced on 02.08.2017 continues till 12.02.2018 and the same disqualification cannot be relieved by merely ceasing to be the promoter or by selling shares in the companies whose accounts are NPA such as Uttam Galva or KSS Petron.
On perusal of annexure R/4, i.e., shareholding pattern annexed with the reply of Numetal Ltd., it is found that ArcelorMittal is a publicly known promoter of Uttam Galva and its shareholding is classified under “promoter and promoter group” in the filings made in the Stock Exchange of India. As per shareholding pattern of Uttam Galva disclosed in the stock exchange as on December, 2017 ArcelorMittal was a single largest shareholder having significant shareholding of 29.05 % in Uttam Galva.
It is an admitted position that AM Netherlands is an indirect 100% subsidiary of ArcelorMittal Societe Anonyme (AMSA) which is a listed company incorporated in Luxemburg. On the other hand, AM India is also an indirect subsidiary (99.99%) of AMSA.
Accordingly, AMSA is promoter, in management and in control of AM India, the resolution applicant and AM Netherlands is a subsidiary company/associate company of AMSA in view of which AM Netherlands becomes a connected person and such connected person has an account of corporate debtor Uttam Galva under its management, control or of whom such connected person, namely, AM Netherlands is a promoter is classified as NPA for more than one year before 02.082017. Consequently, AM India shall not be eligible to submit a resolution plan as on 12.02.2018.
It is an admitted position that Laxminarayan Mittal is controlling AM India being an indirect subsidiary of AMSA. Accordingly, LN Mittal/AMSA is promoter in management and in control of AM India, the resolution applicant, and LN Mittal is also in management and control of KSS Global BV in view of what is stated above and KSS Petron which is a 100% subsidiary of KSS Global BV is also under management and control of LN Mittal. KSS Petron has a NPA for more than one year and consequently, LN Mittal being a promoter/in control of KSS Global BV/KSS Petron Pvt. Ltd., is a connected person whose account is classified nonperforming. Consequently, AM India shall not be eligible to submit a resolution plan.
Section 29A does not distinguish between positive and negative control. Any person who is either promoter or in the management or in the control of the business of the corporate debtor and in default is ineligible. Person connected to ArcelorMittal India Pvt. Ltd., who are either promoter or in the management with KSS Petron and Uttam Galva Steels Ltd., are ineligible. Mere sale of shares and declassification as promoter after the companies have gone into default cannot be absolved them responsibility. In order to become eligible, overdue amounts to lenders in both the cases of KSS Petron and Uttam Galva Steels Ltd., should be paid by ArcelorMittal before being eligible to bid, as provided in Section 29A itself.
D. NCLAT Verdict:(see Full verdict)
In the appeals that were filed before it, the Appellate Authority vide an order dated 7.9.2018 held as follows:-
At the time of submission of 1st Resolution Plan by ‘Numetal Ltd.’, one of the shareholders being ‘AEL’, ‘Numetal Ltd.’ was not eligible to submit ‘Resolution Plan’ in terms of Section 29A.
As on 29th March, 2018, as the ‘AEL’ was not the shareholder of ‘Numetal Ltd.’ and all the three shareholders aforesaid being eligible, we hold that ‘Numetal Ltd.’ in respect of the ‘Resolution Plan’ dated 29th March, 2018, is eligible and the provision of Section 29A, as on 29th March, 2018 is not attracted to the ‘Numetal Ltd.’. For the reasons aforesaid, we are of the view that the ‘Resolution Plan’ submitted by ‘Numetal Ltd.’ on 29th March, 2018 is required to be considered by the ‘Committee of Creditors’ to find out its viability, feasibility and financial matrix.”
In the present case, the ‘Expression of Interest’ was submitted by ‘AM India Ltd.’ on 11th October, 2017 and by ‘Numetal Ltd.’ on 20th October, 2017, both prior to 23rd November, 2017 i.e. the date Section 29A was inserted by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 but the ‘Resolution Plans’ were submitted by both ‘AM India Ltd.’ And ‘Numetal Ltd.’ on 12th February, 2018.
The question arises for consideration is as to what will be the position if, on the basis of ‘Information Memorandum’ the ‘Expression of Interest’ is submitted by the ‘Resolution Applicants’ prior to 23rd November, 2017 and whether they are eligible to take advantage of 2nd proviso to sub-section (4) of Section 30.?
NCLAT held that the Adjudicating Authority rightly held that the Appellant- ‘AM India Ltd.’ should have been given the opportunity by the ‘Committee of Creditors’ in terms of second proviso to sub-section (4) of Section 30.
The question arises for consideration is whether the ‘AM Netherlands’ is eligible, having transferred its entire shareholding of ‘Uttam Galva’ on 7th February, 2018 and by transferring of its entire shareholding of ‘Fraseli’ in ‘KSS Global’ on 9th February, 2018 i.e. two to four days prior to the submission of ‘Expression of Interest’ (first phase of ‘Resolution Plan’).
Proviso to clause (c) of Section 29A makes it clear that the person shall be eligible to submit a ‘Resolution Plan’ if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of ‘Resolution Plan’. It does not stipulate any other mode to become eligible and thereby does not prescribe any other mode to become ineligible, including by selling the shares thereby existing as a member of the Company whose account has been classified as nonperforming asset accounts in accordance with the guidelines of the Reserve Bank of India.
Admittedly, ‘AM Netherlands’ is related party of ‘AM India Ltd.’. ‘AM Netherlands’ was the promoter of ‘Uttam Galva’ on the date when the ‘Uttam Galva’ classified as NPA in accordance with the guidelines of Reserve Bank of India and a period of one year has elapsed from the date of such classification, at the time of commencement of ‘Corporate Insolvency Resolution Process’ of the ‘Corporate Debtor’.
Once the stigma of “classification of the account as NPA” has been labelled on the promoter of the ‘Uttam Galva’, even after sale of shares by ‘AM Netherlands’ it may ceased to be a member or promoter of the ‘Uttam Galva’, but stigma as was attached with it will continue for the purpose of ineligibility under clause (c) of Section 29A, till payment of all overdue amount with interest and charges relating to NPA account of the ‘Uttam Galva’ is paid.
As we hold that ‘AM India Ltd.’ is also entitled to the benefit of second proviso to sub-section (4) of Section 30, we give one opportunity to the ‘Resolution Applicant’- ‘AM India Ltd.’ to make payment of all overdue amount with interest thereon and charges relating to Non Performing Accounts of both the ‘Uttam Galva’ and the ‘KSS Petron’ in their respective accounts within three days i.e. by 11th September, 2018. If such amount is deposited in the accounts of both Non-Performing Accounts of ‘Uttam Galva’ and ‘KSS Petron’ within time aforesaid and is informed, the ‘Committee of Creditors’ will consider the ‘Resolution Plan’ submitted by ‘AM India Ltd.’ along with other ‘Resolution Plans’, including the ‘Resolution Plan’ submitted by the ‘Numetal Ltd.’ on 29th March, 2018, and if so necessary, may negotiate with the ‘Resolution Applicant(s)’. An early decision should be taken by the ‘Committee of Creditors’ and on approval of the ‘Resolution Plan’, the ‘Resolution Professional’ will place the same immediately before the Adjudicating
Authority who in its turn will pass order under Section 31 in accordance with law. The ‘Successful Resolution Applicant’ will take steps for execution of its ‘Resolution Plan’ and deposit the upfront money if proposed, in terms of the ‘Resolution Plan’.
D. Brief about the Supreme Court Decision:
At this point, it is necessary to first set out Section 29A in its various forms: as first introduced by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 and the Insolvency and Bankruptcy Code (Amendment) Act, 2017, together with the amendment made by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018. Section 29A, as introduced by the Insolvency & Bankruptcy Code (Amendment) Ordinance, 2017, on 23.11.2017.
A purposive interpretation of Section 29A, depending both on the text and the context in which the provision was enacted, must, therefore, inform our interpretation of the same. We are concerned in the present matter with sub-clauses (c), (f), (i) and (j) thereof.
It will be noticed that the opening lines of Section 29A contained in the Ordinance of 2017 are different from the opening lines of Section 29A as contained in the Amendment Act of 2017. What is important to note is that the phrase “persons acting in concert” is conspicuous by its absence in the Ordinance of 2017. The concepts of “promoter”, “management” and “control” which were contained in the opening lines of Section 29A under the Ordinance have now been transferred to sub-clause (c) in the Amendment Act of 2017. It is, therefore, important to note that the Amendment Act of 2017 opens with language which is of wider import than that contained in the Ordinance of 2017, evincing an intention to rope in all persons who may be acting in concert with the person submitting a resolution plan.
Persons acting in concert:
In M/s. Daiichi Sankyo Company Ltd. v. Jayaram Chigurupati & Ors., (2010) 7 SCC 449, this Court referred to the concept of “persons acting in concert” and held that there must be a shared common objective for substantial acquisition of shares of a target company under the SEBI regulations. A fortuitous relationship coming into existence by accident or chance obviously cannot amount to “persons acting in concert”.
According to us, it is clear that the opening words of Section 29A furnish a clue as to the time at which sub-clause (c) is to operate. The opening words of Section 29A state: “a person shall not be eligible to submit a resolution plan…”. It is clear therefore that the stage of ineligibility attaches when the resolution plan is submitted by a resolution applicant.
Consequently, the amendment of 2018 introducing the words “at the time of submission of the resolution plan” is clarificatory, as this was always the correct interpretation as to the point of time at which the disqualification in sub-clause (c) of Section 29A will attach. In fact, the amendment was made pursuant to the Insolvency Law Committee Report of March, 2018.
The expression “management” would refer to the de jure management of a corporate debtor. The de jure management of a corporate debtor would ordinarily vest in a Board of Directors, and would include, in accord with the definitions of “manager”, “managing director” and “officer” in Sections 2(53), 2(54) and 2(59) respectively of the Companies Act, 2013, the persons mentioned therein.
46. The expression “control” is defined in Section 2(27) of the Companies Act, 2013 as follows:-
“(27) “control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner;”
The expression “control” is therefore defined in two parts. The first part refers to de jure control, which includes the right to appoint a majority of the directors of a company. The second part refers to de facto control. So long as a person or persons acting in concert, directly or indirectly, can positively influence, in any manner, management or policy decisions, they could be said to be “in control”. A management decision is a decision to be taken as to how the corporate body is to be run in its day to day affairs. A policy decision would be a decision that would be beyond running day to day affairs, i.e., long term decisions. So long as management or policy decisions can be, or are in fact, taken by virtue of shareholding, management rights, shareholders agreements, voting agreements or otherwise, control can be said to exist.
Thus, the expression “control”, in Section 29A(c), denotes only positive control, which means that the mere power to block special resolutions of a company cannot amount to control. “Control” here, as contrasted with “management”, means de facto control of actual management or policy decisions that can be or are in fact taken. A judgment of the Securities Appellate Tribunal in M/s Subhkam Ventures (I) Private Limited v. The Securities and Exchange Board of India (Appeal No. 8 of 2009 decided on 15.1.2010), made the following observations qua “control” under the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, wherein “control” is defined in Regulation 2(1) (e) in similar terms as in Section 2(27) of the Companies Act, 2013.
Under the management or control of such person:
Section 29A(c) speaks of a corporate debtor “under the management or control of such person”. The expression “under” would seem to suggest positive or proactive control, as opposed to mere negative or reactive control. This becomes even clearer when sub-clause (g) of Section 29A is read, wherein the expression used is “in the management or control of a corporate debtor”. Under sub-clause (g), only a person who is in proactive or positive control of a corporate debtor can take the proactive decisions mentioned in sub-clause (g), such as, entering into preferential, undervalued, extortionate credit, or fraudulent transactions. It is thus clear that in the expression “management or control”, the two words take colour from each other, in which case the principle of noscitur a sociis must also be held to apply.
Thus viewed, what is referred to in sub-clauses (c) and (g) is de jure or de facto proactive or positive control, and not mere negative control which may flow from an expansive reading of the definition of the word “control” contained in Section 2(27) of the Companies Act, 2013, which is inclusive and not exhaustive in nature.
The third concept is that of a promoter. “Promoter” is defined by Section 2(69) of the Companies Act, 2013 as follows:
“(69) “promoter” means a person—
(a) who has been named as such in a prospectus or is identified by the company in the annual return referred to in Section 92; or
(b) who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or
(c) in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act:
Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity;”
Here again, sub-clause (a) refers to a de jure position, namely, where a person is expressly named in a prospectus or identified by the company in an annual return as a promoter. Subclauses (b) and (c) speak of a de facto position. Under sub-clause (b), so long as a person has “control” over the affairs of a company, directly or indirectly, in any manner, he could be said to be a promoter of such company. Under sub-clause (c), such person need not be a member of the Board of Directors of a company, but can be a person who in fact advises, directs or instructs the Board to act. Under the proviso, only a person who acts in a professional capacity is excluded from the talons of subclause (c).
The interpretation of Section 29A(c) now becomes clear. Any person who wishes to submit a resolution plan, if he or it does so acting jointly, or in concert with other persons, which person or other persons happen to either manage or control or be promoters of a corporate debtor, who is classified as a non-performing asset and whose debts have not been paid off for a period of at least one year before commencement of the corporate insolvency resolution process, becomes ineligible to submit a resolution plan.
This provision therefore ensures that if a person wishes to submit a resolution plan, and if such person or any person acting jointly or any person in concert with such person, happens to either manage, control, or be promoter of a corporate debtor declared as a non-performing asset one year before the corporate insolvency resolution process begins, is ineligible to submit a resolution plan. The first proviso to sub-clause (c) makes it clear that the ineligibility can only be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the non-performing asset in question before submission of a resolution plan. The position in law is thus clear. Any person who wishes to submit a resolution plan acting jointly or in concert with other persons, any of whom may either manage, control or be a promoter of a corporate debtor classified as a non-performing asset in the period abovementioned, must first pay off the debt of the said corporate debtor classified as a non-performing asset in order to become eligible under Section 29A(c).
When we come to sub-clause (f), it is clear that, if any of the persons mentioned in Section 29A is prohibited by SEBI from either trading in securities or accessing the securities market – again, ineligibility of the person submitting the resolution plan attaches. Under sub-clause (i), if a person situate abroad is subject to any disability which corresponds to sub-clause (f), such person also gets interdicted. it is clear that if a person is prohibited by a regulator of the securities market in a foreign country from trading in securities or accessing the securities market, the disability under sub-clause (i) would then attach.
When we come to sub-clause (j), a “connected person” is defined as meaning the three categories of persons mentioned in the three sub-clauses therein. The first sub-clause of Explanation 1 again takes us back to the same three definitions of “promoter”, “management” and “control” of the resolution applicant. Under sub-clause (ii), again, a “connected person” is a person who is either the promoter, or in management or control, of the business of the corporate debtor during implementation of the resolution plan. And under sub-clause (iii), holding companies, subsidiary companies and associate companies as defined under the Companies Act, 2013, or related parties of persons referred to in clauses (1) and (2) also become connected persons.
Since it is clear that both sets of resolution plans that were submitted to the Resolution Professional, even on 2.4.2018, are hit by Section 29A(c), and since the proviso to Section 29A(c) will not apply as the corporate debtors related to AMIPL and Numetal have not paid off their respective NPAs, ordinarily, these appeals would have been disposed of by merely declaring both resolution applicants to be ineligible under Section 29A(c). Shri Subramanium, on behalf of the Committee of Creditors, requested us to give one more opportunity to the parties before us to pay off their corporate debtors’ respective debts in accordance with Section 29A, as the best resolution plan can then be selected by the requisite majority of the Committee of Creditors, so that all dues could be cleared as soon as possible. Acceding to this request, in order to do complete justice under Article 142 of the Constitution of India, and also for the reason that the law on Section 29A has been laid down for the first time by this judgment, we give one more opportunity to both resolution applicants to pay off the NPAs of their related corporate debtors within a period of two weeks from the date of receipt of this judgment, in accordance with the proviso to Section 29A(c). If such payments are made within the aforesaid period, both resolution applicants can resubmit their resolution plans dated 2.4.2018 to the Committee of Creditors, who are then given a period of 8 weeks from this date, to accept, by the requisite majority, the best amongst the plans submitted, including the resolution plan submitted by Vedanta. We make it clear that in the event that no plan is found worthy of acceptance by the requisite majority of the Committee of Creditors, the corporate debtor, i.e. ESIL, shall go into liquidation. The appeals are disposed of, accordingly.
Section wise analysis of the judgment(source IBBI):
Full text of the judgment(Download in PDF):