Tribunal Approves Vedanta's Plan for Electro Steels Ltd under Insolvency Code

The Tribunal approved Vedanta Limited's resolution plan for Electro Steels Limited, finding it compliant with the Insolvency and Bankruptcy Code and Regulations. RSIPL's objections regarding Vedanta's eligibility were dismissed, as were SRG Earth Resources Pvt. Ltd.'s claims. The resolution plan, approved by the Committee of Creditors with a 100% vote share, became binding on all stakeholders. The moratorium order was lifted, and the Resolution Professional was instructed to transfer all records to the Insolvency and Bankruptcy Board of India. Other related applications were dismissed or disposed of accordingly.

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Issues Involved:
1. Eligibility of Vedanta Limited as a Resolution Applicant under Section 29A of the Insolvency and Bankruptcy Code (IBC).
2. Compliance of the Committee of Creditors (COC) with the directions of the Adjudicating Authority.
3. Admission of the entire claim of the operational creditor, SRG Earth Resources Pvt. Ltd., by the Resolution Professional.

Issue-wise Detailed Analysis:

Point No (i): Eligibility of Vedanta Limited as a Resolution Applicant
The objection raised by Renaissance Steel India Private Limited (RSIPL) contended that Vedanta Limited was ineligible under Section 29A(d) of the IBC due to its connection with Konkola Copper Mines Pvt. Ltd. (KCM), which had been convicted by a Zambian court. The Tribunal examined whether KCM, being a subsidiary of Vedanta Resources Plc (the holding company of Vedanta Limited), was a "connected person" under Section 29A(j) of the IBC. The Tribunal noted that a company is considered a "person" under Section 3(23) of the IBC, and KCM's conviction for an offence punishable with imprisonment or fine did not render Vedanta Limited ineligible. The Tribunal referred to the Supreme Court's judgment in Standard Chartered Bank & Ors. Vs. Director of Enforcement and Ors., which clarified that a company can be punished with a fine in lieu of imprisonment. Therefore, the Tribunal concluded that Vedanta Limited was not disqualified under Section 29A(d) and was eligible to be a resolution applicant.

Point No (ii): Compliance of the COC with the Directions of the Adjudicating Authority
RSIPL argued that the COC had disregarded the Tribunal's earlier order directing independent consideration of Vedanta Limited's eligibility. The Tribunal acknowledged that the COC had deviated from the Tribunal's directions by concluding that KCM was not a "connected person" despite the Tribunal's finding to the contrary. However, the Tribunal found that the resolution plan met all the requirements of the IBC and the Regulations. Despite the COC's deviation, the Tribunal did not reject the resolution plan, as it otherwise complied with the legal provisions.

Point No (iii): Admission of the Entire Claim of SRG Earth Resources Pvt. Ltd.
SRG Earth Resources Pvt. Ltd., an operational creditor, contended that the Resolution Professional did not admit its entire claim. The Tribunal noted that the Resolution Professional had admitted a portion of the claim based on the audit report and reconciliation of the debit note with the corporate debtor's books and ledgers. The Tribunal found that the Resolution Professional's actions were in compliance with the IBC and the Regulations. Additionally, the Tribunal observed that the liquidation value of the corporate debtor was significantly lower than the total admitted financial debt, resulting in no liquidation value due to the operational creditors. Consequently, the Tribunal dismissed the application of SRG Earth Resources Pvt. Ltd.

Conclusion:
The Tribunal approved the resolution plan of Vedanta Limited for Electro Steels Limited, as it met all the requirements of the IBC and the Regulations. The objections raised by RSIPL and SRG Earth Resources Pvt. Ltd. were dismissed. The resolution plan, approved by the COC with a 100% voting share, was binding on all stakeholders involved. The moratorium order ceased to have effect, and the Resolution Professional was directed to forward all records to the Insolvency and Bankruptcy Board of India.

Order:
1. CA(IB) No.277/KB/2018 is allowed, approving the Resolution Plan of Vedanta Limited.
2. The approved Resolution Plan shall come into force immediately.
3. The moratorium order passed under Section 14 shall cease to have effect.
4. The Resolution Professional shall forward all records to the Insolvency and Bankruptcy Board of India.
5. CA(IB) No.271/KB/2018 and CA(IB) No.281/KB/2018 are dismissed.
6. CP(IB) No.361/KB/2018 is disposed of as above.

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