Tribunal upholds Royale Partners Investment Fund's plan approval over ArcelorMittal's challenge.

The Tribunal upheld the approval of Royale Partners Investment Fund Ltd.'s Resolution Plan by the Committee of Creditors, dismissing the challenge by ArcelorMittal India Pvt. Ltd. The Tribunal found that the requirement for Competition Commission of India approval did not apply retrospectively, and there were no procedural irregularities or bias in favor of RPIF. The CoC's decision to approve RPIF's plan was deemed valid based on commercial considerations, leading to the dismissal of ArcelorMittal's plea.

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Issues Involved:
1. Validity of the approval of the Resolution Plan submitted by Royale Partners Investment Fund Ltd. (RPIF).
2. Compliance with the requirement of Competition Commission of India (CCI) approval.
3. Allegations of procedural irregularities and bias in favor of RPIF by the Resolution Professional (RP) and Committee of Creditors (CoC).
4. Evaluation and rejection of the Resolution Plan submitted by the Applicant, ArcelorMittal India Pvt. Ltd.

Issue-Wise Detailed Analysis:

1. Validity of the approval of the Resolution Plan submitted by Royale Partners Investment Fund Ltd. (RPIF):

The Applicant, ArcelorMittal India Pvt. Ltd., sought to declare the approval of RPIF’s Resolution Plan void, illegal, and contrary to the provisions of the Insolvency and Bankruptcy Code (IBC). The Applicant contended that the RPIF’s plan was approved without the mandatory CCI approval, which was required under the proviso to Section 31(4) of the IBC. The Applicant argued that only its plan, which had CCI approval, should have been considered.

2. Compliance with the requirement of Competition Commission of India (CCI) approval:

The Tribunal examined whether the proviso to Section 31(4) of the IBC, which mandates CCI approval prior to the CoC’s approval of a resolution plan, was applicable. The Corporate Insolvency Resolution Process (CIRP) for the Corporate Debtor commenced on 20.04.2018, while the proviso came into effect on 17.08.2018. The Tribunal held that amendments to procedural laws are generally prospective unless specified otherwise. Since the amendment was onerous, it was to be applied prospectively. Therefore, the requirement for CCI approval did not apply to the ongoing CIRP, and the absence of CCI approval did not bar the CoC from considering RPIF’s plan.

3. Allegations of procedural irregularities and bias in favor of RPIF by the Resolution Professional (RP) and Committee of Creditors (CoC):

The Applicant alleged that the RP had amended the process documents arbitrarily to favor RPIF, including removing the requirement for CCI approval and reducing the value of the bank guarantee. The Tribunal found that the CoC had waived the CCI approval requirement due to time constraints and to avoid liquidation. The CoC’s decision to amend the process document was within its procedural rights and was not done to unreasonably favor RPIF. The Tribunal noted that neither resolution applicant provided a performance bank guarantee for 10% of the total consideration, leading the CoC to amend the requirement to 10% of the upfront cash recovery.

4. Evaluation and rejection of the Resolution Plan submitted by the Applicant, ArcelorMittal India Pvt. Ltd.:

The Tribunal found that the CoC had evaluated the Applicant’s plan and found it unsatisfactory due to conditions precedent and assumptions making the plan conditional and non-responsive. The CoC also found the financial offer unsatisfactory and the plan’s viability and feasibility questionable. The Applicant’s plan was rejected with 77.87% of the CoC voting against it. In contrast, RPIF’s plan was approved with 73.17% of the CoC voting in favor, meeting the required threshold under Section 30(4) of the IBC. The Tribunal emphasized that the CoC’s commercial wisdom in evaluating the plans could not be interfered with by the Adjudicating Authority, as per the Supreme Court’s directions in K Sashidhar v. Indian Overseas Bank.

Findings:

The Tribunal concluded that the proviso to Section 31(4) of the IBC did not apply retrospectively to the ongoing CIRP. Even if it did, the Applicant did not have CCI approval on the date of the CoC meeting. The Tribunal found no procedural irregularities or bias in favor of RPIF by the RP and CoC. The CoC’s decision to approve RPIF’s plan was based on commercial considerations and was within its rights. The Tribunal dismissed the Applicant’s Miscellaneous Application, upholding the CoC’s approval of RPIF’s Resolution Plan.

Conclusion:

The Tribunal dismissed the Applicant’s plea, affirming the validity of the CoC’s decision to approve RPIF’s Resolution Plan and rejecting allegations of procedural irregularities and bias. The Tribunal emphasized the limited role of the Adjudicating Authority in interfering with the CoC’s commercial decisions.

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