Tribunal rules against illegal asset attachment in IBC case; JSW Steel's plan approved

The Tribunal concluded that the Directorate of Enforcement's attachment of the Corporate Debtor's assets post-approval of the Resolution Plan was illegal and without jurisdiction. JSW Steel Limited was deemed eligible under Section 29A of the IBC to submit a Resolution Plan. The Tribunal clarified the distribution of profits earned during the CIRP and emphasized the importance of filing claims within the stipulated period. Ambiguities regarding the interim management mechanism were resolved, confirming the Reconstituted Board's role until the Effective Date. The Resolution Plan submitted by JSW Steel Limited was approved with modifications, and appeals by operational creditors and the State of Odisha were dismissed.

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Issues Involved:
1. Legality of the Directorate of Enforcement's attachment of the Corporate Debtor's assets post-approval of the Resolution Plan.
2. Eligibility of JSW Steel Limited under Section 29A of the Insolvency and Bankruptcy Code (IBC).
3. Distribution of profits earned during the Corporate Insolvency Resolution Process (CIRP).
4. Treatment of claims by various creditors, including operational creditors and the State of Odisha.
5. Interim management mechanism and related ambiguities.

Detailed Analysis:

1. Legality of Directorate of Enforcement's Attachment:
The primary issue was whether the Directorate of Enforcement (ED) could attach the Corporate Debtor's assets after the approval of the Resolution Plan under Section 31 of the IBC. The Tribunal concluded that the ED's attachment order dated 10th October 2019 was illegal and without jurisdiction. The Tribunal emphasized that once a Resolution Plan is approved, it is binding on all stakeholders, including government agencies. The newly inserted Section 32A of the IBC provided immunity to the Corporate Debtor and the successful Resolution Applicant from prosecution for offenses committed prior to the commencement of the CIRP, provided they were not related parties or involved in the commission of the offense.

2. Eligibility of JSW Steel Limited:
The Tribunal examined whether JSW Steel Limited was a "related party" under Section 29A of the IBC, which would make it ineligible to submit a Resolution Plan. The Tribunal found that JSW Steel Limited was not a related party to the Corporate Debtor, despite their joint venture in Rohne Coal Company Private Limited. The Tribunal clarified that the association was mandated by the Central Government for coal block allocation and did not make JSW Steel Limited a related party. Therefore, JSW Steel Limited's Resolution Plan was deemed compliant with Section 29A.

3. Distribution of Profits Earned During CIRP:
The Tribunal addressed the condition imposed by the Adjudicating Authority regarding the distribution of profits earned during the CIRP. The Tribunal referred to the Supreme Court's decision in "Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors." and held that the distribution of profits should be made in terms of the addendum to the Request for Proposal (RFP). The Tribunal set aside the condition that required redistribution of profits earned during the CIRP.

4. Treatment of Claims:
The Tribunal dealt with various appeals from operational creditors and the State of Odisha. It was held that claims not filed during the CIRP could not be entertained post-approval of the Resolution Plan. The Tribunal emphasized that all claims must be submitted and decided by the Resolution Professional to ensure the successful Resolution Applicant knows the exact liabilities. The Tribunal dismissed the appeal of the State of Odisha for filing its claim after the approval of the Resolution Plan and beyond the permissible period.

5. Interim Management Mechanism:
The Tribunal clarified ambiguities regarding the interim management mechanism. The Tribunal stated that the direction in para 128(f) of the impugned order, which suspended the existing Board of Directors, was only to ensure that the previous board did not interfere with the interim management mechanism provided in the Resolution Plan. The Tribunal confirmed that the Reconstituted Board, as per the Resolution Plan, would manage the Corporate Debtor until the Effective Date.

Conclusion:
The Tribunal approved the Resolution Plan submitted by JSW Steel Limited with modifications and clarifications. The appeals by various operational creditors and the State of Odisha were dismissed. The Tribunal's judgment provided clarity on the application of Section 32A, the eligibility of JSW Steel Limited, the distribution of CIRP profits, and the treatment of claims, ensuring the successful implementation of the Resolution Plan without legal uncertainties.

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