NCLT Kolkata Admits UCO Bank's Application, Appoints Resolution Pro

The National Company Law Tribunal (NCLT), Kolkata bench admitted the Section 7 Application by UCO Bank against the Corporate Debtor, appointing an Interim Resolution Professional. The Corporate Debtor admitted owing Rs.50 Crores to UCO Bank, with no One Time Settlement (OTS) finalized. The Corporate Debtor later agreed to pay Rs.50.79 Crores as part of an OTS proposal. The Tribunal acknowledged the operational challenges faced by the Corporate Debtor and provided interim directions. Indian Bank's claims would be addressed depending on the outcome of the Corporate Insolvency Resolution Process (CIRP). Various intervention applications were disposed of, and final directions included a stay on implementation pending UCO Bank's consideration of the OTS proposal.

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Issues Involved:
1. Admission of Section 7 Application by UCO Bank.
2. Consideration of One Time Settlement (OTS) Proposal.
3. Impact on the Corporate Debtor's operations and workers.
4. Rights and claims of Indian Bank.
5. Intervention applications by other parties.

Summary of Judgment:

1. Admission of Section 7 Application by UCO Bank:
The National Company Law Tribunal (NCLT), Kolkata bench admitted the Section 7 Application filed by UCO Bank against the Corporate Debtor, M/s Darjeeling Organic Tea Estates Pvt. Ltd., and appointed Mr. Santanu Brahma as Interim Resolution Professional (IRP). The Corporate Debtor admitted a principal amount of Rs.50 Crores payable to UCO Bank, and no One Time Settlement (OTS) had materialized at the time of the order.

2. Consideration of One Time Settlement (OTS) Proposal:
The Corporate Debtor proposed an OTS to UCO Bank, initially offering Rs.41 Crores, which was later increased to Rs.46 Crores. UCO Bank requested an improvement of the OTS offer to Rs.50.79 Crores, which was the Outstanding Ledger Balance (OLB). The Corporate Debtor accepted this offer during the appeal proceedings and communicated its willingness to pay Rs.50.79 Crores. The Tribunal directed UCO Bank to consider this OTS proposal within 60 days.

3. Impact on the Corporate Debtor's Operations and Workers:
The Corporate Debtor operates several Tea Gardens employing over 7000 workers. The Tribunal noted the difficulties in running the Corporate Debtor as a going concern and issued interim directions to ease these difficulties. The Corporate Debtor has been running with financial assistance from M/s Lemongrass Organic Tea Estates Pvt. Ltd., which has invested in the company.

4. Rights and Claims of Indian Bank:
Indian Bank filed a petition under Section 7 against the Corporate Debtor for non-payment of dues amounting to Rs.74.17 Crores. The Tribunal noted that Indian Bank's claims would be addressed if the CIRP continues or if a settlement is reached with UCO Bank. Indian Bank can revive its Section 7 Application or take other legal steps if the CIRP is terminated.

5. Intervention Applications by Other Parties:
Several intervention applications were filed, including by Axis Overseas Ltd. and Ex-Promoters of the Corporate Debtor. These applications were disposed of, with the Tribunal noting the readiness of Axis Overseas Ltd. to propose a better offer to the banks.

Final Directions:
1. The order dated 28.10.2022 admitting the Section 7 Application is not interfered with.
2. The implementation of the order dated 28.10.2022 is stayed for 60 days to allow UCO Bank to consider the OTS proposal of Rs.50.79 Crores.
3. If a settlement is not reached within 60 days, the CIRP proceedings will commence, and the interim directions will become inoperative.
4. Indian Bank can revive its Section 7 Application or take other steps if the CIRP is terminated or continue its claims if the CIRP proceeds.
5. All other intervention/interlocutory applications are disposed of, and parties will bear their own costs.

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