Resolution applicant loses INR 10 crores for failing bank guarantee requirements under Clause 12 Section 5

The NCLAT upheld the forfeiture of INR 10 crores by the CoC led by SBI against the appellant resolution applicant. The tribunal found that the appellant failed to provide valid bank guarantees in SWIFT format and meet financial commitments under the Resolution Plan despite multiple extensions. The forfeiture was justified under Clause 12 of Section 5 of the Resolution Plan and CIRP Regulations. The appellant's argument regarding retrospective application of regulations was rejected as the CIRP was ongoing when regulations came into effect. The tribunal dismissed the appeal but declined to refer the matter to IBBI under Section 74(3) of the Code, finding no wilful non-implementation.

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Issues Involved:
1. Lawfulness of the CoC's forfeiture of INR 10 Crores deposited by the Appellant.
2. Whether the Appellant was restrained by the CoC from implementing its Resolution Plan.

Summary:

Issue 1: Lawfulness of the CoC's Forfeiture of INR 10 Crores
The Appellant, Peter Beck und Partner Vermoegensverwaltung GMBH, challenged the NCLT's order allowing the forfeiture of INR 10 Crores deposited with Abhyudaya Cooperative Bank. The CoC, led by SBI, forfeited the amount due to the Appellant's failure to submit valid bank guarantees and comply with the implementation schedule of the Resolution Plan. The tribunal found that Clause 12 of Section 5 of the Resolution Plan and Regulation 36B(4A) of the CIRP Regulations justified the forfeiture. The Appellant's contention that the Regulation could not be applied retrospectively was dismissed, as the CIRP was ongoing when the Regulation came into effect. The tribunal noted that the Appellant had multiple opportunities to comply but failed to do so, thus justifying the forfeiture.

Issue 2: Whether the Appellant was Restrained by the CoC from Implementing its Resolution Plan
The Appellant argued that the CoC, particularly SBI, obstructed the implementation of the Resolution Plan by not providing necessary account details for additional fund deposits. However, the tribunal found that the bank details were always available to the Appellant, who managed to deposit INR 10 Crores but failed to deposit the remaining INR 5 Crores. The tribunal noted that the CoC provided ample opportunities for compliance, and the Appellant's claims of being restrained were unfounded.

Findings:
The tribunal concluded that the forfeiture of INR 10 Crores was lawful and in accordance with the Resolution Plan and CIRP Regulations. The Appellant's failure to submit valid bank guarantees and meet financial commitments warranted the forfeiture. The tribunal also found no sufficient cause for initiating proceedings u/s 74(3) of the IBC against the Appellant, as the forfeiture itself was deemed adequate.

Order:
The appeals filed by Peter Beck und Partner Vermoegensverwaltung GMBH were dismissed, affirming the NCLT's order dated 12.12.2023. However, the tribunal set aside the observations regarding the reference to IBBI for punishment u/s 74(3) of the IBC.

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