TaxTMI 
TaxTMI 
2018 (5) TMI 695
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....o Interlocutory Applications ["IAs" for short] bears a common legal issue, as has been more particularly stated in IA No. 98 of 2018 (filed by the Applicant, M/s. Numetal Limited), and in IA No. 110/2018 (filed by M/s. Arcellor Mittal India Ltd.) therefore we feel appropriate to deal with together these issues involved in all the IAs and, for the sake of convenience, dispose them same by passing a common order in the interest of justice. The averment in brief as narrated in these IAs those are necessary for disposal may be described as under; I. IA No. 98 of 2018: (i) In this application, the Applicant, M/s. Numetal Limited, has sought for a declaration from this Court to this effect that it is an eligible Resolution Applicant for submitting a Resolution Plan in respect of the Essar Steel India Limited [hereinafter referred to as "ESSAR"] under the provisions of the Insolvency and Bankruptcy Code, 2016 ["the Code" for short] by looking to the best interest of the Corporate Debtor Company more particularly for its revival and resolution. The facts of the case raising to this Application and necessary for disposal are stated as under; (ii) On two separate Applications preferre....
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.... VTB Bank are listed on the Loan and Moscow Stock Exchanges and remaining shares are held by the Russian Government; (b) Indo International Trading FZCO ("INDO") which has been engaged in international commodity trading of steel and steel related raw materials etc., is having major counterparties and it has a presence in UAE, Singapore and Zug with significant trading experience; (c) JSC VO Tyazhpromexport ("TPE") is one of the largest engineering associations in Russia, and being one of the leading players in ferrous and non-ferrous metallurgy project construction TPE is able to leverage its knowledge and expertise and provide technical assistance and equipment supplies for the metallurgy and mining industry and other services related to construction, refurbishment etc. TPE has notable prior experience in the steel sector across the Indian subcontinent and it has executed various projects for various Steel Plants in India; (d) Aurora Enterprise Limited ("AEL") a company incorporated under the laws of Mauritius and which is owned by a discretionary trust, called Prima Trust, is a pure financial investor in Applicant without any control or management rights. (e) It is furthe....
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....ts. Section 29A(g) Has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code Applicant has not been a promoter or in the management of a corporate debtor in which any of the transactions mentioned under section 29A(g) has taken place Section 29A(h) Has executed an enforceable guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code Applicant has not executed any guarantee in favour of a creditor in respect of a corporate debtor against which insolvency has been commenced under the Code Section 29A(i) Has been subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India Applicant has not been subject to any corresponding disability under any law in a jurisdiction outside India Section 29A(j) Has a connected person not eligible under clauses (a) to (i) Explanation -....
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....nvite bids/resolution plans afresh for Essar Steel India Limited; d. An ex-parte relief in terms of para (c) may be granted...;" 3. Notwithstanding the above as per of record, of the case during the pendency of the IA No. 98 of 2018, the Applicant, M/s. Numetal Limited, preferred another application bearing IA No. 111 of 2018 under Section 60(5) of the Code wherein it partly conceded with the decision of the RP so far as it pertains to another contestant, namely "Arcelor Mittal India Private Limited" [hereinafter referred to as "AM"], while for declaring the AM as ineligible hence it further sought for a declaration from this Bench to confirm the decision of the RP on the ineligibility on of the AM on some other additional grounds also to submit a Resolution Plan in respect of the Corporate Debtor, ESSAR. The reliefs, as being sought for in this IA among the other, are read as under; a. That this Tribunal be pleased to declare AM India and its connected persons ineligible to present a Resolution Plan for Essar Steel India Limited by reason of its connected persons being promoters and in the management or control of KSS Petron and/or Uttam Galva for a period of more than one ye....
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.... reproduced hereunder so as to deal with the property main IA No. 98/2018 the relief sought for in the IA No. 110/2018 reads as under; Prayers: (a) To pass an order/direction setting aside and declaring as invalid the decision of the Resolution Professional dated 23.3.2018 disqualifying the Applicant and rejecting the resolution plan dated 12.2.2018 submitted by the Applicant; and (b) Pass an order directing the Committee of Creditors to consider the Resolution Plan dated 12.02.2018 submitted by AIMPL; and (c) Pass an order setting aside the amended RFP dated 23.3.2018 issued by the Resolution Professional inviting fresh/new resolution plans; and (d) Pass any other order(s) or direction as this Hon'ble Tribunal may deem fit and proper in facts and circumstances of the present case. Interim Relief: (a) Pass an order/direction staying the effect, operation and implementation of the decision of the Resolution Professional dated 23.03.2018 disqualifying the Applicant and rejecting the resolution plan dated 12.02.2018 submitted by the Applicant; and (b) Pass an order/direction staying the effect, operation and implementation of the decision of the Resolution Profession....
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....er. 10. During the course of hearing it was further brought to our notice that the RP and the COC have already decided to go for fresh bids as per their amended RFP, because as per the RP both contestants/Resolution Applicants were found ineligible as on cut-off date 12.2.2018 meant for the purpose of submission of a valid and proper Resolution Plan. 11. Subsequent, there to the present Applicant, M/s. Numetal Limited also preferred two IAs, I.A. No. 112 of 2018 and I.A. No. 121 of 2018 proposing an amendment in the main I.A. No. 98 of 2018 by incorporating new clause and sought further direction from this court. The proposed clause proposed to be incorporated reads as under; (A) This Tribunal be pleased to allow the Applicant to add and amend the Prayer Clause in Paragraph 21, to include: "That this Tribunal be pleased to quash and set aside the decision of the Resolution Professional of Essar Steel India Limited conveyed through a letter dated 23rd March 2018". 12. During the course of hearing it is brought to our notice and which is evident from a perusal of the record, and of the Minutes of the CoC that the CoC has decided to go for afresh bids since as per its decision ....
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....gainst the RP of the Corporate Debtor Company. 15. As a further development in the matter, on 3rd April, 2018, the present Applicant, M/s. Numetal Limited filed another Intervention Application P-8 of 2018 seeking prayer for impleading as party Respondent in this LA. No, 110 of 2018 filed by another contestant M/s. Arcellormittal India Private Limited seeking with following reliefs; "In view of the facts and circumstances stated herein above, it is most respectfully prayed that this Hon'ble Court may kindly be pleased to: (a) Allow the Application and pass an order directing the Applicant in the Interlocutory Application to implead the Present Applicant as a party respondent in the Interlocutory Application; and (b) Pass any other order(s) and/or direction(s) as this Tribunal may deem fit, proper and just in the facts and circumstances of the present case." 16. By confronting to these interim applications and opposing of the interim direction issued by this Tribunal therein, the Resolution Professional as well as the CoC of the Corporate Debtor Company through its main constituent SBI filed a detailed affidavit by strongly opposing the same and requested to vacate or su....
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....opinion on the eligibility of Plans as per IBC, RFP and Sec. 29A. * Floated RFP to all Big Four firms and Kroli. After confirming the conflict checks, Kroli was finalized including scope of work and fee * Kroli evaluated list of - 2,000 + entities & connected persons spread across in over 80 Jurisdictions RP requested GT to step out before apprising the CoC on the eligibility of the Resolution Applicants (RAs). RP requested CAM to brief the CoC on the recent legal development. Representative from CAM stated that they have understand that one of the Resolution Applicants (RAs), Numetal, has filed an application in the NCLT, Ahmedabad asking for the stay on the 9th CoC meeting. RP and CAM team mentioned that they have not yet received the interim order issued by NCLT. SAM (lenders counsel) mentioned that SBI has received the order last night. Participants observed that NCLT has not granted stay on the proceedings of the 9th CoC meeting, however, order has mentioned that any decisions taken by the CoC would be subject to the outcome of the application filed by Numetal with NCLT Representative from Edelweiss ARC requested CoC to pass a resolution authorizing SBI to represent th....
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.... Resolution Plan) is ineligible under Section 29A of the IBC, specifically sub-section (c) and (h) and accordingly, as on the Plan Submission Date (i.e. 12 February, 2018), Numetal (which is nothing but an incorporated joint venture investment vehicle through which its shareholders are submitting the Resolution Plan) was not eligible under Section 29A of the IBC. Both CAM and Mr. Darius Khambata concurred that Numetal was ineligible to submits its resolution plan as on 12 February 2018 on account of Section 29A (c) and (h) of the IBC. ArcelorMittal India Private Limited (ArcelorMittal) Eligibility of ArcelorMittal India Private Limited (AM India), the other Resolution applicant was tested on the facts relating to two instances: (i) KSS Petron; and (ii) Uttam Galva Steels Limited (Uttam Galva), each of which were NPAs for more than 1 year. In case of KSS Petron, Mr. L.N. Mittal, Chairman and CEO of the ArcelorMittal group (through holding companies) exercised negative control whereas in the case of Uttam Galva, ArcelorMittal Netherlands (AM Netherlands, a connected person of AM India) and classified as a promoter as well as exercised positive control over Uttam Galva. The ....
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....rson of AM India), continued to be classified as a promoter of Uttam Galva and had not completed the regulatory compliances relating to declassification as a promoter of Uttam Galva and accordingly, the resolution plan was ineligible. Accordingly, and for the reasons mentioned, pursuant to paragraph 4.11.2(a) of the RFP, the Resolution Plans received are not eligible and as CoC had asked only eligible plans to be presented, neither of these Resolution Plans are placed before CoC. RP further mentioned that: (i) the conclusion has been reached that the relevant Resolution Applicants are ineligible on the ground under sub-sections (c) and (h) of Section 29A of the IBC (after having tested for its compliance) as set out above; (ii) other them as stated above, since the evaluation of the Resolution Plan was still ongoing (including with regard to eligibility of each Resolution Applicant and its connected persons under Section 29A of the IBC and the checks being undertaken by Kroli in this regard), it may be noted that the RP has not determined the eligibility, validity or compliance of any Resolution Applicant or its connected persons under Section 29A of the IBC (except as ment....
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....ern around the strict time lines. Representative from Edelweiss ARC requested RP to approach NCLT and seek for the extension of CIRP timelines beyond 270 days. Representative from ICICI bank and Punjab National Bank were of the opinion that given the balance time lines and extent of checks required (if any new resolution applicants submit bid) it will be advisable to go with option 2. Representative from SBI asked for the legal opinion and CAM briefed that legally both the options are possible but since JSW Steel has sent a letter to CoC there are chances that JSW Steel might go to NCLT seeking NCLT's approval to participate in the bidding process of Essar Steet Representative from ICICI Bank stated that JSW had chosen to participate as per EOI (Expression of Interest) issued earlier and therefore it would not be fairi to allow them to participate in the process. It was felt that permitting JSW to participate in the process would mean that opportunity would have to be given to all other potential bidders for which fresh process will have to be initiated and given the timelines of CIRP. CoC advised that same was not feasible. Nandini again explained the detailed time lin....
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....an"). I crave leave to refer and rely upon the said Numetal Resolution Plan if this Hon'ble Tribunal so requires. (a) I say that the Applicant was incorporated on 13th October 2017 for the purposes of submission of the Resolution Plan; (b) I say that at the time of incorporation of the Applicant, the entire shareholding of the Applicant was held by Aurora Enterprises Limited ("AEL"), which was in turn held entirely by Aurora Holding Limited ("AHL") which was in turn held entirely by Mr. Rewant Ruia (through a trust and another holding company); (c) I say that on 18th October 2017, AEL transferred 26.1% of its shareholding in the Applicant to Essar Communications Limited ("ECL"); (d) I say that on 20th October 2017, the Applicant submitted its expression of interest ("Numetal EOI") (seven days after its incorporation) pursuant to the Advertisement. I crave leave to refer and rely upon the Numetal EOI if necessary; (e) I say that following the submission of the Numetal EOI, I understand that ECL transferred its entire shareholding in the Applicant to one Crinium Bay Holdings Limited (Crinium Bay), which is an indirect wholly owned subsidiary of VTB Bank; and AEL transfe....
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....acilities availed by Corporate Debtor from SBI; (l) I say that in the legal opinions submitted by the Applicant (as part of the Numetal Resolution Plan) stipulates that Applicant has confirmed that: (a) Mr. Ravi Ruia is as of the date of the opinion (dated January 16, 2018), the promoter of Corporate Debtor and (b) Mr. Ravi Ruia has also issued personal guarantees for the benefit of Corporate Debtor for securing loans obtained by Corporate Debtor from various banks including SBI. (m) I say that the Applicant has not submitted any agreement or understanding amongst parties to substantiate that the averment that AEL/Mr. Rewant Ruia has no management rights, special rights, or the ability to participate in the management of Applicant either currently or going forward. 10. I say that at the 9th meeting of the Committee of Creditors ("CoC") of the Corporate Debtor held on 21st March 2018, the CoC was intimated of the determination of eligibility of each Resolution Applicant as on the date of submission of the respective resolution plans. In relation to the eligibility of Numetal it was informed to the CoC that: (a) Mr. Ravi Ruia: (i) was the promoter of the Corporate and the Cor....
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....12. I have considered each of the shareholders of Numetal as joint venture partners to be acting jointly for the purposes of submission of the Numetal Resolution Plan, Whilst considering the eligibility of the shareholders of Numetal, since AEL is held completely by Mr. Rewant Ruia (through various holding companies and a trust), I have considered Mr. Rewant Ruia, Crinium Bay, Indo International Limited and Tyazhpromexport for scrutiny under Section 29A of the Code. 13. I say that in light of the fact that Mr. Rewant Ruia (who is acting jointly with the other shareholders of the Applicant for the purposes of submission of the Resolution Plan and is deemed to be acting in concert with Mr. Ravi Ruia) is ineligible under Section 29A of the Code, specifically under sub-section (c) and (h) and accordingly, as on the Plan Submission Date (i.e. 12th February 2018), the Applicant (which is nothing but an incorporated joint venture investment vehicle through which its shareholders are submitting the Numetal Resolution Plan) was not eligible under Section 29A of the Code. 14. I say that there are various averments in the Numetal Resolution Plan that AEL/Mr. Rewant Ruia do not have any co....
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....(c) and (h) of Section 29A of the Code. The CoC noted my decision. A copy of the CoC minutes is being produced separately and will be tendered to this Hon'ble Tribunal in a sealed envelope. 19. I say that vide letter dated 23rd March 2018, the Applicant was informed that the Numetal Resolution Plan submitted by the Applicant was rejected as being ineligible and therefore will not be put forth before the CoC, The reasons on account of which the Applicant was found to be ineligible have been stated in the said letter. A copy of the Letter dated 23rd March 2018 is annexed hereto as Exhibit "B" 18. Further as per the CoC decision dated 21st March, 2018, the RP invited resolution plans from the shortlisted EOI applicants which includes the present Applicant. Therefore, the Applicant has been granted opportunity to submit a resolution plan subject to it being eligible to submit a resolution plan in conformity with the provisions of Section 29A and the amended RFP document issued by me and an opportunity has been given to the Applicant to submit a resolution plan as per the decision of the CoC on 21st March, 2018. A copy of the email sent to the Applicant intimating them of the de....
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....ant, or the Applicant's correspondence with Respondent No.1. the CoC hence does not admit any of the averments made in the Application, for want of specific information, except as stated herein. Nothing in the Reply ought to be deemed to be an admission for want of specific traverse. 6. It is further stated that the period for the Corporate Insolvency Resolution process of the Corporate Debtor expires on 29th April, 2018. The grant of any reliefs in the present Application will significantly impact the timelines for the completion of the process, resulting in grave detriment to various stakeholders of the Corporate Debtor, including the CoC. On this basis alone, the present Application ought not to be considered by this Hon'ble Tribunal. 7. Respondent No.1 issued a Request for Proposal dated 24th December, 2017 ("RPF") inviting resolution applicants to submit resolution plans for the Corporate Debtor. The RFP was amended by the First Addendum to the RFP dated 8th February, 2018, and the Second Addendum to the RFP dated 23rd March, 2018 ("Addendums"). A copy of the RFP and the Addendums are annexed hereto. 8. The CoC understands that Respondent No. 1 has carried out th....
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....e under Section 29A(c) and (h) of the IBC. On this basis, Respondent No.1 has found the resolution plan submitted by the Applicant ineligible. 12. As the CoC had only asked for presentation of plans that were eligible for consideration by it, the plan presented by the Applicant was not placed before the CoC. The Minutes of the Meeting of 21st March, 2018 only note the information provided by Respondent No.1 to the CoC; and there was no voting on the eligibility or ineligibility of the Applicant. 13. In view of the issues surrounding the eligibility of the Applicant, the CoC requested Respondent No.1 to present options for the way forward, with a view to being fair and transparent to all resolution applicants. Respondent No. 1 presented the CoC with the following options: i. Initiate a new process of inviting bids from all interested parties (Starting with issuance of a new Expression of Interest) and follow the entire process as per new Request For Proposals ("RFP") approved by CoC ("Option 1"); or ii. Extend the Due Date for submission of Resolution Plans (as defined in the RFP) and permit all the potential resolution applicants (as defined in the RFP, along with its new a....
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....) Aurora Enterprises Limited ("AEL" is not the promoter of or in control or management of the Resolution Applicant. Accordingly, AEL cannot be put to scruti006Ey under Section 29A of the Code, as done by the RP. In any event, the Applicant has not relied on the credentials of AEL in the Resolution Plan. (iv) Rewant Ruia does not own AEL, as contended by the RP. As disclosed in the Resolution Plan, Rewant Ruia is merely one of the beneficiaries of Prisma Trust, a discretionary trust. Prisma Trust holds the share capital of Aurora Holdings Limited ("AHL") the holding company of AEL. It is a well settled principle of law that ownership and control over the assets of a trust vests with the trustees. A beneficiary cannot be said to be the owner of the assets of the trust or otherwise said to control the trust, especially in case of a discretionary trust. As such, even assuming without admitting that AEL can be put to scrutiny under Section 29a of the Code, Mr. Rewant Ruia cannot be put to such test. (v) Assuming without admitting that Rewant Ruia can be put to test under Section 29A of the Code, it cannot be 'deemed' that Rewant Ruia is necessarily acting in concert with his....
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....ten Submissions are being taken into consideration for deciding the issue involved in the present application. For arriving at such findings/conclusion of the RP has obtained legal opinion and its such findings is based on such opinion which were explained to the CoC for reaching to appropriate conclusion/decision. Equally, the Applicant in IA No. 98/2018 also obtain legal opinion from renowned jurists e.g. (former judge of the Hon'ble Supreme Court) and from former Learned Law Officer of the GOI which are placed on record along with the present IA also in support of their case in this opinion it is expressed the Numetal Limited (Resolution Applicant) is a single and independent corporate entity and it cannot be termed as a consortium of its shareholders not it intend to implement the Resolution Plan jointly with another person hence, in view of this the amended clause 4.11.2 (1) to the RFP would neither be applicable or binding upon the resolution applicant and thus, it is not required at all to seek an approval from the RP or the CoC. In respect of proposed change its shareholding of ESIL in terms of RFP and also are required under the other provisions of the Law. It has be....
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....essional inviting fresh/new resolution plans; and (c) Pass any other order(s) or direction as this Hon'ble Tribunal may deem fit and proper in facts and circumstances of the present case. 2 On filing of IA 110/2018 notices were served upon the RP as well as notices were served upon the respondents and financial creditors viz. State Bank of India and Standard Chartered Bank Ltd. Meanwhile, on 2nd April, 2018 Intervening Application No. 8/2018 is filed on behalf of Numetal Limited,, seeking permission for impleadement in IA (IB) No. 110 of 2018 in CP (B) No. 39-40/7/NCLT/AHMD/2017. Accordingly, RP i.e. Respondent No. 1 and Numetal Limited filed its reply in IA 110/2018. 3. During the course of argument the applicant i.e. AMIPL submitted that the instant application is moved against the arbitrary and legally untenable rejection of its resolution plan by the resolution professional, inter alia, on the ground that AMIPL was in contravention/violation of Section 29A (c) read with (J) of the code, and therefore, ineligible to submit the resolution plan. It is further submitted that, resolution professional vide its decision dated 23.03.2018 have opined that ArcelorMittal Netherl....
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.... other interested parties who meet the qualification requirements to put forward resolution plans. The RFP, inter-alia, stated that all relevant documents showing qualification of eligibility criteria were to be submitted. Annexure A/7 is the true copy of the RPF dated 24.12.2017 filed by the applicant in IA 110 of 2018. 7 It is further submitted by the applicant that, AMNBLBV, a 100% indirect subsidiary of AMSA, held 29.05% shares of UG, a listed company incorporated under the provisions of the Companies Act, 1956. AMNLBV had entered into a co-promotion agreement (CPA) dated 04.09.2009 with UG and the Indian promoters of UG (the Indian Promoters). The CPA inter alia provided AMNBLBV several affirmative voting rights the right to nominate one half of the non-independent directors, the right to nominate independent directors jointly with Indian Promoters etc. 8 During the course of argument the applicant submitted that, the account of UG was classified as NPA on 31.03.2016 under the relevant RBI guidelines and a period of more than one year has lapsed since last classification. However, on the date of submission of Resolution Plan by the applicant herein, the UG was not entered ....
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....applicant submitted the resolution plan on 12.02.2018 as per the Code and the Regulation and RFP as amended from time to time and declared that AMIPL was not covered by disqualifications mentioned under Section 29 A of the Code, as inserted vide Insolvency & Bankruptcy Code (Amendment) Act, 2018. 11 In support of their contention, learned counsels placed reliance on different rulings of Hon'ble Supreme Court relating to interpretation of Section 29A: (1) Harbhajan Singh v. Press Council of India [2002] 3 SCC 722 (2) Sri Ram Saha v. State of W.B. [2004] 11 SCC 497 - paras 16, 19 (3) Kanai Lal Sur v. Paramnidhi Sadhukhan AIR 1957 SC 907 para 6 (4) Pr. Chief Conservator of Forests v. J.K. Johnson [2011] 10 SCC 794-paras 39-41. There is no dispute with regard to ruling so filed by the applicant, however, each case turns to its own merits. 12 The Respondent No. 1 the Resolution Professional filed written objection/reply in the instant application, filed by the applicant (AMIPL) challenging the decision of the Resolution Professional dated 23.03.2018 disqualifying the applicant and rejecting the resolution plan dated 12.02.2018 apart from other correlated grievances rel....
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....ock Exchanges), AM Netherlands sold its shares in Uttam Galva on 7th February, 2018 to an existing promoter of Uttam Galva, The agreement signed between the other promoters of Uttam Galva and AM Netherlands dated 7th February 2018 states that the parties shall cooperate to de-classify AM Netherlands as the promoter of Uttam Galva and obtain all the necessary approvals in this regard. Copies of the relevant stock exchange filings and the agreement dated 7th February, 2018 are attached with the reply of RP, marked as Exhibit D and Exhibit E respectively. (h) AM Netherlands had applied to the Stock Exchanges on 8th February, 2018 for its declassification as a promoter of Uttam Galva under Regulation 31A (2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations) (Stock Exchange Approvals). 14 Learned counsel appearing on behalf of the RP further submitted that, on the date of submission of resolution plan, i.e. 12th February, 2018, AM Netherlands had not completed all the regulatory compliance relating to declassification as a promoter of Uttam Galva and had continued to be classified as a promoter o....
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....etween ArcelorMittal Netherland BV. (b) KSS Petron is a wholly owned subsidiary of KazStroy Service Global BV (incorporated under the laws of Netherlands) (KSS Global BV). KSS Petron has a subsidiary company called Petron Engineering & Construction Limited (Petron Engineering). (c) Vide a Share Purchase Agreement (SPA) dated 3 March 2011, Freseli Investments Sarl (Fraseli) a company owned and controlled by a company called by Mittal Investments Sr (Mittal Investments) acquired about one third of the share capital of KSS Global BV. Pursuant to such acquisition, Fraseli acquired control over KSS Global BV which in turn controls KSS Petron and Petron Engineering. Mittal Investments is owned and controlled by LN Mittal Group, the promoters of the applicant. (d) Consequent to such acquisition of control by Fraseli, on 23 May 2011 a public announcement was made under SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (the Takeover code) for the acquisition of shares of Petron Engineering inter alia by KSS Global BV and Fraseli. The public announcement was followed by the mandatory letter of the offer required under the Takeover Regulations. (e) The public ann....
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....e resolution applicant A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person - (a) is an undischarged insolvent; (b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949; (c) has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor. PROVIDED that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan; (d) has been convicted for any offence punishable with imprisonment for two years or more; (e) is disqualified to act as a directo....
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....t of a liquidation of the corporate debtor under section 53; (c) provides for the management of the affairs of the corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. (3) Then resolution professional shall present to the Committee of Creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). (4) The Committee of creditors may approve a resolution plan by vote of not less than seventy-five per cent of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: PROVIDED that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under Section 29A and may require the resolution professional to invite a fresh resolution plan where no other ....
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....r has lapsed from the date of such classification till the date of commencement of Corporate Insolvency Resolution Process of the Corporate debtor. The said disqualification starts from 02.08.2017 can only be remedied in the manner provided in the proviso to clause (c) of Section 29A read with Section 30 (4) proviso and in no other manner. The disqualification commenced on 02.08.2017, continues till 12,02.2018 and the same disqualification cannot be relieved by merely ceasing to be the promoter or by selling shares in the companies whose accounts are NPA such as Uttam Galva or KSS Petron. 20 On perusal of annexure R/4 i.e. shareholding pattern annexed with the reply of Numetal Limited, it is found that ArcelorMittal is a pubically known promoter of Uttam Galva and its shareholding is classified under "promoter and promoter group" in the filings made in the Stock Exchange of India. As per shareholding pattern of Uttam Galva disclosed in the stock exchange as on December, 2017 ArcelorMittal was a single largest shareholder having significant shareholding of 29.05% in Uttam Galva. 21 On perusal of the record it is found that connected person of the applicant are the promoter of KS....
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.... is very clear that a person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person; has an account, or an account of a corporate debtor under the management or control of such person or whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor, PROVIDED that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan. Section 29A does not distinguish between positive and negative control. Any person who is either promotor or in the management or in the control of the business of the corporate debtor and in default is ineligible. Person connected to ArcelorMittal India Private Limited who are either promoter or in the management with ....
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....29(A) and 30(3) and (4) of the Code which provided as under; 29A....(c) has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor. PROVIDED that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non- performing asset accounts before submission of resolution plan;" "30....(3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). (4) The committee of creditors may approve a resolution plan by a vote of not less than seventy-five per cent of voting share of the financial creditors, after considering its feasibility and viability, and such other re....
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....ing of the CoC and hence the present matter can be remanded back to the RP and CoC on this ground alone for their reconsideration. 28 Even assuming this there is no such expressed bar or any fatter to the right and jurisdiction of the CoC to go for inviting a fresh bid in order to safeguard the paramount interest of the corporate debtor company and to receive a practical and valuable resolution plan but in our humble view, the CoC is equally expected to follow the procedure of the code specifically to Section 30(4) of the Code, even if, a fresh bid is allowed to be opened then there is every possibility that some of them may be found ineligible under section 29(A)(C) of the Code and the RP and the CoC would again legally be expected to provide the opportunity to such Resolution applicant as per Section 30(4) i.e. not exceeding 30 days to make payment overdue amount in accordance with the proviso of clause (c) of Section 29A removing its disability. 29 It is pertinent to mention herein, that the nature of duties assigning to a RP is similar to a public servant, as he is being an appointee of this code, that a part, CoC is also a creature of the statute i.e. the present code, hen....
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....2012 (1) UJ 0334. 2. Pearless General Finance and Investment Co, Ltd. v. Reserve Bank of India [1992] 2 SCC 343. 3. R. Ramakrishna Rao v. State of Kerala AIR 1968 SC 1367. In addition, above stated judicial precedent by the Learned Counsel for the respective parties in support of their contention this Court also considered the law as laid down by the Hon'ble Supreme Court in the matter of R D Shetty v. International Airport Authority of India AIR 1979 SC 162 and in Mohirnder Singh Gill v. Chief Election Commissioner AIR 1978 SC 851. 32 In the light of above stated discussion in the present IAs, our findings and conclusion can be summarised as under: - As per the material available on record and as per affidavits of the State Bank of India (as being major constituent in the CoC) on behalf of the Committee of Creditors, it acted as per the view an eligibility expressed by the RP for submission of a valid and proper resolution plan and it did not decide the issue of determination of the eligibility/ineligibility of the Resolution applicant(s) According to the CoC, it is the duty of the RP, (the Respondent No.1), to decide the issue of the eligibility and to make scrutiny....
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....: PROVIDED FURTHER that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A." It is clear from the above referred enabling provision that, if Resolution Applicant(s) is/are found ineligible under clause (c) of Section 29A, he shall be allowed by the CoC such period not exceeding 30 days to make payment of overdue amount in accordance with proviso to clause (c) of Section 29A. For the sake of convenience may be reproduced hereunder (sic): - Considering the above stated statutory provisions, we find that the CoC did not follow the prescribed procedure in above stated provision(s) of the Code, i.e. Section 29A(c) read with specifically proviso to Section 30(3)(4) to afford reasonable opportunity by making payment of overdue amount in order to remove such disability of the Resolution Applicant(s) as prescribed under clause (c) of Section 29A and/or to make good the disability. In our view such irregularity may vitiat....
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.... 29A(c) of the Code, in that event the RP and the CoC are again bound to provide an opportunity not exceeding 30 days for making payment of overdue amounts or to remove its disability as per the proviso of Section-30 (4) of the Code, which again consume considerable time. Moreover, in our humble view, the nature of duties as assigned to the RP is/are similar to public servant because he is an appointee of this Court further the Committee of Creditors is also a creature of the statue, and, can be termed as the instrumentality of a state, hence, they are under statutory obligation to follow the basic principles of administrative law. Our such view is fortified with a decision of Honourable Supreme Court in the matter of RD Shetty (supra) wherein, it has been ruled that instrumentality of the state has to act in transparent and fair manner and not to take arbitrary decision or to adopt a discriminatory practice. Therefore, in view of the above stated decision of the Honourable Supreme Court the decision of the CoC by not providing sufficient opportunity to the Resolution Applicants concerned under the proviso of Section 30(4) is not only, in contravention of the proviso of Section....