AI Drafter 
TaxTMI 
TaxTMI 
2018 (5) TMI 695
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....facts as narrated in the above mentioned two 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 st....
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....tion, assets and net worth which is having a robust reputation internationally; some of the shares of 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, ....
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.... and Exchange Board of India from trading in securities or accessing the securities markets Applicant is not prohibited from trading in securities or accessing the securities markets. 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 ....
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.... and final disposal of the present Application, this Tribunal be pleased to direct the Resolution Professional and the Committee of Creditors of Essar Steel India Limited not to reject the Resolution Plan of the Applicant and/or invite 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....
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....for declaring it ineligible but on other side it equally has challenged such RP's decision so far as it goes against by it declaring (Herein AM) as ineligible for submission of a Resolution Plan. Thus, the prayer made and relief sought for in the IA No. 110/2018 can also be 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 ....
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....ne the hearing date of the matter by listing the case on 27th March, 2018. Thereafter on 26.3.2018, the Arcelormittal India Private Limited being a third party filed an Intervention Application No. P-7 of 2018 seeking for impleadment in the present IA No. 98 of 2018 and for passing appropriate order/direction from this Court in the present matter. 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 please....
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....sel for both the parties, and by considering the facts and circumstances of the present case issued an interim direction vide its order dated 2nd April, 2018 directing to the RP not to open the bids till disposal of the present IAs, further the RP as well as the COC were directed to file their Reply/objection, if any, to these Applications initially moved by M/s. Numetal Limited as well as by Arcelor Mittal against 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/....
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....varez and Marsal (A&M), Cyril Amarchand Mangaldas (CAM), Kroll and Grand Thornton (GT) since bids submission. Some of the kay activities are as follows: * Co-ordinated and interacted with Resolution Applicants (RAs) related to process, compliance (IBC, RFP and Sec.29A) and additional information required * Engaged and interacted with legal counsel for opinion on eligibility of Resolution Plans and reference to Senior Counsel * Evaluation and forming 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....
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....hose account was classified as an NPA for more than 1 year prior to the commencement of corporate insolvency resolution process (CIRP) of BSIL on 2nd August, 2017, and (b) Ravi Ruia (who Rewant Ruia is deemed to be acting in concert with) has executed guarantee in favour of SBI (for itself and a consortium of lenders) and the CIRP application filed by SBI has been admitted by the NCLT on 2 August 2017. In light of the above, Rewant Ruia (who is acting jointly with the other shareholders of Numetal for the purposes of submission of the 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 Arcelor....
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.... it would be eligible to submit a resolution plan (and would not be subject to the disqualification under Section 29A(c) of the IBC for having an NPA of more than 1 year). Mr. Khambata has opined that a resolution applicant needs to be eligible under Section 29A of the IBC not only on the date of submission of the resolution plan but must also remain eligible till the approval of its resolution plan by the NCLT under Section 31 of the IBC. On account of above two views, CAM recommended to the RP to take the opinion of Mr. Darius Khambata and rely on his advice. RP stated that as on the Plan Submission Data, AM Netherlands (a connected person 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: ....
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....) forwarding a letter from JSW Steel Limited that addressed to Deputy Managing Director, SBI. Aforesaid, letter has requested SBI to consider allowing other interested parties also to submit the bids in the rebidding process of Essar Steel India Limited on as is where is basis, based on available limited information. Further, they have mentioned that then would be able to submit a competitive bid in a shorter time frame based on the data that may be made available to them. Further, Nandini Chopra (Managing Director, Alvarez and Marsal) explained both the options available to CoC in details with revised timelines along with key activities. Representative from Edelweiss ARC, ICICI bank and Punjab National Bank raised concern 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 opi....
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....quest for Proposal) document issued by the RP. Thus, as per the Respondent RP, the Applicant has been given an opportunity to submit a fresh Resolution Plan as per the decision of COC dated 21st March, 2018. Therefore, the present Application as filed by the Applicant is baseless and without any substance and should be dismissed in limine with cost. The RP, while examining and determining the eligibility of the Resolution Applicants as on the date of submission of respective Resolution Plans, has contended as such in Paras No. 9 to 21 of his Reply, the verbatim of such reply affidavit may be reproduced hereunder; 9. I say that following are some of the relevant facts in relation to the Resolution Plan submitted by the Applicant on a confidential basis (the "Numetal Resolution Plan"). 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 ("....
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....nt by itself does not meet the financial eligibility criteria and is relying on its shareholders' strength for satisfying the requirements of the process documents - at the stage of submission of the EOI, it met the tangible net worth' requirement prescribed under the Advertisement by relying on the net worth of ECL and for the purposes of the Numetal Resolution Plan, it satisfies the minimum tangible net worth criteria on account of Crinium Bay. (j) I say that Mr. Ravi Ruia is the father of Mr. Rewant Ruia and on account of Regulation 2(q)(2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations) is deemed to be acting in concert with Mr. Rewant Ruia. (k) I say that Mr. Ravi Ruia has executed a guarantee for the benefit of, amongst others, State Bank of India (SBI) in respect of credit facilities 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....
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.... (b) as on the date of submission of the Numetal EOI, it relied on ECL, one of its then shareholders to comply with the eligibility requirement relating to its tangible net worth' (as stipulated in the section titled 'Eligibility Criteria' in the Numetal EOI); (c) as on the plan submission date i.e. 12 February, 2018 ("Flan Submission Date"), Numetal relied on Crinium Bay (its shareholder) to comply with the eligibility requirement relating to its tangible net worth (as stipulated in Section 6.7 of the Numetal Resolution Plan); (d) Numetal is nothing but a newly incorporated joint venture between Aurora Enterprises Limited, Crinium Bay, Indo International Limited and Tyazhpromexport through which its shareholders are submitting the Resolution Plan; (e) Further, Applicant has relied on the financial and technical credtials of each of its four shareholders as more specifically set out in section 6.3 of the Numetal Resolution Plan. 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 ....
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....for completeness. Further, clause 4.11.3 of the RFP clearly provides that no change or supplemental information of the resolution plan shall be accepted after the due date. 16. I say that I acted on the legal advice of a reputed law firm and a reputed senior counsel. 17. Further, to ascertain the eligibility of the resolution applicants under Section 29A and other applicable Provisions of the Code. I interacted with the process Advisors, my legal advisors and also engaged reputed Consultants to conduct searches and checks in available public records in all relevant jurisdictions. This entailed checks in relation to over 2300 entities and connected persons spread over 70-80 jurisdictions. I further state this process was still ongoing and not completed. 18. I say that accordingly conclusion in relation to the eligibility of the Applicant as determined by me as the Resolution Professional of Corporate Debtor and communicated to the CoC was that the Applicant is ineligible in view of sub-sections (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 T....
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....etailed affidavit, if the same is required or if it is advised to do so. 4. At the very outset, it is stated that most of the issues raised in Application relate to Respondent No.1, the Resolution Professional of the Corporate Debtor, and are best dealt with by the said Respondent. The determination of the eligibility or ineligibility of the Applicant in terms of Section 29A of the IBC, is the duty of Respondent No. 1 and as such, the substantive submissions made by the Applicant in the Application ought to be dealt with by the Resolution Professional. The CoC can only consider resolution plans that are placed before it by Respondent No.1, after Respondent No.1's determination of their eligibility. 5. It is further stated that the CoC considers the information that is placed before it by the Resolution Professional, and as such is not in a position to provide a detailed response to every allegation raised by the Applicant in the Application. In particular, the CoC does not have information with regard to the resolution plan submitted by the Applicant, or the Applicant's correspondence with Respondent No.1. the CoC hence does not admit any of the averments ....
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....L whose account was classified as an NPA for more than 1 year prior to the commencement of corporate insolvency resolution process (CIRP) of ESIL on 2 August 2017; and (b) Ravi Ruia (who Rewant Ruia is deemed to be acting in concert with) has executed guarantee in favour of SBI (for itself and a consortium of lenders) and the CIRP application filed by SBI has been admitted by the NCLT on 2 August 2017". 10. The CoC was also informed that "Rewant Ruia" (who is acting jointly with the other shareholders of Numetal for the purposes of submission of the 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." 11. Respondent No.1 stated that he had taken opinions from its legal advisers with regard to the eligibility of the Applicant, and such opinions had confirmed that the Applicant was not eligible under Section 29A(c) and (h) of the IBC. On this basis, R....
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....d contentions in the Application. The Applicant further reiterated its stand that its Application under Section 98 merits consideration by this Tribunal and deserves to be allowed as prayed for. The Applicant by challenging the decision taken by the RP as stated in its Additional Affidavit, contended by holding that the Resolution Applicant is an incorporated Joint Venture and the shareholders of the Applicants are acting jointly in submission of Resolution Plan as incorrect decision. It further contended that the Aurora Enterprises Ltd., ("AEL") is not a promoter of or in control or management of the Resolution Applicant. Hence, as per the Applicant, the AEL cannot be put to its scrutiny under Section 29A of the Code as has been done in the present case by the learned RP and also clarified that in any event the present Applicant has not relied on the credentials of AEL in the Resolution Plan. The relevant portion of Rejoinder Affidavit, as stated in Para 4 (iii) to (vi) is reproduced as under; 4. Without prejudice to the above, the Applicant will now provide a paragraph-wise response to the Affidavit in Reply as follows: (a)....(e)(i) and (ii)...." (iii)....
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....Application No. P-7/2018 has also sought for impleading itself in Intervention Application No. IA 98/2018 the Numetal has filed a Reply opposing Such relief as being sought for by the present Applicant, Numetal Ltd., and in the present IA and also sought a declaration in its favour to be declared as eligible for filing a valid Resolution Plan as on 12.2.2018 thus, it has opposed the Application alleging disability/ineligibility on the part of M/s. Numetal Ltd., to file a valid and proper Resolution Plan as on date of 12.2.2018. Since we have not decided the Impleadment Application in favour of Arcelormittal by formally impleading it as party in the present IA No. 98 of 2018 and only audience were given to its learned Counsel in support of its resolution plan, therefore, we find it appropriate to confine the issue of determination of eligibility mainly on the reason which formed a basis for the RP and CoC for not founding eligible for submission of resolution plan by the Resolution Applicant, M/s. Numetal Limited and not on additional ground as putforth by the ArcelormittaL However, the oral submissions advanced by the Learned Counsel for parties including the Arcellor Mittal duly s....
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....rse may arrive and think just and proper. This court being Adjudicating Authority under the Code is not expected to substitute its view upon the discretion and wisdom of the RP and CoC to opt for only which a particular view until and unless it is the case of patent illegality or arbitrariness. Therefore, for the aforesaid reason in our prima facie view we do not find any patent illegality in the decision of the RP for declaring ineligible to applicants which is a prudent decision where there is possibility of more than one legal view then this court at this stage is not expected to substitute its view and to interfere with the conclusion of the RP. 22. IA 110 of 2018 1 The instant application IA 110 of 2018 is filed by the applicant under Section 60 (5) (c) of the Insolvency & Bankruptcy Code by ArcelorMittal India Private Limited on 26th March, 2018 with the following prayers: - (a) Pass an order/direction setting aside and declaring as invalid 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 setting as....
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.... operational creditor or other statutory creditors. 4 It is further submitted that, the company is registered and is incorporated under the provision of (Indian) Companies Act, 1956 having paid up capital of INR 583.00 crores (USD 90 mm). The 99.99% of the share of AMIPL are held by Oakey Holding BV ("Oakey") a company incorporated in Netherlands, which, in itself, is wholly owned subsidiary of ArcelorMittal Belval & Differdange ("AMBD") an unlisted company incorporated in Luxembourg. AMBD, in turn, is a 100% indirect subsidiary of ArcelorMittal Societe Anonyme ("AMSA") which is a listed company incorporated in Luxembourg. AMBD has substantial operations and substantial net worth as the world's largest rolling mill of hot rolled steel sheet piles and beams. AMBD, through Oakey, is the promoter of AMIPL. 5 It is further submitted that the Resolution Applicant, along with its holding companies is part of the ArcelorMittal group of companies (collectively referred as "ArcelorMittal Group"). 6 It is further submitted by the learned lawyer appearing on behalf of the applicant that, on 24.12.2017, the RP published a Request for Proposal inter-alia inviting ....
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....6) of the SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) and Regulation 7 (2) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 have also been made by UG to the stock exchanges on 07.02.2018. Both UG and AMNLBV have also made disclosures under Regulation 29 (2) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 on 07.02.2018 to the stock exchanges. Pertinently, the request for modification of status under Regulation 31A (2) of the LODR, requesting the relevant stock exchanges to declassify AMNLBV as the promoter of UG has been made by AMNLBV. The said request has been allowed by the NSE on 21.03.2018 and by the BSE on 23.03.2018. In this regard, UG also has submitted a letter dated 24.03.2018 to BSE and the NSE categorically disclosing the receipt of the aforesaid approvals that AMNLBV has been declassified as a Promoter of UG under Regulation 31A (2) of the LODR. True copy of the letter dated 21.03.2018 issued by NSE, letter dated 23.03.3018 issued by BSE and the letter dated 24.03.2018 submitted by UG are filed and marked as Annexure A/8, Annexure A/9 and Annexure A/10 respectively to the applic....
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....onses discloses AM Netherlands as the 'promoter' of Uttam Galva Steels Limited (Uttam Galva); (c) AM Netherlands had acquired 29.05% of the shareholding in Uttam Galva in 2009 and has since been classified as a promoter of Uttam Galva; (d) AM Netherlands had entered into a "co-promoter agreement" dated 4th September, 2009 with the other promoters of Uttam Galva (Co-promoter agreement) under which AM Netherlands had various rights including certain participative rights. The recitals of the Co- promoter Agreement clearly provide that the intention of the parties was that AM Netherlands should become a co- promoter of Uttam Galva and Clause 6 of the Co-Promoter Agreement provides that the relationship of the parties is that of co-promoters. A copy of the Co-promoter Agreement is attached with the application marked Exhibit A-2. (e) AM Netherlands and was also disclosed as promoter of Uttam Galva in stock exchange filings and as a co- promoter in the annual report for the financial year ended 31st March, 2017. Copy of the stock exchange filings and the annual report are attached with the reply of RP marked as Exhibit B and Exhibit C respectively. ....
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....(Plan Submission Date): "Eligibility of ArcelorMittal India Private Limited (AM India), the other Resolution Applicant was tested on the facts relating to two instances: (i) KSS Patron; (ii) Uttam Galva Steels Limited (Uttam Galva), each of which was NPAs for more than one year." In case of KSS Patron, 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) was classified as a promoter as well as exercised positive control over Uttam Galva." 16 In pursuant to Intervention Application No. 8 of 2018 wherein Numetal Limited made a prayer to implead him as a party, respondent in the instant Interlocutory Application i.e. IA No. 110 of 2018 filed an affidavit in reply to the application made by the instant applicant (ANIPIL) stating inter-alia that the Instant Application filed by AM India is required to be rejected in view of the fact that the account of Uttam Galva Steel Limited (Uttam Galva) and KSS Petron Private Limited (KSS Person) of which AM India is a promoter was classified as non-p....
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...., of which KSS Petron is a wholly owned subsidiary. (g) Therefore, it is clear from each of the public announcement and the letter of offer as well as the AoA of KSS Global BV, that Mittal Investments, wholly owned by LN Mittal Group, is the promoter of and in management and control of KSS Petron, which is an NPA. (h) Accordingly, it is easily discernible that then LN Mittal Group, a connected person of the applicant, is the promoter and is in control and management of KSS Petron since 2011. It is during such tenure of control over KSS Petron by the connected persons of the applicant that the accounts of KSS Petron were classified as an NPA by multiple banks and accordingly, a CIRP was initiated against KSS Petron on 1st August, 2017. (i) Since, an asset under the management and control of the connected party of the applicant has been declared an NPA, the applicant is disqualified under Section 29 A (i) read with Section 29A (c) of the Code. In support of the contention, Numetal also placed reliance on the following citations; - (1) Raipur Development Authority v. Anupam Sahkari Nirman Samiti [2000] 4 SCC 357 (2) H.N. Shankara S....
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.... (i) has been subject to any disability, corresponding to clauses (a) to (h), (j) has a connected person not eligible under clauses (a) to (i) Explanation: For the purposes of this clause, the expression "connected person" means - any person who is the promoter or in the management or control of the resolution applicant; or (ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan; or (iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii) : PROVIDED that nothing in clause (iii) of this Explanation shall apply to - (A) a scheduled bank; or (B) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); or (C) an alternate investment fund registered with the Securities and Exchange Board of India" Section 30 (1) (2) (3) & (4) - Submission of resolution plan ....
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....on 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section 18 In the light of the above discussions and the documents annexed therein as well as the submissions made by both the sides, admittedly, as on 12.02.2018, Arcelorl Mittal is not qualified to submit the Resolution Plan inasmuch as per Section 29A of the Code speaks 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; (a)xxxxxx (b)xxxxx (c) has an account, or an account of Corporate Debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing assets in accordance with the guidelines of Reserve Bank of India issued under the Banking Resolution 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....
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.... the opinions received by the RP from Cyril Amarchand Mangaldas and Mr. Khambatta. Cyril Amarchand Mangaldas had opined that AM Netherlands exercised positive control over Uttam Galva and merely divesting the shareholding prior to the submission of the resolution plan could not remove the disqualification under Section 29A(c) of the Code, unless cured by payment. 23 It is an admitted position that AM Netherlands is an indirect 100% subsidiary of ArcelorMittal Societe Anonyme (AMSA) which is a listed company incorporated in Luxemburg. On the other hand, AM India is also an indirect subsidiary (99.99%) of AMSA. Accordingly, AMSA is promoter, in management and in control of AM India, the resolution applicant and AM Netherlands is a subsidiary company/associate company of AMSA in view of which AM Netherlands becomes a connected person and such connected person has an account of corporate debtor Uttam Galva under its management, control or of whom such connected person namely AM Netherlands is a promoter is classified as NPA for more than one year before 02.08.2017. Consequently, AM India shall not be eligible to submit a resolution plan as on 12.02.2018. 24 I....
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.... section 30 (4) proviso provide 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 30 days, to make payment of overdue amounts in accordance with the proviso to clause (c) of Section 29A. Thus a plain reading of clause (c) of Section 29A as well as Section 30 (4) second proviso clearly says that the applicant would become eligible only after paying the overdue amounts to the lenders in both the cases of KSS Petron and Uttam Galva Steels Ltd. before being eligible to bid and 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, The said opportunity to pay the overdue amounts to the lenders is not provided to the applicant (AMIPL). 26 However, irrespective of our above stated observation we are constrained to observe that RP and CoC did not adhere to some mandatory provision of the Code as provided under Section-30(3)(4) which are to be read jointly with its disab....
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....plan where no other resolution plan is available with it: 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" Which means the intention of the Legislature for enabling such provision to give an opportunity to a Resolution Applicant is even found ineligible under clause (c) of Section 29A, and to allow to make payment of its overdue, within prescribed period in the proviso of the Section 30(4) of the IB Code, so as to remove disability, (c) of Section 29A. For the sake of convenience, the relevant clauses may be reproduced hereunder: - "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 ha....
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....urse of action as both the resolution applicant/plan were found ineligible hence, he submitted before the CoC to go for options available, which are based on a legal advice received by him and both option is legally permissible. In the option No. 1 it has been suggested to initiate a new process for inviting bid from all interested parties (starting with initiation of new expression of interest) and follow the entire process as per new RFP as approved by the CoC which were not considered as viable and appropriate by the CoC keeping in view of the time constrain, while in our humble view such option seems to be more sound reasonable and legally transparent keeping in view of the statutory change/amendment took place in Section 29 of the Code by inserting new clause i.e. section 29(A) in the Code with effect from 23.11.2017, therefore, we feel, while remanding back the matter to the CoC for reconsideration of the resolution plan and resolution applicant, the CoC may relook to opt for option-1 as per the deliberation made in the CoC meeting dated 21.03.2018 and to take appropriate decision looking to the time constraint and paramount interest of the Corporate Debtor Company. ....
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....ion 29A of the Insolvency and Bankruptcy Code, 2016 (as amended upto date). The extract from the CoC minutes as well as the letter of RP dated 23.3.2018 send to Resolution Applicant namely, Numetal Pvt. Ltd. and AMIPL, it is evident that the Resolution Plans of applicants were/are not placed before CoC. Notwithstanding above, a joint reading of Section 29A read with Section 30(4) of the IB Code makes some salutary provisions as provided in Section 30(3), (4) with its proviso(s), for the sake of convenience the same are being reproduced herein below: - "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 w....
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....ration of the CoC before rejection, by following the provisions of Section 29A(c) read with proviso of Section 30(4) to consider for affording an opportunity by the Resolution Applicants before declaring them ineligible. We further hold that, while rejecting resolution plan(s) such procedure has not been followed by RP, thus, IA No.98 of 2018 and IA 110 of 2018 partly succeeds on this limited ground alone and the matter is remanded back to the RP and the COC with such direction to place all the resolution plans as received by him before initiation of fresh bid for consideration of CoC in the light of statutory provisions of Section 29A(c), read with Section 30(4) and other relevant provisions including the legal question of eligibility of the Resolution Applicants on the date of commencement of CIRP of Corporate Debtor, as prescribed under Section-29A(c), hence, we do not propose to rule on this issue which is required to be considered by CoC in accordance with law and prescribed procedure and without being influenced by the observations made, if any, during the course of hearing or in this order. As we have already held in preceding paras that the RP as well as the CoC ha....
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....er decision in the matter of Mohinder Singh Gill (supra) wherein the Honourable Supreme Court has laid down a law about the application of natural justice in administrative proceedings. As per the Hon'ble Apex Court the rules of natural justice are rooted in all legal systems and are not any 'new theology'. They are manifested in the twin principles of memo index in sua causa and audi alteram partem. It has been pointed out that the aim of natural justice is to secure justice, or, to put it negatively to prevent miscarriage of justice. These rights can operate only in areas not covered by any law validly made; they do not supplant the law of the land but supplement it. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case. Whenever a complaint is made before a court that some principle of natural justice has been contravened, the court has to decide whether the observation of that rule was necessary for a just decision on the facts of that case. Which is also theme of the IB Code, as is found in other Section i.e. 86 and 87 of the Code. By following the above stated decisio....