TaxTMI 
TaxTMI 
2019 (2) TMI 1042
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....isha, Mr. Shantanu Chaturvedi, Ms. Priya, Ms. Jasveen Kaur, Ms. Charu Bansal, Ms. Shreyas Gupta, Ms. Srishti Khare, Mr. Anoop Rawat, Advocates, Mr. Kapil Sibal and Mr. Amit Sibal, Senior Advocates with Mr. Manmeet Singh, Ms. Anjali Anchayil, Ms. Geetanjali Shahi, Ms. Anukrit Gupta, Ms. Anusha Nagrajan and Ms. Nishta Chaturvedi, Advocates for 'JSW Steel Limited'., Mr. Tushar Mehta and Mr. Ramji Srinivasan, Senior Advocates with Mr. Bishwajit Dubey, Mr. Spandan Biswal, Ms. Srideepa Bhattacharya, Mr. Bhupendra Verma, Mr. Prafful Goyal, Mr. Manpreet Lamba, Ms. Sylona Mohapatra, Mr. Bunmeet Singh Grover, Ms. Surabhi Khattar, Mr. Naveen Hegde, Advocates for 'Committee of Creditors' Mr. Sumant Batra, Mr. Sanjay Bhatt, Ms. Srishti Kapoor and Mr. Akshat Singh, Advocates for 'Jaldhi Overseas'. JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. 'Tata Steel Limited', one of the 'Resolution Applicants' for 'Bhushan Power & Steel Limited'- ('Corporate Debtor') has challenged the order dated 23rd April, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi, wherein the Adjudicating Authority inter alia directed the 'Committee of Creditors' of 'Bhusha....
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....ot provide the numerous opportunities at the belated stage. 3. It was stated that the 1st Respondent- 'Liberty House' failed to participate and provide necessary documents as per pre-qualification with criteria, including confidentiality affidavit within the time lines as provided by the 'Resolution Professional'. The 1st Respondent- 'Liberty House' in spite of belatedly admitting to express its interest with complete document was provided with numerous opportunities by communications dated 18th November, 2017, 20th November, 2017, 2nd December, 2017, 8th December, 2017 and 16th December, 2017. 4. However, in view of the subsequent development when the appeal was taken up, counsel for the Appellant had not made much effort to challenge the opportunity given to the 1st Respondent- 'Liberty House'. 5. 'Tata Steel Limited' and 'JSW Steel Limited' ("JSW Steel" for short) both had submitted their 'Resolution Plans'. 6. 'JSW Steel' who had already submitted its 'Resolution Plan' on 8th February, 2018 after the aforesaid order passed by the Adjudicating Authority submitted an 'improved financial' offer' on 26th July, 2018. Apart from improving the offers for various creditors,....
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....on of this Appellate Tribunal, but not place the same before the Adjudicating Authority and keep it in a sealed cover........" 10. The 'Operational Creditors' raised grievance that they were not allowed to take part in the meeting of the 'Committee of Creditors', so an interim order was passed directing the 'Committee of Creditors' to allow their representatives to take part in the meeting of the 'Committee of Creditors'. 11. On 1st August, 2018, learned counsel for the 'Tata Steel Limited' submitted that the 'revised financial offers' cannot be allowed to be submitted even for maximization of the assets of the 'Corporate Debtor'. On 1st August, 2018, this Appellate Tribunal while observed that such issue will be decided at the time of disposal of the appeal, as follows: "01.08.2018 xxx xxx xxx 3. In the meantime, to ensure that all parties get opportunities to submit 'revised financial offers' without altering the basic standard like viability and feasibility as shown in the original 'resolution plans', we give opportunity to 'Tata Steel Ltd.' and 'Liberty House Group Pvt. Ltd.', if they so choose to file 'revised financial offer(s)' subject to the....
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.... time for submitting its 'revised financial offer', relevant of which reads as follows:- "5. ......The Applicant stated that it is evaluating its prospects to revise the financial component of the existing resolution plan submitted by it, and intends to file a revised financial component to its resolution plan, subject to business exigencies....." (Emphasis supplied) 14. On 6th August, 2018, when the matter was taken up, this Appellate Tribunal passed the following order: "06.08.2018 As the Interlocutory Application is the conditional one, we are not inclined to pass any specific order, particularly, as the matter is also pending before the Hon'ble Supreme Court. However, on the oral request of the learned counsel for the appellant, we allow the 'Appellant' and the other 'Resolution Applicants' to file additional unconditional 'resolution plans' by 13th August, 2018 improving the 'financial offer' without compromising the basic para-meters of the 'resolution plans' already submitted by them. In such case additional plans will be treated to the part of their respective 'original resolution plans'. I.A. No. 1154 of 2018 stands disposed of. Dasti service ....
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....lace. 21. Learned Counsel for the 'Tata Steel Limited' submitted that the 'Committee of Creditors' had earlier received five bids from 'JSW Steel' through repetitive revisions and sought permission of this Appellate Tribunal to submit 6th revised offer. Thereby, the 'JSW Steel' has submitted as many as six 'Resolution Plans', which were wrongly considered by the 'Committee of Creditors'. 22. It was submitted that after the order of this Appellate Tribunal, after 13th August, 2018 no 'Resolution Plan' could have been accepted by the 'Committee of Creditors'. Further, according to learned Senior Counsel, the 'Resolution Applicants' have no right to revise their bids endlessly and the 'Committee of Creditors' are not authorized to entertain fresh or revised bids without exhausting available bids. 23. Learned Senior counsel appearing on behalf of the 'Committee of Creditors' while refuted the allegations of bias submitted such allegations is not based on record. 24. According to learned Senior Counsel for the 'Committee of Creditors', the orders of this Appellate Tribunal dated 1st August, 2018 and 6th August, 2018 do not restrict the 'Committee of Creditors' from exercisin....
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....d by 'Liberty House', but that does not mean that the 'Resolution Plan' submitted by 'Liberty House' has been approved. 31. In Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors.─ (Civil Appeal Nos. 9402-9405 of 2018 etc.)" the Hon'ble Supreme Court observed that the 'Resolution Applicant' has no vested right or fundamental right to have its 'Resolution Plan' considered or approved. The Hon'ble Supreme Court observed and held as follows: "75. What has now to be determined is whether any challenge can be made at various stages of the corporate insolvency resolution process. Suppose a resolution plan is turned down at the threshold by a Resolution Professional under Section 30(2). At this stage is it open to the concerned resolution applicant to challenge the Resolution Professional's rejection? It is settled law that a statute is designed to be workable, and the interpretation thereof should be designed to make it so workable........." 76. Given the timeline referred to above, and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudica....
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....) is designed for a different purpose: to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings." 32. It is true that the 'Committee of Creditors' will have to ensure a time bound process, to better preserve the economic value of the asset. Simultaneously, it is duty of the 'Committee of Creditors' to ensure that the 'Resolution Plan' is viable, feasible and should maximize the assets of the 'Corporate Debtor'. 33. In "Binani Industries Limited Vs. Bank of Baroda & Anr. - Company Appeal (AT) (Insolvency) No. 82 of 2018 etc.", this Appellate Tribunal by its judgment dated 14th November, 2018 held that the 'Corporate Insolvency Resolution Process' is not a litigation, nor it is money suit. The persons are not required to submit bid. The 'Committee of Creditors' has a statutory mandate to ensure value maximization within the timeframe prescribed by the 'I&B Code'. In the said case, this Appellate Tribunal noticed almost similar facts of submission of 'revised offer' and observed:....
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....with the statutory mandate to ensure value maximization. 36. The 'Process Document' for the 'Corporate Insolvency Resolution Process' of the 'Corporate Debtor' does not curtail the powers of the 'Committee of Creditors' to maximize value. In this regard, we may refer the relevant provisions of the 'Process Document' issued by the 'Resolution Professional' in consultation with the 'Committee of Creditors' which are as follows: 37. From the 'Process Document, it is clear that the 'Committee of Creditors' have absolute discretion but without being under any obligation to do so, update, amend or supplement the information, assessment or assumptions and right to change, update, amend, supplement, modify, add to, delay or otherwise annul or cease the 'Resolution Process' at any point in time. Thus, the 'Resolution Plan' can be modified as per dates or other terms and conditions set out in the 'Process Document'. 38. As per Clause 1.3.6, the 'Committee of Creditors' have right to negotiate better terms with the 'Compliant Resolution Applicant(s)'. In terms of Clause 1.14.13, the 'Resolution Professional' in consultation with the 'Committee of Creditors' can extend the timelines a....
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.... xxx (4) The committee of creditors may approve a resolution plan by a vote of not less than sixtysix 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 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: Provided al....
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....s been approved with 100% voting shares. 47. For the reasons aforesaid, while we are not inclined to interfere with the substantive part of the impugned order dated 23rd April, 2018, set aside part of the order whereby adverse observation has been made against Mr. Mahender Kumar Khandelwal ('Resolution Professional'). 48. The case is remitted to the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi, for passing appropriate order under Section 31. The 'Resolution Professional' will immediately place the 'approved Resolution Plan' before the Adjudicating Authority for its order. 49. The Adjudicating Authority at the time of consideration of the approved 'Resolution Plan' of 'JSW Steel' will only ensure that all the stakeholders, particularly the 'Operational Creditors' are treated similarly. It should ensure that no discrimination is being made between the 'Financial Creditors' or the 'Operational Creditors' as held by this Appellate Tribunal in "Binani Industries Limited" . 50. In case, the Adjudicating Authority is of the opinion that the discrimination has been made between the 'Financial Creditors' and the 'Operational Creditors', it m....
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....s or other terms and conditions set out in this Process Document; 4. Clause 1.3.6 1.3.6 The Resolution Plan(s) submitted by the Qualified Resolution Applicant(s) shall be examined by the Resolution Professional to check the compliance of the Resolution Plan with the requirements under the IBC and this Process Document. The Resolution Plans compliant with the aforementioned requirements shall be presented by the Resolution Professional to the CoC for evaluation based on the Evaluation Criteria and terms and conditions as set out in this Process Document. Further, the CoC shall have the right to negotiate better terms with the Compliant Resolution Applicant(s), 5. Clause 1.14.13 1.14.13 No extension of time shall be granted under any circumstances to the Qualified Resolution Applicant(s) for submission of the Resolution Plan including, but not limited to, on the grounds that the Qualified Resolution Applicant did not obtain a complete set of this Process Document, or on any other ground(s), except with the permission of the CoC. The Resolution Professional in consultation with the CoC may extend the timelines at its sole discretion if e....
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....mposite whole comprising the amounts proposed to be paid to the various categories of creditors of the corporate debtor and the various financial parameters which underpin and provide the basis of arriving at such numbers 10. Format V-Essential Terms of the Resolution Plan ANNEXURE II FORMAT V ESSENTIAL TERMS OF THE RESOLUTION PLAN 1. Mandatory Content of the Plan Part B. Financial Proposal [Applicant to provide the mandatory contents of the plan as per the IBC and as mentioned in Clause 1.12 of the Process Document (including proposal towards the payment to other stakeholders).] Format V of Annexure II of the Process Document was amended vide Annexure A to First Addendum. This note appears at the end of Part B of Format V (on the next page of the Process Document). Document 3 11. Clause 1.12: 1.12.14 In addition to the above requirements, the Resolution Plan should also set out the following: (a) ... (b) Any infusion and/ or arrangement of funds as may be required for working capital and expenditure requirements of the Company; provided that any infusion shall be in compliance of the Company; unless otherwise agreed to by ....