TaxTMI 
TaxTMI 
2024 (10) TMI 507
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....d IA No.2230/2022 in CP No.(IB)-244(ND)/2017. The Appellant aggrieved by the order dated 09.04.2024 passed in above IAs, has come up in these Appeal(s). 2.Brief facts necessary to be noticed for deciding these Appeal(s) are: (i)Athena Energy Ventures Pvt. Ltd. (Holding Company of the Corporate Debtor) was awarded the development and implementation of 1750 Mw Hydro Electric Power Project at river Lohit, Arunachal Pradesh. On 03.08.2007, Athena Demwe Power Ltd. (Corporate Debtor) was incorporated as a Special Purpose Vehicle ("SPV") to implement the Project. (ii)On failure of the Corporate Debtor in repayment of facilities availed, on an Application filed by the Indian Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016 (here in after referred to as the "IBC"), the Adjudicating Authority vide order dated 28.09.2017, initiated the Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor. (iii)The Resolution Professional ("RP") issued Form-G on 11.01.2018 and 01.06.2018, in pursuance of which two Resolution Plans were submitted, one by the Appellant and another by Navayuga Engineering Company Ltd. ("NECL"). The Committee o....
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....ution Plan submitted by Appellant cannot be approved and CA No.246 of 2018 was disposed of accordingly. In consequence to the order passed in CA No.246 of 2018, IA No.2230 of 2022 filed by THDC and IA No.1683 of 2019 filed by Government of Arunachal Pradesh were allowed. The Adjudicating Authority directed the CoC to invite the fresh Expression of Interest ("EoI"), so that all interested party may submit their Resolution Plan and CIRP was extended for a period of 120 days. IA No.3163 of 2023, which was filed by the Appellant for intervention, the Adjudicating Authority has permitted the Appellant to be also entitled to submit a Resolution Plan. Operative portion of the order passed by Adjudicating Authority in paragraph 9, is as follows: "9. As it may, it is not for this Adjudicating Authority to consider the eligibility or suitability or competence of Resolution Applicant to submit the Resolution Plan, far less to comment upon the viability or acceptability of plan. It is stare decisis that it is for CoC to take a decision in this regard. In the present case, once the Resolution Plan submitted by Sikkim Power Investment Corporation Limited is found not in conformity with ....
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....PBG is not correct. It is submitted that CoC was empowered to cancel the LoI, which cancellation having never been taken place, no non-compliance can be read. It is further submitted that Regulation 36-B, (4-A) of the CIRP Regulations, 2016, was subsequently added in the Regulations, which was not operative on the date when Resolution Plan of the Appellant was approved. The consequences provided under Regulation 36-B, (4-A) shall not ensue. It is submitted that Regulation 36-B, (4-A) is not attracted in the facts of the present case and Adjudicating Authority committed error in relying on the said Regulation. It is submitted that the Adjudicating Authority committed error in allowing the Application filed by the State of Arunachal Pradesh and THDC, who had no right to submit a Resolution Plan, they having not submitted their EoI in response to Form-G issued by RP. The Adjudicating Authority had no jurisdiction to permit participation of the Applicants, who were not part of the CIRP. It is submitted that IA No.3163 of 2023, which was filed by the Appellant for intervention was never heard and order passed by Adjudicating Authority dated 09.04.2024, is in violation of principles of n....
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....plications filed by the State of Arunachal Pradesh and THDC in the best interest of the Corporate Debtor. It is submitted that Resolution Plan, which was approved five years ago is no more relevant and in the interest of justice, it is necessary that fresh Resolution Plans be invited to give opportunity to all intending parties to come forward to revive the huge power Project. The Appellant, who could not deposit even the PBG in five years, cannot be allowed to further delay the process. 7.We have considered the submission of learned Counsel for the parties and have perused the record. 8.We may first notice the clauses of RFRP under which the Resolution Plan was submitted by the Appellant. Clause 1.9.3 of the RFRP provides for 'submission of Performance Bank Guarantee', which is as follows:- "1.9.3 Submission of Performance Bank Guarantee Upon approval of the Resolution Plan by CoC, the Successful Resolution Applicant shall cause to furnish a performance bank guarantee of an amount equivalent to 20% of the Bid Consideration amount, within 2 (two) business days of issuance of Lol by the CoC, in favour of the Corporate Debtor, in the form of a bank guarantee, issued....
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....lans shall not require any non- refundable deposit for submission of or along with resolution plan. [(4A) The request for resolution plans shall require the resolution applicant, in case its resolution plan is approved under sub- section (4) of section 30, to provide a performance security within the time specified therein and such performance security shall stand forfeited if the resolution applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule. Explanation I.- For the purposes of this sub-regulation, "performance security" shall mean security of such nature, value, duration and source, as may be specified in the request for resolution plans with the approval of the committee, having regard to the nature of resolution plan and business of the corporate debtor. Explanation II. - A performance security may be specified in absolute terms such as guarantee from a bank for Rs. X for Y years or in relation to one or more variables such as the term of the resolution plan, amount payable to cr....
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.... Sikkim Power Investment Corporation Ltd. NH-31, Near UD&HD Office, Gangtok, Sikkim-737101 3.Sh. Ganesh Chettri MD SPICL and PCE Cum Secretary Power Department, Government of Sikkim Power Secretariat, Kazi Road, Gangtok, Sikkim-737101 4.Sh. VB Pathak Chairman, SPICL Tashling Secretariat, Kazi Road, Gangtok, Sikkim-737101 5.Sh. SC Gupta, IAS Chief Secretary, Govt of Sikkim Tashiling Secretariat Gangtok, Sikkim-737101 6.Sh. Sunil Sarangi Executive Chairman Teesta Urja Limited Aapian Building, Plot No. 38 Ground Floor, Unit A, Sector-44, GURGAON-122003 Ref: Resolution Plan submitted be SPICL in the matter of Athena Demwe Power Limited Sub : Performance Guarantee (PG) from Govt. of Sikkim amounting to Rs. 72,72,15,464/- overdue by 4 years to be provided by SPICL Dear Sir(s), This is in continuation to numerous letters & reminders sent to you by RP on his own and also on behalf of Committee Creditors (CoC) of M/s. Athena Demwe Power Ltd. to remind you that in terms of Resolution Plan submitted by you on dated 4th June, 2018 (wh....
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....ofPerformance Guarantee within stipulated time- 1.Due to your failure to fulfil your prime obligations of providing the PG in terms of provisions of the Resolution Plan and the Process Memorandum even after 4 years of due date, SPICL will be treated as a Resolution Applicant in default. 2.EMD amounting to Rs.5,00,00,000/- deposited by you will stand forfeited. 3.CoC will withdraw your Resolution Plan from NCLT. 4 CoC will initiate necessary action to invite fresh Resolution Plans for Resolution of the Corporate Debtor. CAUTION No further reminders will be sent after this communication We are hopeful that you will take this notice seriously and submit the PG/deposit the amount latest by 30th June 2022. Best Regards Umesh Garg /+91 9818990001 Resolution Professional M/s. Athena Demwe Power Limited Office: 1413-1416, 14th Floor, Devika Tower, New Delhi 110019" 12.In the year 2023 also emails were sent by the Resolution Professional to the Appellant for submitting the Performance Bank Guarantee. A letter dated 04.03.2024 was sent by the Appellant where it was informed that the budget f....
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....d latest reminder dated 3rd May, 2023 is attached herewith as Annexure-A & B respectively. Chairman further informed that just before commencement of this CoC meeting, Mr. Sunil Saraogi, CMD of SPICL has sent an email communication dated 04th May, 2023 to RP wherein Mr. Sunil is seeking 30 days' time from order of 29A matter which is reserved, to submit the PG. Relevant extract of said email communication is reproduced hereunder: "We request you to kindly appreciate that we are Government Company, and have our own limitations and accountability. However, we are serious on the project, and therefore, request you to kindly accord us 30 days' time (as per discussions with our proposed strategic partner) from the date of the pronouncement of this qualifications - disqualification judgment." Chairman also placed the said email communication before the CoC members for their perusal. Copy of email communication received from SPICL on 04th May, 2023 is attached herewith as Annexure-C. Chairman invited CoC members to deliberate the matter and take a decision in this regard. COC DELIBERATION & DECISION: CoC deliberated the matter and ....
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....nt meeting of CoC dated 04.05.2023 the issue pertaining to the non-submission of performance guarantee even after 5 years by SPICL was discussed. The Resolution Professional apprised that on behalf of the CoC an email dated 17.06.2022 was sent wherein the SPICL was warned about the consequences of non-submission of Performance Security/Guarantee. The Excerpts of the email are reproduced below: "Consequences of non-submission of Performance Guarantee within stipulated time 1.Due to your failure to fulfil your prime obligations of providing the PG in terms of provisions of the Resolution Plan and the Process Memorandum even after 4 years of due date, SPICL will be treated as a Resolution Applicant in default. 2.EMD amounting to Rs 5,00,00,000/- deposited by you will stand forfeited. 3.CoC will withdraw your Resolution Plan from NCLT. 4.CoC will initiate necessary action to invite fresh Resolution Plans for Resolution of the Corporate Debtor. CAUTION No further reminders will be sent after this communication. We are hopeful that you will take this notice seriously and submit the PG/deposit the amount latest by 30th June 20....
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....n by the CoC before the Adjudicating Authority is that the Appellant did not give any heed to submit Performance Bank Guarantee and it failed to adhere to the terms and conditions. CoC in its reply, therefore, clearly stated that after deliberation CoC is not objecting to the applications filed by the State of Arunachal Pradesh and the THDC and which applications need to be allowed in the interest of the Corporate Debtor. 17.The submission which has been pressed by the Counsel for the Appellant is that reference by the Adjudicating Authority to Regulation 36B (4-A) is erroneous since Clause (4-A) was inserted in the Regulation on 24.01.2019 i.e. much after submission of the Resolution Plan and approval of the Resolution Plan. As noted above, the requirement of submission of Performance Bank Guarantee was contained in the RFRP. RFRP was dated 21.05.2018. Clause (4-A) which was inserted in Regulation 36B only made it mandatory for Request of Resolution Plan to provide a performance security within time specified therein. There is no conflict in the provisions of the RFRP in the present case and Regulation 36B (4-A). The fact that Clause (4-A) was added subsequently has no bearing ....
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....consequential when the application for plan approval of the Appellant stood rejected on account of non-compliance by the Appellant. We, thus, do not find any substance in the submission of the Appellant that the order passed by the Adjudicating Authority is in violation of principle of natural justice. 22.As noticed above, the Corporate Debtor was awarded a huge project of 1750 MW Hydro Electric Power Project at River Lohit, Arunachal Pradesh. The Resolution Plan submitted by the Appellant was approved on 25.06.2018. More than five years have elapsed when the Adjudicating Authority had occasion to consider the plan approval application. The view taken by the CoC that Resolution Applicant who has not been able to deposit the Performance Bank Guarantee of Rs.72.72 Crores it cannot be trusted for implementation of the huge project. Adjudicating Authority in the impugned order has considered all aspects of the matter and has rightly come to the conclusion that Appellant having not deposited the Performance Bank Guarantee inspite of several opportunities/reminders given to the Appellant, Adjudicating Authority has no option except to reject the application for approval of the Resolut....