TaxTMI 
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2025 (9) TMI 1610
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....Mann, Adv. And Mr. Upmanyu Tewari, AOR For the Respondent(s) : Mr. Tushar Mehta, Solicitor General, Mr. L. Vishwanathan, Adv., Mr. Raunak Dhillon, Adv., Mr. Uday Khare, Adv., Ms. Aishwarya Gupta, Adv., Ms. Isha Malik, Adv., Mr. Nihaad Dewan, Adv., Mr. Anchit Jasuja, Adv., Ms. Bhawna Lakhina, Adv., Mr. Bhuvan Kapur, Adv., Mr. Aman Mehta, Adv., For M/s. Cyril Amarchand Mangaldas, Mr. Neeraj Kishan Kaul, Sr. Adv., Mr. Gopal Jain, Sr. Adv., Ms. Nandini Gore, Adv., Mr. Rajendra Barot, Adv., Ms. Tahira Karanjawala, Adv., Mr. Vivek Shetty, Adv., Mr. Suharsh Sinha, Adv., Ms. Swati Bhardwaj, Adv., Mr. Akarsh Sharma, Adv., Ms. Manvi Rastogi, Adv., Mr. Pranav Garg, Adv., Ms. Sherna Doongaji, Adv., Mr. Akilesh Menezes, Adv., Mr. Harsh Sethi, Adv., Ms. Isha Patil, Adv., Mr. Deepak Joshi, Adv., Ms. Dhanya S. Krishnan, Adv., Mr. Varun Tyagi, Adv., For M/s. Karanjawala & Co., Mr. Tushar Mehta, Solicitor General, Mr. K.M. Nataraj, A.S.G., Mr. Sudarshan Lamba, AOR, Ms. Kanu Agrawal, Adv., Mr. Mohd. Akhil, Adv., Mr. Saurav Roy, Adv., Mr. Vinayak Sharma, Adv., Mr. Pratyush Shrivastava, Adv., Mr. S. S. Shroff, AOR, Ms. Misha, Adv., Mr. Vaijayant Paliwal, Adv., Ms. Charu Bansal, Adv., Ms. Kirti Gupta....
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.... the RP on 21st September 2017, thirteen Potential Resolution Applicants ("PRA" for short.) including Respondent No. 2 in the lead matter (JSW Steel Ltd.) submitted their Resolution Plan to the RP. 2.6. In the 18th Meeting of the CoC dated 14th August 2018, the Resolution Plans were evaluated by the CoC and the plan submitted by JSW Steel Ltd. emerged as the highest evaluated plan based on the evaluation matrix formulated in accordance with the Code and the relevant regulations. The scores of every PRA were submitted to the NCLAT in a sealed cover. Negotiations were held with JSW Steel Ltd. and based on the said negotiations and discussions, a Consolidated Resolution Plan ("CRP" for short.) was submitted by JSW Steel Ltd. on 3rd October 2018. 2.7. On 7th October 2018, the RP called for a meeting of the CoC for consideration and approval of the CRP. In the CoC meeting held on 10th October 2018, the CRP submitted by JSW Steel Ltd. was considered, and further negotiations took place regarding the modifications to bring the CRP in compliance with the amended Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("IBBI (CI....
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....r Section 61 of the IBC before the NCLAT. 2.14. Meanwhile, the ED passed a Provisional Attachment Order ("PAO" for short.) being No. 11 of 2019 dated 10th October 2019 and provisionally attached the assets of the Corporate Debtor - BPSL under Section 5 of the PMLA. 2.15. Being aggrieved, the PAO was challenged by the SRA - JSW before the NCLAT by way of a separate application in the pending company appeal. Vide interim order dated 14th October 2019, the NCLAT stayed the implementation Resolution Plan as well as the PAO. 2.16. The CoC also challenged the said PAO before this Court by filing SLP (C) Nos. 29327 - 29328 of 2019. Vide order dated 18th December 2019, this Court issued notice and stayed the PAO. 2.17. Meanwhile, various other stakeholders filed appeals before the NCLAT challenging the final approval order of the NCLT dated 5th September 2019. 2.18. The NCLAT vide common impugned judgment dated 17th February 2020 allowed the appeal filed by SRA - JSW and modified some of the conditions that had been imposed by the NCLT in the approval order and dismissed the appeals filed by all the appellants herein challenging the approval order. 2.19. Being aggrieved b....
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....W as approved by the CoC stands rejected, being not in conformity with the provisions contained in sub-section (2) of Section 30, read with sub-section (2) of Section 31. (iii) In view of the provisions contained in sub-section (1) of Section 33, and in exercise of the jurisdiction conferred under Article 142 of the Constitution of India, the Adjudicating Authority i.e. the NCLT is directed to initiate the Liquidation Proceedings against the Corporate Debtor-BPSL under Chapter III of the IBC and in accordance with law. (iv) The payments made by the JSW to the Financial Creditors and the Operational Creditors, as also the Equity contribution if any infused, under the garb of the implementation of the Resolution Plan, being subject to the outcome of the present set of Appeals, shall be dealt with by the parties as per the statement of Senior Advocate Dr. Abhishek Manu Singhvi appearing for the CoC, recorded in the order dated 06.03.2020. (v) Since, we have rejected the Resolution Plan of JSW, we have not dealt with the issue of the EBITDA though raised and argued by the Learned Advocates for the parties. The question of law with regard to EBITDA is kept ope....
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....ard Shri Navin Pahwa, learned Senior Counsel appearing for the Resolution Professional. We have heard Shri Pinaki Misra, learned Senior Counsel appearing for the Resolved Entity, i.e. BPSL. We have heard Shri Tushar Mehta, learned Solicitor General appearing on behalf of the CoC. We have also heard Shri Neeraj Kishan Kaul and Shri Gopal Jain, learned Senior Counsel appearing for the SRA - JSW. i. Appellants in Civil Appeal Nos. 2192 - 2193 of 2020 (erstwhile promoters) 4. Before we proceed to record the submissions of the learned counsel for the parties on merits, it will be relevant to note that Shri Tushar Mehta, learned Solicitor General appearing on behalf of the CoC and Shri Kaul, learned Senior Counsel appearing on behalf of the SRA - JSW have raised objections with regard to the very tenability of the appeals at the behest of the erstwhile promoters-cum-directors. 5. Shri Dhruv Mehta, learned Senior Counsel for the Appellants - erstwhile promoters, submitted that the promoters were personal guarantors of the Corporate Debtor and hence fall within the ambit of "persons aggrieved" under Section 61 of the IBC. It is submitted that personal insolvency proceedings ....
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....C OnLine SC 4075] to submit that the CoC's powers are confined to assessing the viability and feasibility of the Resolution Plan, and cease upon its approval. 11. It is further submitted by Shri Dhruv Mehta that the SRA-JSW violated Section 30(2) of the IBC read with Regulation 38 of the IBBI (CIRP) Regulations by paying the FCs before the OCs. The FCs were paid on 26th March 2021, whereas payments to the OCs were made only thereafter, in March 2022. 12. Shri Mehta also raised the issue of delay in implementation of the plan, submitting that though the Resolution Plan was approved on 5th September 2019 and was to be implemented within 30 days, it was only partially implemented after 540 days, and the OCs were paid after a huge delay which exceeded 900 days. 13. Shri Dhruv Mehta submitted that the delay in implementation of the Resolution Plan by SRA-JSW was unjustified, as the provisional attachment by the ED was merely on paper, with no actual possession taken. It is contended that the SRA-JSW had full control of the assets throughout since the PAO only referred to land, buildings, and machinery valued at Rs. 4,025 crore, without any specific attachment or notice of posse....
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....Essar Steel India Limited through Authorised Signatory v. Satish Kumar Gupta and Others [(2020) 8 SCC 531] (hereinafter referred to as "Supreme Court Essar"), the present Resolution Plan contains no provision on the treatment or distribution of EBITDA, making the two cases clearly distinguishable. 19. It was submitted by Shri Dhruv Mehta that the SRA failed to infuse the committed amount of Rs. 26,550 crore, having infused only Rs. 19,350 crore. This shortfall, particularly in the Rs. 7,200 crore working capital infusion, affects the scoring and renders the Plan only partially implemented. It was further submitted that the SRA - JSW contends that it issued Compulsorily Convertible Debentures ("CCD" for short.) to satisfy the commitment of infusion. However, neither the CoC nor the SRA - JSW have brought any documentary evidence on record to show that any actual infusion of funds was undertaken by the SRA - JSW. It was further submitted that the CoC itself had specified that the infusion must be in the form of pure equity and hence, the CCDs issued by the SRA - JSW would not be as per the requirements set by the CoC. ii. Appellants in Civil Appeal No. 2225 of 2020 (Jaldh....
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....es, as many such payments were admitted by the RP. 24. Shri Manu Beri, counsel for Appellant - Darcl is in a similar position as the Appellant - Medi and has supported the submission raised by it. iv. Resolved Entity - BPSL 25. Shri Pinaki Misra, learned Senior Counsel for the Resolved Entity (Bhushan Power and Steel Ltd.), submitted that the company has been successfully revived post-resolution and supported the submissions of the SRA - JSW. v. Resolution Professional 26. Shri Navin Pahwa, learned Senior Counsel for the Resolution Professional (RP), submitted that the Resolution Plan, was in compliance with the IBC and the IBBI (CIRP) Regulations. Since the liquidation value was nil, payments to OCs, though ex gratia, were not required to be made in priority over FCs. He submitted that the relevant amendment to Regulation 38 of the IBBI (CIRP) Regulations mandating such priority came into force only on 27th November 2019, i.e., after the NCLT had approved the Resolution Plan, and hence the Plan remained compliant with the law as it stood then. 27. As regards issues of delay in implementation, equity infusion, and EBITDA, Shri Pahwa submitted that thes....
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....72] to emphasize that the "Commercial Wisdom" of the CoC is not subject to judicial review. 31. It was submitted by Shri Tushar Mehta that the CoC does not become functus officio upon NCLT's approval of the Plan. It continues to operate until the Plan is fully implemented or any challenge to its approval attains finality. Sections 21, 23, and 28 of the IBC, read with Regulation 38 of the IBBI (CIRP) Regulations, support the continued existence of the CoC and the authority of the Monitoring Committee. 32. It was submitted by Shri Tushar Mehta that the CoC remains empowered to act from time to time. Based on a proposal submitted in proceedings under Section 95 of the IBC by the ex-promoters, the CoC held a meeting on 6th August 2025 and passed a resolution to allocate the EBITDA and interest for delayed implementation to FCs. It was submitted that since the SRA-JSW did not contribute to the EBITDA earned during CIRP, and benefited from it after the implementation of the Resolution Plan, it has no rightful claim over the same. 33. Regarding the contentions raised against Clause 3.1 being in contravention of law, it was submitted by Shri Tushar Mehta that this clause permitted....
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....tted that the said Clauses merely permit the CoC to extend the implementation timeline, which falls within its commercial wisdom and complies with Regulation 38(2) of the IBBI (CIRP) Regulations and that a challenge to the said Clauses has been raised for the first time at the stage of oral arguments before this Court, which cannot be permitted. 38. Regarding the issue of priority payments to OCs, it was submitted by Shri Kaul that even though the liquidation value payable to the OCs was nil, the SRA - JSW offered an ex gratia payment to the OCs. It was submitted that as per the law in force during the approval of the Resolution Plan by the Adjudicating Authority, the OCs were to be paid only the "amount due" as per the Resolution Plan in priority over the FCs. Since, no amount was due to the OCs, they were not paid in priority and the Resolution Plan was compliant with the law as it stood. It was further submitted that the amendment to Regulation 38(1) of the IBBI (CIRP) Regulations dated 27th November 2019, is not applicable to the present case as the same was brought into effect after the approval of the Resolution Plan by the NCLT. 39. Regarding the contention of delay in....
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....via CCDs, which qualify as equity as per the judgment of this Court in the case of IFCI Limited v. Sutanu Sinha and Others [2023 SCC OnLine SC 1529]. It was therefore submitted that the CoC itself confirmed full compliance and supported the SRA - JSW's position. 44. Regarding the issue of distribution of EBITDA, Shri Kaul submitted that it is only an "accounting term" and does not reflect actual profitability. After accounting for taxes, interest, depreciation, and amortization, the Corporate Debtor had incurred losses of Rs. 16,616 crore in total during the CIRP period. He further submitted that neither the RfRP nor the Resolution Plan provides for EBITDA distribution. The Resolution Plan binds all stakeholders under Section 31(1) of the IBC and no upward or downward movement of claims is permissible unless expressly provided for by the Resolution Plan. It was submitted that accepting such a novel claim for distribution of EBITDA would be in contravention of the judgment of this Court in the case of Ghanshyam Mishra (supra). 45. It was further submitted by Shri Kaul that the CoC resolution dated 6th August 2025 claiming entitlement to EBITDA is ultra vires. He submitted that....
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.... 22nd August 2023 passed by the High Court. It is therefore submitted that once the enforcement petitions filed before the Calcutta High Court were withdrawn, the foreign award could not be enforced and was not binding under Indian law. viii. Submissions in Rejoinder 50. In rejoinder, Shri Dhruv Mehta, learned Senior Counsel for the erstwhile promoters submitted that EBITDA represents the operating profit of the Corporate Debtor and is not merely an accounting figure, as contended by the SRA- JSW. It was submitted that the NCLAT, in the impugned judgment, has also used the terms "profits" and "EBITDA" interchangeably, reinforcing this interpretation. It was further submitted that SRA-JSW, having not challenged the impugned judgment, is precluded from now contesting the NCLAT's understanding of EBITDA. 51. Shri Dhruv Mehta lastly submitted that the assertion by SRA - JSW that there were no profits during the CIRP period is contrary to the record. The RP, in his affidavit, confirmed the existence of EBITDA valued at Rs. 1,813 crores for the relevant period. It was submitted that the deduction of interest, taxes, depreciation, and amortization to claim the absence of pr....
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....pany undergoing insolvency proceedings is revived or liquidated expeditiously within a stipulated timeframe. 56. The said objective of expeditious resolution can be further found in the IBC under Section 12, which reads thus: "12. Time-limit for completion of insolvency resolution process.-(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process. (2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of sixty-six per cent of the voting shares. (3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days....
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....Second, the IBC perceives corporate insolvency not as an isolated problem faced by individual business entities but places it in the context of a framework which is founded on public interest in facilitating economic growth by balancing diverse stakeholder interests. Third, the IBC attributes a primacy to the business decisions taken by creditors acting as a collective body, on the premise that the timely resolution of corporate insolvency is necessary to ensure the growth of credit markets and encourage investment. Fourth, in its diverse provisions, the IBC ensures that the interests of corporate enterprises are not conflated with the interests of their promoters; the economic value of corporate structures is broader in content than the partisan interests of their managements. These salutary objectives of the IBC can be achieved if the integrity of the resolution process is placed at the forefront. Primarily, the IBC is a legislation aimed at reorganisation and resolution of insolvencies. Liquidation is a matter of last resort. These objectives can be achieved only through a purposive interpretation which requires courts, while infusing meaning and content to its provisions, to en....
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....ct of Erstwhile Promoters 64. It is submitted by the SRA - JSW that Mr. Sanjay Singal (erstwhile Promoter), had attended just one meeting of the CoC himself and had attended just two meetings through his authorized representatives. Furthermore, Mrs. Aarti Singal, according to the SRA - JSW, had not attended even a single meeting of the CoC. In this respect, it will also be relevant to refer to the observations made by NCLT in its Judgment and Order dated 5th September 2019 while approving the Resolution Plan. The NCLT, after reproducing the entire table showing the attendance of the erstwhile management and exhibiting the lackluster participation of the Appellants, observed thus: "126. It appears to us that the Ex-Management and Promoters were moving places to delay the conclusion of proceedings before us. Accordingly, another set of written submissions was filed by Mr. Virendra Ganda, learned Senior Counsel by urging that the judgment of the Hon'ble Appellate Tribunal rendered in the case of Standard Chartered Bank v. Satish Kumar Gupta, R.P. concerning Essar Steel Limited in C.A. No. 287 /2019, 288/2019, 289/ 19 and 295/2019 decided on 04.07.2019 was placed before....
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....clearly be seen that the entire attempt of the appellants has been to thwart the CIRP and to not permit the same to be taken to a logical end. Having observed the conduct of the Appellants, we shall now proceed to deal with their contentions on merit. c. Existence of the CoC after approval of the Resolution Plan by the Adjudicating Authority 67. It is submitted by Shri Dhruv Mehta appearing on behalf of the Appellants - erstwhile promoters that the CoC becomes functus officio after the approval of the Resolution Plan by the Adjudicating Authority. He submitted that the IBC does not recognize the concept of an "erstwhile CoC" and the CoC is to work with the RP. He submitted that since the role of the RP ends after the approval of the Resolution Plan, the CoC cannot exercise its authority independently. Per contra, Shri Tushar Mehta, appearing on behalf of the CoC submitted that the CoC does not lose its authority after the approval of the Resolution Plan. He submitted that the CoC remains in existence until the Resolution Plan is fully implemented or a challenge to the approval order passed by the Adjudicating Authority attains finality, whichever comes later. It is subm....
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....f it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors: Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares or completion of such transactions as may be prescribed, prior to the insolvency commencement date. (3) Subject to sub-sections (6) and (6-A), where the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them. (4) Where any person is a financial creditor as well as an operational creditor,- (a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate ....
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....te on behalf of each financial creditor to the extent of his voting share. (6-B) The remuneration payable to the authorised representative- (i) under clauses (a) and (c) of sub-section (6-A), if any, shall be as per the terms of the financial debt or the relevant documentation; and (ii) under clause (b) of sub-section (6-A) shall be as specified which shall form part of the insolvency resolution process costs. (7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6-A). (8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified. (9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to th....
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....ctions.-(1) Notwithstanding anything contained in any other law for the time being in force, the resolution professional, during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors namely- (a) raise any interim finance in excess of the amount as may be decided by the committee of creditors in their meeting; (b) create any security interest over the assets of the corporate debtor; (c) change the capital structure of the corporate debtor, including by way of issuance of additional securities, creating a new class of securities or buying back or redemption of issued securities in case the corporate debtor is a company; (d) record any change in the ownership interest of the corporate debtor; (e) give instructions to financial institutions maintaining accounts of the corporate debtor for a debit transaction from any such accounts in excess of the amount as may be decided by the committee of creditors in their meeting; (f) undertake any related party transaction; (g) amend any constitutional documents of the corporate debtor; ....
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....paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of Section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of Section 53 in the event of a liquidation of the corporate debtor. Explanation 1.-For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.-For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under Section 61 o....
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....lause (c) of Section 29-A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of Section 12, and the corporate insolvency resolution process shall be completed within the period specified in that subsection. Provided also that the eligibility criteria in Section 29-A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. (5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority." 69. It can be seen that as per Section 20 of the IBC, the IRP i....
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.... (2) A resolution professional may convene a meeting, if he considers it necessary, on a request received from members of the committee and shall convene a meeting if the same is made by members of the committee representing at least thirty three per cent of the voting rights: Explanation: For the purposes of sub-regulation (2) it is clarified that meeting(s) may be convened under this sub-regulation till the resolution plan is approved under sub-section (1) of Section 31 or order for liquidation is passed under Section 33 and decide on matters which do not affect the resolution plan submitted before the Adjudicating Authority. ........." 73. It is to be noted that Explanation to clause (2) of Regulation 18 of the IBBI (CIRP) Regulations came to be added by Notification No. IBBI/2022-23/GN/REG093 dated 16th September 2022. The said Explanation would reveal that it clarified that for the purposes of clause (2) thereof the meeting(s) may be convened under the said clause till the Resolution Plan is approved under sub-section (1) of Section 31 of the IBC or an order for liquidation is passed under Section 33 of the IBC. However, the only rider is that it shall no....
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....on Plan. 77. It can further be seen that the CoC is also empowered to nominate either the RP or any other insolvency professional or any other person including the representatives of the committee and the representatives of resolution applicant(s), as its members. It can thus be seen that the legislative intent is to empower the CoC to monitor and supervise the implementation of the resolution plan through the monitoring committee. 78. We are of the view that if the contention of the appellants that the CoC becomes functus officio is accepted, then it would lead to an anomalous situation. 79. As per the IBC and as is the common experience, after the Resolution Plan is accepted under Section 31 of the IBC by the Adjudicating Authority, the same does not achieve finality unless the appeals under Section 61 of the IBC by the appellate authority and by this Court under Section 62 of the IBC are decided. It also cannot be ignored that in certain cases, the Resolution Plan may not be implemented and the matter may lead to liquidation proceedings. 80. In the present matter itself, it can be seen that when the matter was first decided by this Court by judgment and order dated 2....
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....he IBBI (CIRP) Regulations, the CoC continues to exist till the Resolution Plan is implemented or an order of liquidation is passed under Section 33 of the IBC. It will not be out of place to mention that the cloud of uncertainty exists till a finality is given by this Court in the proceedings under Section 62 of the IBC. 86. In the present case, it will be relevant to see that though the Resolution Plan was implemented on 26th March 2021, there was a statement made by the learned Senior Counsel for the CoC to the effect that in the event the appeals succeed, the creditors would refund the amount. As such, till the present appeals are decided, the CoC had a vital interest in the proceedings. We are therefore unable to accept the contention raised by the appellants (erstwhile promoters-cum-directors of the Corporate Debtor) in that regard and the same are liable to be rejected. d. Grounds of Appeal 87. It is submitted by the SRA - JSW that the present appeals basically arise out of the concurrent findings of fact. It is not in dispute that the Resolution Plan submitted by the SRA - JSW, which was submitted after following the entire procedure prescribed under the IBC ....
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....s costs have not been provided for repayment in priority to all other debts; or (v) the resolution plan does not comply with any other criteria specified by the Board. 91. It can thus be seen that an appeal against an order approving a Resolution Plan would be available before the NCLAT only when it is found that the approved resolution plan is in contravention of the provisions of any law for the time being in force or there has been any material irregularity in exercise of powers by the resolution professional during the corporate insolvency resolution period or that the debts owed to OCs of the Corporate Debtor have not been provided for in the resolution plan in the manner specified by the Board or that the insolvency resolution process costs have not been provided for repayment in priority to all other debts or the resolution plan does not comply with any other criteria specified by the Board. 92. A perusal of the material placed on record in the present matter would reveal that the appeal before the NCLAT in this matter does not fit in any of the aforesaid criteria. Having said that, since an appeal before the NCLAT itself was not made out, we find that the app....
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.... in the present appeal." 94. It can thus be seen that this Court has taken a view that when a concurrent view has been taken by two adjudicating authorities provided under the special statute, unless it is found that such a view was in ignorance of the mandatory statutory provisions or was based on extraneous consideration or was ex-facie arbitrary or illegal, an interference would not be warranted. 95. In the present matter also the findings on all the issues are concurrent. It is only insofar as the issue with regard to distribution of EBITDA wherein the NCLAT has set aside the directions of the NCLT. However, in order to avoid repetition, we will not deal with the said issue here since in the foregoing paragraphs, we have elaborately dealt with the contentions qua the issue of distribution of EBITDA. 96. We are therefore of the view that the appellants could have been non-suited on the short ground of concurrent findings of the NCLT and the NCLAT alone. However, we propose to deal with the other contentions raised by the Appellants - erstwhile promoters on merits as well. e. Legality of clause permitting CoC to extend the period for implementation of the Resolu....
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....ution Plan are to be taken within 30 days from the NCLT approval date or such extended period which may be permitted by 66% majority of the lenders forming part of the erstwhile CoC. However, our experience in matters like the present case, shows that on account of various exigencies, it may not be possible to implement the Resolution Plan within the prescribed period. What has therefore been sought to be done by the aforesaid clause is to reserve certain discretion in the CoC to extend the period for implementation of the Resolution Plan, provided that such an extension is approved by 66% majority of the lenders forming part of the erstwhile CoC. 101. The aforesaid clause provides for the effective date which shall not exceed 30 days from the NCLT approval date or such extended period which may be permitted by 66% majority of the lenders forming part of the erstwhile CoC. It can thus be seen that clause (3) of the Resolution Plan neither provided modification nor withdrawal from the Resolution Plan. The said cannot therefore be stated to be an open ended or indeterminate plan solely at the discretion of the resolution applicant. Under the said clause, there is neither a provisi....
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....note that the NCLT had not granted any relief qua the protections sought by the SRA - JSW in respect of the prosecution sought to be carried out against the erstwhile management. Being aggrieved thereby, the SRA - JSW filed an appeal before the NCLAT contending that it was not liable to share the EBITDA with FCs and OCs and also that it should be protected against criminal proceedings and attachments. 107. It can therefore be seen that unless the issue with regard to sharing of EBITDA with FCs was finally decided by the NCLAT, the Resolution Plan could not have been implemented inasmuch as the direction of the NCLT had, in effect, modified the Resolution Plan submitted by the SRA - JSW. 108. It is further to be noted that in the meantime, on 10th October 2019, the ED issued the PAO whereby it attached the assets of the Corporate Debtor - BPSL at its Odisha Plant worth over Rs.4,025 crore under the PMLA. On 14th October 2019, the NCLAT by an interim order stayed the implementation of the Resolution Plan which stay remained in operation until 17th February 2020. The NCLAT also stayed the PAO issued by the ED. It is further to be noted that, despite the stay of the PAO by the NC....
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.... days. The SRA - JSW replied to the said notice requesting to handover unencumbered and clean assets of the Corporate Debtor which were free from ED attachment and criminal prosecution. It appears that in the meantime there were negotiations between the CoC and the SRA - JSW. It was the stand of the SRA - JSW that though it was willing to go ahead with the implementation of the Resolution Plan, it was not obligated to implement the Resolution Plan until there was clarity in respect of handover of clean and unencumbered assets of the Corporate Debtor. 112. It is apparent from the record that the CoC filed an application on 30th May 2020 in the appeal pending before this Court seeking certain directions. Apart from seeking implementation of the Resolution Plan, the CoC also sought for a declaration for setting aside of the PAO and any consequential proceedings, including ED's prosecution. In the meantime, it appears that, there was an exchange of communication between the SRA - JSW and the CoC with regard to distribution of EBITDA amongst the creditors. It is also to be noted that the NCLT had on 5th September 2019 directed the EBITDA to be shared by the SRA - JSW with the FCs and....
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....reamble of the said Ordinance, it has been brought for three purposes. Firstly, to give the highest priority in repayment to last mile funding to corporate debtors to prevent insolvency in case the company goes into CIRP or liquidation. The second purpose was to provide immunity against prosecution of the Corporate Debtor to prevent action against the property of such Corporate Debtor and the SRA subject to the fulfilment of certain conditions. The third one was to fill the critical gaps in the corporate insolvency framework. By way of the said amendment, Section 32A of the IBC came to be added, which reads thus: "32A. Liability for prior offences, etc.-(1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under Section 31, if the resolution plan results in the change in the management or control of the corporate debtor t....
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....e, and has submitted or filed a report or a complaint to the relevant statutory authority or Court. Explanation.-For the purposes of this sub-section, it is hereby clarified that,- (i) an action against the property of the corporate debtor in relation to an offence shall include the attachment, seizure, retention or confiscation of such property under such law as may be applicable to the corporate debtor; (ii) nothing in this sub-section shall be construed to bar an action against the property of any person, other than the corporate debtor or a person who has acquired such property through corporate insolvency resolution process or liquidation process under this Code and fulfils the requirements specified in this section, against whom such an action may be taken under such law as may be applicable. (3) Subject to the provisions contained in subsections (1) and (2), and notwithstanding the immunity given in this section, the corporate debtor and any person who may be required to provide assistance under such law as may be applicable to such corporate debtor or person, shall extend all assistance and co-operation to any authority investigating an o....
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....lan for recovery of an amount of INR 19,350 crores. The plan is approved by 100% of the lenders. The implementation is presently underway (new Board has already been appointed) and would require a period of at least 20 days for implementation after the decision of this Hon'ble Supreme Court. In view of the actions of ED after the NCLAT's judgment. If the issue concerning the release of assets of BPSL and criminal proceedings against BPSL by the ED is not urgently clarified by the Hon'ble Supreme Court, the implementation of the Resolution Plan would be affected." 121. A perusal of the communications exchanged between the parties would reveal that the negotiations were not with regard to the terms and conditions of the Resolution Plan but to ensure the immediate implementation of the Resolution Plan. It can thus be seen that the negotiations took place due to the consistent efforts made by the lenders of the Corporate Debtor forming part of the CoC for ensuring implementation of the Resolution Plan. As already discussed hereinabove, the CoC in its meeting held on 26th February 2021 passed a resolution to extend the date of implementation of the Resolution Plan to 31st March 2021.....
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....efforts to get the matter sorted out before this Court so as to ensure the expeditious implementation of the Resolution Plan. 127. Insofar as the reliance placed by the Appellants - erstwhile - promoters on the judgment of this Court in the case of Murari Lal Jalan (supra) is concerned, it can be seen that in the said case, the Resolution Plan had not been implemented for a period of almost 5 years after being approved. Not only that, various directions given by various forums, including the directions given by this Court were not implemented. In the said case, this Court, vide order dated 18th January 2024, had directed the Resolution Applicant to infuse an amount of Rs.150 crore in cash on or before 31st January 2024. It is to be noted that this was the fourth extension granted by this Court in the said matter. The aforesaid direction issued by this Court was also not implemented. Again, an application for extension of period was made before this Court. The same was also rejected vide order dated 2nd February 2024. In this factual background, this Court found that the order of the NCLAT upholding the order of the NCLT was not sustainable. 128. In the facts of the present ma....
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....ated the Resolution Plan as per this original Regulation and had submitted it to the CoC for consideration. 134. Only thereafter, the amendment dated 5th October 2018 was brought in, which amended Regulation 38(1). The amended Regulation reads thus: "38. Mandatory contents of the resolution plan. (1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. ..........." 135. The amended Regulation mandated that any amount due to the OCs under a Resolution Plan would be given priority over the FCs. The term "liquidation value" was done away with by way of the aforesaid amendment. 136. When this amendment was brought in, the Resolution Plan was yet to be approved by the CoC. Considering this amendment, the SRA - JSW issued an addendum dated 10th October 2018 which amended Clause 1.4(ii) of the Resolution Plan. It was stated that other than the liquidation value due to the workmen of Rs. 9.86 crore, the liquidation value due to the OCs is nil. It was further stated that the SRA - JSW is proposing to make an additional payment to the OCs despite they having no entitlement as per t....
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....re ex - gratia payments. We do not wish to go into the question as to whether the latest amendment dated 27th November 2019 would mandate even such ex - gratia payments to the OCs being made before the payments to the FCs as we have categorically held that the latest amendment would have no effect on the Resolution Plan in the present case inasmuch as the same was approved by the NCLT on 5th September 2019 i.e. before the amendment dated 27th November 2019 came into effect. 143. It is also to be noted that the said issue has not been raised by any of the OCs of the Corporate Debtor either before the NCLT or before the NCLAT. It is only sought to be raised by the erstwhile promoters-cum-directors. We therefore find that the erstwhile promoters-cum-directors are not directly concerned with the said issue and a contention in that regard on their behalf, in our view, is not merited and liable to be rejected. h. Upfront infusion of funds by the SRA - JSW 144. The Appellants - erstwhile promoters have also raised the contention that the SRA - JSW has not honoured its commitment of "upfront infusion of funds" as per the Resolution Plan submitted by it. It is submitted by th....
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.... [(1881) 7 QBD 165, 172 and 173 : 44 LT 378]. A debenture may contain charge only on a part of the assets of the company (Re Colonial Trusts Corporation [(1879) 15 Ch 465]) or it may not contain any charge on any of its assets (See Speyer Brothers v. IRC [(1907) 1 KB 246] ; and Lemon v. Austin Friars Investment Trust Ltd. [(1926) 1 Ch 15] A debenture may, therefore, be secured or unsecured (Palmer's Company Law, p. 675, 24th edn.). An ordinary debenture has to be distinguished from a 'mortgage debenture' which necessarily creates a mortgage on the assets of a company (See Palmer's Company Law, p. 706). A compulsorily convertible debenture does not postulate any repayment of the principal. Therefore, it does not constitute a 'debenture' in its classic sense. Even a debenture, which is only convertible at option has been regarded as a 'hybrid' debenture by Palmer's Company Law (para 44.07 at page 676). In this connection, reference may be made to the "Guidelines for the Protection of Debenture Holders" issued on January 14, 1987 which have recognised the basic distinction between a convertible and a non-convertible debenture. It is apparent that these were issued for the ....
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....nt was clearly in the nature of debentures which were compulsorily convertible into equity and nowhere is it stipulated that these compulsorily convertible debentures would partake the character of financial debt on the happening of a particular event." (Emphasis supplied) 148. It can thus be seen that this Court has reaffirmed its view that if a CCD is to be compulsorily converted at the time of maturity, without any obligation of repayment of a debt. It has been held that it must be treated the same as an equity instrument. We are therefore of the view that the CCDs infused by the SRA - JSW are to be treated the same as an equity infusion. 149. To examine as to whether the commitment for the upfront infusion was actually satisfied by the SRA - JSW through the CCDs, we must also consider the stand of the CoC. It is submitted by the CoC that the reconstituted Board of the resolved entity - BPSL held a meeting on 26th March 2021 attended by the Steering Committee, i.e., the three largest FCs of the Corporate Debtor. In the said meeting, the issuance of CCDs valued at Rs. 8,450 crore to a company named Piombino Steel Limited, which is a part of the group of the SRA - JSW was....
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....om those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment must also be set aside on this count. Utilisation of profits of the corporate debtor during CIRP to pay off creditors 108. The RFP issued in terms of Section 25 of the Code and consented to by Arcel....
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....d opposing the same was taken by the CoC. 160. It will be relevant to refer to the submissions filed by the CoC of BPSL before this Court on an affidavit, which read thus: "II. The distribution of EBITDA can only be in accordance with the law settled by this Hon'ble Court in the SC Essar Steel Judgment 41. It has been contended by the Appellants that the EBITDA should be distributed to the creditors of BPSL as, (a) The SC Essar Steel Judgment was passed in the facts of the said case wherein a specific clause for distribution of EBTIDA existed in the process document and hence the said judgment cannot be made applicable to the present case, and (b) The CoC in giving up on the EBITDA generated had directly impacted the Appellants. 42. Brief background in this regard, is as follows: (a) Directions by the Hon'ble NCLT: The NCLT Plan Approval Order dated 05.09.2019 directed the RP to redistribute the profits earned by the Corporate Debtor in accordance with judgment passed by the Hon'ble NCLAT in the matter of Standard Charted Bank v. Satish Kumar Gupta, RP of Essar Steel Ltd. and Ors. Company Appeal (AT) (Insolvency) No. 242 of 2....
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.... with law. 46. It is also relevant to note that no contrary stand has been taken by the CoC with respect to treatment of EBITDA. In this regard, it is stated that, (i) the reply affidavit filed by the CoC in October 2019 before the Hon'ble NCLAT stating that EBITDA generated during CIRP should accrue to the benefit of the lenders, was filed at a time when the NCLAT Essar Steel Judgment dated 04.07.2019 held the field of law with respect to distribution of EBITDA i.e. it should be distributed to the creditors. (ii) Pertinently, in the facts of the said case, there was a specific provision for appropriation of a portion of the EBITDA by the CoC in the process document. (iii) Subsequently, the SC Essar Steel Judgment dated 15.11.2019 overturned the NCLAT Essar case, and held that for distribution of profits, provisions in the process document have to be followed. (iv) In view of the aforesaid judgment, the Impugned Judgment dated 17.02.2020 reversed the findings of the NCLT Plan Approval Order that relied on the NCLAT Essar Steel Judgment with respect to distribution of EBITDA, and directed for the SC Essar Steel Judgment to be followed. Ac....
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....the EBITDA generated during the CIRP would remain within the company. As such, the CoC has accepted the position as laid down by the NCLAT in Supreme Court Essar. 162. The submissions would clearly show that the stand taken by the CoC before the NCLAT in this matter with regard to EBITDA treatment was on the basis of the judgment of the NCLAT in NCLAT Essar. It has also been specifically stated that subsequently the Supreme Court Essar overruled the NCLAT Essar and held that for distribution of profits, provisions in the process document have to be followed. It has been reiterated on more than one occasion that since the RfRP was silent on the treatment of EBITDA generated during CIRP and in view of Supreme Court Essar, EBITDA may be retained with the Corporate Debtor. 163. When the CoC had taken a specific stand before this Court in the present appeals and also reiterated the very same stand when the review petitions were pressed into service, in our view, it would not be permissible for the CoC to make a volte face and take a stand which is totally contrary to the one taken by it before this Court when the appeal was earlier heard and decided by this Court on 2nd May 2025 a....
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....e Corporate Debtor, its employees, members, creditors including the Central Government etc. 168. We are of the considered view that unless there is a specific provision with regard to distribution of EBITDA in the RfRP, permitting the CoC to raise a new stand at this stage will be totally inconsistent with the avowed object for which the IBC was incorporated. 169. Though it is sought to be urged on behalf of the SRAJSW that the Corporate Debtor was running into losses till the Resolution Plan was implemented, we do not propose to go into that issue. As already held by us, the scope of interference against the concurrent findings of fact in the present appeals would be very limited. No doubt that insofar as EBITDA is concerned, the findings are not concurrent. It has already been discussed hereinabove that the directions of the NCLT with regard to EBITDA treatment were on the basis of NCLAT Essar whereas the findings of the NCLAT were on the basis of Supreme Court Essar. We, therefore, do not propose to dwell into the question as to whether the Corporate Debtor was running into losses or not. Be that as it may, when a Resolution Plan is approved, the SRA takes over the managem....
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....lized claims whereas contingent creditors were to be paid only 10% as per the Resolution Plan. Per contra, the SRA - JSW submitted that Jaldhi has been rightly classified as a contingent creditor as it has treated itself as a contingent creditor before the NCLT and had later changed its stance. It is further submitted that the appellant withdrew various proceedings filed for enforcement by it before the Calcutta High Court in order to pursue an alternative remedy and therefore, the foreign awards could not be deemed to be binding under Indian law. 173. We must firstly examine the stand taken by the Appellant - Jaldhi before the NCLT from the approval order passed by the NCLT on 5th September 2019. "106. The contentions raised by Mr. A.S Chadha, learned senior counsel appointed by the Adjudicating Authority-NCLT to represent the cause of Operational Creditors, have been that the resolution plan has illegally classified 'Jaldhi' as contingent creditor entitling to be paid only 10 °/o of its claim subject to a cap of Rs. 35 crores, if it crystalized within two years from the date of approval of the resolution plan by the CoC. It is evident that Jaldhi is an ope....
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....reign award is enforceable under Part-II Chapter-I of the Arbitration Act. Therefore, a foreign award would not be automatically enforceable in India. For it to be enforceable in India, the court is required to be satisfied that such an award is enforceable under Part-II Chapter-I of the Arbitration Act. 177. It is relevant to note that though the appellants had initiated proceedings for the execution of international arbitral award in its favour before the Calcutta High Court, the appellants did not prosecute the said proceedings, and the said proceedings were dismissed as withdrawn. Had the appellants pursued the said proceedings before the Calcutta High Court, the SRA - JSW would have had an opportunity of contesting the said proceedings. Not permitting the said proceedings to proceed in accordance with law, in our view, would not permit the appellants to contend that their claims had crystalised and settled as OCs entitling them to claim under the Resolution Plan. 178. It is further to be noted that the provisions of the IBC only differentiate between the OCs and the FCs. This was the reason that the RP in the present case admitted the claim raised by the Appellant - Jald....
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....tings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable. 53. ......... 54. ......... 55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan "as approved" by the requisite per cent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (....
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....al wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors. The fact that substantial or majority per cent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 6-6-2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter III of the I&B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October 2017; and now after the amendment w.e.f. 6-6-2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed resolution plan, de jure, entails in its deemed rejection. 60. ........... 61. ........... 62.....
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....proving the Resolution Plan whereby the Appellant - Jaldhi was classified as a contingent creditor and such a decision is deemed to be non - justiciable by this Court in view of K. Sashidhar (supra) which has been subsequently followed in a catena of judgments. The NCLT, and the NCLAT have also approved the Resolution Plan, and in light of the settled principle of law, we find no question of law being raised by the Appellant - Jaldhi and therefore, the appeal filed by it is liable to be dismissed. k. Pre-CIRP dues of Medi and Darcl 181. Two OCs of the Corporate Debtor namely Medi and Darcl have raised contentions regarding their claims by filing appeals before this Court against the impugned judgment. Since the contentions raised by these two OCs are similar in nature, we are dealing with their appeals together. 182. It was submitted by the Appellants that they were promised their payments of pre - CIRP dues by the RP as an incentive for continuing to do business with the Corporate Debtor during the CIRP period in order to keep it a 'going concern'. It was stated by the learned counsel that after payments for the pre - CIRP dues were received for 10 months during the....
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.... submitted their bids. The RfRP does not provide for treatment of EBITDA. After a prolonged delay on account of variety of reasons enumerated hereinabove, the Resolution Plan was implemented. The Corporate Debtor in the present case was running into substantial losses which has now become a profit - making entity earning substantial profits. The SRA - JSW invested huge amounts in modernization and expansion of the entity (Corporate Debtor). Not only that but thousands of employees have been earning their livelihood on account of the Corporate Debtor running as an on-going concern due to the Resolution Plan being implemented by the SRA - JSW. 187. As such, the very purpose for which the IBC was enacted-namely, to ensure that the Corporate Debtor continues as a going concern-has not only been achieved, but the Corporate Debtor has been transformed from a lossmaking to a profit-making entity. If, after the implementation of the Resolution Plan, the SRA - JSW has converted a lossmaking entity into the one making profits, can it be penalised for that? Suppose if instead of the Corporate Debtor being converted into a profit-making entity, the losses would have increased, can the Corpo....