Committee of Creditors

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National Company Appellate Tribunal (NCLAT): The Bench comprising of S.J. Mukhopadhaya, J. (Chairperson) and A.I.S Cheema, J. and Kanthi Narahari, Members, Judicial and Technical, respectively; declined to intervene and place any opinion for the appeal made by Ex-Directors and Promoters of Bhushan Power and Steel Limited which stated that:

“More than 270 days have been passed and the final order is yet to be passed by the Adjudicating Authority.”

The present appeal was filed by ‘Committee of Creditors’ against the order passed by Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi, wherein the order was reserved.

Facts and Background of the case explained:

Appellate Tribunal by order dated 04-02-2019 remitted the matter back to the Adjudicating Authority for consideration of the ‘Resolution Plan’ submitted by ‘JSW Steel’.

Thereafter, the matter was heard and Judgment had been reserved. While the Judgment was still pending, Punjab and Haryana High Court passed certain directions directing the Adjudicating Authority to follow a certain  procedure giving reference to the Supreme Court’s decision and held that “any order passed by the Adjudicating Authority/NCLT, which is contravention, contradiction or derogation of the directions of Supreme Court should not be taken into consideration.”

Senior Counsel, Mukul Rohatgi with Advocates Arvind Kr Gupta and Henna George, appeared for the erstwhile directors and promoters of Bhushan Power and Steel Limited.

Solicitor General and Senior Advocate Tushar Mehta with Advocates Bishwajit Dubey, Spandan Biswal, Srideepa Bhattacharya, Sylona Mohapatra and Surabhi Khattar, appeared for the Committee of Creditors of Bhushan Power and Steel Limited.

Decision in the present appeal:

NCLAT declined to entertain the present appeal stating that the matter is still pending before the Adjudicating Authority, therefore they are not inclined to entertain the appeal by erstwhile directors and promoters of Bhushan Power and Steel Limited.

Bench also commented that it is unclear on how Punjab and Haryana High Court’s vacation Bench passed an order as noted above when the matter is still pending. It was also stated that the mentioned Court has no territorial jurisdiction over Delhi, where Principal bench of NCLT, New Delhi is situated.

Further, the Bench stated that, Adjudicating Authority is supposed to decide the case on merit in accordance with law uninfluenced by any order except the decision of this Appellate Tribunal and Supreme Court.

Hence, in view of the above, the appeal stands disposed of. [Committe of Creditors of Bhushan Power and Steel Ltd. v. Mahendra Kumar Khandelwal, Company Appeal (AT) (Insolvency) No. 562 of 2019, decided on 11-06-2019]

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National Company Law Appellate Tribunal (NCLAT): A Bench of Justice S.J. Mukhopadhaya, Chairperson and Justice A.I.S Cheema, Member (Judicial) and Kanthi Narahari, Member (Technical) allowed the appellant (shareholder of the Corporate Debtor) to pay the total dues of the Operational Creditor after the application filed against it under Section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted by the the National Company Appellate Tribunal, Bengaluru.

The appellant submitted that though the Section 9 application was admitted against it, however, the Committee of Creditors was not yet constituted. He submitted that he was ready to pay the total dues of the Operational Creditor which brought the application before NCLT.

Three demand drafts brought by the appellant were produced before the Appellate Tribunal, which were directed to be handed over to the Operational Creditor in the discharge of Corporate Debtor’s liability towards it. In view of the fact that the total amount was paid to the Operational Creditor and the Committee of Creditors was not yet constituted, the Appellate Tribunal set aside the impugned order of NCLT admitting the Section 9 application against the Corporate Debtor. [A.P. Abdul Kareem v. Om Industrial Corpn., 2019 SCC OnLine NCLAT 154, Order dated 16-04-2019]

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National Company Law Appellate Tribunal (NCLAT): The Bench of Justice S.J. Mukhopadhaya, Chairperson and Justice Bansi Lal Bhat, Member (Judicial) allowed an appeal filed against the order of National Company Law Tribunal (New Delhi) whereby it had admitted respondent’s application under Section 7 of the Insolvency and Bankruptcy Code, 2016 and appointed an Interim Resolution Professional.

Senior Advocate K. Venugopal assisted by Pawan Sharma, Anuj Shah and Rishabh Sharma, Advocates representing the appellant–Shareholder of the Corporate Debtor, submitted that NCLT failed to notice inter alia that the parties had already settled the claim. The factum of the settlement was accepted by Ashish Agarwal, Advocate appearing for the respondent.

It was informed by the Interim Resolution Professional that advertisement was issued asking for claims but Committee of Creditors was not yet constituted.

The Appellate Tribunal relied on Swiss Ribbons (P) Ltd. v. Union of India, 2019 SCC OnLine SC 73 wherein the Supreme Court held, “at any stage where the committee of creditors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement.”

In such view of the matter, the impugned order of NCLT was set aside as the parties had settled the claim before the constitution of Committee of Creditors and the respondent did not want to proceed with the matter. The appeal was thus allowed. [Arjun Puri v. Kunal Prasad, 2019 SCC OnLine NCLAT 5, dated 31-01-2019]

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National Company Law Appellate Tribunal (NCLAT): A Two-Member bench comprising of S.J. Mukhopadhya (Chairperson) and Bansi Lal Bhat, Member (Judicial) disposed of a set of company appeals by directing National Company Law Tribunal, Kolkata to set up a monitoring committee for implementation of the approved revised resolution plan for Binani Cement Ltd. submitted by UltraTech Cement Ltd.

The appeals arose out of the order of the NCLT wherein it rejected the resolution plan submitted by Rajputana Properties (P). Ltd. after Corporate Insolvency Resolution Process was commenced for Binani Cement under Insolvency and Bankruptcy Code, 2016. The said plan was approved by the Committee of Creditors which was challenged by certain creditors alleging that they were not dealt with equitably as compared to Financial Creditors. While adjudication, NCLT accepted the contention of the said creditors and also observed that the Committee had not given proper consideration to the revised resolution plan submitted by UltraTech Cement. Resultantly, NCLT rejected the plan of Rajputana Properties and directed the Committee to consider UltraTech’s plan in accordance with the provisions of I&B Code.

The Appellate tribunal after perusing various provisions of the code as also the record of the case noted that Rajputana’s plan was indeed discriminatory against the abovesaid creditors when compared to Financial Creditors and was thus inconsistent with the provisions of I&B Code. Furthermore, finding of NCLT regarding improper consideration of UltraTech’s revised plan was also upheld by the Appellate Tribunal. It was noted that after NCLT’s order, the Committee had considered the revised plan submitted by UltraTech which was approved. Also, in an appeal filed by Binani Industries, it was held that Corporate Insolvency Resolution Process had started on admission of an application under Section 7, 9 or 10, the same cannot be set aside, except for illegality to be shown. Accordingly, plea of Binani Industries to repay the dues of creditors and settle the matter was dismissed.

In view of the aforesaid, the appeals filed by Rajputana Properties and Binani Industries were dismissed. The revised plan submitted by Ultra tech Cement which was already approved by the Committee of creditors was accepted and NCLT, Kolkata was directed to constitute a committee for the implementation of the same. The appeals were disposed of accordingly.[Binani Industries Ltd. v. Bank of Baroda,2018 SCC OnLine NCLAT 521, dated 14-11-2018]