Fresh Resolution Plan Cannot Be Considered By Committee Of Creditors: NCLAT New Delhi
National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan, Dr Alok Srivastava & Ms. Shreesha Merla in the matter of Steel Strips Ltd versus Avil Menezes held that a fresh resolution plan cannot be considered by a Committee of Creditors (COC) once it has already approved a resolution plan. Successful Resolution Applicant Steel Strips...
National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan, Dr Alok Srivastava & Ms. Shreesha Merla in the matter of Steel Strips Ltd versus Avil Menezes held that a fresh resolution plan cannot be considered by a Committee of Creditors (COC) once it has already approved a resolution plan.
Successful Resolution Applicant Steel Strips Wheels Ltd. (Steel Strips) filed an appeal before the NCLAT under Section 61 of the Insolvency & Bankruptcy Code, 2016 against the order dated 18.01.2022 of NCLT Ahmedabad wherein it has directed the COC to consider a fresh resolution of Triton Electric Vehicle LLC (Triton Electric) even though the COC has already approved the Resolution Plan submitted by Steel Strips.
Brief Background
The Corporate Insolvency Resolution Process of AMW Auto Component Ltd. was initiated on 01.09.2020 and thereafter, the Resolution Plan dated 24.04.2021 submitted by Steel Strips was approved by COC with 98.55% voting shared. Letter of intent was issued to Steel Strips and a bank guarantee of INR 20 Crores was also submitted by Steel Strips. Thereafter, the Resolution Professional filed an approval application before the NCLT.
Subsequently, Triton Electric filed an application before the NCLT seeking permission for submitting a resolution plan before the COC and same was allowed by NCLT Ahmedabad vide its order dated 18.01.2022.
Contention of Steel Strips
It was contended by Steel Strips that there was no occasion for the Adjudicating Authority to pass an order for consideration of the Resolution Plan submitted by Triton Electric once COC already approved the resolution plan of steel strips with 98.55% voting share and the same is pending approval before the NCLT.
It was also contended that Triton was not included in the final list of prospective resolution applicants and therefore, Triton has no authority to submit any resolution plan. It was also argued that the NCLT has no jurisdiction to direct the COC to consider the resolution plan of Triton once it has already approved the resolution plan of Steel Strips.
Submissions Of Resolution Professional
It was submitted by the Resolution Professional that email dated 22.12.2021 of Triton Electrics requesting to submit the resolution plan was forwarded to COC and the COC denied to consider the same but now the COC has shown its willingness to consider the resolution plan of Triton Electrics.
Submissions Of Committee Of Creditors
It was submitted by COC that looking at the objects and reasons of the Code, the COC in its meeting dated 05.03.2022 deliberated and decided that Triton Electrics may be given an opportunity to present their Resolution Plan.
Contentions of Triton Electrics
It was contended by Triton Electrics that it has submitted a joint resolution plan which also deals with the sister concern of corporate debtor. It was also contended that the Steel Strips itself submitted its resolution plan after the due date and therefore, cannot question the submission of plan by Triton Electric on the ground of delay.
Observations/Analysis by NCLAT
NCLAT observed that it is not disputed two resolution plans were placed for approval before COC and the plan of Steel Strips was approved by 98.55% voting shares. It further observed that it is also not disputed that the COC in its meeting dated 18.12.2021 denied to consider fresh expression of interest submitted by Triton Electrics.
NCLAT held that the CoC could not as per existing law, consider the Resolution Plan of Respondent No.3 after approval of the plan of the Appellant and after over of the CIRP. NCLAT further relied on the judgment of Supreme Court in Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited and held that the finality has been attached to the Resolution Plan of the Steel Strips which was approved by the CoC, which finality could not have been taken away by the impugned order passed by the Adjudicating Authority.
NCLAT further held that the Supreme Court in Ebix also noticed that late and unsolicited bids by Resolution Applicants after the original bidder becomes public upon passage of the deadline for submission of the plan is a reason for deviation of the original objective and timeline under the Code and therefore, resolution plan of Triton Electric cannot be considered after the approval of plan of Steel Strips and CIRP period is over.
NCLAT further relied on its previous judgment in the case of Chhattisgarh Distilleries Ltd. vs. Dushyant Dave and Kalinga Allied Industries India Pvt. Ltd. vs. Hindustan Coils Ltd and held that;
"25…After approval of the Resolution Plan by the CoC by requisite vote and after expiry of CIRP, it is not open for the CoC to contend that it is ready to consider the plan of Respondent No.3 which according to it may be better plan"
In the light of the above observations, NCLAT held that order dated 18.01.2022 is unstainable and set aside the same.
Case Detail: Steel Strips Ltd versus Avil Menezes, CA(AT)(Ins.) No. 89/2022
Counsel for Appellant: Mr. Krishnendu Datta, Sr. Advocate with Samir Malik, Siddharth Nigotia, Mr. Aditya Sharma, Advocates
Counsel for Resolution Professional: Mr. Jayant Mehta, Sr. Advocate with Mr. Bishwajit Dubey, Srideepa Bhattacharya, Aishwarya Gupta, Advocates
Counsel for COC: Ms. Prachi Johri, Mr. Dhrupad Vaghani, Naveli Reshamwalla, Ajiz M.K., Mr. Lakshya Sachdeva, Advocates
Counsel for Triton: Mr. Darius Khambata, Sr. Advocate with Mr. Amit Sibal, Sr. Advocate Mr. Devang Nanavati, Sr. Advocate Mr. Deepak Sharma, Advocates