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INSOLVENCY AND BANKRUPTCY NEWS

claims, the effect of such haircuts may be harsh and unjust on home buyers. Srei Multiple Asset Investment Trust Vs. IDBI Bank Ltd. & Ors.
If the CD goes into liquidation the home buyers being unsecured creditors [Company Appeal (AT) (Ins) No. 593 of 2020]
stand to lose all their monies that are either hard earned and saved or An appeal was led against the order of AA that approved the resolution
borrowed at high rate of interest. It was also observed that the reason for plan submitted by Arcelor Mittal India Private Limited (AMIPL), on the
introducing the threshold of at least 100 or 10% of the total home buyers ground that AMIPL is the successful resolution applicant (SRA) of Essar
of the same project to jointly le an application under section 7, was to Steel India Ltd. (ESIL) who is one of the shareholders of the CD, thereby
tackle the problem of a single home buyer derailing the entire project by making it ineligible to be a resolution applicant of CD under section 29A of
ling an insolvency application. SC observed that the object and purpose of
the Code is not to kill the company and stop/stall the project, but to ensure the Code. NCLAT noted that AMIPL took over the management and
control of ESIL on December 16, 2019, whereas the resolution plan with
that the business of the company runs as a going concern. Considering the regard to the CD was submitted by AMIPL in November, 2019 which came
peculiar facts and circumstances of the case, it allowed the withdrawal of to be approved by the CoC on December 6, 2019, i.e., prior to taking over
CIRP proceedings by exercising its powers under Article 142 of the the management and control of ESIL. NCLAT observed that the SRA who
Constitution.
takes over the company as the going concern unless and otherwise
High Court declared as ineligible under the provisions of the Code cannot be treated as
ineligible. NCLAT while dismissing the appeal, observed that section
M/s. Tharakan Web Innovations Pvt. Ltd. Vs. National Company 29A(c) would not be applicable to resolution applicants who acquire a CD
Law Tribunal Kochi Bench & Anr. [WP(C) No. 27636 of 2020 & pursuant to a prior resolution plan approved under the Code.
WP(C) No. 14158 of 2021]
Association of aggrieved Workmen of Jet Airways (India) Ltd. Vs.
On the issue of applicability of default of threshold limit of `1 crore on or Jet Airways (India) Ltd. & Ors. [Company Appeal (AT) (Insolvency)
after March 24, 2020, Kerala HC held that that the minimum amount of No. 643 of 2021 & I.A. No.1700 of 2021]
default is statutorily xed, with power available to the Government to rex, On the issue as to whether copy of NCLT approved resolution plan be
upto a sum of `1 Crore and once the Government has exercised the said provided to the workmen, NCLAT observed that scheme of the Code
power by issuance of a notication xing the minimum amount of default as
`1 Crore, the section will have to be read by replacing the words one lakh indicates that after resolution plan is approved by AA, it no longer remains a
rupees by rupees one crore. Once that is the position, the application of condential document, so as to preclude Regulator and other persons from
Part II itself is taken away with effect from March 24, 2020, as far as defaults its access. It further observed that workmen who have challenged a
resolution plan under section 61(3) of the Code is entitled to know the
less than `1 Crore are concerned and hence no application can be led contents of the resolution plan to effectively prosecute its appeal.
after March 24, 2020, regarding an amount where the default is less than
`1 Crore. Resolution plan even though, is not a condential document after its
approval, cannot be made available to each and to anyone who has no
National Company Law Appellate Tribunal genuine claim or interest in the process and, its access can be denied in
proper and appropriate cases. NCLAT held that the appellant is entitled for
Kiran Shah Vs. Enforcement Directorate [Company Appeal the relevant part of the resolution plan relating to the claim of the workmen
(AT)(Insolvency) No. 817/2021] and employees and, directed the SRA to share it with the appellant.
The NCLAT observed that section 14 of the Code is not a hindrance for the 63 Moons Technologies Limited formerly known as Financial
authority and the ofcers under the Prevention of Money Laundering Act, Technologies (India) Ltd. Vs. The Administrator of Dewan Housing
2002 (PMLA) to deny a person of the tainted proceeds of crime. PMLA is to Finance Corporation Limited & Ors. [Company Appeals (AT)
fulll the country's obligation in adhering to the United Nations Resolutions (Insolvency) No. 454, 455 and 750 of 2021]
and in regard to assets/properties being the proceeds of crime, it takes a
primacy and precedence over the Code. The purpose of the Code and The AA allowed the avoidance transaction application led under section
PMLA even though at the rst blush appear to be at logger heads, there is 66 holding that CoC has consciously decided that the money realised
no repugnancy and inconsistency between them, in lieu of the fact the text, through the avoidance transactions would accrue to the members of the
shape and its colour are conspicuously distinct and different, operating in CoC and it has ascribed the value of `1 to fraudulent transactions, and if
their respective spheres. NCLAT held that ling of application under any positive money recovery is made, the same would go to the SRA. It
section 60(5) of the Code is not an all pervasive one, thereby conferring held that: “COC exercising its Commercial Wisdom have accepted, approved
jurisdiction to an AA to determine any question/issue of priorities, question the Resolution Plan including the monies to be recovered if any from the
of law or facts pertaining to CD when in reality in law, the AA is not Fraudulent Transactions. Therefore, we as Adjudicating Authority reluctant to
empowered to deal with the matters falling under the purview of another substitute our wisdom at this stage as against their Commercial Wisdom of the
authority under PMLA. CoC. Further by following the judicial precedents, discipline and various
Judgements of the Hon'ble Supreme Court we restrain ourselves from
M/s. Visisth Services Limited Vs. S. V. Ramani & Ors. [Company interfering with the commercial decision of the CoC”.
Appeal (AT) (Insolvency) No. 896 of 2020]
The NCLAT allowed the appeal and held that the CoC’s decision to
On the issue as to whether the successful bidder can withdraw from the bid approve a resolution plan which contains such unlawful stipulations, is
after payment of the Earnest Money Deposit (EMD) and seek for refund of illegal making the plan unsustainable. The resolution plan was sent back to
the amount paid on the ground that the offer made by the bidder was a the CoC for reconsideration with the following observations:
‘conditional offer’, NCLAT noted that by paying the EMD amount and
accepting the bid, the successful bidder cannot say that it was not a ŸThe Code does not have any provision restricting the resolution applicant
concluded contract. The bidder is bound by the terms and conditions of the to avail the benets of avoidance proceedings initiated under section 66,
bid document and no communication to the liquidator stating that it is a but it can’t be presumed that the Code authorises the resolution applicant
conditional offer, is sustainable. If the bidder is allowed to withdraw from for the same.
the bid at this stage and seek refund on the ground that their conditional ŸThe purpose of providing transactions and penalizing improper trading
offer has not been accepted, then the liquidation process would be a never actions are primarily aimed at swelling the asset pool available for
ending one, defeating the scope and objective of the Code. The NCLAT distribution to creditors and, the Code allows the AA to restore the
dismissed the appeal, holding that the bidder cannot wriggle out of the position prior to such transaction or trading by inter-alia investing the
contractual obligations arising out of acceptance of his bid and he cannot be recoveries with the CD.
entitled to the EMD amount, and the amount paid towards the bid
purchase document, if he does not comply with the terms of the contract. ŸAny decision taken by the CoC which strikes at the very heart of the Code
cannot simply be upheld under the garb of commercial wisdom.

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