Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Guj) 239

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
VINEET KOTHARI, BIREN VAISHNAV, JJ.
Gail (India) Ltd and Ors - Appellant
Versus
Essar Steel Ltd and Ors - Respondent
Civil Application (For Direction) No. 1 of 2021 In R/Letters Patent Appeal No. 1618 of 2005 In R/Special Civil Application No. 3348 of 2001
Decided On : 30-03-2021

Advocates:
Advocate Appeared:
For the Appellant : Mr Vishwas K Shah(5364)
For the Respondent: M/S Trivedi & Gupta(949) Mr Devang Vyas(2794) Ms Khyati Chug For Mr. Parth H Bhatt(6381) Mr Ashim Sood And Mr Raheel Patel, Counsel For Nanavati Associates(1375)

Point of law: 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, the NCLAT judgment must also be set aside on this count.

Headnote:
Insolvency and Bankruptcy Code, 2016 - Sections 53, 60(6) , 31 and 30 - Whether secured or unsecured - Seeking disconnection of supply of Gas - Quashing and setting aside their Demand Notice - Consequential benefits in pursuance of the implementation - Company – M/s Steel Limited had filed Special Civil Application against Respondent – Union of India and GAIL (India) Limited for quashing and setting aside their Demand Notice and further seeking disconnection of supply of Gas, for nonpayment of Transportation charges by Essar Steel Limited Special Civil Application came to be allowed by learned Single Judge by quashing and setting aside their Demand Notice and it was held Petitioner – Essar Steel Limited is not liable to pay Transportation charges MMSMDC supply of gas along exHBJ pipeline for supply from landfall point - Further held GAIL is required to follow Pricing Orders - Consequential benefits in pursuance of implementation of Pricing Orders of Government of India including 15% rebate on fall back basis as per agreement - Further observed by learned Single Judge metering charges should be proportionate to expenses incurred by Respondent No.3 – GAIL India Limited and it should not be disproportionate.
Finding of the Court : Proceeding under provisions of Insolvency and Bankruptcy Code, 2016 has acquired finality with the aforesaid judgment of Hon'ble Supreme Court complete copy of which is placed on our record with present Civil Application filed by Arcelor Mittal Nippon Steel India Limited clearly shows a detailed discussion of entire scheme and provisions of Insolvency and Bankruptcy Code, 2016 also and vide aforesaid quoted para it clearly shows 'undecided claim' of operational creditor stands extinguished by said Scheme of Rehabilitation or Revival approved by the Committee of Creditors received the imprimatur or seal of approval by the Hon'ble Supreme Court by setting aside the directions of the NCLAT in its final judgment - we are of the considered opinion that the present Civil Application No.1 of 2021 in Letters Patent Appeal No.1618 of 2005 filed by Arcelor Mittal Nippon Steel India Limited (Formerly known as Essar Steel India Limited) deserves to be allowed and Letters Patent Appeal - Letters Patent Appeal No.1618 of 2005 is accordingly dismissed and Civil Application No.1 of 2021 accordingly stands allowed.
Result: Civil Application No.1 of 2015 also stands disposed of

ORDER :

VINEET KOTHARI, J.

1. The Applicant – Arcelor Mittal Nippon Steel India Limited (Formerly known as Essar Steel India Limited) has filed this Civil Application No.1 of 2021 in Letters Patent Appeal No.1618 of 2005 in Special Civil Application No.3348 of 2001 seeking dismissal of the Letters Patent Appeal filed by M/s. GAIL India Limited, in view of the subsequent developments which have taken place in the matter.

2. The Company – M/s. Essar Steel Limited had filed Special Civil Application No.3348 of 2001 against the Respondent – Union of India and GAIL (India) Limited for quashing and setting aside their Demand Notice dated 1.5.2001 and further seeking disconnection of supply of Gas, for nonpayment of Transportation charges by Essar Steel Limited which Special Civil Application came to be allowed by the learned Single Judge by quashing and setting aside their Demand Notice dated 1.5.2001 and it was held that the Petitioner – Essar Steel Limited is not liable to pay the Transportation charges for 0.35 MMSMDC supply of gas along the exHBJ pipeline for the supply from landfall point. It was further held that GAIL is required to follow the Pricing Orders dated 31.12.1991, 18.9.1997 and 30.9.1997.

3. The Petitioner – Essar Steel Limited (later on name changed to Arcelor Mittal Nippon Steel India Limited) was also held entitled to get all the consequential benefits in pursuance of the implementation of Pricing Orders of Government of India including 15% rebate on fall back basis as per the agreement. It was further observed by the learned Single Judge that the metering charges should be proportionate to the expenses incurred by Respondent No.3 – GAIL India Limited and it should not be disproportionate.

4. Aggrieved by the said order of the learned Single Judge, GAIL India Limited filed the present Letters Patent Appeal No.1618 of 2005 which was pending consideration by the Division Bench for last 20 years.

5. During the pendency of this litigation, it appears that the proceedings under new and overriding law – the Insolvency and Bankruptcy Code, 2016 (IBC) were taken against the Petitioner Company – Essar Steel Limited and the NCLAT finally passed the following directions vide its final judgment dated 4.7.2019 which are quoted below for ready reference:

“6. By its final judgment dated 04.07.2019, the NCLAT held that:

(i) In a resolution plan there can be no difference between a financial creditor and an operational creditor in the matter of payment of dues, and that therefore, financial creditors and operational creditors deserve equal treatment under a resolution plan. Accordingly, the NCLAT has redistributed the proceeds payable under the approved resolution plan as per the method of calculation adopted by it so that all financial creditors and operational creditors be paid 60.7% of their admitted claims;

(ii) Securities and security interest is irrelevant at the stage of resolution for the purposes of allocation of payments, thereby directing that each financial creditor (whether secured or unsecured) with a claim equal to or more than INR 10 lakhs be paid 60.7% of its admitted claim irrespective of their security interest;

(iii) Operational creditors by definition have separate classes within themselves and can be classified into subclasses for the purpose of distribution (while rejecting any classification amongst the financial creditors) on the basis of the admitted amounts thereby directing that operational creditors with a claim of equal to or more than INR 1 crore be paid 60.268% of their admitted claims.

(iv) Certain additional claims of operational creditors (some of which were highly belated and/or without sufficient proof) were admitted, such that the admitted operational debt of approximately INR 5,058 crores at the time of the approval of the approved resolution plan became an operational debt of approximately INR 19,719.20 crores.

(v) The profits generated by the corporate debtor during the Corporate Insolvency Resolutio

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