Once a resolution plan is approved, claims not part of the plan stand extinguished, and bid security forfeiture as per the bid document does not require proof of loss.

JUDGMENT :

1. In this writ petition, the petitioner has prayed to quash the part of letter as contained in Ref. CCL/HQ/C-4/FSA/2021-22/1628 dated 23.8.2021, whereby the bid security deposited by the then Adhunik Alloys and Power Limited was forfeited after cancelling the linkage. A further prayer has been made to refund the deposit of Rs. 59,50,000/-.

2. Learned counsel appearing on behalf of the petitioner submitted that on the facts of this case, the respondents could not have forfeited the bid security. He further submitted that the bid security was deposited with the respondent-M/s Central Coalfields Limited (hereinafter to be referred as ‘CCL’) through the auction provider namely, MSTC by the Adhunik Alloys and Power Limited (hereinafter to be referred as ‘AAPL’) through the Resolution Professional as the said company AAPL was under the Insolvency Resolution Process. When admittedly the respondent CCL did not raise any claim with the Resolution Professional in regard to any outstanding demand which they could not have made in relation with M/s AAPL, now they could not forfeit the security nor could adjust any dues. He further submitted that since none of the dues of AAPL payable to CCL was not a part of the resolution plan on the date of approval of such plan, no claim would survive, thus the forfeiture of security is absolutely bad. Learned counsel argued that the respondents have in fact not suffered any loss in the entire transaction as admittedly the letter of intent was not also issued in favour of M/s AAPL, thus in absence of any loss, the bid security could not have been forfeited. As per the petitioner, the change of name/control was not voluntary or unilateral action of M/s AAPL rather the same happened after conclusion of the process of resolution under IBC, thus the respondent could not have invoked the clause under the Fuel Supply Agreement and the scheme framed for that purpose to forfeit the security deposit.

3. Learned counsel appearing on behalf of the respondent-CCL submitted that as per the auction notice and the scheme, in the event of change of name/control of the successful bidder, the rights and relation to the allocated quantity of coal was permissible with the prior approval of the subsidiary coal company i.e. Central Coalfields Limited. Later the same was modified and it was made mandatory to give intimation to the coal company about the change of control/name. He submitted that admittedly in the instant case, no intimation was given to M/s CCL about the change of name/control of the Company. He further argues that due to misrepresentation made by M/s Adhunik Alloys and Power Limited (AAPL) huge amount of Rs.13.46 fell due and became recoverable from the said company under the Coal Supply Agreement but the said company M/s AAPL did not turn up for payment of such dues, thus supply of coal was discontinued and the existing Bank Guarantee of M/s AAPL towards security deposit stood revoked. The demand which was made by M/s CCL, was challenged by the said Company in writ petition being W.P. (L) No. 4178 of 2016 which was ultimately withdrawn on 23.12.2021. The pendency of the proceeding under the Insolvency and Bankruptcy Code, 2016 was not initially known to the respondent. When the respondent came to know about the matter, they approached the Resolution Professional, who expressed his inability to entertain such claim. In fact, only on 24.10.2018, the respondent came to know about the said insolvency proceeding. On 27.9.2019, when the respondent enquired about the status of the proceeding, the petitioner, herein, informed that they had taken over the Company and the name and control of the Company has changed as M/s Amalgam Steel and Private Limited with effect from 16.8.2019. He also submitted that as per Clause 5.2 of the Scheme, the change of name/control of the successful bidder and/or any transfer of the specified End Use Plant along with a right in relation to allocated quantity was permissible o