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2024 Supreme(Online)(NCLT) 5229
NATIONAL COMPANY LAW TRIBUNAL
Anu Jagmohan Singh, Kishore Vemulapalli, JJ
Amit Gupta – Appellant
Versus
Shah Brothers Ispat Private Limited – Respondent
C.P. (IB) No. 698/MB-IV/2021
For the Appellants/Petitioners: Mr. Nausher Kohli
The court affirmed that a Resolution Plan approved by the Committee of Creditors, with the necessary voting majority, is binding and must comply with statutory requirements under the Insolvency and Bankruptcy Code.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 30(2), 30(6), 29A, 31(1) - Approval of Resolution Plan - The resolution plan submitted by SKM Steels Limited was approved by the Committee of Creditors, comprising 100% voting share, and complied with all regulatory requirements, including payment of debts and management post-approval - Plan received approval outlined in the compliance certificate provided by the Resolution Professional. (Paras 1, 8, 9, 16)
(B) Committee of Creditors - The Committee must approve Resolution Plans by the requisite percent of voting share, with the Adjudicating Authority required to ensure compliance with the law and cannot modify the plan approved by CoC. (Paras 13, 14)
Facts of the case:
The application was filed by the Resolution Professional for approval of the Resolution Plan for Shah Brothers Ispat Private Limited following the Corporate Insolvency Resolution Process initiated due to the petition by the financial creditor. The plan was approved unanimously with a detailed breakdown of debt repayments and timelines. (Paras 2.1, 2.6, 10)
Findings of Court:
The Resolution Plan conforms to all statutory requirements of the IBC and was approved on the correct legal basis, ensuring that it provides adequate solutions for all creditors involved, binding all stakeholders in the resolution process. (Paras 11, 15)
Issues: The main issues included whether the Resolution Plan complied with the necessary legal criteria for approval under the IBC and if it addressed the interests of creditors properly. (Paras 9, 10)
Ratio Decidendi: The court emphasized that the statutory requirements under Sections 30(2), 30(6) are binding, and once approved by CoC, the Resolution Plan cannot be modified by the Adjudicating Authority unless it contravenes the provisions of law. (Paras 13, 14)
Result: The Application is Allowed and the Resolution Plan is approved, becoming effective immediately. (Paras 16, 16.1)
| Table of Content |
|---|
| 1. application for resolution plan approval. (Para 1) |
| 2. initiation of cirp & appointment of irp. (Para 2) |
| 3. eligibility of resolution applicant. (Para 3) |
| 4. valuation of fair and liquidation values established. (Para 4) |
| 5. key features of the approved resolution plan. (Para 5 , 6) |
| 6. implementation and supervisory responsibilities of rp. (Para 7) |
| 7. court directives on approval criteria and judicial review limitations. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 8. final order for approval and its implications. (Para 16 , 17) |
ORDER
1. The instant application has been filed on 15.02.2024 by Mr. Amit Gupta the Applicant Resolution Professional (“RP”) of Shah Brothers Ispat Private Limited (“Corporate Debtor”), under Section 30 (6) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC, 2016”) on behalf of the Committee of Creditors seeking approval of the Resolution Plan submitted by SKM Steels Limited (the “SRA / Successful Resolution Applicant”) and approved by 100% (one-hundred percent) of the voting share of the members of the Committee of Creditors (hereinafter referred to as “CoC”) of the Corporate Debtor herein.
2. The brief facts of the Application are as follows:
2.1 Pursuant to the captioned petition bearing C.P. (IB) No. 698/MB- IV/2021 filed by Labh Capital Services Private Limited (“Financial Creditor”) u/s. 7 of IBC, 2016, this Tribunal was pleased to initiate Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor herein vide Order dated 02.06.2022. In furtherance thereof, Mr. Padmanabhan Nair (IBBI Reg. No.: IBBI/IPA-001/IP-P02289/2020- 21/13495) was appointed as Interim Resolution Professional (“IRP”). The said IRP caused a public announcement to be made on 04.06.2022, informing the commencement of CIRP of the Corporate Debtor, and thereby invited claims from creditors.
2.2 The First Meeting of the CoC was conducted by the IRP on 23.06.2022, and subsequently a resolution was passed with 60.95% of the voting share in the Second Meeting of CoC dated 08.08.2022, to appoint one Mr. Amit Gupta viz. the Applicant herein (IBBI Registration No.: IBBI/IPA-001/IP-P00016/2016-2017/10040) as the Resolution Professional. The said replacement was confirmed by this Bench vide Order dated 24.08.2022.
2.3 The Applicant RP submits that approval of the CoC was duly obtained for the publication of FORM-G i.e. Notice inviting Expression of Interest (“EOI”) for submission of Resolution Plan for the Corporate Debtor and along-with finalisation of the eligibility criterions for the Proposed Resolution Applicants (“PRA”) during the Third Meeting of CoC dated 12.09.2022. Accordingly, FORM-G was published in two newspapers viz. ‘Business Standard’ (English) and ‘Navshakti’ (Marathi) dated 16.09.2022, and the same was duly brought forth in the Fourth Meeting of CoC dated 28.09.2022.
2.4 The Applicant RP submits that discussions ensued in the intervening period from Fifth Meeting of the CoC dated 02.11.2022, to Tenth Meeting of the CoC dated 23.03.2023. In the said period, two extensions in CIRP period were duly granted by this bench, as tabulated herein-below:
| S. No. | I.A. No. | Filed by | Relief Sought | Status |
| 01 | I.A. 3481/2022 | RP | Extension of 90 days beyond 180 days | Allowed vide Order dt. 22.11.2022 |
| 02 | I.A. 888/2023 | RP | Extension of 60 days beyond 270 days | Allowed vide Order dt. 14.03.2023 |
2.5 The Applicant RP submits that the Resolution Plan received in consonance with the Third EOI was tabled for consideration, but was rejected thereto in Twelfth Meeting of the CoC with a vote share of 97.35%. Additionally, the resolution for Liquidation which was tabled in the Twelfth Meeting of the CoC was rejected as well with a vote share of 83.22%. At the backdrop however, on account of the statutory period of 330 days as envisaged by the Code having expired, the Applicant RP sought to approach this Tribunal to initiate Liquidation in respect of the Corporate Debtor herein u/s. 33(1) of the Code. The said Application bearin
