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judgement
Subject : Insolvency and Bankruptcy - Corporate Insolvency
Four appeals were filed by the Suspended Director of the Corporate Debtor - Asian Hotels (West) Ltd. and shareholders of Corporate Debtor challenging the order passed by the Adjudicating Authority (National Company Law Tribunal) New Delhi Bench IV admitting Section 7 application filed by the Financial Creditor as well as orders passed in two Interlocutory Applications. These appeals arising out of the same proceedings were heard together and are being decided by this common judgment..
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The main question to be considered and answered in these Appeals is as to whether the decision of CoC, in which UVARCL has 98.84% voting share, to reject the proposal under Section 12A dated 11.08.2023 as revised on 04.10.2023 is arbitrary and unsustainable?.
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The Hon’ble Supreme Court had occasion to consider Section 12A in “Swiss Ribbons Pvt Ltd. & Anr. vs. Union of India, (2019) 4 SCC 17” in which various provisions of I&B Code including 12A were under challenge. In Para 83 of the judgment following has been laid down:.
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“83. The main thrust against the provision of Section 12-A is the fact that ninety per cent of the Committee of Creditors has to allow withdrawal. This high threshold has been explained in the ILC Report as all financial creditors have to put their heads together to allow such withdrawal as, ordinarily, an omnibus resolution plan is prepared for the revival of the Corporate Debtor and the withdrawal of the application would mean that the revival plan would not be implemented.”
Section 7 application - Financial Creditor - Suspended Directors - Corporate Insolvency Resolution Process (CIRP) - Committee of Creditors (CoC) - Section 12A - Withdrawal of CIRP - Resolution Plan - Promoters - Shareholders - Bank Guarantee - Arbitrary and unsustainable decision
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