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2021 (5) TMI 946 - Tri - Insolvency and BankruptcyDirections to Respondent No. 3 to place the settlement proposals of this Applicant before Respondent No. 2 through Respondent No. 1 - section 60(5), 227 and 239(2) of the Insolvency and Bankruptcy code, 2016 - HELD THAT - From a bare perusal of Section 12A and Regulation 30A of the CIRP Regulations, it is amply clear that for any withdrawal of an admitted application it is the Original Applicant, that must present such withdrawal application for approval of the CoC. Once the CoC (Respondent No. 2) has approved the Resolution Plan, the Administrator of the DHFL, has to obtain no-objection from RBI in accordance with Rule 5(d) of the FSP Insolvency Rules. Apart from the same, neither the Code nor the FSP Insolvency Rules, casts any other obligation on RBI vis- -vis the CIRP process, which is left to be run by the resolution professional along with the CoC as per its commercial wisdom. The RBI cannot intervene in the CIRP process, and the reliefs as sought for by the Applicant qua RBI seeks RBI to intervene in the CIRP process, which is completely contrary and inconsistent with the spirit of the Code and will have the effect of derailing the CIR Process. Without prejudice to the aforesaid, it is pertinent to mention herein that the Applicant is the ex-promoter of DHFL against whom various proceedings, civil and/or criminal, have been filed, alleging cheating, fraud, siphoning of funds and such other serious offences. The Applicant is presently in judicial custody and most regulatory agencies like CBI, EOW, ED etc. are at present investigating against the Applicant. It is beyond any cavil that RBI has been unnecessarily impleaded as a party Respondent in the present Application and been dragged in such litigation. RBI cannot and ought not to intervene in the CIR Process and direct the Administrator to conduct himself in a manner which is contrary to the Code. Further, considering that the CIRP is at a very advanced stage, passing any ad-interim reliefs as sought for by the Applicant will completely derail the process and force DHFL into liquidation, which will be completely against the spirit of the Code. This being so, it is necessary in the interest of justice, equity and good conscience that the Application as against RBI be dismissed in limine and costs be imposed upon the Applicant for filing such frivolous and vexatious application against the RBI. Hon'ble Supreme Court in its decision in the matter of Swiss Ribbon Vs. Union of India 2019 (1) TMI 1508 - SUPREME COURT , has pleased to held that Corporate Debtor may come for settlement in post admission stage before the constitution of CoC and the Adjudicating Authority may exercise its power conferred to the NCLT under rule 11 of the NCLT Rules. After constitution of the CoC an application can be entertained under the procedure of section 12A of the IB Code. Hence the present application appears to be a pre-stage process of an application under section 12A. That can be considered by this AA, if it is filed by the main petitioner in the IB Petition (RBI/Administrator) with having requisite majority of more than 90% voting of the Members of the CoC. Hence there can be no prejudice to either parties if CoC gives due consideration as per norms and in its commercial wisdom to examine feasibility of such proposal of settlement for Approx. ₹ 91,000/- Crores (Rupees Ninety-one Thousand Crores) and above. The CoC may take appropriate decision by taking in to consideration the paramount interest of the Creditors, Fixed Depositors, and Stakeholders of the Corporate Debtor involved in the present matter. CoC ought to have considered such settlement proposal of the applicant as per norms and its commercial wisdom which we did not to have been followed by the CoC in the present matter. From the Submissions of the respondents, they treat this Settlement Proposal as a resolution plan but factually that is not case as discussed - We are conscious about our jurisdiction that this Adjudicating Authority cannot substitute its view of over the Commercial Wisdom that may be exercised by the CoC in respect of the present Applicant, however there appears to be some procedural irregularity by not considering a settlement proposal which is around 150% higher value of the Resolution Plan approved. Hence it needs due consideration and cannot be kept aside nor contention of the applicant in the present IA can be brush aside that an Ex-promoter cannot move a proposal of settlement. This Adjudicating Authority hereby directs the Administrator to place the 2nd Settlement Proposal of the applicant Mr. Kapil Wadhawan before COC for its consideration, decision, voting and inform the outcome of the same within 10 days from today and list the matter on 31.5.2021 - Petition disposed off.
Issues Involved:
1. Entitlement of the Applicant to submit a settlement proposal. 2. Duty of the Administrator to place the settlement proposal before the CoC. 3. Jurisdiction and powers of the Tribunal. 4. Compliance with Section 12A of the IBC and Regulation 30A of the CIRP Regulations. 5. Consideration of the settlement proposal on its merits. 6. Procedural irregularities in handling the settlement proposal. 7. Role of the RBI post-commencement of CIRP. 8. Request for an independent valuation of the Corporate Debtor's assets. Detailed Analysis: 1. Entitlement of the Applicant to Submit a Settlement Proposal: The Applicant, a promoter of the Corporate Debtor (DHFL), forwarded a settlement proposal to the Administrator and CoC. Despite repeated requests, the Applicant was not allowed to participate in CoC meetings, and the settlement proposals were not considered on merits. The Respondents argued that the Applicant, being responsible for the Corporate Debtor's financial distress, should not be allowed to submit a proposal. However, the Tribunal rejected this contention, stating that promoters are generally allowed to offer settlement proposals and one-time settlements (OTS) to banks and creditors. 2. Duty of the Administrator to Place the Settlement Proposal Before the CoC: The Tribunal emphasized that the Administrator is obliged to place any settlement proposal before the CoC for consideration. Previous judgments by the NCLAT (e.g., Sukhbeer Singh vs. Dinesh Chandra Agarwal) have established that the Resolution Professional must place the promoter's proposal before the CoC. The Tribunal noted that the Administrator's failure to do so in this case was procedurally irregular. 3. Jurisdiction and Powers of the Tribunal: The Tribunal cited Section 60(5) of the IBC, which grants it broad jurisdiction to entertain or dispose of any question of law or facts arising out of insolvency resolution or liquidation proceedings. Additionally, Rule 11 of the NCLT Rules, 2016, allows the Tribunal to make necessary orders to meet the ends of justice or prevent abuse of the Tribunal's process. 4. Compliance with Section 12A of the IBC and Regulation 30A of the CIRP Regulations: The Respondents argued that the settlement proposal did not comply with Section 12A and Regulation 30A, which require a withdrawal application to be filed by the original applicant (RBI) with the approval of 90% of the CoC. The Tribunal clarified that the present application is a precursor to a possible Section 12A application. If the CoC accepts the settlement proposal, a formal withdrawal application can be filed by the RBI. 5. Consideration of the Settlement Proposal on Its Merits: The Tribunal observed that the Applicant's 2nd Settlement Proposal offered approximately ?91,158 crores, significantly higher than the next highest bidder's offer of ?37,250 crores. The proposal included upfront repayment of outstanding debts to small investors, NCD holders, and public depositors. The Tribunal directed the Administrator to place the 2nd Settlement Proposal before the CoC for consideration, voting, and decision, emphasizing that it should be evaluated on its merits. 6. Procedural Irregularities in Handling the Settlement Proposal: The Tribunal noted procedural irregularities, including the Administrator's failure to properly communicate the settlement proposal to the CoC and FD/NCD holders. The Tribunal directed the Administrator to ensure that the proposal is considered and voted upon by the CoC, including all stakeholders. 7. Role of the RBI Post-Commencement of CIRP: The RBI argued that its role ended with the initiation of CIRP and the appointment of the Administrator. The Tribunal agreed, stating that the RBI's involvement is limited to providing a 'no objection' under Rule 5(d) of the FSP Insolvency Rules once the CoC approves a resolution plan. The Tribunal dismissed the Applicant's request for the RBI to place the settlement proposal before the CoC. 8. Request for an Independent Valuation of the Corporate Debtor's Assets: The Applicant requested an independent valuation of DHFL's assets. The Tribunal rejected this request, stating that the valuation process had already been completed as part of the CIRP. Conclusion: The Tribunal directed the Administrator to place the 2nd Settlement Proposal before the CoC for consideration, decision, and voting within 10 days. The Tribunal emphasized that the proposal should be evaluated on its merits, considering the interests of all stakeholders, including small investors and public depositors. The Tribunal also clarified that the settlement proposal is a precursor to a possible Section 12A application, which can be filed if the CoC approves the proposal. The matter was listed for further hearing on 31.5.2021.
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