9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 203 - AT - Insolvency and BankruptcyDisqualification of the Successful Resolution Applicant u/s 29A of the Insolvency and Bankruptcy Code, 2016 - Restructuring Settlement Plan claimed to be submitted under Section 12A - NPA classification - What is the purpose and object of expression in the statute that at least a period of one year has elapsed from the date of such classification, as appearing in Section 29A, sub-clause (c)? - HELD THAT - Section 12A proposal cannot be forced upon the lenders. The Promoters, who led to insolvency process of Corporate Debtor cannot claim to submit a Resolution Plan indirectly by way of proposal under Section 12A and ask the lenders to evaluate their Resolution Plan. Something which is not permissible directly by virtue of prohibition under Section 29A for submitting Resolution Plan by the Promoters, cannot be permitted to be done indirectly. Further, the commercial wisdom of the CoC, which is reflected in its Meeting dated 05.03.2021 and 21.04.2021 is not liable to be judicially reviewed. There is no error in rejection of the proposal submitted by the Appellant claimed to be under Section 12A by the CoC, after due consideration and the Adjudicating Authority has rightly refused to interfere with the commercial decision of the CoC in I.A. No.537 of 2021 filed by the Appellants praying for setting aside the decision of the CoC rejecting their proposal. Ineligibility of the NTPC to submit the Resolution Plan - HELD THAT - The Resolution Applicant as per the invitation of submission of Resolution Plan was by 31.12.2019 and process documents was issued on 01.10.2019, the Resolution Applicant, that is, NTPC as well as another Resolution Applicant Adani Power Limited have submitted their Resolution Plans by 30.12.2019. The ineligibility of the Resolution Applicant is sought to be questioned on the strength of Section 29A(c) and (j), Explanation (1). NPA classification - HELD THAT - It is clear that classification of NPA of RGPPL and KLL by SBI and IDBI were on 21.05.2018. The first classification of NPA by the Canara Bank on 21.05.2018 was with effect from 01.04.2009. The submission, which has been pressed by Shri Ramaji Srinivasan is that classification date being 21.05.2018 and from that classification date the period of one year has not elapsed on 27.03.2019, when the CIRP of the Corporate Debtor commenced, hence, there is no disqualification under Section 29A(c). If we take the date 21.05.2018 as the date declared for classification of NPA, one year period has not elapsed on 27.03.2019, but the submission of Appellant is that the classification although declared on 21.05.2018, it was with effect from 01.04.2009 and more than one year period had elapsed, thus, the submission of Resolution Applicant (NTPC) that it was eligible under Section 29A(c) is to be rejected. The statutory provision under Section 29A, sub-clause (c) is plain and clear that grace period of one year has been given and if after expiry of grace period, Resolution Applicant is unable to pay the dues and the NPA continues, the Resolution Applicant becomes ineligible. The question to be answered in the present case is as to what shall be the date of classification of NPA by Canara Bank, whether it is 21.05.2018 or 01.04.2009. From the materials on record, it is clear that classification was declared on 21.05.2018, although with effect from 01.04.2009. So, the date on which classification is declared is relevant or the date with effect from such classification is made to be effective is relevant for the purpose of 29A(c), is the straight question to be answered - the date of NPA classification by the Canara bank shall be treated as 21.05.2018 and it cannot be taken as on 01.04.2009, which is the backdate, as has been given by the Canara Bank, with effect from which date NPA is declared. If the interpretation as put by learned Counsel for the Appellant is accepted, the purpose of statutory prescription under Section 29A(c) can be defeated by the Financial Institutions by declaring NPA on particular date and making it effective from back date, so that no Resolution Applicant can take the benefit of statutory provision as provided under Section 29A(c). The date of classification is to be taken as 21.05.2018 on which date the Resolution Applicant was classified as NPA and the period of one year had not elapsed till 27.03.2019, when CIRP commenced. Since on the date of commencement of CIRP, period of one year has not elapsed, the disqualification under Section 29A(c) shall not attach to the NTPC, who was Resolution Applicant. The submission of learned Senior Counsel for the Resolution Applicant is accepted that Resolution Applicant was eligible on 30.12.2019 when it submitted the Resolution Plan. When Resolution Applicant was eligible on 30.12.2019, it continued to be eligible in entire process of the CIRP. The CoC, which is statutorily authorised to conduct the CIRP with the object of reviving the Corporate Debtor is fully competent to ask the Resolution Applicant to revise its Plan, improve its Plan and submit the revised Resolution Plan. It is found that the Resolution Applicant was eligible on 30.11.2019 when it submitted the first Resolution Plan, there are no necessity to enter into other submission raised by learned Counsel for the parties including the submission regarding applicability of the proviso to Section 29A(c). The Resolution Applicant being eligible, was entitled to submit Resolution Plan and was also entitled to revise its Plan from time to time as per the Scheme of the Code. The Plan having approved by 100% vote of CoC, there are no error in the decision of the Adjudicating Authority rejecting the I.A. No.537 of 2021 filed by the Appellant. The Adjudicating Authority has rightly rejected the application seeking disqualification of the Resolution Applicant as well as praying for setting aside the decision of CoC rejecting the proposal of Appellant under Section 12A - appeal dismissed.
Issues Involved:
1. Disqualification of the Successful Resolution Applicant under Section 29A of the Insolvency and Bankruptcy Code, 2016. 2. Rejection of the Appellant's proposal under Section 12A of the Insolvency and Bankruptcy Code, 2016 by the Committee of Creditors (CoC). Issue-wise Detailed Analysis: 1. Disqualification of the Successful Resolution Applicant under Section 29A of the Insolvency and Bankruptcy Code, 2016: The Appellant argued that NTPC was ineligible to submit the Resolution Plan on 30.12.2019 because its related entities, RGPPL and KLL, were classified as Non-Performing Assets (NPA). According to Section 29A(c) and (j) of the Code, NTPC should have been disqualified. The eligibility of the Resolution Applicant must be assessed on the date of submission of the Resolution Plan. NTPC, being disqualified on 30.12.2019, invalidates all subsequent processes. The Appellant cited that Canara Bank classified RGPPL and KLL as NPAs on 21.05.2018, with effect from 01.04.2009. Even if NTPC claims that RGPPL and KLL settled their debts and received no due certificates, the payments were not made by NTPC, hence the proviso to Section 29A(c) does not apply. The Respondents countered that NTPC was not disqualified under Section 29A(c) as the classification of NPAs by Canara Bank occurred on 21.05.2018, and the period of one year had not elapsed by the commencement of CIRP on 27.03.2019. The NTPC settled all dues by March 2020 and January 2021, making it eligible under Section 29A. The eligibility should be tested on the date when the Plan is placed before the CoC for consideration. The CoC unanimously approved NTPC's revised Plan, indicating compliance with Section 29A. The Tribunal held that the date of NPA classification should be considered as 21.05.2018, not the backdate of 01.04.2009. This interpretation ensures that the grace period of one year is meaningful. Since the period of one year had not elapsed by the commencement of CIRP on 27.03.2019, NTPC was not disqualified. The Tribunal also noted that the CoC is authorized to ask for revised plans and that the commercial wisdom of the CoC is paramount. 2. Rejection of the Appellant's proposal under Section 12A of the Insolvency and Bankruptcy Code, 2016 by the Committee of Creditors (CoC): The Appellant submitted a Restructuring/Settlement offer under Section 12A, which allows withdrawal of the application with the approval of 90% voting shares of the CoC. The Appellant claimed that the CoC arbitrarily rejected their proposal without proper consideration. The CoC reviewed the Appellant's proposal in meetings on 05.03.2021 and 21.04.2021 and found it commercially unviable. The CoC noted that the upfront payment proposed by the Appellant was significantly lower than NTPC's offer. The CoC's decision, based on commercial wisdom, is not subject to judicial review. The Tribunal affirmed that Section 12A proposals cannot be forced upon lenders and that the commercial wisdom of the CoC is paramount. The Tribunal cited the Supreme Court's judgment in K. Sashidhar vs. Indian Overseas Bank, emphasizing that the commercial decisions of the CoC are non-justiciable. Conclusion: The Tribunal dismissed the appeal, upholding the decisions of the Adjudicating Authority. NTPC was found eligible under Section 29A, and the CoC's rejection of the Appellant's proposal under Section 12A was justified based on commercial considerations. The Tribunal emphasized the importance of the CoC's commercial wisdom and the statutory framework of the Insolvency and Bankruptcy Code.
|
