2024 (12) TMI 1097 - SCH - IBC

Challenge to NCLAT judgment on default by a suspended Director - HELD THAT - It is clear that, all issues which are required to be adjudicated, including the facts, have to be raised and decided before the adjudicating authority, that is, the National Company Law Tribunal. Appeal dismissed.

Summary

Issues:
1. Challenge to NCLAT judgment on default by a suspended Director.
2. Approval of resolution plan by CoC and subsequent developments.
3. Payment issues and utilization of Fixed Deposits.
4. Concerns regarding operational creditors and pending resolution plan.
5. Legal provisions and regulations referred to during the hearing.
6. Dismissal of the appeal with liberty to raise contentions before NCLT.
7. Appropriation of FD proceeds by Canara Bank and subsequent directions.

Analysis:

1. The appeal before the Supreme Court challenged the NCLAT judgment regarding the default by a suspended Director of the corporate debtor. The Supreme Court found no grounds to interfere with the NCLAT judgment.

2. The CoC approved a resolution plan submitted by Mr. S.M. Kamal Pasha and Mr. Syed Fahad, which included a Letter of Intent and a bank guarantee. Subsequently, certain payments were made, and further proposals were accepted subject to conditions. The Resolution Professional justified payments made to safeguard assets and prevent litigation with NHAI.

3. Utilization of Fixed Deposits (FDs) held by Canara Bank was authorized by the Supreme Court to make payments to M/s. EKK Infrastructure Ltd. for contractual obligations. The CoC approved a payment of &8377;31 crores from the FDs, which was disbursed accordingly.

4. Concerns were raised about pending payments towards overlaying and operational creditors. The resolution plan submitted by Mr. Kamal Pasha and Mr. Syed Fahad, supported by a bank guarantee, remained pending.

5. During the hearing, various legal provisions and regulations under the Insolvency and Bankruptcy Code were referenced. The Supreme Court emphasized the need for all issues to be adjudicated before the NCLT in accordance with the law.

6. The Supreme Court dismissed the appeal but granted liberty to parties to raise contentions before the NCLT. The observations made in the order were clarified to be for the purpose of disposal of the appeal.

7. Canara Bank's appropriation of FD proceeds was deemed improper, and directions were issued for the CoC members to refund the amounts received. The holding company made additional payments towards the One Time Settlement (OTS).

In conclusion, the Supreme Court's judgment addressed various issues related to the insolvency proceedings, resolution plan approvals, payment concerns, legal provisions, and the actions of the CoC and Canara Bank. The dismissal of the appeal with liberty to raise contentions before the NCLT reflects the court's emphasis on proper adjudication of all matters in accordance with the law.