9911796707
TMI Blog2018 (3) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... the eligibility of the resolution applicants as per section 29A of the Code is with out considering the objections raised by the applicants in the case in hand. Mere pleading in the reply affidavit that RP has considered all objections raised by the applicants seems to have devoid of any merit. More over the pleading in it indicate that the Ld.RP had no knowledge about the connected persons conviction detailed above in a foreign Court. Whether the RP is duty bound to inform the decisions in respect of the objections regarding Eligibility of the resolution applicants to the objectors? - Held that:- RP has to record his reasons for taking any decisions he has to take in the process of finding out a resolution applicant, that he has to record all information and evidence he has collected for enabling to take a decision so as to see that a reasonable prudent person to take a view on the appropriateness of his decisions. What is prohibited is only in making any private communication with any of the stake holders. Even if he wishes to make such communication in the interest of finding out a reputable resolution applicant he can with prior permission of the Adjudicating Authority. Her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of receipt of the copy of the decision as directed above; (iii) The RP is directed to place all the objections of the applicants with supporting documents before the CoC with a copy of this order for its independent consideration as per proviso to section 30 of the Code. - CA (IB) No. 202/KB/2018, CA (IB) No. 203/KB/2018 In CP 9IB) No. 361/KB/2017 - - - Dated:- 20-3-2018 - MR. JINAN K.R., J. For The Applicant : S.N. Mukherjee, Rantnanko Banerjee, Sr. Advs. Sandip Dasgupta, Ms. Tram Hassan, Debayan Sen, Shaunak Mitra, S. Batra and Ms. Honey Satpal, Advs. For The Respondent : Anindya K. Mitra, Abhijit Mitra, Siddhartha Mitra, Jayanta Mitra, Sr. Advs. Siddhartha Datta, Soummo Biswas, Suhani Dwivedi, Ms. Isha Sinha, Ms. Surabhi Binani, Sachchida Nand Pandey, Ms. Manju Bhuteria, Vivek Juhunjhunwala, Mehul Shah, Ms. Shreya Singh, Sanjay Ginodia, Rajendra Bawt, Ms. Anshika Misra, Shwdank Ginodia, Ms. Aarti Goyal Agarwal, Souvik Mazumdar and Arif Ali, Advs. ORDER CA (IB) NO.202/KB/2018 and CA (IB) NO.203/KB/2018 1. By this common order I propose to dispose of two applications filed under Sub-Section 5 of Section 60 of Insolvency and Bankruptcy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the alternative, if he has to taken a decision that the Tata Steel Limited, the Resolution Applicant is eligible to hold that Tata Steel Limited is ineligible because its subsidiary Company is a convict comes under the purview of clause (d) read with clause (i) and (j) of Section 29 of I B Code. Facts in CA(IB) No.203/KB/2018 6. This application has been filed by very same Resolution Applicant namely Renaissance Steel India Private Limited challenging the decision of the Resolution Professional in not considering the objections raised by the applicant as against one another Resolution Applicant namely Vedanta Limited. The applicant contends that the Resolution Applicant namely Vedanta Limited, not eligible to submit the Resolution Plan since it is in ineligible under clause (d) read with clause (i) and (j) of Section 29 A of the Insolvency and Bankruptcy Code,2016, and disregards the objections submitted to the Resolution Professional the Resolution Professional qualified the Vedanta Limited challenging the said decision the applicant filed this application. 7. The applicant alleged that Vedanta Limited is a subsidiary of Vedanta Resources Pic which holds 50.13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Regulation 12(b) of the Environmental Protection and Pollution Control [Water Pollution (Effluent and waste water)] Regulation, Statutory Instrument No. 172 of 1993 runs as follows:- Penalties: Any person who contravenes any of the provisions of these Regulations or a condition of the license after an enforcement notice has been issued under regulation 11- (a) Shall have the license revoked; and (b) Shall be guilty of an offence and shall be liable upon conviction to a fine not exceeding two thousand penalty units or imprisonment for a period not exceeding three years or to both. 10. It is contended by the applicant that as per provisions of the above referred Acts in force in Zambia, the power of court is to inflict imprisonment for not exceeding three years and that KCM has been convicted under the above referred provisions of the Environmental Protection and Pollution control Act wherein a person may be punishable for imprisonment for a term not exceeding three years. KMC is, therefore, is a convict as per the law of Zambia and, therefore, it being a subsidiary Company of the Vedanta Resources of the holding Company Vedanta Limited, it is disqualified to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Resolution Professional so as to verify ineligibility of the Resolution Application has been complied by him. According to him, in compliance of section 29A, he obtained an affidavit from the Resolution Applicants certifying their eligibility and obtained necessary information in that regards and considered all the Resolution applications which were submitted along with affidavit and supporting documents with respect to section 29A of the Code and the Resolution Professional had any knowledge about the resolution applications and their connected persons to conduct the test for ineligibility under section 29A of the Code. He further contends that after receiving the information from the Applicant the Resolution Professional had enquired about the facts from Tata Steels Ltd, and obtained the information from the Legal Counsel and also obtained information from Tata Steel UK Ltd. under HSW Act and its categorisation of offence thereunder and arrived at the decision on the eligibility of Tata Steels Ltd. under section 29A of the Code and the Resolution Plan of Tata Steel Ltd. was placed before the CoC on February 27,2018 for its consideration and approval. 12. Similar obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. According to the respondent, it is learnt from the newspaper that CoC shortlisted Vedanta Ltd. as a successful bidder and learning that the present applicant is not a successful bidder wants to stall the insolvency resolution process of Corporate Debtor in the case in hand, filed the application without any bona fide and liable to be dismissed. 14. Similar objection also filed by Vedanta Limited in C A. No.203 for avoiding the repetition of the objections and for convenience I am not reiterating all the objections raised by Vedanta Limited. The main objection is that the present application is not at all maintainable and since various Resolution Plans submitted before the Resolution Professional are under the consideration of the CoC and CoC has not approved any Resolution Plan an application of this nature is premature and is not maintainable. It also challenged the conduct of the applicant trying to object the Resolution Process after submitting it Resolution Plan raising frivolous contentions against Vedanta Limited and that Vedanta Limited has complied with all the procedures specified by the Resolution Professional and has addressed all the concerns raised by the Resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anta Ltd as per section 29A of I B Code. No doubt approval or rejection of a resolution plan by CoC can only be challenged by any one aggrieved parties at a time when it comes before the adjudicating authority as per section 31 of I B Code. But here in this applications the challenge is not against the resolution plan. Challenge is regarding non consideration of objections raised in respect of eligibility of two resolution applicants came up for consideration before the resolution professional. Whether resolution professional has considered the objections or not raised by the applicant who is also a resolution applicant no doubt a question arises for the consideration in the applications in hand. As per section 60(5)(c) of I B Code, this adjudicating authority has to decide inter alia, any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings under the Code. The above said question arises for determination is on account of non consideration of objections raised by the applicants as against the resolution professional and not against the CoC. So what is to be considered is not the approval or rejection of any one resolution pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deal with the first question I referred to as above. Whether the Resolution Professional has to take a decision regarding the Resolution applicant s eligibility by considering the objections brought to his notice before submission of the Resolution Plan to the CoC?. 21. Ld. Sr Counsel for the RP submits that RP has considered all the objections raised on the side of the applicants, that RP as part of diligence under section 29A, prospective resolution applicants were requested to submit a list of supporting information, to enable him and his advisors to conduct an independent assessment and obtained affidavit and supporting documents with respect of section 29A of the Code and that RP had any knowledge about the resolution applicants and their connected persons to conduct the test for eligibility under section 29A of the code. He further would submit that RP took a decision regarding eligibility of all the four resolution plans received by him and submitted to the CoC for its consideration. Thus it is clear from the averments in the reply affidavit filed by the RP and from the submission of the Ld. Sr. Counsel for the RP that he has taken a decision already regarding the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equity 79.4% in KCM. That being so, the contention on the side of the second respondent Vedanta Limited that it is no way connected to KCM is found devoid of any merits. It appears to me that KCM is a connected person come under the purview of Clause (i) of Section 29A of the Code. 26 The applicant produced proof to prove that KCM was convicted in an offence for violating provisions of Section 91(1), Section 24 and Section 86 (1 and 3) and under Section 12(b) of the Environmental Protection and Pollution Control (Water Pollution (Effluent and Wastewater)] Regulation Statutory Instrument No. 172 of 1993 in an order passed on 25.11.2010 by Subordinate Court of First Class for the Chingola District Holden at Chingola, Zambia (Criminal Jurisdiction). It appears that KCM have pleaded guilty to all four charges before the Subordinate Court of First Class for the Chingola, which imposed a monetary fine on KCM. The Court accordingly found KCM guilty on all 4 counts and imposed the following fines respectively: (i) In Count 1, the Court ordered KCM to pay a penalty of ZMK10,800,000. (ii) In Count 2. the Court ordered KCM to pay a penalty of ZMK 10,800,000. (iii) In Count 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RP regarding the eligibility of the resolution applicants as per section 29A of the Code is with out considering the objections raised by the applicants in the case in hand. Mere pleading in the reply affidavit that RP has considered all objections raised by the applicants seems to have devoid of any merit. More over the pleading in it indicate that the Ld.RP had no knowledge about the connected persons conviction detailed above in a foreign Court. 33. The next point for consideration is whether the RP is duty bound to inform the decisions in respect of the objections regarding eligibility of the resolution applicants to the objectors?. Ld. Sr.Counsel for the RP submits that RP is not bound to inform the decision regarding eligibility of a resolution applicant who is not a related party to the applicants and that if he does so, it would violate Confidentiality of the information relating to the insolvency resolution process. He further would submit that RP is obliged to not to divulge any information to the applicants and hence, the applicant has no locus standi to demand such information from the RP. He also attempted to stress his argument on the strength of clause 21 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure it is good to read Clause 9,16 and Clause 17 of IBBI (Insolvency Professionals) Regulations. It run as follows:- 9. An Insolvency professional shall not influence the decision or the work of the committee of creditors or debtor, or other stakeholders under the Code, so as to make any undue or unlawful gains for himself or his related parties, or cause any undue preference for any other persons for undue or unlawful gains and shall not adopt any illegal or improper means to achieve any mala fide objectives . 16. An Insolvency professional must ensure that he maintains written contemporaneous records for any decision taken, the reasons for taking the decision, and the information and evidence in support of such decision. This shall be maintained so as to sufficiently enable a reasonable person to take a view on the appropriateness of his decisions and actions . 17. An insolvency professional must not make any private communication with any of the stakeholders unless required by the Code, rules, regulations and guidelines thereunder, or orders of the Adjudicating Authority . 35. A reading of the above said clause made it clear that the RP has to record his rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 29A of the code By way of amendment a proviso was provided to sub section 4 of section 30 of the Code. It read as follows:- Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under section 29A and may. where no other resolution plan is available with it, require the resolution professional to invite a fresh resolution plan. 37. The above said proviso is therefore empowers the CoC to consider independently in respect of question of eligibility requirement of all applicants under section 29A and if it is satisfied that resolution applicant is ineligible under section 29A it can require the RP to invite fresh resolution plan or can consider other available resolution plan with it. At this juncture, it is good to read the object of the introduction of ordinance proposing amendment by adding Section 29A to section 29 of the Code. It runs as follows:- The Ordinance aims at putting in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, these applications are liable to be allowed in part with following directions:- (i) A copy of the decision taken by the RP in respect of eligibility of resolution applicant Tata Steal Ltd and Vedanta Ltd, as per section 29A, with supporting reasons for taking the decisions is to be given to the applicant with in three days of the date of this order with proper acknowledgement; (ii) The applicants are allowed to submit its reply or its further objections if any to the decisions taken by the RP to him in person or through by e-mail with in three days of the date of receipt of the copy of the decision as directed above; (iii) The RP is directed to place all the objections of the applicants with supporting documents before the CoC with a copy of this order for its independent consideration as per proviso to section 30 of the Code. 40. Upon the above said directions both the CAs are disposed off. No order as to cost. Registry is hereby directed to communicate the order to the Applicant, Respondent, Financial Creditor and the Corporate Debtor. Registry is also directed to send a copy of the order forthwith to the RP by way of E-mail and speed post. Let the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
