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TMI Blog2019 (1) TMI 1741X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sudhir Sharma , Abhishek Swaroop , Vishal Gehrana , Anupam Prakash , Amit Bhandari , Akhil Anand , Shezad Kazi , Avishkar Singhvi , Deepak Joshi , Nachiket Dave , Ms. Ruby Singh Ahuja and Ms. Misha Chandana for Arcelormittal India P. Ltd., applicant in Inv. Petition No. 77 of 2018. ORDER HARIHAR PRAKASH CHATURVEDI (JUDICIAL MEMBER).- 1. The present application, i. e., I. A. No. 430 of 2018, is filed in the main Company Petition (IB) No. 39 of 2017 and Company Petition (IB) No. 40 of 2017 seeking for appropriate direction of this Bench to the resolution professional (RP) as well as committee of creditors (CoC) to give due consideration to the settlement plan dated October 25, 2018 (annexure J) as proposed by the present applicants and for a further direction to place the settlement plan for voting before all members of the CoC and for a further direction to the CoC of ESIL to facilitate the process of settlement and withdrawal of insolvency applications and CIRP against ESIL if the settlement plan of the applicants is approved by its requisite majority. The applicants have further prayed that, pending hearing and final disposal of the present application, respondent No. 1-reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f redemption as per section 91 of the Transfer of Property Act, by making full payment which is much higher than the offer made by the resolution applicant whose bid has been finalised. Hence, it was incumbent upon the RP and the CoC to consider the settlement plan in favour of the applicants, i. e., for full settlement of Rs. 54,389 crores to all the creditors including the up front payment of Rs. 47,507 crores which ensures payment of entire admitted claims of all creditors. It is alleged that the CoC did not consider their settlement plan fairly but approved the resolution plan of ArcelorMittal India P. Ltd. ("ArcelorMittal" for short) and further moved an application under section 30(6) of the IB Code before this Adjudicating Authority for approval of such resolution plan, which, as per the applicants, is illegal, inacceptable and even premature because it has been considered without being objectively and fairly considering the applicants' superior offer for settlement plan. Hence, the applicants have prayed that appropriate directions may be issued by this Adjudicating Authority to the RP and the CoC. 4. The present application is vehemently opposed not only by the RP and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall go into liquidation. Thus, the honourable Supreme Court was pleased to dispose of the appeal accordingly. 5. It is an undisputed position in the matter that the present application as well as the proposed settlement plan is made by the applicants (being majority shareholding company of the corporate debtor) after the pronouncement of verdict of the honourable Supreme Court. The honourable Supreme Court, while issuing such directions in exercise of extraordinary powers conferred to it under article 142 of the Constitution of India to the RP and CoC has defined the scope by limiting jurisdiction of the RP and the CoC to consider or otherwise any subsequent application. Even if it may be for settlement plan ; then also it may not be appropriate for the RP and the CoC to consider such a subsequent application because it may dilute the direction and mandate given by the honourable Supreme Court to the RP and the CoC. Moreover, their Lordships have already made it clear that, in case no plan is found worthy of acceptance, the corporate debtor-company shall go into liquidation. Hence, if such subsequent settlement plan, as submitted by the present applicants after the verdict of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t's plan, which may amount to dilution of the order passed by the honourable apex court. Hence, on such ground also, the present IA is found not maintainable. 6. We also considered carefully the right of the borrower to settle the outstanding debt at any stage of the proceedings by redeeming the debt under the provisions of the Transfer of Property Act. However, after hearing rival submissions of learned counsel for both the parties at length, we are of the view that the provisions of the IB Code are made having an overriding effect under section 238 of the Code on any other law in force and, in the present IB Code, the mode of settlement of debt has been made permissible only by way of an application to be moved under section 12A of the Code and not otherwise. As per the above stated provision, it is made open to the applicants to move such application only through the RP and the CoC before this court provided 90 per cent. members of the CoC have approved such settlement offer. Before introducing such section 12A, it was not open to the Adjudicating Authority to settle the debts or accept settlement offer after admission of the petition under the IB Code. The post admission s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ArcellorMittal has become functus officio and in normal course is not authorised to entertain subsequent application under section 60(5) of the IB Code for settlement especially when the matter was carried up to the Supreme Court and reached its finality as it amounts to reopening and rehearing of the case despite the categorical mandate of the honourable apex court on the subject and further when the time is mandate of the Code. 8. It is also pertinent to mention here that the honourable Supreme Court in its subsequent decision dated January 25, 2019 in the matter of Swiss Ribbons P. Ltd. v. Union of India (Writ Petition (Civil) No. 88 of 2018) [2019] 213 Comp Cas 198 (SC) has again confirmed and upheld the constitutional validity not only of the IB Code but also carefully examined the subsequent provisions of section 12A read with section 30A in its paragraphs 49 and 51 of the said judgment and pleased to hold that these provisions are not violative of article 14 of the Constitution of India. Paragraphs 49 to 51 of the said judgment of the honourable Supreme Court read as under (page 272) : "Section 12A is not violative of article 14 Section 12A was inserted by the Inso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal judgments in this regard, the consistent pattern that emerged was that a settlement may be reached amongst all creditors and the debtor, for the purpose of a withdrawal to be granted, and not only the applicant creditor and the debtor. On this basis read with the intent of the Code, the committee unanimously agreed that the relevant rules may be amended to provide for withdrawal post admission if the CoC approves of such action by a voting share of ninety percent. It was specifically discussed that rule 11 of the National Company Law Tribunal Rules, 2016 may not be adopted for this aspect of CIRP at this stage (as observed by the hon'ble Supreme Court in the case of Uttara Foods and Feeds P. Ltd. v. Mona Pharmacem, Civil Appeal No. 18520 of 2017 and even otherwise, as the issue can be specifically addressed by amending rule 8 of the CIRP Rules.' Before this section was inserted, this court, under article 142, was passing orders allowing withdrawal of applications after creditors applications had been admitted by the National Company Law Tribunal or the National Company Law Appellate Tribunal. (emphasis1 supplied) Regulation 30A of the CIRP Regulations states as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are reasonable restrictions in the right of property and such right to property can be curtailed and property can be acquired in the public interest under the provisions of the Land Acquisition Act, or under other statutory laws. Hence, such right to property is not made absolute in our constitution. It is equally important to note here that the reasonability and the constitutional validity of the IB Code have recently been tested and examined by the honourable Supreme Court in various decisions, namely, Innoventive Industries Ltd. v. ICICI Bank [2017] 205 Comp Cas 57 (SC) ; [2018] 1 SCC 407, Chitra Sharma v. Union of India [2018] 210 Comp Cas 609 (SC) ; [2018] SCC Online SC 874 and Swiss Ribbons P. Ltd. v. Union of India [2019] 213 Comp Cas 198 (SC), wherein, the honourable Supreme Court has been pleased to uphold its constitutional validity. Considering circumstances, if there is no specific provision for making settlement of the case and closing of CIRP by other than the applicant of petition/financial/operational creditor, it is not open to other persons to make application under section 60(5) of the IB Code for making settlement. Hence, on this count also, the present applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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