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TMI Blog2024 (10) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... the Performance Bank Guarantee of an amount equivalent to 20% of the bid consideration amount within two business days. It is also noticed that the two applications one by the State of Arunachal Pradesh and another by THDC were filed before the Adjudicating Authority praying for liberty to submit the Resolution Plan for resolution of the corporate debtor. The stand which was taken by the CoC before the Adjudicating Authority is that the Appellant did not give any heed to submit Performance Bank Guarantee and it failed to adhere to the terms and conditions. CoC in its reply, therefore, clearly stated that after deliberation CoC is not objecting to the applications filed by the State of Arunachal Pradesh and the THDC and which applications need to be allowed in the interest of the Corporate Debtor. The requirement of submission of Performance Bank Guarantee was contained in the RFRP. RFRP was dated 21.05.2018. Clause (4-A) which was inserted in Regulation 36B only made it mandatory for Request of Resolution Plan to provide a performance security within time specified therein. There is no conflict in the provisions of the RFRP in the present case and Regulation 36B (4-A). The fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, Mr. Yashu Rustogi, Advocates for R3. JUDGMENT ASHOK BHUSHAN, J. This Appeal has been filed by the Appellant challenging order dated 09.04.2024 passed by National Company Law Tribunal, New Delhi Bench (Court-II) in IA No.3163 of 2023, IA No.246/ND/2018 and IA No.2230/2022 in CP No.(IB)-244(ND)/2017. The Appellant aggrieved by the order dated 09.04.2024 passed in above IAs, has come up in these Appeal(s). 2.Brief facts necessary to be noticed for deciding these Appeal(s) are: (i)Athena Energy Ventures Pvt. Ltd. (Holding Company of the Corporate Debtor) was awarded the development and implementation of 1750 Mw Hydro Electric Power Project at river Lohit, Arunachal Pradesh. On 03.08.2007, Athena Demwe Power Ltd. (Corporate Debtor) was incorporated as a Special Purpose Vehicle ( SPV ) to implement the Project. (ii)On failure of the Corporate Debtor in repayment of facilities availed, on an Application filed by the Indian Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016 (here in after referred to as the IBC ), the Adjudicating Authority vide order dated 28.09.2017, initiated the Corporate Insolvency Resolution Process ( CIRP ) against the Corporate Debtor. (iii)The Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nachal Pradesh be allowed. (viii)The Adjudicating Authority heard all the Applications and by the impugned order dated 09.04.2024, held that SRA having not deposited the PBG, the Resolution Plan submitted by Appellant cannot be approved and CA No.246 of 2018 was disposed of accordingly. In consequence to the order passed in CA No.246 of 2018, IA No.2230 of 2022 filed by THDC and IA No.1683 of 2019 filed by Government of Arunachal Pradesh were allowed. The Adjudicating Authority directed the CoC to invite the fresh Expression of Interest ( EoI ) , so that all interested party may submit their Resolution Plan and CIRP was extended for a period of 120 days. IA No.3163 of 2023, which was filed by the Appellant for intervention, the Adjudicating Authority has permitted the Appellant to be also entitled to submit a Resolution Plan. Operative portion of the order passed by Adjudicating Authority in paragraph 9, is as follows: 9. As it may, it is not for this Adjudicating Authority to consider the eligibility or suitability or competence of Resolution Applicant to submit the Resolution Plan, far less to comment upon the viability or acceptability of plan. It is stare decisis that it is for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Authority that there is non-compliance of requirement of submission of PBG is not correct. It is submitted that CoC was empowered to cancel the LoI, which cancellation having never been taken place, no non-compliance can be read. It is further submitted that Regulation 36-B, (4-A) of the CIRP Regulations, 2016, was subsequently added in the Regulations, which was not operative on the date when Resolution Plan of the Appellant was approved. The consequences provided under Regulation 36-B, (4-A) shall not ensue. It is submitted that Regulation 36-B, (4-A) is not attracted in the facts of the present case and Adjudicating Authority committed error in relying on the said Regulation. It is submitted that the Adjudicating Authority committed error in allowing the Application filed by the State of Arunachal Pradesh and THDC, who had no right to submit a Resolution Plan, they having not submitted their EoI in response to Form-G issued by RP. The Adjudicating Authority had no jurisdiction to permit participation of the Applicants, who were not part of the CIRP. It is submitted that IA No.3163 of 2023, which was filed by the Appellant for intervention was never heard and order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and opined that in the current situation, the CoC is not objecting to the Applications filed by the State of Arunachal Pradesh and THDC in the best interest of the Corporate Debtor. It is submitted that Resolution Plan, which was approved five years ago is no more relevant and in the interest of justice, it is necessary that fresh Resolution Plans be invited to give opportunity to all intending parties to come forward to revive the huge power Project. The Appellant, who could not deposit even the PBG in five years, cannot be allowed to further delay the process. 7.We have considered the submission of learned Counsel for the parties and have perused the record. 8.We may first notice the clauses of RFRP under which the Resolution Plan was submitted by the Appellant. Clause 1.9.3 of the RFRP provides for submission of Performance Bank Guarantee , which is as follows:- 1.9.3 Submission of Performance Bank Guarantee Upon approval of the Resolution Plan by CoC, the Successful Resolution Applicant shall cause to furnish a performance bank guarantee of an amount equivalent to 20% of the Bid Consideration amount, within 2 (two) business days of issuance of Lol by the CoC, in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not require any non- refundable deposit for submission of or along with resolution plan. [(4A) The request for resolution plans shall require the resolution applicant, in case its resolution plan is approved under sub- section (4) of section 30, to provide a performance security within the time specified therein and such performance security shall stand forfeited if the resolution applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule. Explanation I. For the purposes of this sub-regulation, performance security shall mean security of such nature, value, duration and source, as may be specified in the request for resolution plans with the approval of the committee, having regard to the nature of resolution plan and business of the corporate debtor. Explanation II. A performance security may be specified in absolute terms such as guarantee from a bank for Rs. X for Y years or in relation to one or more variables such as the term of the resolution plan, amount payable to creditors under the resolution plan, etc.] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secretary Power Department, Government of Sikkim Power Secretariat, Kazi Road, Gangtok, Sikkim-737101 4.Sh. VB Pathak Chairman, SPICL Tashling Secretariat, Kazi Road, Gangtok, Sikkim-737101 5.Sh. SC Gupta, IAS Chief Secretary, Govt of Sikkim Tashiling Secretariat Gangtok, Sikkim-737101 6.Sh. Sunil Sarangi Executive Chairman Teesta Urja Limited Aapian Building, Plot No. 38 Ground Floor, Unit A, Sector-44, GURGAON-122003 Ref: Resolution Plan submitted be SPICL in the matter of Athena Demwe Power Limited Sub : Performance Guarantee (PG) from Govt. of Sikkim amounting to Rs. 72,72,15,464/- overdue by 4 years to be provided by SPICL Dear Sir(s), This is in continuation to numerous letters reminders sent to you by RP on his own and also on behalf of Committee Creditors (CoC) of M/s. Athena Demwe Power Ltd. to remind you that in terms of Resolution Plan submitted by you on dated 4th June, 2018 (which includes all subsequent amendments thereto as submitted from time to time during the CIRP process, the last one submitted on 25th June, 2018) which was approved by CoC in presence of SPICL GM Mr. Nirmal Kumar in COC meeting dated 25th June, 2018 and the same was subsequently submitted to Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forfeited. 3.CoC will withdraw your Resolution Plan from NCLT. 4 CoC will initiate necessary action to invite fresh Resolution Plans for Resolution of the Corporate Debtor. CAUTION No further reminders will be sent after this communication We are hopeful that you will take this notice seriously and submit the PG/deposit the amount latest by 30th June 2022. Best Regards Umesh Garg /+91 9818990001 Resolution Professional M/s. Athena Demwe Power Limited Office: 1413-1416, 14th Floor, Devika Tower, New Delhi 110019 12.In the year 2023 also emails were sent by the Resolution Professional to the Appellant for submitting the Performance Bank Guarantee. A letter dated 04.03.2024 was sent by the Appellant where it was informed that the budget for the year 2023-24 does not include provision in regard to Performance Bank Guarantee and further time was prayed till 15.06.2024. The said letter has been brought on record by the Appellant as Annexure 30 to the Additional Affidavit. 13.The CoC in its meeting held on 04.05.2023 has discussed the non- submission of the Performance Bank Guarantee by Appellant which notices the various reminders sent to the Appellant to submit the Performance Bank Gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the project, and therefore, request you to kindly accord us 30 days time (as per discussions with our proposed strategic partner) from the date of the pronouncement of this qualifications - disqualification judgment. Chairman also placed the said email communication before the CoC members for their perusal. Copy of email communication received from SPICL on 04th May, 2023 is attached herewith as Annexure-C. Chairman invited CoC members to deliberate the matter and take a decision in this regard. COC DELIBERATION DECISION: CoC deliberated the matter and decided that in view of the fact that even if we deliberate this matter now and take a final call on Resolution Plan of SPICL because of pending PG it will be of little use because we can't initiate further actions till 29A application of NEC is pending. As such, CoC decided that it will be appropriate to discuss this agenda after judgement on 29A application of NEC is pronounced. CoC requested RP to call a meeting thereafter on short notice. CoC further decided that communication from SPICL dated 4th May 2023 will also be taken up for consideration in the next meeting itself. 14.The Adjudicating Authority also in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as a Resolution Applicant in default. 2.EMD amounting to Rs 5,00,00,000/- deposited by you will stand forfeited. 3.CoC will withdraw your Resolution Plan from NCLT. 4.CoC will initiate necessary action to invite fresh Resolution Plans for Resolution of the Corporate Debtor. CAUTION No further reminders will be sent after this communication. We are hopeful that you will take this notice seriously and submit the PG/deposit the amount latest by 30th June 2022. 15.That the Resolution professional further informed that the reminder email were also sent vide an email dated 27.02.2023, 13.03.2023, 20.03.2023, 27.03.2023,10.04.2023, 17.04.2023, 24.04.2023, 01.05.2023 and on 03.05.2023. The Resolution professional further shown disappointment that the SPICL did not submit Performance Guarantee. Copies of emails sent to the SPICL are annexed herewith and marked as ANNEXURE R-4(COLLY). 16.That since the SPICL did not give any heed to submit performance security/ guarantee. It further raises serious doubt on the conduct of the management of the SPICL, the management of SPICL have delayed providing performance security by 5 years now. The CoC have now lost confidence in the SPICL as the SPI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rformance Bank Guarantee was contained in the RFRP. RFRP was dated 21.05.2018. Clause (4-A) which was inserted in Regulation 36B only made it mandatory for Request of Resolution Plan to provide a performance security within time specified therein. There is no conflict in the provisions of the RFRP in the present case and Regulation 36B (4-A). The fact that Clause (4-A) was added subsequently has no bearing in the present case since in the present case RFRP dated 21.05.2018 itself contained Clause 1.9.3 requiring submission of the Performance Bank Guarantee of an amount equivalent to 20% of the bid consideration amount within two business days. 18.Counsel for the Appellant has also relied judgment of the Hon ble Supreme Court in Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited Anr. (Civil Appeal No. 3224 of 2020) to contend that the CoC has no jurisdiction to withdraw from Resolution Plan already approved. The present is a case where CoC is not withdrawing the Resolution Plan which was approved by it whereas the Adjudicating Authority rejected the application for approval of the Resolution Plan on the ground that Applicant failed to deposit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lementation of the huge project. Adjudicating Authority in the impugned order has considered all aspects of the matter and has rightly come to the conclusion that Appellant having not deposited the Performance Bank Guarantee inspite of several opportunities/reminders given to the Appellant, Adjudicating Authority has no option except to reject the application for approval of the Resolution Plan. Giving opportunity to the State of Arunachal Pradesh and the THDC to submit a Resolution Plan is in consequence of rejection of the application for approval of the Resolution Plan. The Adjudicating Authority by the impugned order has also clearly given liberty to the Appellant to submit a Resolution Plan in response to EoI. Counsel for the Respondent submitted that in response to the EoI issued in pursuance of the impugned order large number of Resolution Applicants have submitted EoI and the process is proceeding further. 23.In view of the foregoing discussions and our conclusion, we are of the view that no grounds have been made out to interfere with the impugned order. Looking to the fact that Appellant has filed this appeal and Appellant was already permitted by the Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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