Jindal Stainless Limited vs Mr. Shailendra Ajmera Resolution ... on 29 March, 2023

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National Company Law Appellate Tribunal

Jindal Stainless Limited vs Mr. Shailendra Ajmera Resolution ... on 29 March, 2023

This Appeal has been filed against the order dated 20.02.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court II dismissing I.A No. 602 of 2023 in CP (IB) No. 434/(MB) 2018 filed by the Appellant. Brief background facts of the case are:

i. CIRP against the Corporate Debtor - 'Mittal Corp. Ltd.' was initiated on 10.11.2021.

ii. In response to RFRP issues by the Resolution Professional on 11.04.2022, Resolution Plans were submitted by Appellant and one 'Shyam Sel and Power Limited' ('SSPL' in short).

iii. On 15.07.2022, a challenge process between the two Resolution Applications was conducted. In response to the challenge process, the Appellant and two other Resolution Applicants submitted their revised Resolution Plan on 18.07.2022. On 19.07.2022, Resolution Applicant - 'Shyam Sel and Power Limited' sent an email making further modification in the plan. iv. The CoC decided to put all the plans for voting. E-voting process commenced on the plan, during which period an application was filed by 'Shyam Sel and Power Limited'. The Adjudicating Authority passed an order on 25.08.2022 directing the CoC to Company Appeal (AT) Insolvency No. 356 of 2023 -3- consider Shyam Sel's revised plan, which order was challenged by the Appellant in Company Appeal (AT) (Ins.) No.1058 of 2022. v. Company Appeal (AT) (Ins.) No.1058 of 2022 was allowed by this Tribunal vide judgment dated 18.01.2023 setting aside the order dated 25.08.2022 of the Adjudicating Authority and directing the Resolution Professional to complete the process of voting. vi. Subsequent to the order passed by this Tribunal dated 18.01.2023, all the Resolution Plan were placed before the CoC in its meeting dated 25.01.2023. E-voting commenced and CoC vide its 27th meeting held on 10.02.2023 rejected all the Resolution Plans and decided to issue fresh RFRP. vii. Fresh RFRP was issued on 10.02.2023. On 14.02.2023, the Appellant filed I.A. No. 602/2023 before the Adjudicating Authority praying for following reliefs:

              "i.    allow the present Application;
              ii.    rescind the re-issued RFRP dated February 10, 2023 issued

by the RP and the CoC as the same is in contravention of the NCLAT Order;

iii. Not accept any revisions to the earlier resolution plans submitted by the PRAS and to not receive or open any new resolution plans pursuant to the request for resolution plan dated February 10, 2023;

iv. Direct the RP and the CoC to re- initiate the Voting process on the resolution plans received till July 18, 2022 and conclude the process by February 28, 2023 in terms of the directions laid down by the Hon'ble NCLAT vide its order Company Appeal (AT) Insolvency No. 356 of 2023 -4- dated January 18, 2023 passed in Company Appeal (AT) (Ins.) No. 1058 of 2022;

v. To grant a stay on any steps taken by the RP and the CoC pursuant to the request for resolution plan dated February 10, 2023 until the final disposal of the present Application; and/or vi Pass any such other order(s) as it may be necessary in the facts and circumstances of this case."

viii. The application was heard by the Adjudicating Authority on 17.02.2023 and order was passed dated 20.02.2023. ix. Appellant's case is that order was not uploaded and a mention was made on 23.02.2023 and an application was also filed in this Tribunal on 26.02.2023. Appellant's case is that order dated 20.02.2023 was uploaded on 27.02.2023 by which application was rejected. It is submitted that this Appeal has been filed against order dated 20.02.2023 passed by the Adjudicating Authority rejecting the I.A. No. 602 of 2023.

2. Learned counsel for the Appellant submitted that Appellant having challenged the RFRP dated 10.02.2023, which challenge was under

consideration before the Adjudicating Authority, CoC ought not to have proceeded to approve any Resolution Plan submitted in response to RFRP dated 10.02.2023. It is submitted that CoC hurriedly proceeded the process to achieve the pre-determined approval favouring one particular Resolution Applicant whose plan has been approved in a hasty manner, when the issue of new RFRP was sub-judice before the Adjudicating Authority. Appellant was denied right of participation in the process although Appellant was ready to Company Appeal (AT) Insolvency No. 356 of 2023 -5- offer an amount of INR 365 Crores for the resolution of the Corporate Debtor. Learned counsel for the Appellant submitted that this Tribunal vide its judgment dated 18.01.2023 directed the CoC to vote on all the Resolution Plans, which order clearly intended that CoC has to take a final decision on the plans received and it was not open for the CoC to reject all plans and issue new RFRP. Learned counsel for the Appellant submitted that approval of the plan which was hurriedly done by the CoC, Resolution Professional has already filed an application I.A. No. 791/2023 before the Adjudicating Authority seeking approval of the plan of 'SSPL'. Learned counsel for the Appellant has further submitted that the Financial Creditors of the Corporate Debtor i.e. Public Sector Bank has assigned their debt during pendency of the Appeal in favour of 'Phoenix ARC', who is holding 89.10% voting shares, at an inflated price of Rs.405 Crores which was higher than the highest bid received in the Resolution Process.

3. Learned counsel for the Resolution Professional (Respondent No.1) as well as Respondent No.2 has refuted the submission of learned counsel for the Appellant and submitted that CoC as well as the Resolution Professional has duly complied the directions of this Tribunal dated 18.01.2023 and when all the plans received could not be approved, CoC had every right to take a decision to issue new RFRP as per Regulation 36B(7) of CIRP Regulations, 2016. It is submitted that on 10.02.2023, the Appellant was also intimated to submit his plan by Resolution Professional by email but the Appellant chose not to submit any plan; instead filed I.A. No. 602 of 2023 before the Adjudicating Authority.

Company Appeal (AT) Insolvency No. 356 of 2023 -6-

4. We have considered the submissions of learned counsel for the parties and perused the record.

5. The Adjudicating Authority in Para 8 of the impugned order has noted the relevant portion of the order dated 18.01.2023 and has come to the conclusion that the actions of the Resolution Professional and the CoC are consistent with the NCLAT order. Para 8 of the impugned order is as follows:

"8. In order to deal with the first issue, it is pertinent to note the observations and directions of the Hon'ble NCLAT in its Order dated 18th January 2023, relevant portions of which are reproduced hereinbelow:

"26. We have gone through the whole Application filed by the Respondent No.2. There is not even mention of the fact that voting has already commenced w.e.f. 07.08.2022. The Adjudicating Authority without there being any valid reason ought not to have been interfered with the voting on the Resolution Plans which had already commenced w.e.f. 07.08.2022. As result of the order of the Adjudicating Authority the process of voting which had commenced on 07.08.2022 wa abandoned by the Resolution Professional.

27. In view of the foregoing discussion, we are of the view that the order passed by the Adjudicating Authority dated 11.08.2022 is unsustainable and deserves to be set aside. When this Appeal was heard on 01.09.2022, we have already passed an interim order that no further steps shall be taken in pursuance of the impugned order.

28. CoC having already resolved to vote on all the Resolution Plans including the Resolution Plan submitted by the Appellant and the Respondent No.2 which voting process having commenced and was disrupted due to impugned order, we are of Company Appeal (AT) Insolvency No. 356 of 2023 -7- the view that the voting process in pursuance of the CoC decision dated 03.08.2022 may commence afresh and be completed in a time bound manner.

29. In result, this Appeal is allowed with following directions:-

(i) The order dated 11.08.2022 passed by the Adjudicating Authority is set aside.

(ii) As per the decision of the CoC dated 03.08.2022, the Resolution Professional may initiate fresh voting process on the Resolution Plans received in the process which may be completed within the period of one month."

From the above, it is seen that the observations of the NCLAT unambiguously point to the fact that the e-voting that was already underway on and after 7th August 2022 was disrupted due to the NCLT Order dated 11 th August 2022. Consequently, the NCLAT directed that the RP may initiate a fresh voting process on the Resolution Plans received in the process. The intention of the NCLAT was to allow the process to continue from the point it was disrupted. This can be seen from Paragraph 28, where it is observed that since the voting process had already commenced after due approval of the CoC in its Meeting held on 30 August 2022, the stalled voting process may commence afresh. Accordingly, the RP placed the Resolution plans received as on 18th July 2022 before the CoC for voting on 10th February 2023. This included the Plans of all four Prospective Resolution Applicants including that of Shyam SEL, without any modifications made post 18th July 2022. The voting was conducted thereafter and all the four plans came to be rejected by the CoC in exercise of their commercial wisdom. Company Appeal (AT) Insolvency No. 356 of 2023 -8- Therefore, in our opinion, the actions of the RP and the CoC are consistent with the NCLAT Order."

6. When we look into order dated 18.01.2023 passed by this Tribunal, it is clear that this Tribunal directed the Resolution Professional to initiate fresh voting process on the Resolution Plans received in the process which was to be completed within a month. The Adjudicating Authority has noticed that in pursuance of the order dated 18.01.2023, all the Resolution Plans were put before the CoC in its meeting dated 25.01.2023 and voting result was declared in its meeting dated 10.02.2023 where all plans were rejected by voting share of 89.10% and it was decided by the CoC to issue fresh RFRP.

7. We are of the view that consideration of all Resolution Plans and voting on the plans by the CoC as per direction of this Tribunal dated 18.01.2023 cannot be said to be non-compliance of order of this Tribunal. When none of the Resolution Plans was approved, the CoC under the CIRP Regulations was empowered to issue fresh RFRP. We, thus, do not find any error in the order of the Adjudicating Authority refusing the prayers of the Appellant to reissue RFRP and reinitiate the voting process.

8. From the facts which have been noticed above, it is clear that after issue of fresh RFRP on 10.02.2023 although other Resolution Applicants submitted their Resolution Plans but the Appellant did not submit a plan but filed I.A. No. 602/2023 on 14.02.2023 before the Adjudicating Authority. Learned counsel for the Appellant submitted that CoC ought not to have proceeded with the process during pendency of the application and the Company Appeal (AT) Insolvency No. 356 of 2023 -9- approval of Resolution Plan of a Resolution Applicant in a hurried manner is denial of equal participation to the Appellant.

9. The present Appeal arise out of the order dated 20.02.2023 by which I.A. No. 602/2023 was rejected, by which Appellant was challenging the RFRP issued on 10.02.2023. Subsequent events which took place after 10.02.2023 are not subject matter of this Appeal and needs no consideration by this Tribunal. Learned counsel for the Appellant submitted that Resolution Professional has already filed an I.A. No. 791/2023 before the Adjudicating Authority for approval of a Resolution Plan. It is open for the Appellant to file an appropriate application/objection in I.A. No. 791/2023, the issues raised by the Appellant subsequent to 10.02.2023 need no consideration, as observed above. We make it clear that we have not expressed any opinion with regard to I.A. No. 791/2023 or the objections which are to be raised by the Appellant to the I.A. and it is for the Adjudicating Authority to consider the same in accordance with law. Subject to liberty as above, this Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) NEW DELHI 29th March, 2023 Archana Company Appeal (AT) Insolvency No. 356 of 2023

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