Case Law Details
Trimex Industries Pvt. Ltd Vs Sathavahana Ispat Ltd (NCLT Cuttack)
Conclusion: IBC does not bar a related party of the Financial Creditor from submitting a resolution plan for the Corporate Debtor and also, an application based upon over future contingencies or apprehensions was unsustainable.
Held: M/s. JC Flowers Asset Reconstruction Pvt. Ltd. (“Corporate Debtor) was admitted into Corporate Insolvency Resolution Process (“CIRP”). M/s. Jindal Saw Ltd. (“PRA/Respondent No. 3”) had submitted a resolution plan for the Corporate Debtor and thus became Prospective Resolution Applicant. Trimex Industries Pvt. Ltd. (“Applicant”) was one of the Operational Creditors of the Corporate Debtor. Applicant had filed an application originally before the NCLT-Hyderabad under Section 60(5) of IBC, seeking to restraint the Committee of Creditors (CoC) from considering any resolution plan for the Corporate Debtor submitted by the Respondent No. 3, pending the hearing and disposal of the application. Applicant argued that the basis for seeking the relief was that the CoC and PRA were related parties. The CoC, PRA, M/s.Siddeshwari and M/s. Hexa were all group companies, which had colluded with each other. The PRA was holding a key position in the latter two companies, and the said two companies funded the purchase by the CoC of the entire Financial Debts of the Corporate Debtor from its original Financial Creditors. Thus, the PRA taking advantageous position held by the CoC as the sole successor of Financial Creditor and the member in the CoC of the Corporate Debtor, had submitted the Resolution Plan. The issue was whether the CoC could be restrained from considering the resolution plan of M/s. Jindal Saw Ltd., which already submitted by the Resolution Professional to the CoC. It was held that Applicant were bereft of any tangible evidence. The application was based on presumptions and apprehensions that CoC will approve the Resolution Plan submitted by the PRA. Hence it was premature and any application filed on future contingencies was unsustainable. A mere contemplation or possibility that a right might be infringed without any legitimate basis for the right, would not be sufficient to hold that the pleadings disclose a cause of action. Further, in view of the proviso to Section 30(5) of IBC, it is only a figment of imagination by the Applicant to state that the related party of the Financial Creditor is prohibited from submitting the resolution plan, more particularly when it is not statutorily barred in Section 29A of IBC. Hence, the allegation of collusion between the CoC and PRA on the only ground that they are related parties is unsustainable. It was opined that Section 30(2) of IBC enables challenging the approved Resolution Plan before the Adjudicating Authority and the inherent powers of the Adjudicating Authority cannot supersede Section 30(2). It was held that the IBC does not prohibit the related party to the Financial Creditor to submit the resolution plan. Giving an opportunity to the CoC to consider the Resolution Plan submitted by the PRA would not in any manner detract from the integrity of the IBC. In these circumstances, the reference is answer that the Committee of Creditors cannot be restrained from considering the Resolution plan of the 3rd respondent and I agree with the findings of the Hon’ble Judicial Member and accordingly am of the view that this application deserves to be dismissed as held by him.
FULL TEXT OF THE NCLT CUTTACK ORDER
1. This Application is referred to me to hear as a single Bench under Section 419(5), of Companies Act, 2013, and Rule 60(2) & (3), NCLT Rules, 2016, by the Hon’ble President NCLT-New Delhi, for disposal.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
