Case Law Details

Case Name : ICICI Bank Limited Vs Unimark Remedies Ltd. (NCLT, Mumbai)
Appeal Number : MA No. 1529 of 2018 and CP No. 197 of 2018
Date of Judgement/Order : 21/12/2018
Related Assessment Year :
Courts : NCLT

ICICI Bank Limited Vs Unimark Remedies Ltd. (NCLT, Mumbai)

Spirit of the Code is first and then comes the other things. The rejection of the Resolution Plan by the CoC even without opening the envelope containing the Resolution Plan on the ground that the same is submitted after the expiry of the stipulated time fixed by the CoC, is certainly against the law/Code.

Now the point is whether the Resolution Plan of the Applicant can be considered at this belated hour or should the same be rejected even without looking into the same. In our view of the case and keeping in view the very object of the Code, when there is a clash/ conflict between the Regulations and the Code, the object of the Code is paramount and not the Regulations which are formed only for the just implementation of the Code. Purely on the basis of technicalities, the rejection of Resolution Plan even without looking into its merits, is certainly an act which shall go against the very spirit of the Code and may even result in a huge loss to the Company. Any Regulation which does not anticipate such a situation and if the same comes in the way of proper justification and implementation of the principles of the Code, the same need not be considered nor can be treated as an impediment in the implementation of the Code.

We are of the considered view that the spirit of the Code is first and then comes the other things. The rejection of the Resolution Plan by the CoC even without opening the envelope containing the Resolution Plan on the ground that the same is submitted after the expiry of the stipulated time fixed by the CoC, is certainly against the law/Code and we hereby direct the Respondent to forthwith consider the Resolution plan of the Applicant on its merits and judicious decision may be taken in the best interest of the parties concerned. The Application is allowed,

 

1. This application is filed by Omkara Assets Reconstruction Private Limited (Applicant) as a member of joint-venture between Omkara Assets Reconstruction Private Limited and Raju Chemicals Limited against the Resolution Professional (RP) of Unimark Remedies Ltd (Corporate Debtor) with the following prayer:

a. That this Hon’ble Tribunal be pleased to call for the records of the 13thCoC meeting and after satisfying itself of the illegality of the decision of the CoC, refusing to open the envelop of the Resolution Plan sent by the Applicant and to return the same to the Applicant without considering the resolution plan on its merits, be pleased to quash and set aside the decision of the CoC;

b. That this Hon’ble tribunal be pleased to direct the CoC to consider the resolution plan submitted by the Applicant on its merits as Applicant believes that its plan will maximize the asset value of the Corporate Debtor;

c. That this Hon’ble Tribunal by an order and injunction restrain the CoC from approving any resolution plan without considering the resolution plan of the Applicant;

d. Any other order that this Hon’ble Tribunal may deem fit in the facts and circumstances of the present cae.

2. It is submitted that the Corporate Debtor was put into CIRP by an order of this Tribunal dated 03.04.2018 and consequently the present Applicant submitted its claim to the IRP and on admission of the claim the Applicant was made as member of the Committee of Creditors (‘CoC’) of the Corporate Debtor. On 08.06.2018, CoC invited prospective resolution Applicants to submit Expression of Interest (‘EOI’) on or before 29.06.2018 which was subsequently extended to 31.10.2018 and the RP received three EOI from prospective resolution Applicants. The CoC fixed 31.10.2018 as the cut-off date for the Resolution Applicants (‘RA’) to submit the Resolution Plan for approval by the CoC. It is further submitted that two Resolution Plans were received by the CoC before the deadline of 31.10.2018. The Applicant submits that it was unable to submit the Resolution Plan within the time specified. However the Applicant submits that they have forwarded a copy of the resolution plan to the Respondent RP on 11.12.2018.

3. The Applicant submits that CoC in the 13th meeting held on 12.12.2018 refused to open the cover containing the Resolution Plan submitted by the Applicant solely on the ground that it was submitted after the cut-off date even without appreciating and scrutinizing the plan on its merits. However CoC in the same meeting permitted one Resolution Applicant lead by Asset Reconstruction Company India Limited (‘ARCIL’) to revise their plan and submit a fresh revised Resolution Plan for consideration by CoC. The Applicant alleged that the CoC acted in an arbitrary manner by refusing to accept the plan submitted by the Applicant. It is contended that no harm or prejudice would be caused to the Company or the CoC or the Corporate Debtor if the Resolution Plan submitted by the Applicant is scrutinized by CoC for its consideration purely on merits. Further, it is claimed that it will be beneficial to the CoC, Creditors and the Corporate Debtor. It is further contended that by refusing to accept the plan submitted by this Applicant the CoC has effectively monopolized the Corporate Insolvency Resolution Process (‘CIRP’) in favour of ARCIL. The Applicant further contends that once CoC granted an opportunity to one of the resolution Applicants to submit a fresh revised Resolution Plan and in the same manner the CoC ought to have treated the present application in parity of the same and should have considered the Resolution Plan submitted by the Applicant. It is further alleged that neither the RP nor the CoC opened the envelope containing the Resolution Plan or consider the Resolution Plan on merits. Hence this application.

4. Applicant submits that the decision of RP/COC in rejecting resolution plan is erroneous for the following reasons:

a. Cut-off date as contemplated by EOI is not mandatory and can be extended.

b. RP/ CoC can certainly receive the Resolution Plans even after the expiry of the date of the last day of submission of EOI so long as the CIRP period has not elapsed and/or any other Resolution Plan has not already be accepted by the CoC.

c. RP is required to present the Resolution Plan to the CoC as provided under Section 30(3) of the Code, but admittedly RP in the present case has not submitted the Resolution Plan in the manner as contemplated but as only forwarded the envelop to the CoC and by doing so RP in fact has extended the period for submission of Resolution Plan and therefore CoC was duty bound to consider the Resolution Plan on merits.

d. CoC is mandated under section 30(4) of the Code to consider the Resolution Plan on merits and it cannot reject the Resolution Plan forwarded by RP without considering the same on its merits.

e. The object of the Insolvency Code is to maximize the value of the assets and to ensure that best possible returns has drawn from Resolution Plan and the action of the CoC in rejecting the Resolution Plan would defeat the object of the Insolvency Code.

f. The Regulations framed under the Code cannot be construed in a way so as to deprive any Resolution Applicant from coming forward at any stage prior to acceptance of other Resolution Plan by CoC/NCLT and/or expiry of CIRP period.

g. The Applicant submits that in the following cases, NCLT and NCLAT have permitted submission of Resolution Plan at a subsequent date:

I. Punjab National Bank vs. Bhushan Power & Steel Ltd. NCLT New Delhi, CA No. 152(PB)/2018 in CP (IB)-202(PB)/2017

II. Sharda Energy & Minerals Ltd. Vs. Impex Metal & Ferro Alloys Ltd. NCLT Kolkata, CA(IB) No. 641/KBH/2018 in CP No. 176/KB/2018

III. Binani Industries Ltd. Vs. Bank of Baroda, NCLAT, CA(AT) (Insolvency) No. 82 of 2018

IV. SBI vs. Adhunik Alloys & Power Ltd., NCLT Kolkata, CA (IB) No. 1086/KB/2018 and CA (IB) No. 1092/KB/2018 in CP (IB) No. 387/KB/2017

V. Canara Bank vs. Deccan Chronicle Holdings Ltd., NCLT Hyderabed, IA No. 253/2018 in CP(IB) No. 41/7/HDB/2017.

h. Regulation 36A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 was amended w.e.f. 03.07.2018 will not apply to this case since EOI had been issued by the RP on 08.06.2018. However, the erstwhile Regulation 36A which came into effect on and from 06.02.2018 would be applicable to this case. In any case RP himself has not issued EOI in terms of Form G and therefore cannot oppose this present application.

5. The counsel for the Respondent filed written submissions contending that the Applicant is one of the Financial Creditors of the Corporate Debtor and also a member of CoC and therefore is aware of the strict timelines prescribed under the Insolvency and Bankruptcy Code. It is submitted that pursuant to section 25(2)(h) of the code, the RP had issued advertisement on 08.06.2018 inviting EOI from prospective resolution Applicants. The last date for submission of EOI was extended thrice by announcement made on the website of the Corporate Debtor that is on 28.06.2018, 19.07.2018 and 17.08.2018. It is further submitted that the request for resolution plans (RFRP) inviting resolution plans from Resolution Applicants was published on the website of the Corporate Debtor on 16.07.2018 with the cut-off date for submission of the Resolution Plan as 14.08.2018. Subsequently, the cut-off date was extended to 14.09.2018, and thereafter to 01.10.2018 and further extended to 31.10.2018. It is submitted that four EOI were received from Resolution Applicants and two Resolution Plans were received within the cut-off date of 31.10.2018. The Applicant herein has not submitted the Resolution Plan on or before 31.10.2018, however the Applicant has submitted the Resolution Plan on 12.12.2018 which is beyond the cut-off date. It is further submitted that the 270 days of CIRP will expire on 29.12.2018. The Respondent submits that the present application is a clear abuse of process of law with mala fide intent to disrupt the CIRP and this Application is to be dismissed with exemplary cost.

6. In reply to the contention of the Respondent, the Applicant further submits that they were making efforts to tie up with some prospective investors and it was only few days back a concrete picture has emerged which would in their opinion can definitely revive the prospects of the company. The delay in submitting the Resolution Plan is neither deliberate nor wanton and is purely on account of the reasons beyond their control.

7. This Bench after hearing both the parties, looked into the Regulations which would not allow the acceptance of any proposal by any resolution Applicant beyond the date as fixed by the CoC. It is clear that the Resolution Applicant had approached the RP with a proposal at the 12th hour but certainly before accepting or finalization of any Resolution Plan.

8. Now the point is whether the Resolution Plan of the Applicant can be considered at this belated hour or should the same be rejected even without looking into the same. In our view of the case and keeping in view the very object of the Code, when there is a clash/ conflict between the Regulations and the Code, the object of the Code is paramount and not the Regulations which are formed only for the just implementation of the Code. Purely on the basis of technicalities, the rejection of Resolution Plan even without looking into its merits, is certainly an act which shall go against the very spirit of the Code and may even result in a huge loss to the Company. Any Regulation which does not anticipate such a situation and if the same comes in the way of proper justification and implementation of the principles of the Code, the same need not be considered nor can be treated as an impediment in the implementation of the Code.

9. For all the aforementioned reasons we are of the considered view that the spirit of the Code is first and then comes the other things. The rejection of the Resolution Plan by the CoC even without opening the envelope containing the Resolution Plan on the ground that the same is submitted after the expiry of the stipulated time fixed by the CoC, is certainly against the law/Code and we hereby direct the Respondent to forthwith consider the Resolution plan of the Applicant on its merits and judicious decision may be taken in the best interest of the parties concerned. The Application is allowed.

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