After Adoption Of Swiss Challenge Method, RA Not Allowed To Submit Revised Plan: NCLAT Delhi
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), while adjudicating an appeal filed in Jindal Stainless Ltd. v Mr. Shailendra Ajmera & Anr., has held that after adoption of Swiss Challenge Method to find out the best plan, one Resolution Applicant cannot be allowed to submit a revised plan.
Mittal Corp Limited (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) on 10.11.2021 by the Adjudicating Authority. Mr. Shailendra Ajmera was appointed as the Resolution Professional.
The Resolution Professional received six resolution plans for the Corporate Debtor including plans from Jindal Stainless Ltd. and Shyam Sel and Power Ltd. The Resolution Applicants were communicated the rules of Challenge Process and gave their unconditional acceptance to the same.
On 15.07.2022, the Challenge Process was conducted and continued for seven rounds, until only one competing Resolution Applicant remained in the Challenge Process. All the Resolution Applicants were notified that the signed and compliance Resolution Plan must be submitted by 18.07.2022. Jindal Stainless Ltd., Shyam Sel and Power Ltd. alongwith two other resolution applicants submitted their amended Resolution Plans by 18.07.2022.
On 19.07.2022, Shyam Sel and Power Ltd. addressed an e-mail to the Resolution Professional, stating its willingness to submit the entire NPV offered as upfront payment within 30 days. Further, Shyam Sel and Power Ltd. also filed an application before the Adjudicating Authority, seeking direction to the Resolution Professional to consider the offer dated 19.07.2022 and place the same before the Committee of Creditors (“CoC”).
The Adjudicating Authority vide an order dated 11.08.2022, directed the CoC to consider the revised resolution plan of Shyam Sel and Power Ltd. and take an informed decision. In pursuance of the said Order, the Resolution Professional stopped the voting process which was underway. Jindal Stainless Ltd. filed an appeal before NCLAT against the Order dated 11.08.2022.
Contentions Of Appellant
Jindal Stainless Ltd. (“Appellant”) submitted that the CoC decided to adopt Challenge Process and resolution applicants, including Shyam Sel and Power Ltd., participated in the same. The resolution applicant Shyam Sel and Power Ltd., who made the highest offer in the Challenge Process, had no right to further revise its plan. The adoption of Challenge Process by the CoC was in accordance with Regulation 39(1A)(b) of the CIRP regulations, as has been substituted w.e.f. 30.09.2021. The CIRP has to be completed within timeline and the Adjudicating Authority’s Order would delay the process, which is not the object of IBC.
Whether after closure of Challenge Process on 15.07.2022 and consequent receipt of Resolution Plan by 18.07.2022, the Adjudicating Authority could have directed for consideration of the revised plan submitted by Shyam Sel and Power Ltd. thereafter?
The Bench placed reliance on the Supreme Court judgment in Ngaitlang Dhar vs. Panna Pragati Infrastructure Private Limited & Ors., Civil Appeal Nos. 3665-3666 of 2020, and held that after adoption of Swiss Challenge Method to find out the best plan, one Resolution Applicant cannot be allowed to submit a revised plan.
The Bench observed that the decision of CoC to vote on the Resolution Plan after completion of Challenge Process and not to further accept any modification of the plan, should not be interfered with. The Application was filed by Shyam Sel and Power Ltd. on 07.08.2022, when CoC had already resolved the vote on all the plans and voting had also 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 was abandoned by the Resolution Professional.”
The Bench set aside the Order dated 11.08.2022 passed by the Adjudicating Authority. Further, the Resolution Professional has been directed to initiate fresh voting process on the Resolution Plans received in the process which may be completed within the period of one month.
The Appeal was disposed off.
Case Title: Jindal Stainless Ltd. v Mr. Shailendra Ajmera
Case No.: Comp. App. (AT) (Ins.) No. 1058 of 2022
Counsel for Appellant: Mr. Ramji Srinivasan, Sr. Advocate with Mr. Rahul Kumar, Mr. Bishwajit Dubey, Ms. Neha, Advocates Ms. Madhvi Divan, Mr. Vikas Mehta, Mr. Sahil Monga, Mr. Apoorv Khator, Ms. Rashi Rampal, Advocates for IBBI.
Counsel for Respondent: Mr. Sumesh Dhawan, Ms. Shweta Dubey, Ms. Kanishka Prasad, Advocates for R-1/RP. Mr. Abhijit Sinha, Mr. Anuj Tiwari, Mr. Kaustubh Rai, Mr. Rahul Kumar, Mr. Saurabh Kumar Mishra, Mr. Aditya Shukla, Ms. Tuhina Mishra, Advocates for R2. Mr. Gaurav Mitra, Mr. Piyush Beriwal, Ms. Ankit Raj, Advocates for R-3. Mr. Ritin Rai, Sr. Advocate with Mr. Udit Mendiratta, Ms. Niharika Sharma, Mr. Tejas Jha and Mr. Shivkrit Rai, Advocates for ACRE (Intervenor)
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