NCLAT Upholds Eligibility Of NTPC As A Resolution Applicant For Jhabua Power Ltd. : NCLAT Delhi

The National Company Law Appellate Tribunal ("NCLAT") Principal Bench comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Mr. Naresh Salecha (Technical Member), while adjudicating an appeal filed in Avantha Holdings Limited v Mr. Abhilash Lal, has upheld the eligibility of NTPC Ltd. under Section 29A of the IBC to submit Resolution Plan for Jhabua Power Ltd. BACKGROUND FACTS FLSmidth Private Limited had filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") before the NCLT Kolkata ("Adjudicating Authority"), seeking initiation of CIRP against Jhabua Power Limited ("Corporate Debtor"). The Adjudicating Authority vide an order dated 27.03.2019 had initiated CIRP against the Corporate Debtor and Mr. Abhilash Lal ("Respondent No. 1") was appointed as Resolution Professional. Avantha Holdings Limited ("Appellant") is the Promoter and Shareholder of Avanta Power and Infrastructure Limited, which in turn hold 17.9% shares of Corporate Debtor. On 03.06.2019, the Appellant had submitted a One Time Settlement ("OTS") proposal to the Resolution Professional, which was considered by CoC and was not found commercially viable. Thereafter, the Resolution Professional invited Expression of Interest ("EOI") from prospective Resolution Applicants for submission of Resolution Plan on 19.08.2019. On 22.10.2019 NTPC Ltd. ("Respondent No.3") had submitted an affidavit certifying its eligibility under Section 29A of IBC and had informed Resolution Professional on 06.12.2019 that Ratnagiri Gas and Power Private Ltd. ("RGPPL") and Konkan LNG Private Limited ("KLL"), which were joint ventures of NTPC, have been declared Non-Performing Asset ("NPA"). The Canara Bank classified RGPPL as NPA on 21.05.2018, with effect from, 01.04.2009. Similarly, Canara Bank has classified KLL as NPA with effect from 01.04.2009. NTPC submitted its Resolution Plan on 30.12.2019 and revised the same on subsequent three occasions and had stated on affidavit that No Dues Certificates in respect of KLL has been received and with regard to RGPPL, there was no overdue amount. On 21.12.2020, the Appellant made a proposal to the Committee of Creditors ("CoC") under Section 12A of the IBC for settlement of debt owed by the Corporate Debtor. In a meeting dated 05.03.2021 the CoC rejected the Appellant's proposal as not being economically viable. On 16.04.2021, the NTPC submitted its revised Resolution Plan and an affidavit under Section 29A, claiming that the dues towards the lenders of KLL and RGPPL have been satisfied and lenders have provided no due certificates as on 30.03.2020 and January 2021 respectively. On 06.06.2021, the Appellant had filed an application bearing I.A. No.537 of 2021 before the Adjudicating Authority seeking declaration that NTPC as not compliant with Section 29A of the IBC and further praying to set-aside the CoC decision's rejecting the proposal under Section 12A. Thereafter, NTPC yet again submitted a revised Resolution Plan dated 14.06.2021, which was approved by the CoC with 100% votes. Subsequently, I.A. No.586 of 2021 was filed by the Resolution Professional before the Adjudicating Authority for approval of the Resolution Plan. The Adjudicating Authority vide an order dated 08.03.2021 rejected the I.A. No.537 of 2021 filed by the Appellant and held that the NTPC is not disqualified under Section 29A of the IBC. The Appellant filed an appeal before the NCLAT challenging the Order dated 08.03.2021; seeking disqualification of NTPC under Section 29A of IBC; and praying to set-aside decision of the CoC rejecting the proposal of the Appellant under Section 12A of IBC. RELEVANT LAW Section 29A(c) "29A. Persons not eligible to be resolution applicant.- A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person— (c) at the time of submission of the resolution plan has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) or the guidelines of a financial sector regulator issued under any other law for the time being in force, and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor: Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to nonperforming asset accounts before submission of resolution plan:" CONTENTIONS OF THE APPELLANT The Appellant argued that IBC does not contemplate submission...

NCLAT Upholds Eligibility Of NTPC As A Resolution Applicant For Jhabua Power Ltd. : NCLAT Delhi

Pallavi Mishra

Tags