Upholding the right of resolution applicants to submit revised plans, and that of the Committee of Creditors(CoC) to update, amend, modify or annul resolution plans, the National Company Law Appellate Tribunal(NCLAT) yesterday rejected the appeal filed by Tata Steels against consideration of revised resolution plans in the insolvency process of Bhushan Power and Steels.
"granting more opportunity to all the eligible 'Resolution Applicants' to revise its 'financial offers', even by giving more opportunity, is permissible in the Law. However, all such process should complete within the time frame", the order said.
The tribunal termed the appeal "premature" and "uncalled for" as the Resolution Professional(RP) was yet to submit the approved resolution plan before the Adjudicating Authority, the NCLT.
"Admittedly, the Adjudicating Authority has not taken any decision on any of the 'Resolution Plan'. Therefore, we hold that there is no cause of action for the Appellant- 'Tata Steel' to prefer the appeal", observed the Tribunal bench headed by Justice S J Mukhopadhyay.
Tata Steel's objection was initially against the consideration of "belated" resolution plan submitted by Liberty House. Later, it objected to the consideration of revised resolution plans submitted by JSW Steel. Tata claimed to have submitted the highest bid as on the original deadline of February 8, 2018. However, the CoC proceeded to consider the improved financial bids subsequently submitted by JSW Steel.
According to Tata, the 'Resolution Applicants' have no right to revise their bids endlessly and the 'Committee of Creditors' are not authorized to entertain fresh or revised bids without exhausting available bids. It insisted that after submission of the original 'Resolution Plan', no 'revised financial offer' can be submitted.
It had earlier approached the NCLAT against the CoC considering the revised plans by bidders. But the Tribunal declined interference, and granted liberty to Tata Steels to revise its plans in an order passed in August 2018. Accordingly, it also submitted revised plans. Therefore, the NCLAT noted that it was not open to Tata Steels to contend that revised plans cannot be accepted.
Also, referring to its judgment in Binani Cements Case, it said that improved financial offer(s) submitted by a 'Resolution Applicant is a continuation of its Resolution Plan already. "Submission of revised offer is in continuation of the 'Resolution Plan' already submitted and accepted by the 'Resolution Professional'", the Tribunal had held in Binani Cements.
The bench also observed that resolution applicant had no vested right or fundamental right to have its 'Resolution Plan' considered or approved, quoting the SC decision in Arcelor Mittal case.
Referring to the clauses in the process document, the NCLAT observed that "the 'Committee of Creditors' have absolute discretion but without being under any obligation to do so, update, amend or supplement the information, assessment or assumptions and right to change, update, amend, supplement, modify, add to, delay or otherwise annul or cease the 'Resolution Process' at any point".
The Resolution Plan can be modified as per dates or other terms and conditions set out in the 'Process Document'.The CoC have right to negotiate better terms with the Resolution Applicant to ensure value maximisation.
Opening the sealed cover submitted by the Committee of Creditors, the Tribunal found that the plan submitted by JSW Steel was approved by CoC with 97.12 % votes.
Recording this, the matter was remitted to the NCLT for passing appropriate order under Section 31. The RP was directed to submit the approved plan before the NCLT.
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