National Company Law Tribunal (NCLT): The Coram of Justice R. Sucharitha (Judicial Member) and Anil Kumar B (Technical Member) was of the opinion that the proposed settlement plan resembled more to a ‘Business Restructuring Plan”, and thus based on ambiguity, dismissed the application. The application had originally sought for liquidation of the Corporate Debtor in case of any default in the proposed Settlement Plan.
In the instant matter the Counsel for the Applicant, submitted that since all the conditions as provided under Section 12A of IBC, 2016 read with Regulation 30A of the CIRP Regulations 2016 were fulfilled by the applicant, therefore the application so put forth should be allowed.
The Tribunal while rejecting the proposal calling it as a “business restructuring plan” rather than a settlement envisaged under section 12 A of the Insolvency and Bankruptcy Code (IBC), held that the terms of the settlement were ambiguous. It stated that, “There is no final offer made by the promoter of the corporate debtor, and also the acceptance made by the committee of creditors (CoC) in this regard.” It also further questioned the proposal on the basis of it being submitted by a promoter, who is already not eligible to submit under Section 29A of the Code.
The Tribunal further note,
“As per the plan, there is no final offer made by the promoter of the corporate debtor and also the acceptance made by the CoC in this regard. There is no finality reached between the promoter of the Corporate debtor and the CoC of the Settlement proposal; hence based on ambiguity of the terms of settlement, we cannot order for the withdrawal of CIRP”. And hence, was of the opinion that,
“The prayer as sought for by the Applicant transcends beyond the scope of IBC, 2016 and granting such a prayers would be doing violence to the provisions of IBC, 2016. Also, for instance if at this stage, on the basis of the purported settlement proposal, if the Corporate Debtor is being wriggled out of the CIRP, at any later stage, during the 180 days period of the settlement plan, upon any of the Operational Creditor filing an application under Section 9 of IBC, 2016 against the Corporate Debtor, it would again trigger the CIRP in relation to the Corporate Debtor and the whole process is required be started de novo, which would very much defeat the very purpose of IBC, 2016”.
[Siva Industries and Holdings Ltd., In re, MA/43/CHE/2021 IN IBA/453/2019, decided on 12-08-2021]
Agatha Shukla, Editorial Assistant has reported this brief.
Advocates before the Tribunal:
For RP:
Sanjeev Kumar and Anshul Sehgal, Advocates
For Corporate Debtor:
Arvindh Pandian, Senior Advocate and Avinash Krishnan Ravi, Advocate
For IDBI Bank:
Satish Parasaran, Senior Advocate and Subhang P. Nair, Advocate
For SBI:
M.L. Ganesh, Advocate