Vipul Ganda is an Independent Litigation Counsel with over 14 years of experience and a proven track record in Litigation and Dispute Resolution.

First Global Finance Pvt. Ltd. Versus IVRCL Limited and Anr.


Court / Forum : National Company Law Appellate Tribunal
Citation : Company Appeal (AT) (Ins) No. 918-919 of 2019
Coram : Justice Jarat Kumar Jain, Member (Judicial), Mr. Balvinder Singh Member (Technical), Dr. Ashok Kumar Mishra, Member (Technical)
Subject : Section 30 (4) of the Insolvency and Bankruptcy Code, 2016
Date of Decision : May 29, 2020

Brief Facts

  • The Adjudicating Authority vide order dated February 23, 2018 had accepted the application filed by the State Bank of India against IVRCL Ltd. (“Corporate Debtor”) under section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code”). Thereafter, the Resolution Professional had invited Expression of Interest (“EoI”) from potential Resolution Applicants.
  • The Appellant, being one of the Resolution Applicant had also submitted EoI with others as a group but did not submit the Resolution Plan. The Committee of Creditors (“CoC”) decided to again invite EoI in which qualified Resolution Applicants from 1st process of EoI were also allowed to submit their Resolution Plan. The Resolution Professional had issued Bid Process Memorandum and Evaluation Matrix for submission of Resolution Plan.
  • The Appellant along with Mr. Shankar Sharma, Ms. Devina Mehra and Phoenix ARC Pvt. Limited had submitted a Resolution Plan. The CoC was informed that Phoenix ARC Pvt. Limited did not want to be categorised as a resolution applicant with the Appellant. For inviting a fresh resolution applicant or making any deviation in EoI, the CoC is required to approve the deviation and restart EoI process.
  • The Appellant again submitted a Resolution Plan but it was rejected by CoC due to deviation in EoI, non placing of Earnest Money Deposit, non-compliance of minimum qualification criteria. Further, the Resolution Plan was commercially not acceptable to the CoC and the Appellant did not improve the commercial and technical aspects of the Resolution Plan.
  • The Adjudicating Authority had passed the liquidation order of the Corporate Debtor vide order dated July 26, 2019 and July 31, 2019 (“Impugned Orders”).
    • Aggrieved by the rejection of resolution plan and Impugned Orders, the Appellant preferred Appeal before Hon’ble National Company Law Appellate Tribunal (“NCLAT”).

Issues

  1. Whether the CoC was justified in rejecting the Resolution Plan submitted by the Appellant?

Decision

  • The Hon’ble NCLAT held that the decision of CoC is well informed and well thought business and commercial decision as it has been taken after considering all the available options, keeping in mind interest of all stakeholders and spirit of the Code.
  • The Appellant had not complied with the terms and conditions of EoI dated August 14, 2018 as Earnest Money Deposit was not submitted with submission of Resolution Plan dated October 4, 2018 as required by the Bid Process Memorandum. Further, there were various deviations from set parameters. Therefore, CoC rejected the Resolution Plan.
  • The liquidation proceedings are going on since July 2019 and the Resolution Applicants can always opt for arrangement under section 230-232 of the Companies Act, 2013 if they are eligible in accordance with provisions of the Code along with relevant Rules.
  • Accordingly, the Hon’ble NCLAT dismissed the Appeal.