Mr. Vishal Vijay Kalantri Versus Mr. Shailen Shah (Resolution Professional of Dighi Port Limited) & Ors.

Court / Forum : National Company Law Appellate Tribunal
Citation : Company Appeal (AT) (Insolvency) No. 466 of 2020
Coram : Justice Bansi Lal Bhat, Justice Jarat Kumar Jain and Ms. Shreesha Merla, Member (Technical)
Subject : Section 61 of the Insolvency and Bankruptcy Code, 2016
Date of Decision : July 24, 2020

Brief Facts

• The CIRP in relation to Dighi Port Limited was initiated vide order dated March 25, 2018, which was challenged before the Appellate Tribunal in CA(AT) (Insolvency) No. 139 of 2018. During the pendency of the Appeal, settlement talks were initiated between the debtor and the creditor. However, the CIRP continued. ‘Committee of Creditors’ was given liberty to consider all ‘Resolution Plans’ pending before it and approve one or other resolution plan within the given time frame.
• Resolution Plans were submitted by JNPT, APSEZ and Veritas Consortium, along-with a settlement proposal from BIPL, the holding company of the promoters of the Corporate Debtor. However, the promoters failed to submit the earnest money, as sought by the COC.
• The Resolution Plan and the settlement proposal were put up for voting before the COC, and the settlement proposal was rejected with 99.68% votes. Accordingly, the Resolution Plan of APSEZ, the Respondent No. 4 herein, was approved with 60.46% votes by the COC and later by Ld. Adjudicating Authority in terms of the Impugned Order.

Issues

1. Whether the settlement proposal of the Appellant (promoters) was rejected by the COC arbitrarily?
2. Whether obtaining of requisite approval of the Competition Commission of India under the Competition Act, 2002, with respect to the provision of the Combination in a Resolution Plan is required to be done prior to the approval by COC or after?

Decision

• Issue 1: The judicial review qua the approval of the Resolution Plan is limited and the business decision based on commercial wisdom of Committee of Creditors cannot be assailed in appeal. In absence of Appellant being able to demonstrate that the Adjudicating Authority has failed to consider the statutory mandate embodied in Section 31(1) of the ‘I&B Code’ as regard the Resolution Plan meeting the requirements of sub-sections (2) & (4) of Section 30 and that the settlement offer emanating from the promoter was rejected arbitrarily in spite of the same conforming to the requirements under the ‘I&B Code’ and the CIRP Regulations, there is no justifiable reason to interfere with the approval of the Resolution Plan of Respondent No.4 by the Adjudicating Authority.
• Issue 2: A cursory look at the provision engrafted in sub-section (4) of Section 31 of the ‘I&B Code’ reveals that while with regard to an ordinary Resolution Plan, the Resolution Applicant is required to obtain necessary approval required under any extant law within one year from the date of such approval by Adjudicating Authority only after such Resolution Plan has been approved by the COC. Further relying upon the judgement of Arcelormittal India Pvt. Ltd. v. Abhijit Guhathakurta, Company Appeal (AT) (Insolvency) No. 524 of 2019, it was held that obtaining of requisite approval under Competition Act, 2002 with regard to the provision of the Combination in the instant case is stated to be not required as the same is below threshold limit and directory not mandatory.