NCLT Chandigarh (13.02.2019) In The CoC of Amtek Auto Limited Vs. Liberty House Group Pte Ltd. & Ors. [CA Nos. 567/2018 & 601/2018 In CP (B) No.42/Chd /Hry /2017 ] excluded, certain period, while calculating the period of 270 days for completion of the Resolution Plan with liberty to the financial creditor and /or Resolution Professional to make appropriate complaint with the Insolvency and Bankruptcy Board of India or the Central Government on the allegation of wilful or intentional default and to pursue the appropriate remedy for the offence, if any, committed by the respondent with right to respondent No.1 to defend the action.
The facts of the case, briefly stated, are that;
Corporation Bank as a financial creditor filed a petition under Section 7 of the Code against M/s Amtech Auto Limited, for having made a default in making payment of the outstanding dues.
The petition was admitted on 24.07.2017, declaring the moratorium in terms of sub-section (1) of Section 14 of the Code.
by order dated 27.07.2017, Mr. Dinkar T. Venkatasubramanian, was appointed as Interim Resolution Professional with the necessary directions.
the Resolution Plan submitted by respondent No. 1 Liberty House Group Pte Ltd. (for brevity 'LHG'), was approved by this Tribunal, vide order dated 25.07.2018.
The Resolution Applicant has not made the payment or compliance of the terms of Resolution Plan within a stipulated long stop date of 90 days from the date of approval by the Tribunal, subject to receipt of CCI approval. In the instant case, the CCI approval was received on 22.11.2018. ii) The Resolution Applicant failed to furnish a performance guarantee of $100 Crores against total bid amount of 34025 Crores, which has been committed as part of the esolution Plan; or the creation of escrow equivalent to 15% of the upfront cash pay-out contemplated under the terms of the Plan as an alternative to the performance guarantee.
The basic ground that has been highlighted is that the Resolution Process needs to be restarted as respondent No.1 has failed to make payment of the upfront amount as required under the approved Resolution Plan. The Corporation Bank, a financial creditor also invoked the bid bond guarantee, against which respondent No. 1 has filed the Civil Suit, CS (Comm) 1245 of 2018 before the Hon'ble High Court of Delhi, inter alia, seeking a permanent injunction of the invocation of the bid bond guarantee, which is pending adjudication.
Excerpts of the order;
CA No.567/2018
The instant application has been filed on behalf of all the Financial Creditors of the corporate debtor through the Corporation Bank under Section 60(5) read with Section 74(3) of the Insolvency and Bankruptcy Code, 2016, (for short to be referred hereinafter as the 'Code"), with the prayer
to declare that the Resolution Applicant M/s Liberty House Group Pte Limited (respondent No. 1 herein) and its promoters upon whom the Resolution Plan is binding under Section 31 of the Code, have knowingly contravened the terms of the Resolution Plan, having failed to implement the same.
The further prayer made is that the Committee of Creditors be reinstated to run the corporate debtor, as a going concern
and to grant minimum of 90 days for the Resolution Professional to make another attempt for a fresh process rather than forcing the corporate debtor into liquidation on account of fraud committed by respondent No. 1.
It has also been prayed that respondent No.1 be debarred from applying for a fresh resolution plan and the Insolvency and Bankruptcy Board of India, may be directed to initiate the process under Section 74(3) of the Code.
# 29. There being a clear default in implementing the Plan within the time stipulated in the Resolution Plan, the instant application deserves to be allowed with liberty to any Member of the Committee of Creditors or the Resolution Professional file a complaint before the Insolvency and Bankruptcy Board of India or the Central Government with a prayer to file the criminal complaint on the ground of corporate debtor having intentionally and wilfully contravened the terms of the Resolution Plan, for which we are restraining ourselves from making any observation either way. However, for LHG to say that the Tribunal was not properly assisted at the time of hearing on the application for approval of the Resolution Plan, would be a misplaced allegation. The order dated 25.07.2018 by which the Resolution Plan was approved shows that DVI had raised the issue of eligibility of LHG, which was opposed by LHG tooth and nail.
# 33. The Hon'ble Appellate Tribunal in Quinn Logistics India's case (supra) held that the following good grounds and unforeseen circumstances, the intervening period can be excluded for counting of the total period of 270 days of resolution process:
i). If the corporate insolvency resolution process is stayed by 'a court of law or the Adjudicating Authority or the Appellate Tribunal or the Hon'ble Supreme Court.
ii). If no 'Resolution Professional' is functioning for one or other reason during the corporate insolvency resolution process, such as removal.
(iii) The period between the date of order of admission/moratorium is passed and the actual date on which the 'Resolution Professional' takes charge for completing the corporate insolvency resolution process.
(iv) On hearing a case, if order is reserved by the Adjudicating Authority or the Appellate Tribunal or the Hon'ble Supreme Court and finally pass order enabling the 'Resolution Professional' to complete the corporate insolvency resolution process. If the corporate insolvency resolution process is set aside by the Appellate Tribunal or order of the Appellate Tribunal is reversed by the Hon'ble Supreme Court and corporate insolvency resolution process is restored.
(vi) Any other circumstances which justifies exclusion of certain period.
The facts of the present case are not covered under various circumstances from Point No. (i) to (v) as laid down by the Hon'ble National Company Law Appellate Tribunal, but the matter in this case is required to be considered under principal Point No. (vi) to see whether the circumstances in the present case are such which would justify the exclusion of certain period.
# 35. The Hon'ble Supreme Court further held in Arcelormittal India Private Limited's case (supra) as under:
"A reasonable and balanced construction of this statute would therefore lead to the result that, where a resolution plan is upheld by the Appellate Authority, either by way of allowing or dismissing an appeal before it, the period of time taken in litigation ought to be excluded. This is not to say that the NCLT and NCLAT will be tardy in decision making. This is only to say that in the event of the NCLT, or the NCLAT, or this Court taking time to decide an application beyond the period of 270 days, the time taken in legal proceedings to decide the matter cannot possibly be excluded, as otherwise a good resolution plan may have to be shelved, resulting in corporate death, and the consequent displacement of employees and workers"
# 38. With the aforesaid discussion and holding that the approved Resolution Plan submitted by LHG is not capable of implementation due to default in adhering to the payment schedule, we dispose of this application by directing that the period from the date when DVI submitted its final plan i.e. on 05.03.2018 as given in Paragraph No.8 of CA No. 140 of 2018 upto the date of the receipt of copy of this order be excluded while calculating the period of 270 days for completion of the Resolution Plan with liberty to the financial creditor and/or Resolution Professional to make appropriate complaint with the Insolvency and Bankruptcy Board of India or the Central Government on the allegation of wilful or intentional default and to pursue the appropriate remedy for the offence, if any, committed by the respondent with right to respondent No.1 to defend the action.
CA No.601/2018
The instant application has been filed by successful Resolution Applicant, namely, Liberty House Group Pte Limited (LHG), under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter to be referred as the 'Code') with a prayer that the Corporate Insolvency Resolution Process (CIRP) in respect of Amtek Auto Limited, commencing on 24.04.2017 and culminating into order of approval of Resolution Plan on 25.07.2018 by this Tribunal, is vitiated by misrepresentation/fraud/mistake of fact.
# 28. We have heard the learned Senior Counsel for the applicant (LHG) and have carefully perused the record at the preliminary stage.
# 29. In view of the contentions raised by the learned Senior Counsel for the applicant-LHG, learned Senior Counsel for the financial creditor and the learned counsel for the Resolution Professional at the time of hearing application, being CA No.567/2018 and the order disposing of the same in which the right has been kept open to the applicant to defend any action, the prayer made in this application would not survive.
# 30. The learned Senior Counsel for the applicant-LHG however, contended that the Adjudicating Authority must lay down the guidelines for compliance by the Resolution Professionals in such matters and the adjudicating authority is vested with such a right. We have already held that there has been a default in implementing the Resolution Plan submitted by the applicant. The application of the financial creditor has been disposed of with liberty to the Resolution Applicant or the financial creditors to file a complaint before the Insolvency and Bankruptcy Board of India or the Central Government, claiming that the LHG overn intentionally and wilfully contravened the terms of the Plan. No effective order therefore, can be passed in this application as the matter would be within the purview of the Competent Authority. The Adjudicating Authority under the Code Without passing an effective order cannot lay down the guidelines in the exercise of its jurisdiction, which is to adjudicate the matters under the Code and the Rules and Regulations framed thereunder.
In view of the above, we reject this application in limine. CA No.601/2018 stands disposed of.
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