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Supreme Court of India
Committee Of Creditors Of Amtek … vs Dinkar T. Venkatsubramanian on 1 December, 2021Author: M.R. Shah
Bench: M.R. Shah, Sanjiv Khanna
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6707 OF 2019
Committee of Creditors of Amtek Auto Limited ..Appellant
through Corporation Bank
Versus
Dinkar T. Venkatsubramanian and others ..Respondents
JUDGMENT
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 16.08.2019 passed by the National Company Law
Signature Not Verified
NatarajanAppellate Tribunal, New Delhi (hereinafter referred to as the ‘Appellate
Digitally signed by R
Date: 2021.12.01
16:36:56 IST
Reason:
Authority’) in Company Appeal (AT) (Insolvency) No. 219 of 2019, the
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Committee of Creditors of Amtek Auto Limited through Corporation Bank
(hereinafter referred to as the ‘COC’) has preferred the present appeal.
2. The present appeal, as such, has a chequered history.
3. Pursuant to an application made under Section 7 of the Insolvency
and Bankruptcy Code, 2016 (hereinafter referred to as the ‘IBC’), the
corporate insolvency resolution process was initiated against Amtek Auto
Limited – Corporate Debtor on 24.07.2017. A resolution professional
was appointed. An advertisement was published by the resolution
professional inviting prospective resolution applicants to submit a
Resolution Plan by 31.08.2017. The Resolution Plans submitted by
respondent No.3 herein – Deccan Value Investor LP (hereinafter referred
to as the ‘DVI’) and respondent no.2 herein – M/s Liberty House Group
Private Limited (hereinafter referred to as the “Liberty”) were considered
by the COC. However, DVI withdrew its Resolution Plan and therefore
the revised plan of Liberty was considered and approved by the COC on
2.4.2018. Subsequently, the Resolution Plan submitted by Liberty came
to be approved by the National Company Law Tribunal, Chandigarh
Bench, Chandigarh (hereinafter referred to as the “Adjudicating
Authority”) vide order dated 25.07.2018. However, the successful
resolution applicant – Liberty did not act as per the approved Resolution
Plan. Thereafter, number of proceedings were initiated against the
successful resolution applicant – Liberty.
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3.1 An application under Section 60(5) read with Section 74(3) of the
IBC was filed by the COC/financial creditors before the Adjudicating
Authority informing that the successful resolution applicant – Liberty has
failed to act as per the approved Resolution Plan and it was prayed to
reinstate the COC and the resolution professional to ensure that the
Corporate Debtor remain as a going concern. Further prayer was made
to grant 90 days to 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 Liberty.
3.2 The Adjudicating Authority held that Liberty has defaulted in its
obligation under the approved Resolution Plan and granted liberty to the
COC and the resolution professional to approach the appropriate
authority under the IBC for the determination of the wilful default. The
Adjudicating Authority did not accede to the request for carrying out a
fresh process by inviting the plans again but directed the reconstitution
of the COC for re-consideration of the Resolution Plan submitted by DVI.
The Adjudicating Authority disposed of the said application/appeal
accordingly.
3.3 Feeling aggrieved and dissatisfied with the order passed by the
adjudicating authority dated 13.02.2019, the COC filed an appeal before
the appellate authority – NCLAT. That thereafter, the resolution
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professional invited fresh applications from prospective resolution
applicants and called upon them to submit their resolution plans. Over
and above two other resolution applicants, an interest was also received
from DVI on 31.05.2019. However, the same was rejected and DVI was
declared as an ineligible resolution applicant. Against the said rejection,
DVI filed an appeal before the appellate authority. Vide order dated
26.06.2019, the appellate authority held that in light of the earlier order
dated 20.05.2019 the COC was required to consider all resolution plans
subject to the pending appeal. The DVI submitted the revised resolution
plan. However subsequently, the appellate authority by the impugned
judgment and order disposed of the appeal filed by the COC and
rejected the prayer for exclusion of time. Consequently, virtually ordered
the liquidation of the Corporate Debtor.
4. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 16.08.2019 passed by the appellate authority, the COC
has preferred the present appeal contending inter alia that (a) the
Corporate Debtor is financially viable entity and there is enough interest
in the market for submission of a resolution plan for the Corporate
Debtor; (b) Resolution of the financial affairs of a distressed company is
primary aim of the Code and a failure/infirmity on the part of a resolution
applicant ought not to undermine the primary mischief sought to be
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resolved; (c) Maximisation of the value of the assets of the Corporate
Debtor is imbedded in the Code and even forms the part of its Preamble
and therefore, an opportunity ought to be granted to the Committee of
Creditors to make an attempt at resolution specially keeping in view the
availability of suitable resolution applicants in the market; and (d) Liberty,
by its deliberate failure in implementing the Approved Resolution Plan,
has defrauded the Adjudicating Authority, the Committee of Creditors
and all the stakeholders of the Corporate Debtor, hence, the period
extended in proceeding with the CIR Process with Liberty as a
Resolution Applicant ought to be excluded to uphold the principles
underlining the Code.
5. By order dated 6.9.2019, while issuing notice in the present
appeal, this Court stayed the liquidation proceedings, until further orders.
5.1 When the appeal was taken up for further hearing on 24.09.2019,
it was submitted on behalf of the COC that the resolution professional
may be permitted to invite the fresh offers within a period of 21 days.
This Court permitted the resolution professional to invite fresh offers
within a period of 21 days. This Court further passed an order that within
two weeks thereafter, the COC shall take a final call in the matter and
the decision of the COC and the offers received be placed before this
Court. DVI also submitted the fresh resolution plan which was approved
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by the COC with 70% majority. By order dated 8.6.2020, this Court
relegated the matter of IA No. 48906/2020 filed by the COC for
appropriate directions/orders to the adjudicating authority to consider the
same and pass appropriate orders, after hearing the parties. This Court
also observed that the time spent before the adjudicating authority and
before this Court be excluded for calculating long stop date. DVI tried to
withdraw from resolution plan. The same came to be specifically
rejected by this Court vide order dated 18.06.2020. This Court further
observed that in case the DVI indulges in such kind of practice, it will be
treated as contempt of this Court in view of the various orders passed by
this Court at its instance.
5.2 That the resolution plan submitted by the DVI came to be
approved by the adjudicating authority – NCLT in the month of July,
2020. Since the approved resolution plan submitted by the DVI was not
acted upon by the DVI, the COC filed Contempt Petition No. 524/2020
before this Court. DVI also filed an application for rectification of the
earlier order dated 18.06.2020 by which this Court rejected the prayer of
the DVI for withdrawal of the offer and observed that in case the DVI
indulges in such kind of practice, it will be treated as contempt of this
Court. Both the contempt petition filed by the COC as well as the
application for rectification filed by the DVI were heard together. By a
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detailed order dated 23.02.2021, this Court dismissed the application for
rectification filed by the DVI of the order of this Court dated 18.06.2020
instituted by the DVI.
5.3 While rejecting the said application, this Court specifically
observed that DVI’s application for rectification is an attempt to renege
from the resolution plan which it submitted and to resile from its
obligations. It was further observed that this is a devious attempt which
must be disallowed. Simultaneously, this Court also dismissed the
contempt petition. However, while dismissing the contempt petition, it is
observed in para 38 as under:
“38 The issue which needs to be addressed is whether recourse to the
contempt jurisdiction is valid and whether it should be exercised in the
facts of this case. Undoubtedly, as we have noted earlier, the conduct of
DVI has not been bona fide. The extension of time in the course of the
judicial process before this Court enures to the benefit of DVI as a
resolution applicant whose proposal was considered under the auspices of
the directions of the Court. DVI attempted to resile from its obligations and
a reading of its application which led to the passing of the order of this
Court dated 18 June 2020 will leave no doubt about the fact that DVI was
not just seeking an extension of time but a re-negotiation of its resolution
plan after its approval by the CoC. Then again, despite the order of this
Court dated 18 June 2020 rejecting the attempt of DVI, it continued to
persist in raising the same pleas within and outside the proceedings
before the NCLAT. The conduct of DVI is lacking in bona fides. The issue
however is whether this conduct in raising the untenable plea and in failing
to adhere to its obligations under the resolution plan can per se be
regarded as a contempt of the order of this Court dated 18 June 2020. DVI
was undoubtedly placed on notice of the order that should it proceed in
such terms, it would invite the invocation of the contempt jurisdiction.
Having said that, it is evident that the order of this Court dated 18 June
2020 rejected the IA moved by DVI and as a necessary consequence, the
basis on which the reliefs in the IA were sought. Therefore correctly, it has
been now stated on behalf of the DVI that it will not set-up a plea of force
majeure in view of the dismissal of its IA on 18 June 2020. 29 However
lacking in bona fides the conduct of DVI was, we must be circumspect
about invoking the contempt jurisdiction as setting up an untenable plea
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should not in and by itself invite the penal consequences which emanate
from the exercise of the contempt jurisdiction. Likewise, the default of DVI
in fulfilling the terms of the resolution plan may invite consequences as
envisaged in law. On the balance, we are of the considered view that it
would not be appropriate to exercise the contempt jurisdiction of this
Court. During the course of the hearing, Dr Abhishek Manu Singhvi,
learned Senior Counsel has relied on the affidavit filed in response to the
contempt petition while seeking to urge that DVI will be within in its rights
to urge whether the conditions precedent to the enforcement of the
resolution plan have been fulfilled. Since DVI is in appeal before the
NCLAT, we express no opinion on the merits of the submission. The
NCLAT will take a view on the tenability and merits of the submission of
DVI that the conditions precedent under the resolution plan have not been
fulfilled after hearing the parties. This is not an issue which arises before
the Court in the present proceedings either upon the application for
rectification moved by DVI or the contempt petition moved by the CoC.”
5.4 While dismissing the application for rectification and disposing of
the contempt proceedings, this Court ultimately concluded and directed
as under:
“39 For the above reasons, our conclusions and directions are that:
(i) There is no merit in the application for rectification moved by DVI.
IA No. 58156 of 2020 in Civil Appeal No 6707 of 2020 shall stand
dismissed;
(ii) It is not expedient in the interest of justice to pursue the contempt
proceedings. The Contempt Petition (C) No. 524 of 2020 in Civil
Appeal No. 6707 of 2019 shall accordingly stand dismissed,
subject to (iii) below;
(iii) In terms of the submission which has been made by DVI before
this Court and even otherwise, as a consequence of the dismissal
of its IA on 18 June 2020, it 30 shall not set-up a plea for force
majeure in the proceedings which are pending before the NCLAT in
appeal against the order of the NCLT approving the resolution plan;
and
(iv) The appeal filed by DVI against the approval of the resolution plan
by the NCLT shall peremptorily be heard and disposed of by the
NCLAT not later than within a period of one month from the date of
the present judgment.”
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This Court also directed that the appeal filed by the DVI against the
approval of the resolution plan shall peremptorily be heard and disposed
of by the appellate authority within a period of one month from the date
of the said judgment.
5.5 That thereafter, by a detailed judgment and order dated
16.04.2021, the appellate authority dismissed the appeal preferred by
the DVI which was filed against the order passed by the adjudicating
authority dated 9.7.2020 approving the resolution plan submitted by the
DVI itself. Thus thereafter, the Resolution Plan submitted by the
successful resolution applicant – DVI was to be implemented and acted
upon by the DVI. However subsequently when the present appeal was
taken up for further hearing, it was pointed out that the DVI – successful
resolution applicant is not acting as per the approved resolution plan.
However, it was pointed out that the implementation of the successful
resolution plan has been commenced. Therefore, this Court directed the
parties to submit the status report on implementation of the approved
resolution plan submitted by DVI.
6. Status Report filed by DVI – successful resolution applicant was
produced before this Court on 23.11.2021, when this Court passed the
following order:
“We have heard Shri Tushar Mehta, learned Solicitor General appearing
on behalf of the Appellant, Ms. Shikha Tandon, learned counsel appearing
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on behalf of the DVI/successful resolution applicant and Shri Sanjay Bhatt,
learned counsel appearing on behalf of the Resolution Professional.
It is not in dispute that the Resolution Plan submitted by the DVI has been
approved by the NCLAT as far as back in July, 2020. Earlier, the attempts
were made to resile from the Resolution plan which has not been
accepted by this Court by detailed orders. Thereafter, the matter has been
adjourned time and again so as to enable the DVI to act as per the
Resolution Plan. Today, a status report has been filed on behalf of the
respondent no.3 – DVI.
In paragraph 2, it is stated as under –
“At the outset, it is submitted that DVI has been committed towards
implementation of DVI’s Resolution Plan and has been taking active
steps towards its implementation. In furtherance of the same, DVI and/
or its affiliate (“DVI Affiliate”) has already remitted amounts aggregating
to INR 500 Crore, i.e., the upfront infusion amount (“Upfront Cash
Amounts”) under DVI’s Resolution Plan to the Indian branch of
Standard Chartered Bank (DVI Affiliate’s custodian bank) for settlement
of debt under DVI’s Resolution Plan. DVI is currently awaiting details of
Amtek’s designated accounts in which such Upfront Cash Amounts are
to be remitted on the closing date, as may be agreed to between the
members of the IMC for implementation of DVI’s Resolution Plan. It is
further stated that DVI undertakes to disburse this money in accordance
with the terms of DVI’s Resolution Plan, as and when such closing date
is achieved.”
Under the Resolution Plan, the following steps are to be undertaken –
“a) Delisting of Amtek’s equity share capital from the stock exchanges –
Completed.
b) Increase of authorised share capital of Amtek and completion of
necessary filings – Completed.
c) DVI and/or its affiliate to subscribe to the equity shares of Amtek by
infusing nominal amounts of INR 5,00,000 (“Nominal Infusion”) –
Ongoing.
d) Debt identified as unsustainable to be converted into equity and
equity to be issued and allotted to the creditors (“Unsustainable Equity
Allotment”) – Ongoing.
e) Reduction in pre-CIRP sharesholding of Amtek and equity held by
way of Unsustainable Equity Allotment – This action is pending and can
be undertaken only upon Nominal Infusion and Unsustainable Equity
Allotment.
f) Issuance and allotment of 90% of equity share capital to DVI and/or
its affiliates – Ongoing.
g) Issuance and allotment of 10% of equity share capital to financial
creditors – Ongoing.
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h) Issuance and allotment of non-convertible debentures to DVI Affiliate
– Ongoing DVI vide its emails dated 18.11.2021 had informed the IMC
members that:
(a) Upfront Cash Amounts have currently been remitted by DVI Affiliate
to the Indian branch of the DVI Affiliate’s custodian bank for settlement
of debt under the Resolution Plan; and
(b) details of the designated accounts in which such amounts are to be
deposited have not been provided to DVI.”
One of the steps to be undertaken by the DVI is to deposit Rs.500 crores
“Upfront Cash Amounts”. As per the communication dated 18.11.2021
addressed by DVI a sum of Rs.500 crores is lying in a deposit account in
India with their custodian Standard Chartered Bank and the money is
ready for disbursement to lenders. The submission on behalf of the DVI is
that unless and until the other steps are undertaken as per the Resolution
Plan, the aforesaid amount of Rs.500 crores may not be transferred to
Amtek Auto Limited. The aforesaid is just contrary to their own
communication dated 18.11.2021. Therefore, when even according to the
DVI a sum of Rs.500 cores is lying in a deposit account in India with their
custodian and even as per the said communication the money is ready for
disbursement to lenders, we direct that the aforesaid amount of Rs.500
crores to be transferred to the Bank Account of Amtek Auto Limited by
24.11.2021, the particulars of the Bank Account are as under –
Bank Name – State Bank of India A/c No. – 32985171467 IFSC –
SBIN0004109 Beneficiary – Amtek Auto Limited Branch – 12th Floor, STC
Building, 1, Tolstoy Marg, Jawahar Vyapar Bhawan, New Delhi
Put up on 25.11.2021.”
7. Today, when the present appeal is taken up for further hearing, Shri
Tushar Mehta, learned Solicitor General of India appearing on behalf of
the COC has submitted that an amount of Rs. 500 crores are transferred
to the bank account of the Corporate Debtor – Amtek Auto Limited. It is
to be noted that even in the status report the DVI has stated that DVI has
been committed towards its approved resolution plan and has been
taking active steps towards its implementation.
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8. Under the approved resolution plan, both the parties have to fulfil
their obligations. The Corporate Debtor has also to perform its
obligations simultaneously so that the amount of Rs.500 crores be
transferred to the financial creditors/lenders of the Corporate Debtor. It is
the case on behalf of the respective parties that the aforesaid obligations
are to be performed mutually and simultaneously. It is reported that
Implementation and Monitoring Committee (IMC) has been constituted
comprising of resolution professional, three identified lenders of the
Corporate Debtor and nominee of DVI to supervise the implementation of
the resolution plan.
9. The approved resolution plan has to be implemented at the earliest
and that is the mandate under the IBC. As per Section 12 of the IBC,
subject to sub-section (2), the corporate insolvency resolution process
shall be completed within a period of 180 days from the date of
admission of the application to initiate such process, which can be
extended by a further period of 180 days. As per proviso to Section 12 of
the IBC, which has been inserted by Act 26 of 2019, the insolvency
resolution process shall mandatorily be completed within a period of 330
days from the insolvency commencement date, including any extension
of the period of corporate insolvency resolution process granted under
Section 12 of the IBC and the time taken in legal proceedings in relation
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to such resolution process of the Corporate Debtor. As per the third
proviso to Section 12 of the IBC, which is also inserted by Act 26 of
2019, where the insolvency resolution process of a Corporate Debtor is
pending and has not been completed within a period stated hereinabove,
i.e., within a period of 330 days, such resolution process shall be
completed within a period of 90 days from the date of commencement of
the IBC amendment Act, 2019, i.e., 16.08.2019.
10. Thus, the entire resolution process has to be completed within the
period stipulated under Section 12 of the IBC and any deviation would
defeat the object and purpose of providing such time limit. However, by
earlier order, the time limit has been condoned in view of the various
litigations pending between the parties and in the peculiar facts and
circumstances of the case. Therefore, any further delay in
implementation of the approved resolution plan submitted by DVI which
as such has been approved by the adjudicating authority in the month of
July, 2020 and even the appeal against the same has been dismissed
subsequently, any further delay would defeat the very object and purpose
of providing specific time limit for completion of the insolvency resolution
process, as mandated under Section 12 of the IBC. Therefore, we direct
all the concerned parties to the approved resolution plan and/or
connected with implementation of the approved resolution plan including
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IMC to complete the implementation of the approved resolution plan,
within a period of four weeks from today, without fail. It is further directed
and it goes without saying that on implementation of the approved
resolution plan and even as per the approved resolution plan, an amount
of Rs. 500 crores now deposited by DVI-successful resolution applicant
be transferred to the respective lenders/financial creditors as per the
approved resolution plan and/or as mutually agreed. Any lapse on the
part of any of the parties in implementing the approved resolution plan
with the time stipulated hereinabove shall be viewed very seriously.
11. With the above observations and directions, the present appeal
stands disposed of. Pending applications, if any, also stand disposed of.
………………………………….J. [M.R. Shah]
New Delhi; …………………………………..J.
December 01, 2021. [Sanjiv Khanna]
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