Feedback   New User   Subscription   Demo   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

RBL Bank Limited Versus MBL Infrastructures Limited And Others

2018 (2) TMI 984 - NATIONAL COMPANY LAW TRIBUNAL, KOLKATA

Corporate insolvency procedure - Resolution Applicant for transmitting to the Committee of Creditors for taking immediate steps - Held that:- In the case in hand, the guarantee has not been invoked, and the personal guarantor has not committed any default. No demand has been made under guarantee. Therefore, no default in the payment of dues by the guarantor has occurred. During the moratorium period, the guarantee cannot be invoked. Thus, present Resolution Applicant is not barred by clause (c) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bmitting a Resolution Plan who, on account of their antecedents, may adversely impact the credibility of the processes under the Code. It is clear that contract of guarantee under which no claim has been made and which need not be performed cannot be treated as a subsisting or enforceable contract for clause (h) of section 29A, as the liability to pay for a guarantor arises when the debt is crystalised. If the guarantee is not invoked and demand is not made on the guarantor, debt payable by him .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

entire class of guarantors under clause (h) of section 29A would be discriminatory. However, it is to be made clear that we have clarified the legal position only and CoC has to take independent decision on the Resolution Plan of the applicant. - C.A. (I.B.) No. 543/KB/2017 arising out of C.P(IB)/170/KB/2017 - Dated:- 11-12-2017 - MR. V.P. SINGH AND MR. JINAN K. R., JJ. For The Appearing parties : Ms. Neelima Chatterjee, Adv, Sanjeev Ahiya, Jyoti Singh, Adv, Rahul Auddy, Adv, Ratnanko Banerji, S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ider and/or reconsider the Resolution Plan dated 22nd November 2017 submitted by the Applicant. Brief facts as stated in the application are as follows: The applicant is a promoter-director of the MBL Infrastructure Ltd. (from now on also referred to as the Corporate Debtor or MBL ). It is important to point out that application filed u/s 7 by RBL Bank Ltd. against the Corporate Debtor MBL has been admitted by the order dated 30th March 2017 of the Adjudicating Authority. After the admission of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Committee of Creditors. After that in the 4th meeting of the Committee of Creditors (in short CoC) held on 11th August 2017, it was decided to get the Resolution plan vetted by an external Agency to act as a Financial Advisor to CoC. PNB Investments Services was appointed as Financial Advisor to CoC. The Resolution Plan submitted by the Applicant was presented before the PNB Investment Services Ltd. and in the 5th meeting of the CoC, Resolution Plan was discussed. After that, in 6th CoC meeting .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Resolution Plan was deliberated in details, and it was decided that a final resolution plan will be submitted by the Applicant and Resolution Professional shall submit the Resolution Plan to the Committee of Creditors for voting in its tentative meeting on 11th December 2017. The Resolution Applicant submitted the amended Resolution Plan on 22nd November 2017. It is also contended by the Resolution Applicant that the amended Resolution Plan was thoroughly examined by the Legal Counsel for the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urther submitted that by e-mail dated 30th November 2017, Resolution Professional confirmed that the Resolution Plan is in compliance with the applicable rules and regulations of the Code (including the amendments till dated 7th November 2017). Resolution Applicant has further stated that Financial Advisor to CoC, PNB Investment Services Ltd. Vetted the Resolution Plan and it was also vetted by Legal Advisor of the Resolution Professional. On 23rd November 2017, Government of India has amended t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mber 2017 stating the reasons as to why he is not disqualified by reasons of the amendment made in the Code regarding Ordinance dated 23rd November 2017. Applicant has further stated that he is not ineligible under the newly inserted section 29A of the Code, 2016 to submit resolution plan because the applicant, nor any other person collaborating with the applicant, is a promoter or in the management or control of the Corporate Debtor; the applicant is not an undischarged insolvent under clause ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of section 29A; the applicant has not been disqualified to act as Director of the Company as provided in clause (b) of Section 29A; the applicant has not been prohibited by SEBI from trading as provided under clause (f) of section 29A; the applicant has not indulged in preferential transaction, undervalue transaction or fraudulent transaction as provided in clause (g) of section 29A. The applicant has further stated that the guarantee executed in favour of the Creditor by the Applicant in respe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lution Professional convened a meeting of CoC on 1st December 2017 to discuss and deliberate on the impact of an ordinance passed by the Govt. of India about IBC, 2016 amendment dated 23rd November 2017. The said agenda item of the notice was only for discussion and not for voting. In the said CoC meeting, CoC shows inability to accept the view of the legal expert and opined that the applicant was ineligible to submit the Resolution Plan, in light of sub-clauses (c) and (h) of section 29A of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not authorised to vote as agenda circulated was only for discussion and deliberation. Some of the members of CoC including Bank of India, Allahabad Bank, Union Bank explicitly stated that they are not in a position to express any opinion. Resolution Professional has further issued advertisement in leading newspaper and invited expression of interest on 2nd December 2017. Applicant states that the opinion of some of the members of CoC was based on incorrect interpretation of clauses (c) and (h) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to calculate one year or more. It merely states that, whose account is classified as NPA and period of one year or more has elapsed from the date of such classification and who has failed to make the payment of all overdue amounts with interest thereon and charges relating to NPA before submissions of the Resolution Plan. The petitioner has further stated that no payment of overdue amount with interest thereon and charges can be made to Financial Creditors of the Corporate Debtor during the Ins .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or any demand has been made on the applicant to make any payments as guarantor of the Corporate Debtor. Applicant has stated that he is not a defaulter under the Guarantee. The Resolution Applicant does not have at present any enforceable guarantee which has been executed in favour of the creditor in respect of the Corporate Debtor. The Applicant has stated that by purporting to disqualify the entire class of guarantors under clause (h) of section 29A would be violative of the valuable rights gu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oC has not considered these facts that in this case the guarantee is not invoked and the demand is not made on the Guarantor and debt payable by him is not crystalised, and the Guarantor cannot be therefore considered to be a defaulter. The Resolution Applicant has further submitted that extended period for submission of Resolution Plan is expiring on 23rd December 2017. If no Resolution Plan is sanctioned within a reasonable time before such date, it will result in the liquidation of the Corpor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

forward for submission of Resolution Plan and ultimately the Company will go into liquidation. The Sec. 60 of the Insolvency and Bankruptcy Code, 2016 authorises Adjudicating Authority to decide: (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. We have heard the argument of the Ld. Counsel for the Resolution Profession and the Ld. Coun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed eligible. This would help a company of the stature of MBL Infrastructures Ltd. survive and create a win- win situation for all the stakeholders. RP also offered to be around for any meeting or clarification required or sought by any of the authorities of any of the CoC members just to speed up the process and to ensure that we together can come up with some workable solution to ensure that Corporate Debtor survives . We have perused the minutes of the CoC meeting dated 1st December 2017, whic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ability of the provisions of the said Ordinance on the Resolution Applicant, a legal opinion by an expert was sought by Resolution Applicant and submitted to Resolution Professional along with his views which were shared with CoC members before the meeting on 29th November 2017. According to expert opinion, based on a harmonious interpretation of all the provisions including section 29A(c) and (h) of the Ordinance with the intent and spirit of the law, Code and the BLRC Report, the Resolution Ap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nance. CoC members unanimously were of the opinion that the Resolution Applicant was ineligible to submit a Resolution Plan and was hit by the provisions, especially under the plain reading of the clause (c) and clause (h) of Section 29A of the Ordinance. .. Due to the view of the most of the CoC members that Resolution Applicant was ineligible at this stage, RP suggested that as per Ordinance, we should immediately issue a fresh expression of interest to seek potential Resolution Applicant. It .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ied charge filed with RoC was not brought to their information either by CD or the Consortium. RP expressed his inability to go back in history and make any changes or change his stand on what went amiss during earlier transactions between the RBL, CD and the Consortium lenders. To avoid any blame game between the various stakeholders, RP provided an opportunity to consider RBL as secured should all CoC members agree to allow the present charge to be perfected by the due procedure of the law, wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the bank guarantee against the Corporate Debtor shall be a violation of the moratorium. On perusal of the above contents of the 10th CoC meeting dated 1st December, 2017, it appears that the Resolution Plan submitted by the Resolution Applicant was not approved by the CoC on account of amended provision of IBC, i.e. clause (c) and (h) of Section 29A, which has been promulgated by the Ordinance dated 23rd November 2017. It is crucial to consider the scope of clauses (c) and (h) of Sec. 29A of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed from the date of such classification and who has failed to make the payment of all overdue amounts with interest thereon and charges relating to non-performing asset before submission of the resolution plan; (h) has executed an enforceable guarantee in favour of a creditor, in respect of a corporate debtor under insolvency resolution process or liquidation under this Code. Section 29A clause (c) imposed restriction on the person whose account is classified as Non-Performing Asset in accordanc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is clear that the Financial Creditor RBL has opted to move out of Consortium, which is evident from the modified charge filed with the RoC. It also appears that RP provided an opportunity to consider RBL as secured , subject to the approval of the CoC. But the CoC directed RP to maintain its status quo, i.e. of treating RBL as an unsecured creditor. It also appears that PNB, one of the CoC member also informed that in the capacity of lead lender in SPV, he would go ahead with the corporate guara .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was amended by the Ordinance and section 29A, which specifies ineligibility to submit a resolution plan, has been added. The statement and objective echoes in the Ordinance state that the Ordinance has been promulgated to prohibit certain persons from submitting a Resolution Plan who, on account of their antecedents, may adversely impact the credibility of the processes under the Code . It is clear from the above intention of the legislature in enacting the Insolvency & Bankruptcy Code and t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with criminal intent. Merely because there is a default by a borrower in repayment of borrowed amount to a creditor does not render the borrower or its guarantor, dishonest. Every act of default cannot be equated with malfeasance. Therefore, it can safely be concluded that the intention of the legislature is not to prohibit bona fide persons from submitting Resolution Plan. Clause (h) of Section 29A is not to disqualify the promoters as a class for submitting a Resolution Plan. The intent is to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Guarantor is found to be guilty of being a connected person to persons prescribed under clauses (a) to (g) under section 29A, who have antecedents, which may adversely impact the credibility of the processes under the IB Code. Disqualifying the entire class of guarantors under clause (h) of section 29A would be discriminatory and be violative of Article 14 of the Constitution of India and cannot be stated to have a logical nexus with the objective sought to be achieved by the Ordinance. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

antors who have not been offered an opportunity to pay by calling upon them to pay the dues, by invoking the guarantee. Therefore, the words enforceable guarantee appearing in clause (h) are not to be understood by their ordinary meaning or in the context of enforceability of the guarantee as a legal and binding contract, but in the context of the objectives of IB Code and Ordinance in general and clause (h) in particular. Enforceable guarantee in context of clause (h) means and refers to such c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bt payable by him is not crystalised. The guarantor cannot, therefore, be said to be in default for breach of the guarantee and penalise merely because a legal and binding contract of guarantee exists which is enforceable but is subject to its invocation by the terms of guarantee. It is a settled position of law that the liability of a guarantor may accrue only on invoking the guarantee. In the case in hand, the guarantee has not been invoked, and the personal guarantor has not committed any def .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version