The Mumbai Bench of the National Company Law Tribunal (NCLT) has observed that rejection of a resolution plan on technicalities, without going into its merits, goes against the spirit of the Insolvency and Bankruptcy Code.
Hearing the case of the applicant Omkara Assets Reconstruction Private Limited, the applicant, against the Interim Resolution Professional (IRP) of Unimark Remedies Ltd., the corporate debtor, the NCLT Bench noted that the applicant had submitted a resolution plan to the interim resolution professional (IRP) on December 11, 2018, even though IRP had set October 31, 2018 as the deadline.
The applicant submitted that the CoC, at the 13th meeting held on December 12, 2018, refused to open the envelope containing the resolution plan submitted by the applicant solely on the ground that it was submitted after the cut-off date.
Omkara alleged that the CoC acted in an arbitrary manner by refusing to accept the plan submitted by it and contended that no harm or prejudice would be caused to the company or the CoC or the corporate debtor, if the plan submitted by the applicant was considered purely on merit.
“It is clear that the resolution applicant had approached the IRP with a proposal at the 12th hour, but certainly before accepting or finalisation of any resolution plan,” the NCLT Bench comprising Justice Bhaskara Pantula Mohan and V. Nallasenapathy noted. The Bench directed the IRP to conisder the bid on its merits.
The verdict may have bearing on the proceedings in the Essar Steel case, where the NCLT Ahmedabad is seized with similar circumstances.
The CoC for Essar Steel had given its nod to an ArcelorMittal bid for the company under the IBC framework.
The original promoters of the beleaguered steel firm had put in a higher bid after the last date was over.
A day later, the CoC decided in ArcelorMittal’s favour. In Omkara’s case, the Bench observed: “Keeping in view the very object of the code, when there is a clash/conflict between the regulations and the code, the object of the code is paramount and not the regulations which are formed only for the just implementation of the code.”
‘Expedite proceedings’
Separately, the National Company Law Appellate Tribunal has asked the Ahmedabad Bench of the NCLT to expeditiously take the final decision in the Essar Steel case, where the CoC’s selection of ArcelorMittal as the highest bidder is being contested by Essar Steel’s promoters. The next hearing for the case may come up on Monday, January 7.
via Object of IBC paramount, says NCLT – BUSINESS – The Hindu
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