Arcelormittal India Private Limited vs Satish Kumar Gupta - Supreme Court Important Judgment
Arcelormittal India Private Limited vs Satish Kumar Gupta - Supreme Court Important Judgment 2018 -
On 4th October, 2018, in the case of Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors. [Civil Appeal Nos.9402-9405 of 2018], the primary issues for consideration were: (1) whether the stage of ineligibility of the resolution applicant under Section 29A(c) of the Insolvency and Bankruptcy Code, 2016, attaches at the time when the resolution plan is submitted by the resolution applicant or at the date of commencement of the Corporate Insolvency Resolution Process (CIRP); and (2) if a resolution plan is turned down at the threshold by a Resolution Professional under Section 30(2) of the Code, at this stage is it open to the concerned resolution applicant to challenge the Resolution Professional’s rejection.
With regard to the first issue, the Supreme Court observed that the opening words of Section 29A of the Code “furnish a clue as to the time at which sub-clause (c) is to operate.” It was held that “the opening words of Section 29A state: “a person shall not be eligible to submit a resolution plan…” and “it is clear therefore that the stage of ineligibility attaches when the resolution plan is submitted by a resolution applicant.”
However, it was also held that “despite the fact that the relevant time for the ineligibility under sub-clause (c) to attach is the time of submission of the resolution plan, antecedent facts reasonably proximate to this point of time can always be seen, to determine whether the persons referred to in Section 29A are, in substance, seeking to avoid the consequences of the proviso to sub-clause (c) before submitting a resolution plan. If it is shown, on facts, that, at a reasonably proximate point of time before the submission of the resolution plan, the affairs of the persons referred to in Section 29A are so arranged, as to avoid paying off the debts of the non-performing asset concerned, such persons must be held to be ineligible to submit a resolution plan, or otherwise both the purpose of the first proviso to sub-section (c) of Section 29A, as well as the larger objective sought to be achieved by the said sub-clause in public interest, will be defeated.”
On the second issue, the Supreme Court observed that “given the timeline” within which the insolvency process is to be completed, “and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudicating Authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage.”
However, the Supreme Court also observed that “a Resolution Professional is only to “examine” and “confirm” that each resolution plan conforms to what is provided by Section 30(2).” It was held that “the Resolution Professional is not required to take any decision, but merely to ensure that the resolution plans submitted are complete in all respects before they are placed before the Committee of Creditors, who may or may not approve it.” The Supreme Court held that “even though it is not necessary for the Resolution Professional to give reasons while submitting a resolution plan to the Committee of Creditors, it would be in the fitness of things if he appends the due diligence report carried out by him with respect to each of the resolution plans under consideration, and to state briefly as to why it does or does not conform to the law.”