NCLAT allows successful bidder of ARSS Infrastructure Projects to sweeten the deal

The National Company Law Appellate Tribunal (NCLAT) has set aside the Cuttack Bench of the NCLT order (on 18 April 2023) rejecting the resolution plan of Ocean Capital Market Limited (OCML) for ARSS Infrastructure Projects Ltd, and ordered liquidation of the Bhubaneswar-based company.

The NCLAT allowed the successful resolution applicant (OCML) to submit an addendum to resolution plan within a period of two weeks from the date of order (9 August 2023).

The NCLAT further directed the resolution professional – Uday Narayan Mitra – to place the Addendum for consideration of the Committee of Creditors (CoC), the proceeding of which should be completed within period of four weeks.

Two weeks after that the resolution professional has been asked to submit an appropriate application for approval, in case, the Addendum is also approved with the sufficient majority, before the NCLT for consideration. The NCLT should then consider the said application filed by the resolution profession for approval of plan as well as addendum, expeditiously.

Earlier, the resolution plan of Ocean Capital Market was rejected by the NCLT as the tribunal found the plan was not in conformity with the requirements provisions of the IBC.

The NCLT had noted that that the resolution plan requiring the financial creditors to assign their debts payable by the corporate debtor inclusive of the personal guarantee, the corporate Guarantee and other security Interests, and surrender the original guarantee deed and all other relevant security documents including title deeds, Hypothecation deeds and pledge Agreements to the Resolution applicant contravene section 128 of Indian Contract Act 1892 and the same is in violation section 30(2)(e) of IBC 2016.

In consequence of rejection of the resolution plan, and the fact that the resolution period and extended period were already expired, and more than sixteen months expired from 30 November 2021 the date on which the corporate debtor was admitted into CIRP, corporate debtor ARSS Infrastructure Projects Limited was ordered to be liquidated under section 33 of IBC 2016.

NCLAT’s reasoning

Giving its verdict in favour of the successful resolution applicant, NCLAT argued that the resolution plan once having approved by the CoC with vote share of 76.67%, for the purpose of this case, ends of justice be served in permitting the Successful Resolution Applicant to place an Addendum to the Resolution Plan before the CoC.

The NCLAT said that it is of the view that there is no lack of jurisdiction in the Adjudicating Authority to remit the plan for reconsidering the amendment which the successful resolution applicant himself was requesting to be carried out.

The appellate tribunal also noted that Ocean Capital Market’s resolution value is Rs 432.90 crore where the liquidation value of ARSS Infrastructure Projects was only Rs.147.11 crore.

“The successful resolution applicant has proposed an excess amount of Rs.285.79 crore,” said the tribunal.

Also Read: Landmark Judgement