The NCLAT, New Delhi Bench observed that Appellant was granted various opportunities to comply with the terms and conditions laid down in LOI and process memorandum, but the Appellant failed to comply with the same and could not even gave the performance guarantee of Rs. 100 Crores as against the resolution plan of Rs. 2505 Crore. 

It was opined that the observations which are sought to be expunged or deleted are relevant and germane to the process for taking decision for allowing the application filed by SBI for withdrawal of the application filed by the RP for approval of the resolution plan submitted by the Appellant in which it did not show any interest as it could not even deposit a sum of Rs. 100 Crores as the performance guarantee and requested to treat the BBG of Rs. 40 Crores as part of the performance guarantee of Rs. 100 Crores and asked for rest of the amount of Rs. 60 Crores to deposit in the overseas escrow account which was not the spirit of LOI and process memorandum. 

Brief Facts: 

The present appeal has been filed against the order of the NCLT vide which the application filed by the Financial Creditor has been allowed and further application by Resolution Professional for approval of plan was withdrawn. 

The Appellant was aggrieved with observations of the NCLT. 

Brief Background:

State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC” ) against Castex Technologies Limited (Corporate Debtor) which was admitted, declaring moratorium. 

The CoC approved the process note containing terms and conditions for consideration and selection of the resolution plans and the same was shared with potential resolution applicants subject to their furnishing the non-disclosure undertakings and eligibility declaration in terms of Section 29A of the IBC. 

2 resolution plans were submitted by two potential resolution applicants, namely, Deccan Value Investors L.P. (DVI) and Liberty House Group PTE Limited (LHG) and both were considered deficient. Later, CoC classified LHG as the preferred bidder and it was granted time for submission of the resolution plan after addressing the issue raised by the CoC. 

The plan of LHG was approved by the CoC. The LHG was required to provide a performance guarantee of Rs. 100 Crores in favour of State Bank of India for and on behalf of the CoC. 

The Resolution Professional filed before the NCLT for the approval of the resolution plan, however, before it could have been approved, State Bank of India filed an application on behalf of the CoC in respect of the Corporate Debtor under Section 30 r/w Section 31 and 60(5) of the Code to exclude the time period spent, in negotiating with LHG and in litigation w.e.f. 18.05.2018 till passing of the final order on that application. The decision to withdraw the application for approval of resolution plan was taken as LSG was unable to comply with the basic requirement of furnishing performance guarantee to the tune of Rs. 100 Crores which casted a serious doubt on the ability of LHG to implement the plan. 

Since, fresh process was initiated, the resolution plan by DVI has been approved by both CoC and NCLT. 

Contentions of the Appellant:

It was submitted that the Appellant was only seeking expunction of certain observations in the impugned order and willing to pay Rs. 10 lakhs (Cost) as a goodwill gesture and in this regard submitted that the order may be modified to the extent that instead of treating it be an amount of cost, it may be treated a payment made by the Appellant voluntarily. 

It was further urged that that the order of withdrawal of the resolution plan was not opposed by the Appellant, therefore, there was no occasion to pass any strictures as there was no lis before the Adjudicating Authority and there was any dispute regarding withdrawal of the resolution plan. 

Observations of the Tribunal: 

It was observed that Appellant was granted various opportunities to comply with the terms and conditions laid down in LOI and process memorandum, but the Appellant failed to comply with the same and could not even gave the performance guarantee of Rs. 100 Crores as against the resolution plan of Rs. 2505 Crore. 

It was further noted that the observations which are sought to be expunged or deleted are relevant and germane to the process for taking decision for allowing the application filed by SBI for withdrawal of the application filed by the RP for approval of the resolution plan submitted by the Appellant in which it did not show any interest as it could not even deposit a sum of Rs. 100 Crores as the performance guarantee and requested to treat the BBG of Rs. 40 Crores as part of the performance guarantee of Rs. 100 Crores and asked for rest of the amount of Rs. 60 Crores to deposit in the overseas escrow account which was not the spirit of LOI and process memorandum. 

The decision of the Tribunal: 

Based on the aforementioned reasons, the appeal was accordingly dismissed. 

Case Title: Liberty House Group Pte Ltd. v. Dinkar T. Venkatasubramanian 

Case No.: Comp. App. (AT) (Ins) No. 637 of 2019

Coram: Justice Rakesh Kumar Jain, Mr. Naresh Salecha (Technical Member)

Advocates for Appellant: Advs. Mr. Virender Ganda, Mr. Arvind Kumar Gupta, Ms. Henna George, Ms. Ashmeet Arora, Ms. Tanya Hasija, Mr. Ayandeb Mitra

Advocates for Respondent: Advs. Sumant Batra, Mr. Ruchi Goyal, Mr. Sandeep Bajaj, Mr. Vipul Jai, Mr. Mayank

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