Arcelormittal India Private Limited Vs. Satish Kumar Gupta & Ors. [October 4, 2018]
2018 Latest Caselaw 729 SC

ArcelorMittal India Pvt. Ltd. Vs. Satish Kumar Gupta & Ors.

[Civil Appeal Nos. 9402-9405 of 2018]

[Civil Appeal No. 9582 of 2018]

[Civil Appeal No._______ of 2018]

[Diary No.35253 of 2018]

[Civil Appeal No._______ of 2018]

[Diary No.33971 of 2018]

R.F. Nariman, J.

1. The facts of the present case revolve around the ineligibility of resolution applicants to submit resolution plans after the introduction of Section 29A into the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the Code"), with effect from 23.11.2017.

2. On 2.8.2017, the Adjudicating Authority, being the NCLT, Ahmedabad Bench, passed an order under Section 7 of the Code at the behest of financial creditors, being the State Bank of India and the Standard Chartered Bank, admitting a petition filed under the Code for financial debts owed to them by the corporate debtor Essar Steel India Limited (hereinafter referred to as "ESIL"), in the sum of roughly Rs.45,000,00,00,000 (Rupees Forty Five Thousand Crores). Shri Satish Kumar Gupta was appointed as the Interim Resolution Professional and confirmed as such on 4.9.2017. Consequently, the Resolution Professional published an advertisement dated 6.10.2017, seeking expression of interest from potential resolution applicants who wished to submit resolution plans for the revival of ESIL.

In terms of the advertisement, the last date for submission of an expression of interest was 23.10.2017. Pursuant to this advertisement, one 'ArcelorMittal India Private Limited' (hereinafter referred to as "AMIPL") submitted an expression of interest on 11.10.2017. An entity called Numetal Limited (hereinafter referred to as "Numetal"), also submitted an expression of interest on 20.10.2017. On 24.12.2017, the Resolution Professional published a 'request for proposal', in which it was stated that the last date for submission of resolution plans would be 29.1.2018. On a request made by the Committee of Creditors, the NCLT extended the duration of the corporate insolvency resolution process by 90 days beyond the initial period of 180 days, i.e., upto 29.4.2018. The Resolution Professional therefore issued the first addendum to the request for proposal, extending the date for submission of resolution plans to 12.2.2018.

Given this, both AMIPL and Numetal submitted their resolution plans on this date. On 20.3.2018, apprehending that the Resolution Professional would recommend that it be declared ineligible, Numetal filed I.A. No. 98 of 2018 before the NCLT inter alia seeking that it be declared eligible as a resolution applicant. On 23.3.2018, however, the Resolution Professional found both AMIPL and Numetal to be ineligible under Section 29A. Insofar as AMIPL is concerned, the Resolution Professional found thus:

"2. Please note that during the course of the evaluation of the Resolution Plan, I became aware of the fact that ArcelorMittal Netherlands B.V. (AM Netherlands) (which is mentioned as a 'connected person' of AM India in the Resolution Plan) has been disclosed as the 'promoter' of Uttam Galva Steels Limited (Uttam Galva) pursuant to which my Advisor had requested certain clarifications from AM India on 26 February 2018 (Request for Clarification 1) and on 14 March 2018 (Request for Clarification 2). Further to the responses received from AM India on 28 February 2018 and 17 March 2018 (collectively the AM India Responses) on the aforementioned requests for clarifications, I understand that:

2.1. AM Netherlands had acquired 29.05% of the shareholding in Uttam Galva in 2009 and has since been classified as a promoter of Uttam Galva;

2.2. AM Netherlands had entered into a 'co-promoter' agreement dated 4 September 2009 with the other promoters of Uttam Galva (Co-Promoter Agreement) under which AM Netherlands had various rights (including certain rights which can be considered as participative in nature and not merely protective);

2.3. Uttam Galva's account was classified as a 'nonperforming asset' (NPA) on 31 March 2016 by Canara Bank and Punjab National Bank (which classification has continued for more 1 year till 02 August 2017);

2.4. AM Netherlands has sold its shareholding in Uttam Galva to the other promoters of Uttam Galva on 7 February 2018; and

2.5. AM Netherlands has applied to the National Stock Exchange Limited and the BSE Limited, each on 8 February 2018 for declassification as a 'promoter' of Uttam Galva under Regulation 31A(2) of the Securities and Exchange Board of India

3. Further, as on the Plan Submission Date, AM Netherlands (had not obtained the Stock Exchange Approvals relating to declassification as a promoter of Uttam Galva and) continued to be classified as a promoter of Uttam Galva.

4. In light of the above, AM India is ineligible under the provisions of Section 29A(c) of the IBC and pursuant to paragraph 4.11.2(a) of the RPP, the Resolution Plan is hereby rejected and will not be placed before the Committee of Creditors."

3. Similarly, holding Numetal to be ineligible, the Resolution Professional, on the same date, found:

"2.1. as on the date of submission of its expression of interest (EOI) on 20 October 2017 by Numetal, it relied on Essar Communications Limited (ECL), one of its shareholders to comply with the eligibility requirement relating to its 'tangible net worth' (TNW) (as stipulated in the section titled 'Eligibility Criteria' in the EOI);

2.2. as on the Plan Submission Date, Numetal relied on Crinium Bay, its shareholder to comply with the eligibility requirement relating to its TNW (as stipulated in Section 6.7 of the Resolution Plan);

2.3. Numetal was incorporated 7 days before submission of the EOI; and

2.4. Numetal is a newly incorporated joint venture between Aurora Enterprises Limited, Crinium Bay, Indo International Limited and Tyazhpromexport.

3. Since Numetal has at all stages relied on its shareholders to comply with the eligibility requirements relating to submission of a resolution plan in respect of ESIL, for the purposes of ensuring compliance with Section 29A of the Insolvency and Bankruptcy Code, 2016 (IBC), I have considered each of the shareholders of Numetal as joint venture partners to be acting jointly for the purposes of submission of the Resolution Plan. Whilst considering the eligibility of the shareholders of Numetal, since Aurora Enterprises Limited (AEL) is held completely by Rewant Ruia (through various companies and a trust), I have considered Rewant Ruia, Crinium Bay, Indo International Limited and Tyazhpromexport for scrutiny under Section 29A of the IBC.

4. Further, pursuant to Regulation 2(q) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations), a person is deemed to acting in concert with amongst others, his (or her) 'immediate relatives', which term (as defined under Regulation 2(1) of the SAST Regulations) includes the father of such person. Therefore, in relation to the Resolution Plan in respect of ESIL (which contemplates the acquisition of ESIL by Numetal by way of a merger of ESIL with a wholly owned subsidiary of Numetal), Rewant Ruia is deemed to be acting in concert with his father Ravi Ruia.

5. Further, as on the Plan Submission Date: (a)* Ravi Ruia (who Rewant Ruia is deemed to be acting in concert with) was the promoter of ESIL whose account was classified as an NPA for more than 1 year, prior to the commencement of corporate-insolvency resolution process (CIRP) of ESIL on 2 August 2017; and (b) Ravi Ruia (who Rewant Ruia is deemed to be acting in concert with) has executed a guarantee in favour of SBI (for itself and a consortium of lenders) and the CIRP application filed by SBI has been admitted by the National Company Law Tribunal on 2 August 2017.

6. In light of the above, Rewant Ruia (who is acting jointly with the other shareholders of Numetal for the purposes of submission of the Resolution Plan) is ineligible under Section 29A of the IBC, specifically paragraphs (c) and (h) and accordingly, as on the Plan Submission Date, Numetal (which is nothing but an incorporated joint venture investment vehicle through which its shareholders are submitting the Resolution Plan) was not eligible under Section 29A of the IBC.

7. Accordingly and for the reasons set out in paragraphs 5 and 6 above, please note that pursuant to paragraph 4.11.2(a) of the RFP, the Resolution Plan is hereby rejected and will not be placed before the Committee of Creditors."

5. On 26.3.2018, AMIPL filed I.A. No. 110 of 2018 before the Adjudicating Authority, challenging "the order" of the Resolution Professional dated 23.03.2018. Numetal did likewise vide I.A. No. 111 of 2018.

6. On 2.4.2018, pursuant to the Resolution Professional's invitation, fresh resolution plans were submitted (as both the resolution plans before this were found to be ineligible) by AMIPL, Numetal, and one other entity, namely 'Vedanta Resources Ltd.'. On this very date, the NCLT directed that the bids of the resolution applicants, submitted pursuant to the revised request for proposal, should not be opened pending adjudication of I.A. No. 98 of 2018 filed by Numetal.

7. On 19.4.2018, the Adjudicating Authority, being the NCLT, passed its order in all the I.A.s, in which it first held:

"21. As per the matter available on the record, a third party contestant, Arcelor Mittal India Pvt. Ltd., by filing Additional Application No. P-7 of 2018 has also sought for impleading itself in Intervention Application No. IA 98/2018 the Numetal has filed a Reply opposing such relief as being sought for by the present Applicant, Numetal Ltd., and in the present IA and also sought a declaration in its favour to be declared as eligible for filing a valid resolution plan as on 12.2.2018 thus, it has opposed the application alleging disability/ineligibility on the part of M/s. Numetal Ltd., to file a valid and proper resolution plan as on date of 12.2.2018. Since we have not decided the Impleadment Application in favour of ArcelorMittal by formally impleading it as party in the present I.A. No. 98 of 2018 and only audience were given to its learned counsel in support of its resolution plan, therefore, we find it appropriate to confine the issue of determination of eligibility mainly on the reason which formed a basis for the RP and CoC for not founding eligible for submission of resolution plan by the resolution applicant, M/s. Numetal Ltd., and not on additional ground as put forth by the ArcelorMittal.

However, the oral submissions advanced by learned counsel for parties including the ArcelorMittal duly supported by their Written Submissions are being taken into consideration for deciding the issue involved in the present application. For arriving at such findings/conclusion of the RP has obtained legal opinion and its such findings is based on such opinion which were explained to the CoC for reaching to appropriate conclusion/decision. Equally, the applicant in I.A. No. 98/2018 also obtain legal opinion from renowned jurists, e.g. (former judge of the hon'ble Supreme Court) and from former learned Law Officer of the GOI which are placed on record along with the present IA also in support of their case in this opinion it is expressed the Numetal Ltd. (Resolution Applicant) is a single and independent corporate entity and it cannot be termed as a consortium of its shareholders not it intend to implement the resolution plan jointly with another person hence, in view of this the amended clause 4.11.2(1) to the RFP would neither be applicable nor binding upon the resolution applicant and thus, it is not required at all to seek an approval from the RP or the CoC. In respect of proposed change its shareholding of ESIL in terms of RET and also are required under the other provisions of the Law.

It has been also emphasised that the Numetal Ltd., is not a SPV brought into existence merely for the purpose of submitting the resolution plan in respect of the corporate debtor ESIL as it has recently entered into an agreement to acquire majority stock in Odisha Slurry Pipeline Infrastructure Ltd., by an independent contract from the Resolution Plan. Thus, it cannot be presumed that the applicant is such a corporate entity which is brought into the existence only for the purpose of putting forth resolution plan for the ESIL. Since, there is difference in the legal opinions among the Learned Luminaries and law firms and more than one views are possible in the present case to be acted upon then, it cannot be said that there is patently illegality in the conclusion of the RP or it acted arbitrarily or mala fidely in rejecting the resolution plan by relying on the legal opinion received and believed to be true by him and which were placed before the CoC.

Moreover, the RP under the provision of the Code it is expected to make scrutiny of a resolution plan in conformity with the law of the land and to take such a prudent decision which a common man in normal course may arrive and think just and proper. This court being the Adjudicating Authority under the Code is not expected to substitute its view upon the discretion and wisdom of the RP and CoC to opt for only which a particular view until and unless it is the case of patent illegality or arbitrariness. Therefore, for the aforesaid reason in our prima facie view we do not find any patent illegality in the decision of the RP for declaring ineligible to applicants which is a prudent decision where there is possibility of more than one legal view then this court at this stage is not expected to substitute its view and to interfere with the conclusion of the RP."

7. It then went on to hold:

"19. Thus, the date on which a person stands disqualified would be the date of commencement of the Corporate Insolvency Resolution Process of the Corporate Debtor, i.e., ESIL. This date is 02.08.2017 on which date, ArcelorMittal India Pvt. Ltd., is disqualified in view of the fact that its connected persons of AM Netherland and L.N. Mittal are disqualified as they have an account or an account of the corporate debtor under their management and control or of whom they are a promoter classified as NPA under the guidelines of the Reserve Bank of India and at least a period of one year has lapsed from the date of such classification till the date of commencement of corporate insolvency resolution process of the corporate debtor. The said disqualification starts from 02.08.2017 can only be remedied in the manner provided in the proviso to clause (c) of section 29A read with section 30(4) proviso and in no other manner.

The disqualification commenced on 02.08.2017 continues till 12.02.2018 and the same disqualification cannot be relieved by merely ceasing to be the promoter or by selling shares in the companies whose accounts are NPA such as Uttam Galva or KSS Petron.

20. On perusal of annexure R/4, i.e., shareholding pattern annexed with the reply of Numetal Ltd., it is found that ArcelorMittal is a publicly known promoter of Uttam Galva and its shareholding is classified under "promoter and promoter group" in the filings made in the Stock Exchange of India. As per shareholding pattern of Uttam Galva disclosed in the stock exchange as on December, 2017 ArcelorMittal was a single largest shareholder having significant shareholding of 29.05 % in Uttam Galva.

21. On perusal of the record it is found that connected person of the applicant are the promoter of KSS Petron Pvt. Ltd., a company incorporated under the Companies Act, 1956, having registered office at Swastik Chamber, 6th Floor, Sion Trombay Road, Chembur, Mumbai has been NPA for more than a year and CIRP has been initiated against the KSS Petron vide order dated 01.08.2017 by Mumbai Bench of the National Company Law Tribunal.

22. It is also pertinent to mention herein that, in the minutes of the meeting of the committee of creditors which reproduces the decision of the RP pursuant to the opinions received by the RP from Cyril Amarchand Mangaldas and Mr. Khambatta. Cyril Amarchand Mangaldas had opined that AM Netherlands exercised positive control over Uttam Galva and merely divesting the shareholding prior to the submission of the resolution plan could not remove the disqualification under section 29A(c) of the Code, unless cured by payment.

23. It is an admitted position that AM Netherlands is an indirect 100% subsidiary of ArcelorMittal Societe Anonyme (AMSA) which is a listed company incorporated in Luxemburg. On the other hand, AM India is also an indirect subsidiary (99.99%) of AMSA. Accordingly, AMSA is promoter, in management and in control of AM India, the resolution applicant and AM Netherlands is a subsidiary company/associate company of AMSA in view of which AM Netherlands becomes a connected person and such connected person has an account of corporate debtor Uttam Galva under its management, control or of whom such connected person, namely, AM Netherlands is a promoter is classified as NPA for more than one year before 02.082017. Consequently, AM India shall not be eligible to submit a resolution plan as on 12.02.2018.

24. It is an admitted position that Laxminarayan Mittal is controlling AM India being an indirect subsidiary of AMSA. Accordingly, LN Mittal/AMSA is promoter in management and in control of AM India, the resolution applicant, and LN Mittal is also in management and control of KSS Global BV in view of what is stated above and KSS Petron which is a 100% subsidiary of KSS Global BV is also under management and control of LN Mittal. KSS Petron has a NPA for more than one year and consequently, LN Mittal being a promoter/in control of KSS Global BV/KSS Petron Pvt. Ltd., is a connected person whose account is classified nonperforming. Consequently, AM India shall not be eligible to submit a resolution plan.

25. From a bare reading of section 29A(c) it is very clear that a person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person; has an account, or an account of a corporate debtor under the management or control of such person or whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor, PROVIDED that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan. Section 29A does not distinguish between positive and negative control.

Any person who is either promoter or in the management or in the control of the business of the corporate debtor and in default is ineligible. Person connected to ArcelorMittal India Pvt. Ltd., who are either promoter or in the management with KSS Petron and Uttam Galva Steels Ltd., are ineligible. Mere sale of shares and declassification as promoter after the companies have gone into default cannot be absolved them responsibility. In order to become eligible, overdue amounts to lenders in both the cases of KSS Petron and Uttam Galva Steels Ltd., should be paid by ArcelorMittal before being eligible to bid, as provided in Section 29A itself."

8. Having said this, it then remanded the matter to the Committee of Creditors as follows:- "27. Further, we are of the view that RP ought to have produced both the resolution plan before the CoC, along with his comments of eligibility of both the resolution applicants for consideration of the CoC and to follow the provision of section 29A(c) read with section 30(4) for the purpose of affording the opportunity to the resolution applicants before declaring them ineligible. In our view, such procedure has not been followed hence, it vitiate the proceeding of the CoC and hence the present matter can be remanded back to the RP and CoC on this ground alone for their reconsideration."

9. Appeals were filed by both Numetal and AMIPL, on 26.4.2018 and 27.4.2018 respectively, before the Appellate Authority, being the NCLAT. Before these appeals could be decided, in compliance with the order passed by the Adjudicating Authority, the Committee of Creditors, after hearing both AMIPL and Numetal, disqualified AMIPL by an order dated 8.5.2018 as follows:

"48. In wrapping up this post-decisional hearing, we reiterate that AMIL is an ineligible resolution applicant under Section 29A(c) of the IBC, who acting in concert with AMBV (the promoter of Uttam Galva on insolvency commencement date and connected person of AMIL) and Arcelor Mittal Group in attempting to avoid their obligations to make payment as provided under Section 29A(c) of mc (sic) with reference to Uttam Galva and KSS Petron. Their unwillingness to make payment in the Uttam Galva matter or the KSS Petron matter by their actions of 7th of February, 2018 and 9th of February, 2018 as stated above is an avoidance device.

49. In case of Uttam Galva, AMBV arranged the sale of its shareholding at a nominal value just days prior to the date of submission of the Resolution Plan is evidence of the fact that AMIL is in concert with AMBV such action is a manifestation of the passage of Section 29A under IBC. As promoter of Uttam Galva and as member of the Arcelor Mittal Group referred above, they should have made payment of the Overdue Amounts to the lenders of Uttam Galva.

50. The same conduct of Arcelor Mittal Group acting through Fraselli and KSS Global in terminating the shareholders agreement in KSS Global, the holding company of KSS Petron, a device has been to avoid payment of the Overdue Amounts of KSS Petron before filing the Resolution Plan for ESIL. The close proximity of this action on 9th February, 2018, one day before the plan submission date is a telling act of avoidance.

51. Since the CoC have not by themselves filed an appeal over the Ld. Adjudicating Authority's order dated 19th April, 2018, the concession granted by the Ld. Adjudicating Authority to give an opportunity to cure the ineligibility, we are indicating to AMIL, its connected persona and persons in concert to cure their disability under Section 29A(c) of IBC by making a payment to the lenders of Uttam Galva for Overdue Amounts of Uttam Galva, another payment to the lenders of KSS Petron constituting Overdue Amounts in KSS Petron and Overdue Amounts of such other companies which are classified as NPAs and where Arcelor Mittal Group is a promoter.

Such payments will have to be made by AMIL or its constituents / connected persons no later than 15th May, 2018, especially since the law actually requires that this curative payment of overdue amounts, interests and charges should be made by the corporate resolution intending applicant / resolution applicant before the Resolution Plan is filed. This concession by the CoC is without prejudice to the CoC's right to strictly enforce the law and provisions of Section 29A(c) of the IBC. The proof of such payment in form of a No Overdue Amounts letter (indicative format set out in Annex) shall be submitted to the RP (with notification to the CoC) by 6:00 P.M. IST on 15th May 2018. As we have limited time available under the CIR process of ESIL, AMIL is requested to adhere to these timelines."

10. By another order of the same date, the Committee of Creditors disqualified Numetal as follows:

"44. Numetal and AEL are related as an associate company, on account of the fact that AEL (alias Rewant Ruia) has significant influence over Numetal pursuant to its control of at least 20% of the total voting power of Numetal. Since an associate company is considered as a related party to a resolution applicant where such resolution applicant and other persons are acting jointly or in concert, Numetal is clearly said to be acting jointly and in concert with AEL. This in turn means Numetal is acting in concert with Mr. Rewant Ruia and hence with Mr. Ravi Ruia, the promoter and guarantor of ESIL (a non-performing asset since 2016). This inflicts a disability and ineligibility upon Numetal / its consortium and constituent shareholders."

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57. Thus in wrapping up the post decisional hearing, we reiterate that Numetal is an ineligible resolution applicant acting in concert with Rewant Ruia and his connected person namely his relative / father Ravi Ruia, who is a promoter of a corporate debtor ESIL, which has a non-performing asset account. 58. Since the CoC have not by themselves filed an appeal over the Ld. Adjudicating Authority's Order dated 19th April, 2018, the concession granted by the Ld. Adjudicating Authority to give an opportunity to cure the ineligibility, we are indicating to the resolution applicant, i.e. Numetal and the consortium of Crinium Bay, Indo, TPE and AEL as persons acting in concert with Numetal, that they would be eligible only if they make payment of

(i) the Overdue Amounts constituting NPA in ESIL as on 30th April, 2018 aggregating to Rs. 37,558.65 crores in principal and interest and Rs. 1,688.27 crores in penal interest and other charges and such other additional Overdue Amounts which have accrued till the date of payment; and

(ii) the Overdue Amounts of such other companies which are classified as NPAs and where Mr. Ravi Ruia / Mr. Rewant Ruia are promoters. Such payments will have to be made by Numetal or its constituents / consortium no later than 15th May, 2018, especially since the law actually requires that this curative payment should be made before the resolution plan is filed.

This concession is without prejudice to the CoC's right to strictly enforce the law and the provisions of Sections 29A(c) and 29A(h) of IBC. The proof of such payment in form of a no-Overdues Amounts letter (indicative format set out in Annex 3) shall be submitted to the RP (with notification to CoC) by 6:00 P.M. IST on 15 th May 2018, As we have limited time available under the CIR process of ESIL, Numetal is requested to adhere to these timelines."

11. In the appeals that were filed before it, the Appellate Authority, insofar as Numetal's Resolution plan was concerned, vide an order dated 7.9.2018 held as follows:-

"44. On behalf of 'AM India Ltd.', it was submitted that 'VTB Bank' one of the shareholders of 'Numetal Ltd.' is ineligible in view of Article 5(c) of the EU Regulations of 2014. Though such submission has been made, no order or evidence has been placed on record to suggest that any order of prohibition was imposed by the European Union against the 'VTB Bank'. Neither the date of order nor order passed by any competent authority or court of law has been placed on record.

45. On the other hand, it will be evident that Council of European Union adopted Council Regulation (EU) No. 833/2014 concerning Restricting measures in view of Russia action. In fact, in view of situation in Ukraine, the European Union Regulation was adopted. Apart from the aforesaid fact, that 'AM India Ltd.' has not brought on record any penal order passed by any court of law relating to disability, if any, which is corresponding to any of the disability shown in clauses (a) to (h) of Section 29A. Therefore, the stand taken by the 'AM India Ltd.' with regard to ineligibility of 'VTB Bank' is fit to be rejected.

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Resolution Plan submitted by the 'Numetal Ltd.' on 12 th February, 2018 60. As on 12th February, 2018, when the 1st Resolution Plan was submitted by 'Numetal Ltd.', it had four shareholders.

(i) 'Crinium Bay' : 40%

(ii) 'Indo' : 25.1%

(iii) 'TPE' : 9.9%

(iv) 'AEL' : 25%

61. Admittedly, Mr. Rewant is 100% shareholder of 'AEL' and 'AEL' held 25% in 'Numetal Ltd.' even as on 12th February, 2018, Mr. Rewant being son of Mr. Ravi, who is the promoter of the 'Corporate Debtor', we hold that 'AEL' is a related party and comes within the meaning of 'person in concert' in terms of Regulation 2(1)(q).

62. In view of the aforesaid findings, we hold that at the time of submission of 1st Resolution Plan by 'Numetal Ltd.', one of the shareholders being 'AEL', 'Numetal Ltd.' was not eligible to submit 'Resolution Plan' in terms of Section 29A.

Position of 'Numetal Ltd.' as on 29 th March, 2018 when the subsequent 'Resolution Plan' was submitted by 'Numetal Ltd.'.

63. The 'Committee of Creditors' had extended the period for submitted a fresh 'Resolution Plan' by 2nd April, 2018. 'Numetal Ltd.' filed fresh 'Resolution Plan' on 29th March, 2018.

On the said date the 'Numetal Ltd.' consisted of the three shareholders: -

(a) 'Crinium Bay' ('VTB') : 40%

(b) 'Indo' : 34.1%

(c) 'TPE' : 25.9%

64. As on 29th March, 2018, as the 'AEL' was not the shareholder of 'Numetal Ltd.' and all the three shareholders aforesaid being eligible, we hold that 'Numetal Ltd.' in respect of the 'Resolution Plan' dated 29th March, 2018, is eligible and the provision of Section 29A, as on 29th March, 2018 is not attracted to the 'Numetal Ltd.'. For the reasons aforesaid, we are of the view that the 'Resolution Plan' submitted by 'Numetal Ltd.' on 29th March, 2018 is required to be considered by the 'Committee of Creditors' to find out its viability, feasibility and financial matrix."

12. In the same order, insofar as AMIPL's resolution plan was concerned, the Appellate Authority held as follows:

"107. In the present case, the 'Expression of Interest' was submitted by 'AM India Ltd.' on 11th October, 2017 and by 'Numetal Ltd.' on 20th October, 2017, both prior to 23rd November, 2017 i.e. the date Section 29A was inserted by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 but the 'Resolution Plans' were submitted by both 'AM India Ltd.' and 'Numetal Ltd.' on 12th February, 2018.

108. The question arises for consideration is as to what will be the position if, on the basis of 'Information Memorandum' the 'Expression of Interest' is submitted by the 'Resolution Applicants' prior to 23rd November, 2017 and whether they are eligible to take advantage of 2nd proviso to sub-section (4) of Section 30.?

109. Section 29A came into force on 23rd November, 2017. Those who submitted 'Resolution Plan' prior to the said date and if covered by clause (c) of Section 29A are entitled to derive benefit of second proviso to sub-section (4) of Section 30. Under 'I & B Code' there is no provision to submit 'Expression of Interest' prior to 'Resolution Plan'. What we find from the invitation seeking 'Expression of Interest' to submit a 'Resolution Plan' for 'Essar Steel Limited' published on 6th October, 2017 is the first stage of 'Resolution Plan'. Therefore, we hold that 'Expression of Interest' is part of the 'Resolution Plan', which follows the 'Resolution Plan'. In such case, the date of submission of the 'Expression of Interest' should be treated to be the date of submission of the 'Resolution Plan'. In this background, we hold that the date of submissions of the 1st 'Resolution Plan(s)' of 'AM India Ltd.' and 'Numetal Ltd.' will be deemed to be 11th October, 2017/12th February, 2018 and 20th October, 2017/12th February, 2018 respectively.

110. If the aforesaid proposition is not accepted, it will deprive the 'Resolution Applicants' from deriving advantage of second proviso to sub-section (4) of Section 30 inserted on 23rd November, 2017, even though they acted to submit the 'Resolution Plan' by submitting the 'Expression of Interest' of 'Resolution Plan'.

111. In view of the aforesaid finding, we hold that the Adjudicating Authority rightly held that the Appellant- 'AM India Ltd.' should have been given the opportunity by the 'Committee of Creditors' in terms of second proviso to sub-section (4) of Section 30.

112. The question arises for consideration is whether the 'AM Netherlands' is eligible, having transferred its entire shareholding of 'Uttam Galva' on 7th February, 2018 and by transferring of its entire shareholding of 'Fraseli' in 'KSS Global' on 9th February, 2018 i.e. two to four days prior to the submission of 'Expression of Interest' (first phase of 'Resolution Plan').

113. Proviso to clause (c) of Section 29A reads as follows: "Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan"

114. The aforesaid proviso to clause (c) makes it clear that the person shall be eligible to submit a 'Resolution Plan' if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of 'Resolution Plan'. It does not stipulate any other mode to become eligible and thereby does not prescribe any other mode to become ineligible, including by selling the shares thereby existing as a member of the Company whose account has been classified as nonperforming asset accounts in accordance with the guidelines of the Reserve Bank of India.

115. Second proviso to sub-section (4) of Section 30 also stipulates, as follows:

"30. Submission of resolution plan.-

(4) xxx xxx xxx

Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A" 116. From both the aforesaid provisions, it is clear that except in the manner the 'Resolution Applicants' can make it eligible and get rid of ineligibility under clause (c) of Section 29A that is by making payment of all overdue amounts in accordance with the proviso to clause (c) of Section 29A, no other manner a person, who is otherwise ineligible under clause (c) of Section 29A, can become eligible. There is no provision in the 'I & B Code' which permits an ineligible person to become eligible by selling or transferring its shares of the Company whose accounts have been declared as NPA in accordance with the guidelines of Reserve Bank of India.

117. Admittedly, 'AM Netherlands' is related party of 'AM India Ltd.'. 'AM Netherlands' was the promoter of 'Uttam Galva' on the date when the 'Uttam Galva' classified as NPA in accordance with the guidelines of Reserve Bank of India and a period of one year has elapsed from the date of such classification, at the time of commencement of 'Corporate Insolvency Resolution Process' of the 'Corporate Debtor'.

118. Once the stigma of "classification of the account as NPA" has been labelled on the promoter of the 'Uttam Galva', even after sale of shares by 'AM Netherlands' it may ceased to be a member or promoter of the 'Uttam Galva', but stigma as was attached with it will continue for the purpose of ineligibility under clause (c) of Section 29A, till payment of all overdue amount with interest and charges relating to NPA account of the 'Uttam Galva' is paid.

119. 'AM Netherlands' is 100% subsidiary of 'AMSA' which is a listed company incorporated in Luxemburg. 'AM India Ltd.' is also a subsidiary of 'AMSA' having 99.99% shareholding in it. Accordingly, 'AMSA' is also a promoter, in the management and in control of 'AM India Ltd.'. 'Fraseli' is a company owned and controlled by a company called by 'Mittal Investments' acquired about one third of the share capital of 'KSS Global BV'. Pursuant to such acquisition, 'Fraseli' acquired control over 'KSS Global BV' which in turn controls 'KSS Petron' and 'Petron Engineering'. 'Mittal Investments' is owned and controlled by LN Mittal Group, the promoters of the 'AM India Pvt. Ltd'.

120. 'AM India Ltd.' divested its shareholding in 'KSS Global BV' which is 100% owner of 'KSS Petron' (a Company whose account has been declared as NPA). 'AM India Ltd.' has its control over it will be evident from the fact that it has nominee Directors, who also resigned on 9th February, 2018 i.e. 3 days before submission of the 'Expression of Interest' of 'Resolution Plan' by 'AM India Ltd.' This will be also clear from the fact that the 'AM India Ltd.' was nothing that an entity controlling and managing in 'KSS Global BV' (which is 100% owner of 'KSS Petron' an NPA Company) divested its shareholding in 'KSS Global BV' on 9th February, 2018 i.e. 3 days before submission of the 'Expression of Interest' of 'Resolution Plan'.

121. We have also noticed that consequent to such acquisition of control by 'Fraseli', on 23rd May, 2011 a public announcement was made under 'SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997' for the acquisition of shares of 'Petron Engineering' inter alia by 'KSS Global BV' and 'Fraseli'. Therefore, we hold that Mr. L.N. Mittal Group, a connected person of 'AM India Ltd.' being the promoter and in the control and management of 'KSS Petron' since 2011 and 'KSS Petron' having classified as 'NPA' by multiple banks, the stigma attached to it cannot be cleared by 'KSS Global' by divesting its shares in 'KSS Petron' on 9th February, 2018 and the stigma will continue for the purpose of ineligibility under clause (c) Section 29A, till the payment of all overdue amount with interest thereon and charges relating to NPA account of 'KSS Petron'.

122. Admittedly, there are three nominee Directors of 'AM India Ltd.' in 'KSS Petron', one of the NPA Company. The nominee Directors of the Appellant- 'AM India Ltd.' had also resigned on 9th February, 2018 i.e. three days' before the submission of the 'Resolution Plan'. Therefore, it is clear that the 'AM India Ltd.' had complete control over the 'KSS Petron'.

123. It is informed that after impugned order passed by the Adjudicating Authority, the 'AM India Ltd.' had made conditional deposit of Rs. 7,000 Crores in its own current account (Escrow Account). Such depositation of the amount in its own Escrow Account does not qualify as a payment of overdue amounts in terms of proviso to clause (c) of Section 29A. A conditional offer to pay the over dues amount cannot be accepted till it is complied in the light of proviso to clause (c) of Section 29A unconditionally.

124. Dr. Abhishek Manu Singhvi, learned Senior Counsel appearing on behalf of 'AM India Ltd.' when asked, on instruction, submitted that if this Appellate Tribunal accept the 'Resolution Plan' submitted by the 'AM India Ltd.', it may deposit the non-performing assets amount with interest in the respective accounts which were declared as NPA in accordance with the guidelines of the Reserve Bank of India.

125. As we hold that 'AM India Ltd.' is also entitled to the benefit of second proviso to sub-section (4) of Section 30, we give one opportunity to the 'Resolution Applicant'- 'AM India Ltd.' to make payment of all overdue amount with interest thereon and charges relating to Non Performing Accounts of both the 'Uttam Galva' and the 'KSS Petron' in their respective accounts within three days i.e. by 11th September, 2018. If such amount is deposited in the accounts of both Non-Performing Accounts of 'Uttam Galva' and 'KSS Petron' within time aforesaid and is informed, the 'Committee of Creditors' will consider the 'Resolution Plan' submitted by 'AM India Ltd.' along with other 'Resolution Plans', including the 'Resolution Plan' submitted by the 'Numetal Ltd.' on 29th March, 2018, and if so necessary, may negotiate with the 'Resolution Applicant(s)'. An early decision should be taken by the 'Committee of Creditors' and on approval of the 'Resolution Plan', the 'Resolution Professional' will place the same immediately before the Adjudicating Authority who in its turn will pass order under Section 31 in accordance with law. The 'Successful Resolution Applicant' will take steps for execution of its 'Resolution Plan' and deposit the upfront money if proposed, in terms of the 'Resolution Plan'.

126. Taking into consideration the fact that a long period has taken due to pendency of the case before the Adjudicating Authority and thereafter, before this Appellate Tribunal, we direct the Adjudicating Authority to exclude the period the appeal was pending before this Appellate Tribunal i.e. from 26th April, 2018 till today (7th September, 2018) for the purpose of counting the total period of 270 days. The impugned order dated 19th April, 2018 passed by the Adjudicating Authority so far as it relates to eligibility of 'Numetal Ltd.' as on the date of the submission of the 'Resolution Plan' dated 29th March, 2018 is set aside. The impugned judgment/order in respect to 'AM India Ltd.' is affirmed with conditions as mentioned in the preceding paragraphs. All the appeals are disposed of with aforesaid observations and directions. The parties will bear their respective cost."

13. This is how both AMIPL and Numetal are before us in appeals from the Appellate Authority's order dated 7.9.2018.

14. Shri Harish N. Salve, learned Senior Advocate appearing on behalf of AMIPL, argued that Section 29A, as originally enacted, disqualified a person who has an account of a corporate debtor under the management or control of such person, or of whom such person is a promoter, which account was declared as a nonperforming asset. The further condition is that one year should have elapsed from the date of such declaration till the date of commencement of the corporate insolvency resolution process of the corporate debtor. Thus, a plain reading of the same establishes that the ineligibility under Section 29A is in relation to the submission of a resolution plan, which must consist of the elements set out in Section 30.

Responding to preliminary enquiries, i.e., an expression of interest, is not the subject matter of a resolution plan, and therefore, the relevant time is the time of submission of a resolution plan. He further argued that the amendment made to Section 29A in June, 2018, expressly stating that the relevant time was the time of submission of a resolution plan, is clarificatory in nature. Once this becomes clear, everything on facts falls into place.

According to the learned Senior Advocate, AMIPL is an indirect subsidiary of one 'ArcelorMittal Societe Anonyme' (hereinafter referred to as "AMSA"), which is a listed company in Luxemburg. AMSA holds 100% shares in one 'ArcelorMittal Belvel & Differdange Societe Anonyme' (hereinafter referred to as "AMBD"), a company incorporated in Luxemburg, which in turn holds 100% in one 'Oakey Holding BV', a company incorporated in the Netherlands, which in turn holds 99.99% shares in AMIPL. ArcelorMittal Netherlands BV (hereinafter referred to as "AMNLBV"), which is a member of the L.N. Mittal Group incorporated in the Netherlands, is 100% held by AMSA (the Chairman and CEO of AMSA being Shri L.N. Mittal). AMNLBV held 29.05% in one 'Uttam Galva Steels Limited' (hereinafter referred to as "Uttam Galva") which is an Indian company, listed in India. Uttam Galva was declared as a non-performing asset on 31.3.2016, with a debt of around Rs. 6000 crores. According to Shri Salve, Uttam Galva, though it entered into a Co-Promotion Agreement with AMNLBV on 4.9.2009, was really promoted by the Miglani Group of businessmen who are Indian citizens residing in Mumbai.

The Co- Promotion Agreement conferred on AMNLBV the right to appoint 50% of the non-independent directors on the board, as well as certain affirmative voting rights. This required that the Articles of Association be amended, which was never in fact done. In 2015 itself, AMNLBV had written off the investment in Uttam Galva from its books, seeking an exit from Uttam Galva at this time. AMNLBV never appointed any director or exercised any voting rights in Uttam Galva. What is important to note is that it had transferred its entire shareholding in Uttam Galva on 7.2.2018 to one 'Sainath Trading Company Private Limited', which was a Miglani Group Company, for Re.1 per share (having purchased the shares at Rs.120 per share).

The depository participant account of AMNLBV ceased to show the said shares with effect from 7.2.2018. The Co-Promotion Agreement dated 4.9.2009, pursuant to which the status of "promoter" had been conferred on AMNLBV, stood automatically terminated vide clause 21.6 thereof on 7.2.2018. In order to put the matter beyond any doubt, the parties also executed a Co-Promotion Termination Agreement on 7.2.2018. On 8.2.2018, Uttam Galva filed the necessary forms with the Registrar of Companies and made the necessary disclosures with the National Stock Exchange and Bombay Stock Exchange to declassify AMNLBV as a promoter of Uttam Galva. This was accordingly done on 21.3.2018 and 23.3.2018 before the NSE and BSE respectively.

Such declassification, being a ministerial act, is relatable to the date of sale of shares, i.e., 7.2.2009, and considered effective from the said date. Inasmuch as AMNLBV therefore ceased to be a promoter in Uttam Galva prior to 12.2.2018, the resolution plan is not hit by Section 29A(c). Similarly, according to the learned Senior Advocate, insofar as KSS Petron Private Limited (hereinafter referred to as "KSS Petron") is concerned, it is an admitted case that 'Fraseli Investments Sarl' (hereinafter referred to as "Fraseli") is a company owned and controlled by one 'Mittal Investments Sarl,' which in turn is owned and controlled by the L.N. Mittal Group, the promoters of AMIPL. Fraseli held 32.22% in one 'KazStroy Service Global BV' (hereinafter referred to as "KSS Global"), a company incorporated in the Netherlands which in turn held 100% of KSS Petron, an Indian company.

The shareholders agreement entered into between Fraseli and KSS Global permitted Fraseli to appoint two out of six nominee directors in KSS Global, and provided for an affirmative vote of shareholders with respect to certain matters. According to the learned Senior Advocate, if the definition of "control" in Section 2(27) of the Companies Act, 2013 is applied, the relationship of KSS Global with KSS Petron would not constitute "control" over the wholly owned subsidiary in India. In any case, the entire shareholding of Fraseli in KSS Global was transferred back to the promoters of KSS Global on 9.2.2018, i.e., 3 days before submission of the resolution plan. KSS Petron has been classified as a non-performing asset by multiple banks, and the corporate insolvency resolution process was initiated against it on 1.8.2017 before the NCLT.

It may be added that KSS Petron was declared a non-performing asset on 30.9.2015 with a debt of around Rs. 1000 crores. The learned Senior Advocate therefore attacked the finding of the Appellate Authority on this score, and stated that, as Section 29A was not attracted, the question of paying off the debts of Uttam Galva and KSS Petron would not arise.

15. When it came to Numetal's resolution plan, the learned Senior Advocate argued that it is important to remember that Numetal was incorporated on 13.10.2017 by Shri Rewant Ruia, son of Shri Ravi Ruia (who was a promoter of the corporate debtor of ESIL), with the specific objective of trying to acquire ESIL. At the time of its incorporation, one 'Aurora Enterprises Limited' (hereinafter referred to as "AEL"), a Ruia Group Company, held 100% shareholding of Numetal. In turn AEL's 100% shareholding was held by one 'Aurora Holdings Limited' (hereinafter referred to as "AHL"), 100% of whose shareholding was held by Shri Rewant Ruia, who was a former director of the corporate debtor, i.e. ESIL. On 18.10.2017, a few weeks before Section 29A was introduced, AEL transferred 26.1% of its shares in Numetal to one 'Essar Communications Limited' (hereinafter referred to as "ECL"), a group company of the corporate debtor. On 19.10.2017 Shri Rewant Ruia settled an irrevocable discretionary trust, called the 'Crescent Trust', which purchased the shares of AHL at par value. On 20.10.2017, when Numetal submitted its expression of interest, it had two share holders, i.e., AEL (holding 73.9%) and ECL (holding 26.1%).

On 22.11.2017, when the Finance Minister made a statement that the Code would be amended in order to prevent unscrupulous persons from submitting resolution plans, AEL transferred 13.9% of its shareholding in Numetal, and ECL its entire 26.1% shareholding, to one 'Crinium Bay Holdings Limited' (hereinafter referred to as "Crinium Bay"), a 100% indirectly held subsidiary of one 'VTB Bank', which in turn was a Russian company, the majority of whose shares were held by the Russian Government. Crinium Bay thus became the owner of 40% of the shareholding of Numetal.

AEL subsequently transferred 25.1% of the shareholding in Numetal to one 'Indo International Trading FZCO' (hereinafter referred to as "Indo"), a Dubai company, and 9.9% of the shareholding to one 'JSC VO Tyazhpromexport' (hereinafter referred to as "TPE"), a Russian company. AEL was left with only a 25% shareholding in Numetal. Even this holding in Numetal was ultimately divested on 29.3.2018, so that Crinium Bay held 40%, TPE held 25.9% and Indo held 34.1% in Numetal, with AEL's holding becoming 'Nil'. Shri Salve has argued that Numetal is hit by Section 29A(i) of the Code, as VTB Bank, the parent of Crinium Bay, stands prohibited from accessing the securities markets in the European Union pursuant to an order dated 31.7.2004, and in the United States by two orders.

This being the case, Numetal is directly hit by sub-section (f) read with sub-section (i) of Section 29A. It is also hit by Section 29A(j) as Crinium Bay, being a subsidiary of VTB Bank, becomes a "connected person" as defined under sub-clauses (i) and (iii) of Explanation 1 to Section 29A(j). One very important fact that was stressed by him was that an amount of Rs. 500 crores was given by AEL to Numetal so that it could deposit the requisite earnest money that had to be made along with the resolution plan furnished by Numetal. This amount, that was admittedly furnished by AEL, continues to remain with the Resolution Professional, and has till date not been withdrawn by AEL, showing that Shri Rewant Ruia continues to be vitally interested and linked with the resolution plan of Numetal, even after the complete exit of AEL as its shareholder.

He therefore submitted that, given these facts, whereas AMIPL should have been held eligible, it was wrongly held to be ineligible by the Appellate Authority; and that Numetal, being clearly hit by several provisions of Section 29A, was wrongly held to be eligible. He stressed the fact that one of the core objectives of Section 29A was to ensure that the promoter of the corporate debtor should not through or by circular means come back in order to regain the company that he himself had run to the ground. For this purpose, he relied upon the Finance Minister's statement on 29.12.2017, while introducing the Bill to amend the Code by introducing Section 29A, together with the Statements of Objects and Reasons appended to the said Bill.

16. Dr. A.M. Singhvi, learned Senior Advocate, supported the arguments of Shri Salve. According to him, Section 29A(c) always had the application of the resolution plan date as the relevant date, given the in praesenti "has" which is also there in clauses (h) and (j), and is similar to the expression "is" which is to be found in clauses (a), (b), (e) and (f), as contrasted with the expression "has been" used in clauses (d) and (g), of Section 29A. According to him, the amendment made in 2018 is in any case clarificatory in nature. He supported the attack of Shri Salve on the Appellate Authority's judgment, stating that so far as Uttam Galva is concerned, it is well established that the sale of shares is complete once they move out of the demat account of the seller, which in this case took place five days before 12.2.2008.

For this he cited certain judgments. He also supported Shri Salve's argument by stating that Numetal is clearly disqualified under several clauses of Section 29A.

17. On the other hand, Shri Mukul Rohatgi, learned Senior Advocate, appearing on behalf of Numetal, stated that Numetal was a company which was therefore a separate person in law from its shareholders. He contended that on the date of submission of the resolution plan (i.e., 12.2.2018), AEL held only 25%, which would be below the figure of 26% mentioned in the request for proposal dated 24.12.2017, wherein "control" has been defined as a person holding more than 26% of the voting share capital in the company.

According to him, in any case by 2.4.2018, when it submitted a fresh resolution plan, AEL had walked out completely, leaving behind two Russian companies holding 40% and 25.9% respectively of Numetal, and Indo, a Dubai Company, holding 34.1%. According to the learned Senior Advocate, Numetal cannot possibly be described as a joint venture of its shareholders, and for this purpose he cited some of our judgments.

According to him, a joint venture is a contractual arrangement whereby two or more parties undertake an economic activity which is subject to joint control, which is missing in the present case as a shareholder in a company is distinct from the company itself. He added that Section 29A(c) requires that Numetal as a person, together with any other person acting jointly or in concert, has to have an account of a corporate debtor under its management or control, or of whom such person is a promoter (which is classified as a nonperforming asset for a period of at least one year before the date of commencement of the corporate insolvency resolution process of the corporate debtor).

According to the learned Senior Advocate, Shri Rewant Ruia would not fall within any of these categories, on a reading of Section 2(27) of the Companies Act, 2013, which defines "control"; Section 2(69) of the Companies Act, 2013, which defines "promoter"; and Sections 2(53) and 2(54) of the Companies Act, 2013, which define "manager" and "managing director" respectively. He emphatically argued that though Shri Rewant Ruia is the son of Shri Ravi Ruia, who is a promoter of the corporate debtor, and though he may be deemed to be a "person acting in concert" within the definition contained in Regulation 2(1) (q) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as the "2011 Takeover Regulations"), yet, he cannot be considered to be a "connected person" under Section 29A(j) of the Code.

This is for the reason that under Explanation 1 to Section 29A(j), the expression "connected person" can only mean a related party or a person who is referred to in sub-clauses (i) and (ii) of Explanation 1, and since Shri Rewant Ruia is neither a promoter of nor in the management or control of the resolution applicant Numetal, he would fall outside of sub-clause (iii) of Explanation 1. According to Shri Rohatgi, the Appellate Authority was absolutely correct in saying that Numetal would not be ineligible under Section 29A. He strongly attacked Shri Salve's argument that VTB Bank, the holding company of Crinium Bay, was barred from accessing the securities market by either the European Union or the United States.

He took us to the original orders and argued that the document of the European Union, being Council Regulation 833 of 2014 dated 31.7.2014, pursuant to Article 215 of the Treaty on the Functioning of the European Union, was owing to restrictive measures taken in view of Russia's actions destabilizing the situation in Ukraine. Because Russia had illegally annexed Crimea, political sanctions were imposed by this document, which cannot possibly be said to be sanctions imposed by an authority equivalent to SEBI in India.

The sanctions also did not relate in any manner to the securities market. Equally, insofar as the two orders of the United States are concerned, they were also political sanctions imposed against Russian companies for the same reason by the Office of Foreign Assets Control by a Presidential Order. He even argued that insofar as the European Union is concerned, the corresponding "authority" to SEBI is the 'European Securities and Market Authority', whereas in the United States it would be the 'Securities Exchange Commission,' neither of whom has issued any sanctions which would interdict VTB Bank from accessing or trading in the securities market.

He also countered Shri Salve's submission that the Rs. 500 crores that was advanced by AEL and given as earnest money for the resolution plan was not yet withdrawn, contending that this was so because the validity of the first bid by Numetal continues to be sub judice.

18. Shri Rohatgi then attacked AMIPL by stating that even a literal reading of Section 29A(c) would make it clear that in the case of Uttam Galva, AMNLBV, which is admittedly an L.N. Mittal Group Company, was directly covered by sub-clause (c) as it had been shown as a "promoter" in the annual reports of Uttam Galva, and would therefore fit the definition of "promoter" contained in Section 2(69) of the Companies Act, 2013. What is of great importance, and what is in fact not disclosed, is that a Non- Disposal Undertaking was issued to the State Bank of India, the secured creditor of Uttam Galva, on 12.7.2011 by AMNLBV, agreeing that it would not sell, transfer or dispose of any shares held by it without the consent of the lenders of Uttam Galva. According to Shri Rohatgi, therefore, the transfer of these shares, the recognition of such transfer by Uttam Galva, and the consequent application to the Stock Exchanges for declassification as promoter, without obtaining the consent of the State Bank of India, is invalid in law and a fraud played by AMNLBV.

Further, in the disclosures that were made under the 2011 Takeover Regulations, the column relatable to the existence of any nondisposal undertakings was left blank. In addition, since a sale of shares between co-promoters inter se is exempted from the requirement of making a public offer under Regulation 3(1) read with Regulation 10(1)(a)(2) of the 2011 Takeover Regulations, it is clear that on the one hand promoter status is claimed in order to avail of the regulation, whereas, in the present case, it is argued that, in substance, AMNLBV is not in fact a promoter.

Equally, leaving a blank in the form against the column which required disclosure of non-disposal undertakings, is a fraud played on SEBI, and on the shareholders of Uttam Galva; as otherwise, in the public offer that would have had to be made, the shares of Uttam Galva would have had to be purchased at the higher price that is mentioned in the said Regulations. Incidentally, according to Shri Rohatgi, in any case, getting out of Uttam Galva by paying a price of Re.1 per share when the market value on that date was Rs.19.50 per share is again a fraudulent transaction, which cannot possibly pass muster under Section 29A.

Further, insofar as KSS Petron is concerned, it is clear that Fraseli's holding of 32.22% in KSS Global would certainly amount to de facto control, if not de jure control, of KSS Petron, its wholly owned subsidiary, as defined under Section 2(27) of the Companies Act, 2013. The transfer of Fraseli's shareholding on 9.2.2018, before submission of the resolution plan on 12.2.2018, is again a dubious and fraudulent act squarely hit by Section 29A. Shri Rohatgi further argued that Shri Pramod Mittal, brother of Shri L.N. Mittal, is a connected person, which would trigger Section 29A(j). Shri Pramod Mittal is a promoter and director of one 'Gontermann Piepers (India) Limited', which has also been declared an NPA, rendering Shri L.N. Mittal ineligible under Section 29A(j).

Equally, Shri L.N. Mittal, Shri Pramod Mittal and other members of the Mittal family are promoters of one 'Ispat Profiles India Limited'. This company was ordered to be wound up by the BIFR, appeals from which have been dismissed by the AAIFR. Consequently, Shri L.N. Mittal, as a related party of Shri Pramod Mittal, would render AMIPL ineligible under sub-clause (c) read with sub-clause (j) of Section 29A of the Code.

19. Shri Gopal Subramanium, learned Senior Advocate appearing on behalf of the Committee of Creditors, has placed before us the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, introducing Section 29A, and commented on the difference between the opening lines of the said Ordinance as compared with those of the Amendment Act of 2017.

The Amendment Act of 2017 brings in "persons acting in concert". According to the learned senior counsel, "persons acting in concert" has been dealt with by the Justice P.N. Bhagwati Committee Report on Takeovers, 1997, which he read out to us in copious detail. He also referred to some of our judgments on tearing the corporate veil, and on persons acting in concert. According to him, there should be no interference by the appropriate authority at the behest of a resolution applicant at the stage of a Resolution Professional processing resolution applications, and the subsequent stage of a Committee of Creditors disapproving a resolution plan.

According to him, the period of 270 days is a watertight compartment, within which either a resolution plan will be approved, or the corporate debtor be wound up. According to him, the practice of interlocutory applications being filed at anterior stages of the proceedings before the Adjudicating Authority, and orders of remand to the Committee of Creditors, should be stopped. However, the time taken by the Adjudicating Authority and the Appellate Authority in deciding disputes that may arise before them should be excluded from the computation of 270 days as aforesaid. According to the learned Senior Advocate, the expressions "persons acting in concert" and "control" are broad enough to bring all associated persons within the dragnet of Section 29A.

He cited a number of judgments on how this provision should be construed in accordance with the object sought to be achieved by the said provision, which should never be stultified or defeated, so as to get to the real state of affairs of the facts of every given case. Therefore, it is very important to remember that phrases such as "