The NCLT approved the resolution plan, affirming the primacy of the CoC's commercial wisdom and ensuring compliance with Section 30(2) of the IBC.
The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Mr. Charan Singh (Technical Member), approved the resolution plan, affirming the primacy of the CoC’s commercial wisdom under the IBC, with compliance to Section 30(2) and relevant regulations, while limiting judicial interference to statutory conformity, consistent with precedents like K. Sashidhar v. Indian Overseas Bank and Essar Steel India Ltd. v. Satish Kumar Gupta.
The National Company Law Tribunal (NCLT) admitted a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), filed by the Operational Creditor on 16.11.2021, initiating the Corporate Insolvency Resolution Process (CIRP) against M/s. Abhirama Steels Ltd. The applicant, initially appointed as the Interim Resolution Professional (IRP), was later confirmed as the Resolution Professional (RP). Following public announcements, the claims were invited, and a Committee of Creditors (CoC) was formed, with Indian Bank holding 92.92% voting share and Arien Trading Pvt. Ltd. holding the remaining 7.08%.
During the CIRP, registered valuers assessed the Corporate Debtor's assets, estimating the fair value between ₹10.44 crores to ₹10.65 crores and the liquidation value between ₹7.30 crores to ₹7.36 crores. A forensic audit concluded that there were no avoidable transactions under Sections 43 to 66 of the IBC. Additionally, six Expressions of Interest (EOIs) were received, and all prospective resolution applicants qualified under Section 29 of the IBC. However, the properties of the Corporate Debtor were subject to attachment by the MPID Court due to the involvement of a promoter in another company’s default, complicating asset disposal despite the Indian Bank’s challenge to the attachment under the SARFAESI Act.
A resolution plan from M/s. Dwaraka Iron Industries Pvt. Ltd. was presented at the 17th CoC meeting, held on 02.05.2024 and 03.05.2024, and was unanimously approved. Initially offered at ₹9.70 crores, the plan was revised to ₹14.50 crores through negotiations. The plan allocated ₹13.62 crores to secured creditors, ₹10 lakhs to unsecured financial creditors and ₹6 lakhs to operational creditors. No claims were received from employees or workmen. The resolution applicant deposited 10% of the bid amount as performance security, with 80% of the payment to be made within 30 days of the NCLT order.
The NCLT approved the resolution plan under Section 31 of the IBC, with the RP certifying compliance with Section 30(2) of the IBC and Regulations 38 and 39(4) of the CIRP Regulations, 2016. The tribunal emphasized the primacy of the CoC's commercial wisdom, relying on Supreme Court judgments such as K. Sashidhar v. Indian Overseas Bank and Others, REEDLAW 2019 SC 02502, Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Others, REEDLAW 2019 SC 11505, and Vallal RCK v. Siva Industries and Holdings Limited and Others, REEDLAW 2022 SC 06502. However, the applicant's request to lift the attachment under the MPID Act was denied, limiting the judicial relief available for waivers and concessions.
The resolution plan outlined a detailed payment schedule, including 10% of the bid amount within three days of the Letter of Intent (LOI) and the remaining 80% within 30 days of the NCLT order. A monitoring committee was established to oversee the implementation, with relevant updates directed to be filed with the Registrar of Companies, Hyderabad. The approval of the plan extinguished all liabilities except statutory obligations, marking the end of 330 days of CIRP and terminating the moratorium under Section 14 of the IBC. The NCLT’s order ensured compliance with the IBC framework, bringing finality to the insolvency resolution process.
Mr. B. Chandrasen Reddy, Senior Advocate assisted by Ch. Srinivasulu, Advocate represented the Appellant.
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