NCLAT upholds forfeiture of INR 10 crores for the Appellant’s non-compliance with the resolution plan.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) was hearing an appeal and observed that the Appellant’s failure to submit valid and enforceable bank guarantees, coupled with delays and non-compliance with the implementation schedule, justified the forfeiture.
In the judgment delivered by the National Company Law Appellate Tribunal (NCLAT), Peter Beck und Partner Vermoegensverwaltung GMBH, a German company, challenged the NCLT Mumbai Bench's decision from December 12, 2023, which had allowed the forfeiture of INR 10 Crores deposited by the appellant. This amount was initially deposited with Abhyudaya Cooperative Bank and later forfeited by the Committee of Creditors (CoC), led by the State Bank of India (SBI). The appellant sought the refund of this amount, arguing that the forfeiture was unjust and contrary to the Resolution Plan and regulations.
The background of the case involves the appellant's failure to provide valid and enforceable bank guarantees as stipulated in the approved Resolution Plan for Sharon Bio Medicine Limited, the corporate debtor. This failure led to delays and non-compliance, prompting the CoC to seek forfeiture of the INR 10 Crores. The NCLT had dismissed the appellant’s application for a refund, agreeing with the CoC’s request to forfeit the funds due to the appellant's non-compliance.
The appellant contended that the forfeiture was unlawful, asserting that the CoC had obstructed its compliance by not providing necessary account details and that the deposited funds were intended for share application money, not as a performance guarantee. Despite multiple opportunities and extensions provided by the CoC and various judicial bodies, including the NCLT and the Supreme Court, the appellant failed to comply with the Resolution Plan's requirements. The Supreme Court had previously upheld the need for valid bank guarantees and compliance with the plan.
In its ruling, the NCLAT upheld the NCLT's decision, affirming that the forfeiture of the INR 10 Crores was justified under Clause 12 of the Resolution Plan and Regulation 36B(4A) of the CIRP Regulations. The NCLAT found that the forfeiture was in accordance with the provisions governing performance securities and the appellant's failure to meet its obligations under the approved Resolution Plan. The tribunal dismissed the appellant's arguments regarding the alleged restraint by the CoC and the nature of the deposited funds, concluding that the forfeiture was lawful and warranted based on the appellant’s non-compliance.
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