ARCELORMITTAL INDIA PRIVATE LIMITED v. SATISH KUMAR GUPTA & ORS.

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A question mark on the utility of the Sick Industrial Companies (Special Provisions) Act, 1985. The Committee further pointed out that effectiveness of the Sick Industrial Companies (Special Provisions) Act, 1985 as has been pointed out earlier, has been severely undermined by reason of the enormous delays involved in the disposal of cases by BIFR. (See Paras 5.8, 5.9 and 5.15 of B the Report.) Consequently, the Committee recommended that the Sick Industrial Companies (Special Provisions) Act, 1985 be repealed and the provisions thereunder for revival and rehabilitation should be telescoped into the structure of the Companies Act, 1956 itself.

C 41. Pursuant to the Eradi Committee Report, the Companies Act was amended in 2002 by providing for the constitution of a National Company Law Tribunal as a substitute for the Company Law Board, the High Court, BIFR and AAIFR. The Eradi Committee Report was further given effect to by inserting Sections 424-A to D 424-H into the Companies Act, 1956 which, with a few changes, mirrored the provisions of Sections 15 to 21 of the Sick Industrial Companies (Special Provisions) Act, 1985. Interestingly, the Companies Amendment Act, 2002 omitted a provision similar to Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. Consequently, creditors were given liberty to file suits E or initiate other proceedings for recovery of dues despite pendency of proceedings for the revival or rehabilitation of sick companies before the National Company Law Tribunal.

42. This Amendment Act came under challenge, which challenge culminated in the Constitution Bench decision in Union of India v. F R, Gandhi, President, Madras Bar Association, (2010) 11 SCC 10 by which the amendments were upheld, with certain changes recommended by the Constitution Bench of this Court.

43. Close on the heels of the amendment made to the Companies Act came the Sick Industrial Companies (Special Provisions) G Repeal Act, 2003. This particular Act was meant to repeal the Sick Industrial Companies (Special Provisions) Act, 1985 consequent to some of its provisions being telescoped into the Companies Act. Thus, the Companies Amendment Act, 2002 and the SICA Repeal Act formed part of one legislative scheme, and H neither has yet been brought into force. In fact, even the Companies

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Act, 2013, which repeals the Companies Act, 1956, contains A Chapter 19 consisting of Sections 253 to 269 dealing with revival and rehabilitation of sick companies along the lines of Sections 424-A to 424-H of the amended Companies Act, 1956. Conspicuous by its absence is a provision akin to Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 in the 2013 Act. However, this Chapter is also yet to be brought into force. These statutory provisions, though not yet brought into force, are also an important pointer to the fact that Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 has been statutorily sought to be excluded, Parliament veering around from wanting to protect sick industrial companies and rehabilitate them to giving credence to the public interest contained in the recovery of public monies owing to banks and financial institutions. These provisions also show that the aforesaid construction of the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 vis-à-vis the Sick Industrial Companies (Special Provisions) Act, 1985, leans in favour of creditors being able to realise their debts outside the court process over sick industrial companies being revived or rehabilitated. In fact, another interesting document is the Report on Trend and Progress of Banking in India 2011-2012 for the year ended 30-6-2012 submitted by Reserve Bank of India to the Central E Government in terms of Section 36(2) of the Banking Regulation Act, 1949. In Table IV.14 the Report provides statistics regarding trends in non-performing assets bank-wise, group-wise. As per the said Table, the opening balance of non-performing assets in public sector banks for the year 2011-2012 was Rs 746 billion but F the closing balance for 2011-2012 was Rs 1172 billion only. The total amount recovered through the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 during 2011-2012 registered a decline compared to the previous year, but, even then, the amounts recovered under the said Act constituted 70% of the total amount recovered. The G amounts recovered under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 constituted only 28%. All this would go to show that the amounts that public sector banks and financial institutions have to recover are in staggering figures and at long last at least one statutory measure has proved to be of H

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A some efficacy. This Court would be loathe to give such an interpretation as would thwart the recovery process under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 which Act alone seems to have worked to some extent at least.” (emphasis supplied)

63Copy pinpoint63. These two enactments were followed by the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002. As has been noted hereinabove, amounts recovered under the said Act recorded improvement over the previous two enactments, but this was yet found to be inadequate.

64Copy pinpoint64. The Code was passed after great deliberation and pursuant to various Committee Reports, as has been held in Innoventive Industries Ltd. v. ICICI Bank & Anr. (2018) 1 SCC 407 at paragraph 12. The Statement of Objects and Reasons, which is reproduced in the said paragraph, makes it clear that the existing framework for insolvency and bankruptcy was not only inadequate and ineffective, but resulted in undue delays in resolution. One of the primary objects of the Code, therefore, is to resolve such matters in a time bound manner. This would not only support the development of credit markets and encourage entrepreneurship, but would also improve ease of doing business and facilitate more investment, leading to higher economic growth and development.

65Copy pinpoint65. Paragraph 16 of the said judgment refers to the report of November, 2015 of the Bankruptcy Law Reforms Committee and refers to speed being of essence as follows: “Speed is of essence F Speed is of essence for the working of the bankruptcy code, for two reasons. First, while the “calm period” can help keep an organisation afloat, without the full clarity of ownership and control, significant decisions cannot be made. Without effective leadership, the firm will tend to atrophy and fail. The longer the delay, the G more likely it is that liquidation will be the only answer. Second, the liquidation value tends to go down with time as many assets suffer from a high economic rate of depreciation. From the viewpoint of creditors, a good realisation can generally be obtained if the firm is sold as a going concern. Hence, when H

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delays induce liquidation, there is value destruction. Further, even in liquidation, the realisation is lower when there are delays. Hence, delays cause value destruction. Thus, achieving a high recovery rate is primarily about identifying and combating the sources of delay.”

66Copy pinpoint66. The Committee then chose certain principles within which the new Insolvency and Bankruptcy Code would work. One of them is that the Code will ensure a time bound process, which will not be extended, to better preserve the economic value of the asset (see Principle No.8 set out at page 427 of Innoventive Industries (supra.)).

67Copy pinpoint67. After setting out the Scheme of the Code, this Court further went on to hold: “31. The rest of the insolvency resolution process is also very important. The entire process is to be completed within a period of 180 days from the date of admission of the application under Section 12 and can only be extended beyond 180 days for a further period of not exceeding 90 days if the committee of creditors by a voting of 75% of voting shares so decides. It can be seen that time is of essence in seeing whether the corporate body can be put back on its feet, so as to stave off liquidation.” xxx xxx xxx E

33. Under Section 30, any person who is interested in putting the corporate body back on its feet may submit a resolution plan to the resolution professional, which is prepared on the basis of an information memorandum. This plan must provide for payment of insolvency resolution process costs, management of the affairs of the corporate debtor after approval of the plan, and implementation and supervision of the plan. It is only when such plan is approved by a vote of not less than 75% of the voting share of the financial creditors and the adjudicating authority is satisfied that the plan, as approved, meets the statutory requirements mentioned in Section 30, that it ultimately approves such plan, which is then binding on the corporate debtor as well as its employees, members, creditors, guarantors and other stakeholders. Importantly, and this is a major departure from previous legislation on the subject, the moment the adjudicating authority approves the resolution plan, the moratorium order passed by the authority under Section 14 H

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A shall cease to have effect. The scheme of the Code, therefore, is to make an attempt, by divesting the erstwhile management of its powers and vesting it in a professional agency, to continue the business of the corporate body as a going concern until a resolution plan is drawn up, in which event the management is handed over under the plan so that the corporate body is able to pay back its debts and get back on its feet. All this is to be done within a period of 6 months with a maximum extension of another 90 days or else the chopper comes down and the liquidation process begins.”

68Copy pinpoint68. It is in this backdrop that we must consider the provisions of the Code, insofar as the Code requires either that the corporate debtor be taken over by another management and run as a going concern or, if that fails, go into liquidation. Some of the relevant provisions of the Code, insofar as this case is concerned, are set out hereinbelow: “5. (12) “insolvency commencement date” means the date of admission of an application for initiating corporate insolvency resolution process by the Adjudicating Authority under Sections 7, 9 or Section 10, as the case may be: Provided that where the interim resolution professional is not appointed in the order admitting application under Section 7, 9 or Section 10, the insolvency commencement date shall be the date on which such interim resolution professional is appointed by the Adjudicating Authority; xxx xxx xxx (14) “insolvency resolution process period” means the period of one hundred and eighty days beginning from the insolvency commencement date and ending on one hundred and eightieth day; xxx xxx xxx (25) “resolution applicant” means a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of Section 25; (26) “resolution plan” means a plan proposed by resolution applicant for insolvency resolution of the corporate debtor as a H going concern in accordance with Part II;

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(27) “resolution professional”, for the purposes of this Part, A means an insolvency professional appointed to conduct the corporate insolvency resolution process and includes an interim resolution professional; xxx xxx xxx

7. Initiation of corporate insolvency resolution process by financial creditor.—(1) A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government, may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. Explanation.—For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. D (2) The financial creditor shall make an application under sub- section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish— E (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. F (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3). G (5) Where the Adjudicating Authority is satisfied that— (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit H

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A such application; or (b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: B Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5). (7) The Adjudicating Authority shall communicate— (a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor; (b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be. E xxx xxx xxx

12. Time-limit for completion of insolvency resolution process.—(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process. (2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of sixty-six per cent of the voting shares. (3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject-matter of the case is such that corporate insolvency resolution process cannot H

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be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days: Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once. xxx xxx xxx

30. Submission of resolution plan.—(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under Section 29-A to the resolution professional prepared on the basis of the information memorandum.

(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan— D (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor; (b) provides for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not E be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under Section 53; (c) provides for the management of the affairs of the corporate debtor after approval of the resolution plan; F (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by G the Board. Explanation.—For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval H

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A shall be deemed to have been given and it shall not be a contravention of that Act or law. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). B (4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a C resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under Section 29-A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of Section 29-A, 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 29-A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub- section (3) of Section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub- section. Provided also that the eligibility criteria in Section 29-A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. (5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered: H

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Provided that the resolution applicant shall not have a right to vote A at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority. B

31. Approval of resolution plan.—(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of Section 30 meets the requirements as referred to in sub-section (2) of Section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan: Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation. (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of approval under sub-section (1),— E (a) the moratorium order passed by the Adjudicating Authority under Section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in Section 5 of the Competition Act,

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A 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.

32. Appeal.—Any appeal from an order approving the resolution plan shall be in the manner and on the grounds laid down in sub- B section (3) of Section 61. xxx xxx xxx

33. Initiation of liquidation.—(1) Where the Adjudicating Authority,—

C (a) before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under Section 12 or the fast track corporate insolvency resolution process under Section 56, as the case may be, does not receive a resolution plan under sub-section (6) of Section 30; or D (b) rejects the resolution plan under Section 31 for the non- compliance of the requirements specified therein, it shall— (i) pass an order requiring the corporate debtor to be liquidated in E the manner as laid down in this Chapter; (ii) issue a public announcement stating that the corporate debtor is in liquidation; and (iii) require such order to be sent to the authority with which the corporate debtor is registered. F (2) Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors approved by not less than sixty-six per cent of the voting share to liquidate the corporate G debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub- section (1). (3) Where the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor, any H

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person other than the corporate debtor, whose interests are A prejudicially affected by such contravention, may make an application to the Adjudicating Authority for a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub- section (1). (4) On receipt of an application under sub-section (3), if the B Adjudicating Authority determines that the corporate debtor has contravened the provisions of the resolution plan, it shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). (5) Subject to Section 52, when a liquidation order has been passed, C no suit or other legal proceeding shall be instituted by or against the corporate debtor: Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority. D (6) The provisions of sub-section (5) shall not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (7) The order for liquidation under this section shall be deemed to E be a notice of discharge to the officers, employees and workmen of the corporate debtor, except when the business of the corporate debtor is continued during the liquidation process by the liquidator. xxx xxx xxx F

60. Adjudicating Authority for corporate persons.—(1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located. G (2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a

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A corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor shall be filed before such National Company Law Tribunal. B (3) An insolvency resolution process or liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor pending in any court or tribunal shall stand transferred to the Adjudicating Authority dealing with insolvency resolution process or liquidation proceeding of such corporate debtor. C (4) The National Company Law Tribunal shall be vested with all the powers of the Debts Recovery Tribunal as contemplated under Part III of this Code for the purpose of sub-section (2). (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of— (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. (6) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded.

61. Appeals and Appellate Authority. - (1) Notwithstanding anything to the contrary contained under the Companies Act, 2013,

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any person aggrieved by the order of the Adjudicating Authority A under this part may prefer an appeal to the National Company Law Appellate Tribunal. (2) Every appeal under sub-section (1) shall be filed within thirty days before the National Company Law Appellate Tribunal: Provided that the National Company Law Appellate Tribunal may B allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days. (3) An appeal against an order approving a resolution plan under Section 31 may be filed on the following grounds, namely— C

(i) the approved resolution plan is in contravention of the provisions of any law for the time being in force; (ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period; (iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board; (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or (v) the resolution plan does not comply with any other criteria specified by the Board. (4) An appeal against a liquidation order passed under Section 33 may be filed on grounds of material irregularity or fraud committed in relation to such a liquidation order.

62. Appeal to Supreme Court.—(1) Any person aggrieved by an order of the National Company Law Appellate Tribunal may file an appeal to the Supreme Court on a question of law arising out of such order under this Code within forty-five days from the date of receipt of such order. (2) The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within forty-

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A five days, allow the appeal to be filed within a further period not exceeding fifteen days. xxx xxx xxx

64. Expeditious disposal of applications.—(1) Where an application is not disposed of or an order is not passed within the B period specified in this Code, the National Company Law Tribunal or the National Company Law Appellate Tribunal, as the case may be, shall record the reasons for not doing so within the period so specified; and the President of the National Company Law Tribunal or the Chairperson of the National Company Law C Appellate Tribunal, as the case may be, may, after taking into account the reasons so recorded, extend the period specified in the Act but not exceeding ten days. (2) No injunction shall be granted by any court, tribunal or authority in respect of any action taken, or to be taken, in pursuance of any D power conferred on the National Company Law Tribunal or the National Company Law Appellate Tribunal under this Code.”

69Copy pinpoint69. Since the present case deals, on facts, with financial creditors, we may set out how the corporate insolvency resolution process is to work from the inception. Before admission of an application under Section E 7 by a financial creditor, the Adjudicating Authority is, under Section 7(4), to first ascertain the existence of a default within 14 days of receipt of the application, as specified in Section 7(4). Upon satisfaction that such default has occurred, it may then admit such application, subject to rectification of defects, which the proviso in Section 7(5) says must be done within 7 days of receipt of such notice from the Adjudicating F Authority by the applicant. The time frame within which ascertainment of default is to take place, as well as the time within which the defect is to be rectified, have both been held by a judgment of this Court to be directory in nature, the reason being that the stage of these provisions is before admission of the application (see Surendra Trading Co. v. G Juggilal Kamlapat Jute Mills Company Ltd. & Ors. (2017) 16 SCC 143). The corporate insolvency resolution process commences from the date of admission of the application vide Section 7(6). Section 7(7) makes it incumbent upon the Adjudicating Authority to communicate the order accepting or rejecting the application to the financial creditor and the corporate debtor within a period of 7 days of such admission or H rejection.

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70Copy pinpoint70. The time limit for completion of the insolvency resolution process is laid down in Section 12. A period of 180 days from the date of admission of the application is given by Section 12(1). This is extendable by a maximum period of 90 days only if the Committee of Creditors, by a vote of 66%2, votes to extend the said period, and only if the Adjudicating Authority is satisfied that such process cannot be completed within 180 days. The authority may then, by order, extend the duration of such process by a maximum period of 90 days (see Sections 12(2) and 12(3)). What is also of importance is the proviso to Section 12(3) which states that any extension of the period under Section 12 cannot be granted more than once. This has to be read with the third proviso to Section 30(4), which states that the maximum period of 30 C days mentioned in the second proviso is allowable as the only exception to the extension of the aforesaid period not being granted more than once.

71Copy pinpoint71. What is important to note is that a consequence is provided, in the event that the said period ends either without receipt of a resolution plan or after rejection of a resolution plan under Section 31. This consequence is provided by Section 33, which makes it clear that when either of these two contingencies occurs, the corporate debtor is required to be liquidated in the manner laid down in Chapter III. Section 12, construed in the light of the object sought to be achieved by the Code, and in the light of the consequence provided by Section 33, therefore, makes it clear that the periods previously mentioned are mandatory and cannot be extended.

72Copy pinpoint72. In fact, even the literal language of Section 12(1) makes it clear that the provision must read as being mandatory. The expression “shall be completed” is used. Further, sub-section (3) makes it clear that the duration of 180 days may be extended further “but not exceeding

2 It is pertinent to note that the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 (26 of 2018), inter alia amended the Code, with retrospective effect from 6th June, 2018, in so far as the requirement in certain sections of approval of 75% of the Committee of Creditors for various decisions was reduced to 51% in Section 21(8) (i.e. G the minimum percentage of votes required for any decision of the Committee, where not otherwise provided for in the Code), and to 66% in Sections 12(2) (i.e. extension of time for completion of the process by 90 days), 22(2) (i.e. appointment of resolution professional), 27(2) (i.e. replacement of resolution professional), 28(3) (i.e. approval for certain actions by the resolution professional), 30(4) (i.e. approval of resolution plan), and 33(2) (i.e. initiation of liquidation). H

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A 90 days”, making it clear that a maximum of 270 days is laid down statutorily. Also, the proviso to Section 12 makes it clear that the extension “shall not be granted more than once”.

73Copy pinpoint73. After admission of the application under Section 7 by the Adjudicating Authority, the scheme of the Code is as follows: B (i) Under Sections 13 to 15, a moratorium is declared; a public announcement of the initiation of the corporate insolvency resolution process and call for submission of claims is made; and an Interim Resolution Professional is to be appointed under Section 16 of the Code. This action is to be completed by the Adjudicating C Authority within a period of 14 days from the insolvency commencement date, i.e., the date of admission of the application under Section 7 by the Adjudicating Authority. (ii) Under Section 17, the corporate debtor’s affairs are to be managed by the Interim Resolution Professional so appointed, and D the Board of Directors of the corporate debtor shall stand superseded. The officers and managers of the corporate debtor are now to report to the Interim Resolution Professional, who has the authority to act on behalf of the corporate debtor. (iii) Under Section 18(1), some of the important duties of this E Interim Resolution Professional are set out, which are to collect all information relating to the financial position of the corporate debtor and, most importantly, to constitute a Committee of Creditors. That this has to be done at the very earliest, is clear from the scheme of the corporate insolvency resolution process which, as has been stated earlier, cannot exceed the maximum period of 270 days from the date of admission of the financial creditors’ application. (iv) Under Section 21, the Interim Resolution Professional is to constitute this Committee of Creditors after collating all claims received against the corporate debtor and after determination of the financial position of the corporate debtor, both of which need to be done at the very earliest. This Committee of Creditors is to comprise of financial creditors of the corporate debtor. All decisions of this Committee of Creditors are to be taken by a majority vote of not less than 51% of the voting share of each financial creditor. H

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(v) Under Section 22, the first meeting of the Committee of A Creditors is to be held within 7 days of its constitution in order to appoint a Resolution Professional. The Committee of Creditors either continues the Interim Resolution Professional or replaces the Interim Resolution Professional by a majority vote of 66%. The application to replace the Interim Resolution Professional is then to be sent to the Adjudicating Authority, who is to forward the same to the Insolvency and Bankruptcy Board of India (hereinafter referred to as the “IBBI”) for confirmation. Upon such confirmation, the Adjudicating Authority then appoints the Resolution Professional. In case the IBBI does not confirm the name of the proposed Resolution Professional within 10 days of receipt of the same, the Adjudicating Authority is then to direct the Interim Resolution Professional to continue to function as the Resolution Professional until such time as the IBBI confirms the appointment of the Resolution Professional. (vi) It is this Resolution Professional who is then to conduct the corporate insolvency resolution process, which really begins at this stage (see Section 23). Section 25 then lays down some of the duties of this Resolution Professional, which are to continue the business operations of the corporate debtor, subject to the prior approval of the Committee of Creditors over the matters stated in Section 28. One of the important duties of the Resolution E Professional under Section 25 is to invite prospective resolution applicants to submit resolution plans. (vii) Under Section 29, the Resolution Professional is to prepare an information memorandum giving relevant information, as may be specified by the IBBI, to persons interested in formulating a F resolution plan. (viii) Section 30 is an important provision in that a resolution applicant may submit a resolution plan to the Resolution Professional, who is then to examine the said plan to see that it conforms to the requirements of Section 30(2). Once this plan G conforms to such requirements, the plan is then to be presented to the Committee of Creditors for its approval under Section 30(3). This can then be approved by the Committee of Creditors by a vote of not less than 66% under sub-section (4). What is important H

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A to note is that the Committee of Creditors shall not approve a resolution plan where the resolution applicant is ineligible under Section 29A, and may require the Resolution Professional to invite a fresh resolution plan where no other resolution plan is available. Once approved by the Committee of Creditors, the resolution plan is to be submitted to the Adjudicating Authority under Section 31 B of the Code. It is at this stage that a judicial mind is applied by the Adjudicating Authority to the resolution plan so submitted, who then, after being satisfied that the plan meets (or does not meet) the requirements mentioned in Section 30, may either approve or reject such plan. C (ix) An appeal from an order approving such plan is only on the limited grounds laid down in Section 61(3). However, an appeal from an order rejecting a resolution plan would also lie under Section 61. (x) As has been stated hereinbefore, the liquidation process gets D initiated under Section 33 if, (1) either no resolution plan is submitted within the time specified under Section 12, or a resolution plan has been rejected by the Adjudicating Authority; (2) where the Resolution Professional, before confirmation of the resolution plan, intimates the Adjudicating Authority of the decision of the E Committee of Creditors to liquidate the corporate debtor; or (3) where the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor. Any person other than the corporate debtor whose interests are prejudicially affected by such contravention may apply to the Adjudicating Authority, who may then pass a liquidation order on such application. F

74Copy pinpoint74. Regulation 40A of the CIRP Regulations presents a model timeline of the corporate insolvency resolution process, on the basis that the time available is 180 days. It states as follows:- “40A. Model time-line for corporate insolvency resolution G process. The following Table presents a model timeline of corporate insolvency resolution process on the assumption that the interim resolution professional is appointed on the date of commencement of the process and the time available is hundred and eighty days: H

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A Description of Latest Section/Regulation Norm Activity Timeline

Commencement of Section 16(1) CIRP and …. T appointment of IRP B

Within 3 Days Public of Regulation 6(1) announcement T+3 Appointment inviting claims of IRP C For 14 Days Section Submission of from 15(1)(c)/Regulations T+14 claims Appointment 6(2)(c) and 12 (1) of IRP D Up to 90th day Submission of Regulation 12(2) of T+90 claims commencement

Verification of claims received E Regulation 13(1) T+21 under regulation Within 7 days 12(1) from the receipt of the Verification of claim claims received Regulation 13(2) T+97 F under regulation 12(2)

Section Within 2 days Application for 21(6A)(b)/Regulation from T+23 appointment of AR 16A verification of G claims received Report certifying under Regulation 17(1) T+23 constitution of CoC regulation 12(1)

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A W ithin 7 days of the Se ction 1 st m ee tin g of the c onstitution of 22 (1) /R eg ulation T +30 CoC the Co C, but 19 (1) with se ve n da ys’ no tic e B Res olution to In the firs t Se ction 22 (2) ap point R P b y the me eting of th e T +30 CoC C oC

Ap pointm e nt of O n a pp rova l by Se ction 16 (5) ….. RP the A A C IR P performs the If RP is not fun ction s o f R P a ppoin ted by Regula tion 17( 3) T +40 till the R P is 40 th d ay of ap pointe d. c omm e nc em e nt

W ithin 7 days of appo intm en t Ap pointm e nt of of RP , b ut n ot Regula tion 27 T +47 va lu er later than 40 th da y of c omm e nc em e nt

Subm ission of ap plication fo r B efore issue of withd rawal o f W Eo I ap plication ad mitted.

G Filing a pp lica tio n of w ith draw al, if W ithin 3 days ap pro ved b y C o C of appr oval by W +1 0 with 90 % C oC m ajo rity voting, by R P to A A H

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RP to form a n A Within 75 days opinion on of the T +75 pref erential a nd com mencement other tr ansactions

RP to make a Within 115 determination on B Regulation 35A days of T+115 pref erential a nd com mencement other tr ansactions

RP to file Within 135 applications to AA days to T+135 for appr opriate com mencement relief

Within 2 wee ks of appointment Submission of I M of RP, but not Regulation 36(1 ) th T +54 to CoC later than 54 day of com mencement

Publish For m G Within 75 days of T +75 Invita tion of EoI com mencement E At least 15 days from issue Submission of EoI T +90 of EoI (Assume 15 days)

Within 10 days F Pr ovisional List of from the la st Regulation 36A T+100 RAs by RP day of receipt of EoI

Fo r 5 days Submission of from the d ate objections to T+105 G of provisional provisional list list

Within 10 days Final List of RAs of the r eceipt T+115 by RP of objec tions H

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A Issue of RFRP, Within 5 days including of the issue of T+105 Evaluation Matrix the provisional and IM list Regulation 36B At least 30 B days from issue Receipt of of RFRP T+135 Resolution Plans (Assume 30 days)

C Submission of As soon as CoC approved Regulation 39(4) approved by T+165 Resolution Plan to the CoC AA

Approval of D Section 31(1) resolution plan by T=180 AA

AA: Adjudicating Authority; AR: Authorised Representative; E CIRP: Corporate Insolvency Resolution Process; CoC: Committee of Creditors; EoI: Expression of Interest; IM: Information Memorandum; IRP: Interim Resolution Professional; RA: Resolution Applicant; RP: Resolution Professional; RFRP: Request for Resolution Plan.” F It is of utmost importance for all authorities concerned to follow this model timeline as closely as possible.

75Copy pinpoint75. What has now to be determined is whether any challenge can be made at various stages of the corporate insolvency resolution process. Suppose a resolution plan is turned down at the threshold by a Resolution G Professional under Section 30(2). At this stage is it open to the concerned resolution applicant to challenge the Resolution Professional’s rejection? It is settled law that a statute is designed to be workable, and the interpretation thereof should be designed to make it so workable. In Commissioner of Income Tax, Delhi v. S. Teja Singh, [1959] Supp. H 1 S.C.R. 394, this Court said, at page 403:

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“We must now refer to an aspect of the question, which strongly reinforces the conclusion stated above. On the construction contended for by the respondent, S.18-A(9)(b) would become wholly nugatory, as ss.22(1) and 22(2) can have no application to advance estimates to be furnished under s.18-A(3), and if we accede to this contention, we must hold that though the legislature enacted s.18-A(9)(b) with the very object of bringing the failure to send estimates under s.18-A(3) within the operation of s.28, it signally failed to achieve its object. A construction which leads to such a result must, if that is possible, be avoided, on the principle expressed in the maxim, “ut res magis valeat quam pereat”. Vide Curtis v. Stovin [1889] 22 Q.B.D.513 and in particular the following observations of Fry, L. J., at page 519: “The only alternative construction offered to us would lead to this result, that the plain intention of the legislature has entirely failed by reason of a slight inexactitude in the language of the section. If we were to adopt this construction, we should be construing the Act in order to defeat its object rather than with a view to carry its object into effect”. Vide also Craies on Statute Law, p. 90 and Maxwell on The Interpretation of Statutes, Tenth Edn., pp. 236-237. “A statute is designed”, observed Lord Dunedin in Whitney v. E Commissioners of Inland Revenue [1925] 10 Tax Cas.88, 110, “to be workable, and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable”.

76Copy pinpoint76. Given the timeline referred to above, and given the fact that a F resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudicating Authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution G Professional may only invite fresh resolution plans if no other resolution plan has passed muster.

77Copy pinpoint77. However, it must not be forgotten that a Resolution Professional is only to “examine” and “confirm” that each resolution plan conforms to what is provided by Section 30(2). Under Section 25(2)(i), the H

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A Resolution Professional shall undertake to present all resolution plans at the meetings of the Committee of Creditors. This is followed by Section 30(3), which states that the Resolution Professional shall present to the Committee of Creditors, for its approval, such resolution plans which confirm the conditions referred to in sub-section (2). This provision has to be read in conjunction with Section 25(2)(i), and with the second proviso to Section 30(4), which provides that where a resolution applicant is found to be ineligible under Section 29A(c), the resolution applicant shall be allowed by the Committee of Creditors such period, not exceeding 30 days, to make payment of overdue amounts in accordance with the proviso to Section 29A(c). A conspectus of all these provisions would show that the Resolution Professional is required to examine that the resolution plan submitted by various applicants is complete in all respects, before submitting it to the Committee of Creditors. The Resolution Professional is not required to take any decision, but merely to ensure that the resolution plans submitted are complete in all respects before they are placed before the Committee of Creditors, who may or may not approve it. The fact that the Resolution Professional is also to confirm that a resolution plan does not contravene any of the provisions of law for the time-being in force, including Section 29A of the Code, only means that his prima facie opinion is to be given to the Committee of Creditors that a law has or has not been contravened. Section 30(2)(e) does not empower the Resolution Professional to “decide” whether the resolution plan does or does not contravene the provisions of law. Regulation 36A of the CIRP Regulations specifically provides as follows:- “(8) The resolution professional shall conduct due diligence based on the material on record in order to satisfy that the prospective resolution applicant complies with- (a) the provisions of clause (h) of sub-section (2) of section 25; (b) the applicable provisions of section 29A,

G and (c) other requirements, as specified in the invitation for expression of interest. (9) The resolution professional may seek any clarification or additional information or document from the prospective resolution H applicant for conducting due diligence under sub-regulation (8).

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(10) The resolution professional shall issue a provisional list of eligible prospective resolution applicants within ten days of the last date for submission of expression of interest to the committee and to all prospective resolution applicants who submitted the expression of interest. (11) Any objection to inclusion or exclusion of a prospective resolution applicant in the provisional list referred to in sub- regulation (10) may be made with supporting documents within five days from the date of issue of the provisional list. (12) On considering the objections received under sub-regulation (11), the resolution professional shall issue the final list of prospective resolution applicants within ten days of the last date for receipt of objections, to the committee.”

78Copy pinpoint78. Thus, the importance of the Resolution Professional is to ensure that a resolution plan is complete in all respects, and to conduct a due diligence in order to report to the Committee of Creditors whether or not it is in order. Even though it is not necessary for the Resolution Professional to give reasons while submitting a resolution plan to the Committee of Creditors, it would be in the fitness of things if he appends the due diligence report carried out by him with respect to each of the resolution plans under consideration, and to state briefly as to why it does or does not conform to the law. E

79Copy pinpoint79. Take the next stage under Section 30. A Resolution Professional has presented a resolution plan to the Committee of Creditors for its approval, but the Committee of Creditors does not approve such plan after considering its feasibility and viability, as the requisite vote of not less than 66% of the voting share of the financial creditors is not F obtained. As has been mentioned hereinabove, the first proviso to Section 30(4) furnishes the answer, which is that all that can happen at this stage is to require the Resolution Professional to invite a fresh resolution plan within the time limits specified where no other resolution plan is available with him. It is clear that at this stage again no application before the G Adjudicating Authority could be entertained as there is no vested right or fundamental right in the resolution applicant to have its resolution plan approved, and as no adjudication has yet taken place.

80Copy pinpoint80. It is the Committee of Creditors which will approve or disapprove a resolution plan, given the statutory parameters of Section 30. H

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A Under Regulation 39 of the CIRP Regulations, sub-clause (3) thereof provides:- “(3) The committee shall evaluate the resolution plans received under sub-regulation (1) strictly as per the evaluation matrix to identify the best resolution plan and may approve it with such modifications as it deems fit: Provided that the committee shall record the reasons for approving or rejecting a resolution plan.” This regulation shows that the disapproval of the Committee of Creditors on the ground that the resolution plan violates the provisions of any law, including the ground that a resolution plan is ineligible under Section 29A, is not final. The Adjudicating Authority, acting quasi-judicially, can determine whether the resolution plan is violative of the provisions of any law, including Section 29A of the Code, after hearing arguments from the resolution applicant as well as the Committee of Creditors, D after which an appeal can be preferred from the decision of the Adjudicating Authority to the Appellate Authority under Section 61.

81Copy pinpoint81. If, on the other hand, a resolution plan has been approved by the Committee of Creditors, and has passed muster before the Adjudicating Authority, this determination can be challenged before the E Appellate Authority under Section 61, and may further be challenged before the Supreme Court under Section 62, if there is a question of law arising out of such order, within the time specified in Section 62. Section 64 also makes it clear that the timelines that are to be adhered to by the NCLT and NCLAT are of great importance, and that reasons must be recorded by either the NCLT or NCLAT if the matter is not disposed of F within the time limit specified. Section 60(5), when it speaks of the NCLT having jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person, does not invest the NCLT with the jurisdiction to interfere at an applicant’s behest at a stage before the quasi-judicial determination made by the Adjudicating G Authority. The non-obstante clause in Section 60(5) is designed for a different purpose: to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings.

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82Copy pinpoint82. One thing that must be made clear at this stage is that when A Section 33 speaks of the “Adjudicating Authority” in sub-section (1), it is referring to both the Adjudicating Authority as well as the Appellate Authority. An Adjudicating Authority may decide in favour of a resolution plan, which order may then be set aside by the Appellate Authority. This order of the Appellate Authority, setting aside the order of the Adjudicating B Authority, would then be the order which rejects the resolution plan for the purposes of Section 33. The same would apply to an ultimate order of rejection by the Supreme Court under Section 62. This is on the principle that, as stated in Lachmeshwar Prasad Shukul & Ors. v. Keshwar Lal Chaudhuri & Ors. AIR 1941 FC 5 and followed in a number of our judgments, an appeal is a continuation of the original C proceedings.

83Copy pinpoint83. Given the fact that both the NCLT and NCLAT are to decide matters arising under the Code as soon as possible, we cannot shut our eyes to the fact that a large volume of litigation has now to be handled by both the aforesaid Tribunals. What happens in a case where the D NCLT or the NCLAT decide a matter arising out of Section 31 of the Code beyond the time limit of 180 days or the extended time limit of 270 days? Actus curiae neminem gravabit - the act of the Court shall harm no man - is a maxim firmly rooted in our jurisprudence (see Jang Singh v. Brijlal & Ors. [1964] 2 S.C.R. 146 at page 149, and A.S. Antulay v. R.S. Nayak & Ors. [1988] Supp. 1 S.C.R. 1 at page 71). E It is also true that the time taken by a Tribunal should not set at naught the time limits within which the corporate insolvency resolution process must take place. However, we cannot forget that the consequence of the chopper falling is corporate death. The only reasonable construction of the Code is the balance to be maintained between timely completion of the corporate insolvency resolution process, and the corporate debtor otherwise being put into liquidation. We must not forget that the corporate debtor consists of several employees and workmen whose daily bread is dependent on the outcome of the corporate insolvency resolution process. If there is a resolution applicant who can continue to run the corporate debtor as a going concern, every effort must be made to try and see that this is made possible.3 A reasonable and balanced construction of this

3 Regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, states that the liquidator may also sell the corporate debtor as a going concern. H

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A statute would therefore lead to the result that, where a resolution plan is upheld by the Appellate Authority, either by way of allowing or dismissing an appeal before it, the period of time taken in litigation ought to be excluded. This is not to say that the NCLT and NCLAT will be tardy in decision making. This is only to say that in the event of the NCLT, or the NCLAT, or this Court taking time to decide an application beyond the period of 270 days, the time taken in legal proceedings to decide the matter cannot possibly be excluded, as otherwise a good resolution plan may have to be shelved, resulting in corporate death, and the consequent displacement of employees and workers.

84Copy pinpoint84. Coming to the facts of the present case, let us first examine the resolution plan presented by Numetal. Numetal was incorporated in Mauritius on 13.10.2017, expressly for the purpose of submission of a resolution plan qua the corporate debtor, i.e., ESIL. Two other companies, viz., AHL and AEL, were also incorporated on the same day in Mauritius. Shri Rewant Ruia, son of Shri Ravi Ruia (who was the promoter of D ESIL) held the entire share capital of AHL, which in turn held the entire shareholding of AEL, which in turn held the entire share capital of Numetal. At this stage there can be no doubt whatsoever that Shri Rewant Ruia, being the son of Shri Ravi Ruia, would be deemed to be a person acting in concert with the corporate debtor, being covered by Regulation 2(1)(q)(v) of the 2011 Takeover Regulations. E

85Copy pinpoint85. On 18.10.2017, AEL transferred its shareholding of 26.1% in Numetal to a group company, viz., ECL. This group company is ultimately owned by ‘Virgo Trust’ and ‘Triton Trust’, the beneficiaries of which are companies owned by Shri Ravi Ruia, his brother Shri Shashikant Ruia and their immediate family members. The object of including ECL, F as stated in the relevant extract from Numetal’s expression of interest is as follows: “The Company satisfies the minimum tangible net worth requirement of INR 30 Billion considering ECL, as a group company that holds 26.1% (Twenty Six point one Percent) shares G in the Company, has net worth of USD 2,974 million (US Dollars Two Thousand Nine Hundred Seventy Four million) or INR 192.8 Billion (Rupees One Hundred Ninety Two Point Eight Billion) as on 31st March 201 (immediately preceding completed financial year). Please refer Annexure I for the certificate of Chartered H

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Accountant of the Company certifying satisfaction of the minimum tangible net worth requirement in terms of the Eligibility Criteria which includes A, a certificate of Chartered Accountant certifying ECL’s tangible net worth. It is pertinent to note that in case the company is considered as a consortium potential resolution applicant, it continues to satisfy the minimum tangible net worth requirement since the total tangible net worth of the Company, computed on the basis of the weighted average of AEI’s and ECL’s net worth proportionate to their respective shareholding in the Company, is INR 50.33 Billion, which is in excess of INR 30 Billion”.

86Copy pinpoint86. The very next day, Shri Rewant Ruia settled an irrevocable and discretionary trust, viz., the ‘Crescent Trust’, and settled the entire share capital of AHL into the Trust, at a par value of USD 10,000. The beneficiaries of this Trust were general charities, as well as entitles owned by Shri Shashikant Ruia (brother of Shri Ravi Ruia, promoter of the corporate debtor), and entities owned by Shri Rewant Ruia himself. D

87Copy pinpoint87. On 20.11.2017, Shri Rewant Ruia settled ‘Prisma Trust’, another irrevocable and discretionary trust, whose beneficiaries are “general charities” and one ‘Solis Enterprises Limited’, a company incorporated in Bermuda, whose share capital is held by Shri Rewant Ruia. Numetal, vide a response dated 30.3.2018, admitted that while the trust deed relating to Prisma Trust allowed the trustee to benefit any English or Bermuda charity, “no particular charity is named at this stage”. The Trustee of AEL is one ‘Rhone Trustee’, Singapore. What is important to note is that Shri Rewant Ruia was the ultimate natural person who held the beneficial interest in AEL through Prisma Trust, through Solis Enterprises Limited. This emerges from Section 6.7 of the resolution plan submitted by Numetal to the Resolution Professional. Interestingly enough, in an affidavit dated 5.3.2018, the Trustee of Prisma Trust submitted: “that the Trustee (for itself and each person controlled by it), hereby confirm that AEL or Rewant Ruia neither are nor will, following the implementation of the Resolution Plan, be a promoter of or have control over or have any management rights in the RA or ESIL (or the resultant company upon completion of the Merger) (including without limitation, the rights to appoint directors on the H

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A board of the RA or ESIL, or any specific veto rights or the right to direct the policy or management of the RA or ESIL in any manner).”

88Copy pinpoint88. The Resolution Professional, after looking at this affidavit, correctly noted that statements of such a nature would not have been B made by a truly independent trustee of a discretionary trust, which demonstrates that the trustee was under the complete control of Shri Rewant Ruia. This in turn indicates that Prisma Trust is one more smokescreen in the chain of control, which would conceal the fact that the actual control over AEL is by none other than Shri Rewant Ruia himself. C

89Copy pinpoint89. “Curiouser and Curiouser” was the expression of Alice, in Lewis Carroll’s Alice in Wonderland. In this wonderland of Shri Rewant Ruia, one day later on 22.11.2017, the trustees of the Prisma Trust now acquired 100% of the shareholding of AHL for a par value of approximately USD 10,000 from the trustees of the Crescent Trust. On D this very date, merely one day before the Ordinance bringing into force Section 29A was promulgated, ECL transferred its shareholding of 26.1% of the share capital of Numetal to Crinium Bay, an indirect wholly owned subsidiary of VTB Bank, whose shares in turn are held by the Russian Government. AEL also transferred shares representing 13.9% of the E share capital of Numetal to Crinium Bay, thus making Crinium Bay’s total holding in Numetal 40%. On the same date, AEL also transferred shares representing 25.1% of the share capital of Numetal to Indo, and also transferred shares representing 9.9% of the share capital of Numetal to TPE. These transfers are likely to have taken place between 10.2.2018 and 12.2.2018. At the time of submission of its first Resolution Plan F dated 12.2.2018, the shareholding of Numetal was as follows: Crinium Bay : 40% Indo : 25.1% TPE : 9.9% G AEL : 25%

90Copy pinpoint90. It is important to note that, as of this date, Shri Rewant Ruia, who is the ultimate beneficiary in the chain of control of the trusts which in turn controlled AEL, was very much on the scene, holding through AEL 25% of the shareholding of Numetal. H

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91Copy pinpoint91. One other extremely important fact needs to be noticed at this stage. The earnest money in the form of Rs. 500 crores, credited to the account of the corporate debtor, has been provided to Numetal by AEL as a shareholder of the resolution applicant, viz. Numetal. It is important to note that this earnest money deposit of Rs.500 crores made by AEL continues to remain with the Resolution Professional till date, despite the fact that, by the time the second resolution plan was submitted by Numetal on 2.4.2018, AEL had exited as a shareholder of Numetal. It is also important to note that under clause 4.4.4 of the request for proposal for submission of resolution plans for ESIL, the earnest money deposit stands to be forfeited if any condition thereof is breached or the qualifications of the potential resolution applicant are found to be untrue. At this stage, it is important to reproduce relevant extracts of the resolution plan first submitted by Numetal in response to the request for proposal. The same are as under: “4. … the Resolution Applicant is a newly established company that has been incorporated to provide a platform to create and sustain a leading Indian steel business and is focused on the acquisition and turnaround of the Corporate Debtor. Accordingly, to implement the Plan, Numetal believes that it has access to the right mix and balance of the financial and technical market experience which can be provided to the Corporate Debtor. E Numetal is held by four independent shareholders, who possess complementary skill-sets in financial, operational, trading and industrial sectors together with regional expertise that will support the business in the medium and longer term. xxx xxx xxx F 5.2. … (i) Numetal is backed by seasoned and experienced shareholders who bring deep expertise from different industries covering Finance, Steel, Oil and Gas, Metal Mining, Trading expertise across geographies. Crinium Bay Holdings Limited (“Crinium Bay”) an indirect wholly owned subsidiary of VTB G Bank PJSC (“VTB Bank”). VTB Bank is one of the largest emerging market groups listed on Moscow Exchange (“MOEX”) and London Stock Exchange (“LSE”) with current market capitalization of approximately US$ 12.3bn (approximately INR H

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A 79,000 Crores) and total assets in excess of approximately US$ 220bn (approximately INR 14,08,000). xxx xxx xxx VTB Banks support to provide financing, credit assistance to the Resolution Applicant is set out in Annexure 2 and is subject to the B terms of the letter provided therein. The other shareholders in Numetal also have material businesses with international operations focused on the steel, materials and resources sector-

C (a) Tyazhpromexport JSC (“TPE”) a leading engineering agency in Russia in ferrous and non ferrous metallurgy project operations and construction with experience with over 60 years and wholly owned by Russian State corporation, Rostec; (b) Indo International Trading FZCO (“Indo” or “IITF”), a leading commodity trading company; and (c) Aurora Enterprise Trading (sic) Limited (“AEL” or “Aurora”) a financial investor with regional expertise. Numetals (sic) shareholders bring together a wealth of experience in technical and operational capabilities, banking and finance, commodity trading and regional expertise for the benefit of creating long term steel business. xxx xxx xxx 6.3. …The shareholders of Numetal bring to the table, considerable experience from difference industries covering finance, steel, oil and gas, metals and mining chemicals and other sectors across geographies. They have extensive experience in the field of management of distressed assets/situations, restructuring of debt, turnaround of corporates and improvement of strategies for cash flows. In addition these shareholders have a good understanding of Asian markets having dealt with large corporates in these markets. The above factors coupled with the financial strength of its shareholders, put Numetal in a strong position to implement the turnaround successfully. xxx xxx xxx H

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(c) … Aurora Enterprises Limited (“AEL”) brings a careful focus A on financial returns and expertise of the Indian business and commercial sector to Numetal. AEL is a pure financial investor. The beneficiaries of such discretionary trust are general charities and Solis Enterprise Limited, a company incorporated in Bermuda, the share capital of which is held by Mr. Rewant Ruia. B Mr. Rewant Ruia is the son of Ravi Ruia, who is one of the existing promoters of the Corporate Debtor.”

92Copy pinpoint92. Clause 6.7 of Numetal’s resolution plan stipulated that it satisfied the minimum tangible net worth requirement, as set out under the request for proposal, because Crinium Bay held 40% of the C shareholding of Numetal, and that VTB Bank, Crinium Bay’s holding company had sufficient net worth, as on 31.12.2016, to comply with the requirement under the request for proposal. The Resolution Professional, in its affidavit before the Adjudicating Authority, took note of this plan and, therefore, stated: D “Under Para 1 of the Eligibility Criteria for Potential Resolution Applicants published by this Respondent on the website of the Corporate Debtor, potential resolution applicants were given the option of satisfying the minimum tangible net worth net owned funds requirement at a “Group Level” by taking into consideration the financial of entities controlling or controlled by or under common control with the potential resolution applicant. It is evident from the foregoing that Numetal took advantage of this provision and relied upon the financial wherewithal of its constituents/ shareholders. Numetal has not submitted or relied upon its stand- alone financials to satisfy the eligibility criteria. It is submitted that having taken advantage of this provision it is not open to Numetal to contend that this Respondent cannot look at its constituents/ shareholders when determining the issue of eligibility under Section 29A of the Code. Further, it is submitted that even though the RFP document does not allow a resolution applicant to look at its constituents/ shareholders for the purposes of demonstrating its experience, it is clear from the foregoing that Numetal has extensively relied on the experience of its constituents/ shareholders to demonstrate its experience. It is submitted that having relied on the experience of its constituents/shareholders it H

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A is not open to Numetal to contend that this Respondent cannot look at its constituents/shareholders when determining the issue of eligibility under Section 29A of the Code.”

93Copy pinpoint93. The excerpted portions of Numetal’s resolution plan make it clear that, since Numetal itself was a newly incorporated entity, with no B financial or experience credentials of its own, it therefore relied entirely on the credentials of each of its constituent shareholders. This shows that Numetal itself revealed in its resolution plan that its corporate veil should be lifted, for without lifting this veil, none of the parameters of the request for proposal could have been met by Numetal itself. It is thus clear that the four shareholders of Numetal were persons “acting jointly” C within the meaning of Section 29A. This being the case, it is clear that Shri Salve’s argument that VTB Bank is a “connected person”, being ineligible under sub-clause (j), would have to be rejected, as VTB Bank is itself, through its wholly owned subsidiary of Crinium Bay, a person acting jointly with the three other shareholders of Numetal, and would, D therefore, fall within the first part of Section 29A itself. This being so, it cannot be said that VTB Bank is a person “connected to” any one of the persons acting jointly, as it is itself a person acting jointly, and therefore covered by the first part of Section 29A.

94Copy pinpoint94. It is important to note that on 29.3.2018, AEL transferred its E 25% shareholding in Numetal to the other three constituent shareholders, thereby leaving its shareholding in Numetal as ‘Nil’. In response to the Resolution Professional’s invitation, the second Resolution Plan, therefore, submitted by Numetal on 2.4.2018, did not have AEL as a constituent of Numetal; instead, Crinium Bay continued with 40% of the shareholding of Numetal, with TPE’s holding now augmented to 29.5% and Indo’s to F 34.1%.

95Copy pinpoint95. Given the fact that Shri Rewant Ruia is a person deemed to be acting in concert with his father Shri Ravi Ruia (who was a promoter of the corporate debtor ESIL), there is no doubt whatsoever that Section 29A(c) would be attracted as on the date of submission of the first G resolution plan, viz. 12.2.2018, as AEL was held by Prisma Trust, whose ultimate beneficiary is Shri Rewant Ruia himself. This would show that the NPA declared over a year before the date of commencement of the corporate resolution process of ESIL (i.e. in 2015) would render Numetal ineligible to submit a resolution plan. The only manner in which Numetal H

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could successfully present a resolution plan would be to first pay off the debts of ESIL, as well as those of such other corporate debtors of the Ruia group of companies, which were declared as NPAs prior to the aforesaid period of one year, before submitting its resolution plan. However, if the date of the second resolution plan is to be seen, Shri Rewant Ruia appears to have disappeared from the scene altogether, as the three entities left are stated to be independent entities in the form of two Russian entities and one UAE entity. Viewed on 2.4.2018, therefore, could it be said that Shri Rewant Ruia had disappeared from the scene altogether, so as to obviate the application of Section 29A(c)? The obvious answer is no. This is for two reasons. First, as has been stated earlier, the Rs.500 crores that has been deposited towards submission of earnest money continues to remain deposited by AEL even post 2.4.2018, showing thereby that Shri Rewant Ruia continues to be present, insofar as Numetal’s second resolution plan is concerned. Further, having regard to the reasonably proximate state of affairs before submission of the resolution plan on 2.4.2018, beginning with Numetal’s initial corporate structure, and continuing with the changes made till date, it is evident that, the object of all the transactions that have taken place after Section 29A came into force on 23.11.2017 is undoubtedly to avoid the application of Section 29A(c), including its proviso. We therefore hold that, whether the first or second resolution plan is taken into account, both would clearly be hit by Section 29A(c), as the looming presence of Shri Rewant Ruia E has been found all along, from the date of incorporation of Numetal, till the date of submission of the second resolution plan.

96Copy pinpoint96. Another argument raised by Shri Salve is that VTB Bank is ineligible to present a resolution plan, as the major constituent of Numetal, through its wholly owned subsidiary of Crinium Bay, as VTB Bank is F ineligible as sub-clause (f) read with sub-clause (i) of Section 29A have been attracted.

97Copy pinpoint97. In February/March 2014, the Russian Federation annexed the Ukrainian region of Crimea. Consequently, on 6.3.2014, the President of the United States issued Executive Order 13660, pursuant to the G International Emergency Economic Powers Act and the National Emergencies Act. The said order sought to block the property of Russian entities contributing to the situation in Ukraine. Summarizing the executive order issued by the President, the Department of Treasury’s Office of Foreign Assets Control commented:- H

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A “The Ukraine/Russia-related sanctions program implemented by the Office of Foreign Assets Control (OFAC) began on March 6, 2014, when the President, in Executive Order (E.O.) 13660, declared a national emergency to deal with the threat posed by the actions and policies of certain persons who had undermined democratic processes and institutions in Ukraine; threatened the peace, security, stability, sovereignty, and territorial integrity of Ukraine; and contributed to the misappropriation of Ukraine’s assets. In further response to the actions and polices of the Government of the Russian Federation, including the purported annexation of the Crimea region of Ukraine, the President issued three subsequent Executive orders that expanded the scope of the national emergency declared in E.O. 13660. Together, these orders authorize, among other things, the imposition of sanctions against persons responsible for or complicit in certain activities with respect to Ukraine; against officials of the Government of the Russian Federation; against persons operating in the arms or related materiel sector of the Russian Federation; and against individuals and entities operating in the Crimea region of Ukraine. E.O. 13662 also authorizes the imposition of sanctions on certain entities operating in specified sectors of the Russian Federation economy. Finally, E.O. 13685 also prohibits the importation or exportation of goods, services, or technology to or from the Crimea region of Ukraine, as well as new investment in the Crimea region of Ukraine by a United States person, wherever located.”

98Copy pinpoint98. The Office of Foreign Assets Control thereafter issued Directive Number 1 under Executive Order 13662, stating:- F “DIRECTIVE 1 (AS AMENDED ON SEPTEMBER 29, 2017) UNDER EXECUTIVE ORDER 13662 Pursuant to sections 1(a)(i), 1(b), and 8 of Executive Order 13662 of March 20, 2014, “Blocking Property of Additional Persons Contributing to the Situation in Ukraine” (the Order) and 31 C.F.R. G § 589.802, taking appropriate account of the Countering Russian Influence in Europe and Eurasia Act of 2017, and following the Secretary of the Treasury’s determination under section 1(a)(i) of the Order with respect to the financial services sector of the Russian Federation economy, the Director of the Office of Foreign H

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99Copy pinpoint99. The names of persons determined to be subject to the directives issued under Executive Order 13662 are published in the ‘Sectoral Sanctions Identification List’, published by the Office of Foreign Assets Control. A perusal of this list shows that VTB Bank is listed therein, along with various entities affiliated to it.

100Copy pinpoint100. Similarly, under EU Council Regulation 833 of 2014 dated 31.7.2014, certain restrictive measures in view of Russian actions destabilizing the situation in Ukraine were taken against certain Russian entities, of which VTB Bank was one. These measures included: “(5) It is also appropriate to apply restrictions on access to the capital market for certain financial institutions, excluding Russia- based institutions with international status established by intergovernmental agreements with Russia as one of the shareholders. Other financial services such as deposit business, payment services and loans to or from the institutions covered by this Regulation, other than those referred to in Article 5, are not covered by this Regulation.” Under Article I of this regulation, ‘transferable securities’ was defined as : “(f) ‘transferable securities’ means those classes of securities which are negotiable on the capital market, with the exception of instruments of payment, such as: (i) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares, F (ii) bonds or other forms of securitised debt, including depositary receipts in respect of such securities, (iii) any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement;” Article V thereto provided:- G “It shall be prohibited to directly or indirectly purchase, sell, provide brokering or assistance in the issuance of, or otherwise deal with transferable securities and money-market instruments with a maturity exceeding 90 days, issued after 1 August 2014 by…”

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Further, Annexure III thereto listed VTB Bank as one of the institutions subject to the ‘restrictive measures’.

101Copy pinpoint101. What has been argued on behalf of Shri Rohatgi is that, in order to be covered by sub-clause (f) read with sub-clause (i) of Section 29A, the person must be subject to a disability, which corresponds to a prohibition by SEBI in India from trading in securities or accessing the securities markets. Sub-clauses (f) and (i) therefore refer to persons who, on account of their antecedents, may adversely impact the credibility of the processes under the Code. This is in fact stated in the Preamble of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, dated 23.11.2017, which introduced Section 29A into the Code, as follows: C “AND WHEREAS in order to strengthen further the insolvency resolution process, it has been considered necessary to provide for prohibition of certain persons from submitting a Resolution Plan who, on account of their antecedents, may adversely impact the credibility of the processes under the Code.” (emphasis supplied) D

102Copy pinpoint102. What is stressed by Shri Rohatgi is that, in his speech while introducing the Amendment Bill in Parliament, the Finance Minister stated:- “and a person who is prohibited under SEBI cannot apply. E So these are statutory disqualifications.” In the light of this object, Section 29A(i) will have to be read as a disability which corresponds to Section 29A(f) in view of the antecedent conduct on the part of the person applying as a resolution applicant in a jurisdiction outside India. F

103Copy pinpoint103. What will be noticed is that the sanctions that have been imposed by the authorities of both the United States and the Council of the European Union are not on account of any misconduct on the part of VTB Bank. Rather, they have been imposed politically, because of the conduct of a particular country, i.e. Russia, which has sought to undermine G Ukraine’s territorial integrity, sovereignty and independence, by illegally annexing Crimea and Sevastopol. We are of the view that Shri Rohatgi is right, inasmuch as VTB Bank cannot be said to have been prohibited by an authority outside India from trading in securities or accessing the securities markets, due to any fraudulent and/or unfair trade practices H

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A relating to the securities market generally. A prohibitory sanction by an authority situate outside India for political reasons would thus not be covered by sub-clause (i). However, Shri Salve pointed to an order dated 19.9.2017 of the US Commodity Futures Trading Commission, which held: B “A. Respondents Violated Section 4c(a)(1) and (2) of the Act Respondents’ RUB/USD block trades constituted unlawful fictitious sales and caused prices to be reported or recorded that were not true and bona fide prices. Section 4c(a)(1) and (2) of C the Act makes it unlawful “for any person to offer to enter into, enter into, or confirm the execution of a transaction that is ... a fictitious sale” or that “is used to cause any price to be reported, registered, or recorded that is not a true and bona fide price.” xxx xxx xxx D Respondents’ RUB/USD block trades were fictitious sales under the Act. Respondents designed the block trades to accomplish through the use of the futures market that which was not otherwise possible for VTB to accomplish in the swaps market. Through the block trades, VTB was able to transfer its cross-currency risk to VTB Capital which could then hedge the risk in the swaps market. VTB obtained pricing from VTB Capital for these transactions that was more favorable than it admittedly could have obtained from third-parties in the futures market. With this structure, Respondents, as intended, negated market risk and avoided price competition. Accordingly, Respondents’ block trades were “fictitious from the standpoint of reality and substance” and in violation of Section 4c(a)(1) and (2)(A) of the Act. In re Goldwurm, 7 Agric. Dec. 265, 275 (providing that cotton futures trades entered for purpose of accomplishing income tax reporting goals were “fictitious from the standpoint of reality and substance”). Further, Respondents’ trades caused prices to be reported to or recorded by the CME that were not true and bona fide prices in violation of Section 4c(a)(2)(B) of the Act. See In re Morgan Stanley & Co., [2012 Transfer Binder] Comm. Fut. L. Rep. (CCH) ¶ 32,218 (CFTC June 5, 2012) (settlement order) (finding violation of Section 4c(a) where unlawfully executed H

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exchanges for related positions caused non-bona fide prices to be A reported or recorded). xxx xxx xxx V. FINDINGS OF VIOLATION B Based on the foregoing, the Commission finds that, during the Relevant Period, VTB and VTB Capital violated Section 4c(a)(1) and (2) of the Act and Regulation 1.38(a).”

104Copy pinpoint104. VTB Bank had submitted an offer before the US Commodity Futures Trading Commission, in which it, without admitting or denying the findings or conclusions, had offered to cease and desist from violating C the regulations aforementioned, to pay a civil monetary penalty in the amount of USD five million, and had ordered its successors and assigns to comply with the conditions consented to. This offer was accepted by the Commission, and by way of settlement, apart from what was offered by the respondents, the respondents further agreed, in the said Order D dated 19.9.2017 as follows:- “3. Respondents further agree that they shall comply with the following additional undertakings: a. Respondents shall not enter into privately negotiated futures, options or combination transactions with one another on or E through any U.S.-based futures exchange for a period of two years from the date of this Order;”

105Copy pinpoint105. A reading of this order makes it clear that, even assuming that the Commodity Futures Trading Commission is an authority which corresponds with SEBI (Shri Rohatgi has argued that in the United States F the Securities Exchange Commission is the authority which corresponds with SEBI in India), it is clear that there is no prohibition by the Commodity Futures Trading Commission of the United States interdicting VTB Bank from trading in securities or accessing the securities market. All that VTB Bank has done is consent to a cease and desist order; consent to G pay a monetary penalty in the amount of USD five million; and further consent to not enter into privately negotiated futures options with a particular subsidiary, viz. VTB Capital, on or through any US-based futures exchange for a period of two years from the date of the order. Obviously, a prohibition regarding privately negotiated futures options, H

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A or combination transactions with one another, is not a prohibition from trading in securities or accessing the securities market. We thus agree with Shri Rohatgi that Crinium Bay, being a wholly owned subsidiary of VTB Bank, does not therefore incur any disqualification under sub-clause (f) read with sub-clause (i) of Section 29A.

106Copy pinpoint106. This brings us to the Appellant, i.e., AMIPL. So far as Uttam Galva is concerned, the corporate structure is as follows:- AMSA is a listed company in Luxemburg. This company is the ultimate parent company of the resolution applicant, through its wholly owned subsidiary AMBD, a company incorporated in Luxemburg, which in turn holds 100% of the shares in Oakey Holding BV, a company incorporated in C the Netherlands, which in turn holds 99.99% shares in AMIPL, a company incorporated in India. AMNLBV is a company incorporated in the Netherlands, and is a 100% subsidiary of AMSA. It is this group company of Shri L.N. Mittal that held 29.05% of the shareholding in Uttam Galva (as on 7.2.2018).

107Copy pinpoint107. On 4.9.2009, a Co-Promotion Agreement was executed between AMNLBV and the Indian promoters of Uttam Galva, who are stated to be the Miglani family, who are residents of Mumbai. As per the Co-Promotion Agreement, the foreign promoter, viz., AMNLBV was entitled to nominate one half of the non-independent directors on the board of Uttam Galva, the other half being nominated by the Miglanis. Both of them were to jointly nominate all of the independent directors. Clause 16 of the said agreement, read with Schedule II thereof, provides a list of matters which require the affirmative vote of AMNLBV. It is important to notice that the original shareholding of AMNLBV in Uttam Galva was 32%. This shareholding was reduced to 29.05% in the hands of AMNLBV, the Miglani group holding 31.82% as of December 2017. The rest of the shares were held by the public. This Co-Promotion Agreement, therefore, not only names AMNLBV as the foreign promoter of Uttam Galva, but also makes it clear that Uttam Galva would be jointly managed and controlled by the foreign and Indian promoters. G Pursuant to this Co-Promotion Agreement, on 7.9.2009 AMNLBV issued a letter of offer to acquire 35,226,233 fully paid shares of the face value of Rs.10, representing 25.76% of the share capital of Uttam Galva. In this letter, it was disclosed to the public at large that AMNLBV was becoming a promoter of this company, with significant affirmative voting

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rights. On 20.9.2011, a Non Disposal Undertaking was provided by A AMNLBV, as promoter of Uttam Galva, to the lender banks of Uttam Galva, which included the State Bank of India. On 31.3.2016, Canara Bank and Punjab National Bank declared Uttam Galva’s accounts as NPA. It is important to note that, in all the annual returns of Uttam Galva till date, AMNLBV’s shareholding has been shown as ‘promoter’s B shareholding.’ All the annual reports, upto 2017, contained a list of promoters, which included AMNLBV as one such, holding 29.05%% of the share capital of the company, and having significant influence over the company. Shri Salve’s argument that, in point of fact, no control was actually exercised as AMNLBV never appointed any directors or exercised its voting rights, cannot be accepted as that makes no difference to the de jure position of AMNLBV being a “promoter” as defined in Section 2(69)(a) of the Companies Act, 2013.

108Copy pinpoint108. On 7.2.2018, a few days before AMIPL submitted its first resolution plan, AMNLBV sold its entire shareholding in Uttam Galva by way of an off market sale, to a company of the Indian co-promoters, viz., ‘Sainath Trading Company Private Limited’. Shares that were purchased for Rs.120 each, were sold for Re.1 each, when the market value of the shares on the said date was admittedly Rs.19.50 per share. The aforesaid sale of shares was done without making an open offer under the 2011 Takeover Regulations, on the basis that it was an inter se transfer of shares between promoters, and therefore exempt from such requirement under Regulation 10 of the said regulations. Also, as a matter of fact, the sale of the said shares was effected without taking the consent of the lenders of Uttam Galva, which consent was necessary as per the Non Disclosure Undertaking that was executed by AMNLBV. On 7.2.2018, consequent to the aforesaid inter se transfer, the Co- F Promotion Agreement is said to have stood automatically terminated. By way of abundant caution, a formal deed of termination was entered into. AMNLBV addressed letters to the NSE and the BSE to record the aforesaid inter se transfer, who accordingly declassified AMNLBV as a promoter of Uttam Galva on 21.3.2018 and 23.3.2018 respectively. G

109Copy pinpoint109. It is absolutely clear that Shri L.N. Mittal, who is the ultimate shareholder of the resolution applicant, viz. AMIPL, is directly the ultimate shareholder of AMNLBV as well, which is an L.N. Mittal Group Company. When the corporate veil of the various companies

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A aforementioned is pierced, both AMIPL and AMNLBV are found to be managed and controlled by Shri L.N. Mittal, and are therefore persons deemed to be acting in concert as per Regulation 2(1)(q)(2)(i) of the 2011 Takeover Regulations. That AMNLBV is a promoter of Uttam Galva is clear from the aforementioned facts, being expressly stated as such in Uttam Galva’s annual returns. The reasonably proximate facts prior to the submission of both resolution plans by AMIPL would show that there is no doubt whatsoever that AMNLBV’s shares in Uttam Galva were sold only in order to get out of the ineligibility mentioned by Section 29A(c), and consequently the proviso thereto. The fact that the lenders with whom AMNLBV had a Non Disposal Undertaking have not yet moved any forum for a declaration that the sale of the shares, being without their consent, is non est, does not absolve AMNLBV from having failed to first obtain their consent before selling off its shares in Uttam Galva. Such sale is directly contrary to the Non Disposal Undertaking given to the lenders. Quite apart from this, it is also clear that shares worth Rs.19.50 each were sold at a distress value of Re.1 D each, so as to overcome the provisions of Section 29A(c) and the proviso thereto. It is clear therefore that the Uttam Galva transaction clearly renders AMIPL ineligible under Section 29A(c) of the Code.

110Copy pinpoint110. Insofar as the transaction with regard to KSS Petron is concerned, the facts are as follows:- on 3.3.2011, Fraseli, an entity registered and incorporated in Luxemburg, which is managed and controlled by Shri L.N. Mittal, held 32.22% of the shareholding of KSS Global, a company domiciled in the Netherlands. On 19.5.2011, by a Shareholders Agreement entered into between KSS Holding, KSS Infra EALQ, Fraseli and KSS Global, the first three companies were each given a right to appoint an equal number of directors on the board of directors of KSS Global, which in turn held 100% of the share capital of KSS Petron, a company incorporated in India. Fraseli was also granted affirmative voting rights on decisions regarding certain specified matters, both at the board and the shareholder level, in respect of KSS Global and all companies controlled by it, which would include KSS Petron. As G has been stated hereinabove, KSS Petron was declared as an NPA on 30.9.2015. As in the case of Uttam Galva, Fraseli divested its shareholding in KSS Petron on 9.2.2018, i.e., only three days before AMIPL submitted its first resolution plan. On the same day, the directors nominated by Shri L.N. Mittal, through Fraseli, resigned from the board H of KSS Global.

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