Supreme Court lays down basis of reportable matters under Section 29 A (c) of IBC

The Hon'ble Supreme Court of India issued a ruling in ArcelorMittal India Private Limited v. Satish Kumar Gupta on October 4, 2018, interpreting Section 29A of the Insolvency and Bankruptcy Code, 2016, in the case of ArcelorMittal India Private Limited v. Satish Kumar Gupta. Essar Steel India Limited was placed under corporate insolvency proceedings after the National Company Law Tribunal, Ahmedabad Bench, admitted a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016. As a result, the Interim Resolution Professional (in this case, Satish Kumar Gupta, "the Respondent") was appointed, and he requested resolution plan proposals from interested parties.

Numetal Limited and ArcelorMittal India Private Limited both presented resolution plans. AMIPL and Numetal, on the other hand, were declared ineligible under Section 29A of the IBC by the Resolution Professional. In the instant case titled ArcelorMittal India Private Limited v. Satish Kumar Gupta the issue raised before the Apex Court for clarification was:

Whether resolution can be submitted under Section 29A (c) of the IBC by any of the parties?

With regard to this issue, the Court rejected the argument made by one of the petitioners in the above petitions that, commercially speaking, no one would ever make a speculative bid in which he would pay off the debt of another related corporate debtor classified as an NPA without knowing his resolution plan would be accepted, because this would reduce the pool of resolution applicants to nil, stultifying the object sought to be achieved by the proviso to Section 29A. (c). That the IBC's Section 12 time restriction of 270 (two hundred seventy) days for completing the corporate insolvency process cannot be extended. Examining the scope of Section 29A as a whole, the Court lays out the entire corporate bankruptcy resolution process from start to finish. The time spent in litigation before the NCLT or the NCLAT over any issues originating from the corporate insolvency resolution process shall be exempt from the 270 (two hundred seventy) day time limit set forth in Section 12 of the IBC, according to the Court. Finally, the Court ruled that AMIPL and Numetal were both unqualified to submit resolution plans under Section 29A (c) of the IBC. However, at the request of the ESIL Committee of Creditors, the Court has exercised its extraordinary power under Article 142 of the Constitution and has given AMIPL and Numetal another two weeks from the date of receipt of the Judgment to pay off the NPAs of their related corporate debtors, in accordance with the proviso to Section 29A (c) of the IBC. Finally, the Court ruled that AMIPL and Numetal were both unqualified to submit resolution plans under Section 29A (c) of the IBC. However, at the request of the ESIL Committee of Creditors, the Court has exercised its extraordinary power under Article 142 of the Constitution and has given AMIPL and Numetal another two weeks from the date of receipt of the Judgment to pay off the NPAs of their related corporate debtors, in accordance with the proviso to Section 29A (c) of the IBC.

The Court categorically held that,

"Since it is clear that both sets of resolution plans that were submitted to the Resolution Professional, even on 2.4.2018, are hit by Section 29A(c), and since the proviso to Section 29A(c) will not apply as the corporate debtors related to AMIPL and Numetal have not paid off their respective NPAs, ordinarily, these appeals would have been disposed of by merely declaring both resolution applicants to be ineligible under Section 29A(c)."
However, if such payments are made within the aforementioned time frame, both resolution applicants can re-submit their previously submitted resolution plans to the Committee of Creditors, who must examine and make a decision within 8 (eight) weeks after the judgement date. ESIL will be liquidated if the Committee of Creditors fails to reach such a decision with the required majority.