- Bookmark
- Share
- CaseIQ
Vishal Vijay Kalantri v. Dbm Geotechnics & Constructions Pvt. Ltd. And Another
Factual and Procedural Background
The appellant challenged an order dated 12 March 2020 of the National Company Law Appellate Tribunal (NCLAT) before the Supreme Court under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC).
Key chronological events extracted from the record are:
- 29 July 2016: Respondent No. 1 issued a notice invoking arbitration concerning Contract No. 2, followed by a Section 11(6) application before the Bombay High Court on 15 December 2016.
- 23 March 2017: A second arbitration notice (Contract No. 1) was later withdrawn on 29 March 2017 pursuant to consent terms, which ultimately failed.
- 16 June 2017: A demand notice under Section 8 of the IBC was served; the appellant responded on 29 June 2017 disputing liability and terming the consent terms void.
- 14 September 2017: The Section 11(6) petition was withdrawn.
- 25 March 2018: The National Company Law Tribunal (Adjudicating Authority) admitted a Section 9 petition commencing the Corporate Insolvency Resolution Process (CIRP).
- NCLAT Appeal: The appellant’s challenge was dismissed. NCLAT recorded that the Committee of Creditors (CoC) rejected a settlement proposal under Section 12A of the IBC with 99.68% voting share and, instead, approved a Resolution Plan submitted by APSEZL with the same voting percentage.
- Supreme Court: The present civil appeal (No. 2730/2020) was heard and decided on 20 July 2020.
Legal Issues Presented
- Whether the NCLAT erred in failing to decide the issue allegedly crystallised in its earlier orders dated 18 April 2018 and 23 May 2018.
- Whether a “real dispute” existed that could bar initiation of insolvency proceedings under Section 9 of the IBC, applying the standard laid down in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.
Arguments of the Parties
Appellant's Arguments
- The NCLAT disposed of the appeal without deciding the specific issue framed in its orders dated 18 April 2018 and 23 May 2018.
Respondents' Arguments
- The claims before the CoC total approximately ₹3,000 crore, vastly exceeding the ₹30 crore claims originally raised in arbitration, demonstrating near-unanimous creditor support (99.68%).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., (2018) 1 SCC 353 | A dispute must be genuine; it cannot be spurious, hypothetical or illusory to defeat a Section 9 IBC petition. | The Supreme Court held that, on the facts, no genuine dispute existed; hence NCLAT acted correctly in not revisiting the earlier framed issue. |
Court's Reasoning and Analysis
The Court noted that although the NCLAT did not expressly decide the issue referred to in its 18 April 2018 and 23 May 2018 orders, the tribunal’s approach was justified. Applying the standard from Mobilox, the Supreme Court reiterated that only real, not speculative, disputes can bar an insolvency petition.
Given the CoC’s overwhelming rejection (99.68%) of the appellant’s Section 12A settlement proposal and its simultaneous approval of APSEZL’s resolution plan, the Court found no merit in the appellant’s contention. Consequently, it concluded that the existence of any dispute was not “genuine” within the meaning of the precedent, and interference with the NCLAT’s decision was unwarranted.
Holding and Implications
The appeal is dismissed with no order as to costs.
Immediate Effect: The NCLAT order dated 12 March 2020 stands affirmed; the Resolution Plan approved by the CoC remains operative. No broader legal precedent was set beyond reaffirming the principle in Mobilox.
1. This appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (I.B. code, for short) is directed against the order dated 12.03.2020 passed by the National Company Law Appellate Tribunal, New Delhi (for short “NCLAT”) in Company Appeal (AT) (Insolvency) No. 139 of 2018.
2. During the course of its order, the NCLAT observed as under:
“11. The voting on the resolution for approval of Settlement Proposal under Section 12A of the I&B Code proposed at the ‘Committee of Creditors’ Meeting held on 13 September 2019 was concluded on 17 September, 2019. From the results of the voting, it was noted that the resolution for withdrawal of ‘corporate insolvency resolution process’ under Section 12A of the I&B Code was rejected by the members of the ‘Committee of Creditors’ by 99.68% voting shares and ‘Committee of Creditors’ members having the remaining 0.3% voting shares abstained from voting. As such, it is unequivocally clear that the resolution for withdrawal of ‘corporate insolvency resolution process’ under Section 12A of the I&B Code came to be rejected by the members of the ‘Committee of Creditors’ as the same could not muster the requisite 90% voting share.
12. It is pertinent to mention that the said Resolution Plan of the ‘APSEZL’ was found to be in compliance with Section 30(2) of the I&B Code and Regulation 38 of the CIRP Regulations. Since, the withdrawal resolution under Section 12A of the I&B Code stood rejected by the members of the ‘Committee of Creditors’, as per the instructions of the ‘Committee of Creditors’ in its 22 Meeting, the Resolution Professional put the Resolution Plan submitted by ‘APSEZL’ for voting by the members of the ‘Committee of Creditors’. The voting on the same commenced on 17 September, 2019 and concluded on 19 September, 2019.
13. On 19 September, 2019, the voting results were received which revealed that the Resolution Plan submitted by APSEZ was approved by the members of the ‘Committee of Creditors’ with 99.68% votes.”
3. It was also recorded that the Settlement Proposal of the appellant under Section 12A of the I.B. Code was rejected by 99.68% votes of the Committee of Creditors (CoC, for short).
4. The facts on record indicate that a notice invoking arbitration was issued on 29.07.2016 by respondent no. 1 in relation to Contract No. 2 whereafter an application under Section 11(6) of the Arbitration & Conciliation Act, 1996 was filed in the High Court of Bombay on 15.12.2016. A notice was also issued on 23.03.2017 invoking arbitration in relation to Contract No. 1. Thereafter, Consent Terms dated 29.03.2017 were entered into, in terms whereof, the Notice dated 23.03.2017 stood withdrawn. It appears that Consent Terms did not fructify and completely failed.
5. On 16.06.2017 a Notice under Section 8 of the Code was issued. In its response dated 29.06.2017, respondent No. 2 submitted inter alia that the Terms of Consent were void and unenforceable.
6. Thereafter, the application under Section 11(6) as aforesaid was withdrawn on 14.09.2017.
7. The Adjudicating Authority admitted the petition under Section 9 of the I.B. Code vide Order dated 25.03.2018 against which an appeal was preferred. The appeal was dismissed by the NCLAT with above quoted observations.
8. Mr. P. Chidambaram, learned Senior Advocate for the appellant submitted that the issue which got crystallized in the orders dated 18.04.2018 and 23.05.2018, whereafter the matter was adjourned on 12.07.2018 and 17.10.2019, was not decided by the NCLAT while disposing of the appeal.
9. Mr. Mukul Rohatgi, learned Senior Advocate for the respondent-original applicant submitted that as against the claims amounting to Rs. 30 crores which were subject matter of the arbitration notice, the claims received by the CoC are to the tune of Rs. 3000 crores and the voting pattern referred to in the above quoted paragraphs from the order of NCLAT discloses near unanimity amongst the claimants.
10. Though the issue as framed in the orders dated 18.04.2018 and 23.05.2018 was not decided by the NCLAT, in our view, in keeping with the law laid down by this Court in Mobilox Innovations Private Ltd. v. Kirusa Software Private Ltd., (2018) 1 SCC 353, a dispute must truly exist in the facts and should not be spurious, hypothetical and illusory.
11. In the light of the facts adverted to in paragraphs 11 to 13 as quoted above, the NCLAT was right in not considering the issue framed in the Orders dated 18.04.2018 and 23.05.2018
12. In the circumstances, we see no reason to interfere in the matter. The appeal is, accordingly, dismissed. No costs.
13. In view of the dismissal of the appeal, no separate orders are called for in I.A. No. 62152/2020.
SUPREME COURT OF INDIA
RECORD OF PROCEEDINGS
Civil Appeal No. 2730/2020
Vishal Vijay Kalantri.….Appellant(s)
v.
DBM Geotechnics & Constructions Pvt. Ltd. & Anr.….Respondent(s)
(FOR ADMISSION; IA No. 62053/2020 - FOR EX-PARTE STAY; IA No. 62054/2020 - FOR EXEMPTION FROM FILING AFFIDAVIT; and, IA No. 62152/2020 - FOR INTERVENTION/IMPLEADMENT)
Date : 20-07-2020 This appeal was called on for hearing today.
(Before Uday Umesh Lalit and Vineet Saran, JJ.)
For Appellant(s) Mr. P Chidambaram, Sr. Adv.
Mr. Darius Khambatta, Sr. Adv.
Mr. Ameet Naik, Adv.
Ms. Neeha Nagpal, Adv.
Ms. Pallavi Langar, Adv.
Mr. Abhishek Kale, Adv.
Ms. Nisha Kaba, Adv.
Mr. Vishvendra Tomar, Adv.
Mr. Malak Manish Bhatt, AOR
For Respondent(s) Mr. Vikram Nankani, Sr. Adv.
(For R-1) Mr. Mahesh Agarwal, Adv.
Mr. E. C. Agrawala, AOR
For R-2 Mr. Mukul Rohatgi, Sr. Adv.
Ms. Radhika Gautam, AOR
UPON hearing the counsel the Court made the following
14. The Appeal is dismissed, in terms of the Signed Order.
15. Pending application(s), if any, also stand disposed of.
Alert