Facts
- RP directed to invite fresh offers within 21 days by the Court on 24 September 2019.
- CoC directed to make a final decision within two weeks after receiving the fresh offers.
- RP requested DVI to submit a performance bank guarantee of INR 150 crores by 10 July 2020.
- NCLAT had directed the liquidation of the corporate debtor, leading to the Civil Appeal by CoC on 26 August 2019.
- Civil Appeal stayed the liquidation of the corporate debtor on 6 September 2019 by this Court.
- NCLT ordered reconstitution of CoC to consider DVI’s resolution plan on 13 February 2019.
- DVI attempted to back out of commitments under the resolution plan approved by CoC on 11 February 2020 due to COVID-19 impact.
- DVI filed an IA on 12 June 2020 requesting a two-month extension before the Court.
- DVI submitted a resolution plan on 17 January 2020 with a performance bank guarantee of INR 150 crores.
- Revised proposal of DVI discussed in CoC meeting on 29th January 2020.
- DVI submitted an addendum to its resolution plan on 7 February 2020.
- DVI filed an IA seeking cancellation of the performance bank guarantee on 10 September 2020.
- NCLT approved DVI’s resolution plan on 9 July 2020.
- CoC directed to evaluate offers within three weeks as per Court order.
- DVI sought modifications based on COVID-19 impact on 12 June 2020.
- Resolution plan of DVI approved by 70.07% of CoC on 11 February 2020.
- Contempt petition filed by CoC against DVI on 26 August 2020 for breaching court order.
- RP made public announcement for fresh resolution plans on 26 September 2019.
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Arguments
- DVI did not intend to withdraw from the resolution plan but highlighted the financial impact of COVID-19 on the economy and the corporate debtor.
- The IA moved by DVI was to address practical difficulties due to a limited decision period by the NCLT, not to withdraw the offer.
- DVI emphasized the impact of the pandemic on the corporate debtor’s business and asked for time to assess the situation.
- DVI did not move any previous application before the Court for an extension of time, contrary to the statement in the Court’s order.
- The plea of force majeure was raised by DVI in a subsequent affidavit before the NCLAT, not as a basis for withdrawing from the resolution plan.
- DVI’s challenge to the NCLT order and their assessment of conditions precedent in the resolution plan cannot be a basis for invoking contempt jurisdiction.
- Contempt jurisdiction requires willful disobedience, which DVI did not show in challenging the NCLT order or addressing conditions precedent.
- Dr. Abhishek Manu Singhvi, learned Senior Counsel, stated before the Court that DVI shall not plead force majeure in the pending proceedings before the NCLAT due to the Covid-19 pandemic.
- The application for rectification is based on two factual misconceptions in the order of the Court dated 18 June 2020.
- The application submitted on 12 June 2020 was to address delays caused by COVID-19 and seek an extension of time, not to plead force majeure.
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Analysis
- DVI attempted to withdraw from the resolution plan but was rejected by the court.
- The conduct of DVI post approval of the resolution plan caused a stand-still in the process.
- Contempt jurisdiction should be used cautiously, especially for setting up untenable pleas.
- DVI tried to raise force majeure as a defense but retracted it after the rejection of the IA.
- Extensions granted were for the consideration of the resolution plan submitted by DVI.
- DVI sought to renegotiate its resolution plan post-approval by CoC, which was not permissible.
- The conduct of DVI lacked bonafide intent towards fulfilling its obligations.
- The order of the court rejecting DVI’s IA also rejected the basis for the reliefs sought in the IA.
- DVI’s continued attempts to avoid obligations after rejection of the IA led to contempt proceedings.
- DVI’s actions post-rejection of IA indicated a lack of willingness to fulfill agreed terms.
- The court noted that extensions were granted to benefit DVI as a resolution applicant for plan evaluation.
- The conduct of DVI post-approval of the plan and its subsequent actions were deemed non-bonafide.
- The role of the adjudicating authority was to ensure effective plan implementation before approval.
- DVI’s persistence in justifying relief from obligations despite rejection of the IA was noted.
- DVI failed to fulfill various obligations even after approval of the resolution plan.
- The contempt jurisdiction of the Court is considered inappropriate in this case.
- DVI is in appeal before NCLAT, hence no opinion on the merits of the submission is expressed.
- Dr. Abhishek Manu Singhvi argued that DVI can question whether conditions for enforcement of the resolution plan have been fulfilled.
- The issue of conditions precedent to the enforcement of the resolution plan does not arise in the present proceedings.
- The present proceedings do not concern the rectification application by DVI or the contempt petition by the CoC.
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Decision
- The application for rectification moved by DVI has no merit and is dismissed.
- Contempt proceedings are not expedient in the interest of justice.
- Public announcement made by the RP on 3 December 2019 in pursuance of the court order.
- CoC sought liberty to consider additional resolution offers, including one from DVI.
- Contempt Petition (CP) No 524 of 2020 in Civil Appeal No 6707 of 2019 is dismissed, subject to conditions.
- DVI cannot set up a plea for force majeure in the pending proceedings before the NCLAT.
- DVI’s appeal against the approval of the resolution plan by NCLT to be heard and disposed of by NCLAT within one month.
- NCLAT will decide on the tenability and merits of DVI’s submission regarding conditions precedent under the resolution plan after hearing the parties.
Case Title: COMMITTEE OF CREDITORS OF AMTEK AUTO LIMITED THROUGH CORPORATION BANK Vs. DINKAR T. VENKATSUBRAMANIAN (2021 INSC 112)
Case Number: C.A. No.-006707 / 2019
