STATE BANK OF INDIA AND ORS versus E CONSORTIUM OF MR MURARI LAL JALAN AND MR FLORIAN FRITSCH AND ANR

STATE BANK OF INDIA AND ORS versus E CONSORTIUM OF MR MURARI LAL JALAN AND MR FLORIAN FRITSCH AND ANR

The NCLAT was not justified in permitting the SRA to adjust the PBG of Rs 150 crores in lieu of the required cash infusion of Rs 350 crores as envisaged by SBI's affidavit dated 16 August 2023; the SRA must deposit the outstanding Rs 150 crores in cash by the date directed by this Court and the PBG shall remain in operation pending final disposal of the appeal before NCLAT.

Parties
Appellants / Consortium of Lenders: State Bank of India and Ors; Respondents / Successful Resolution Applicant (sra): The Consortium of Mr Murari Lal Jalan and Mr Florian Fritsch and Anr
Jurisdiction
India
Judgment Date
18 January 2024
Procedural Posture
Civil Appeal (arising From Nclat/nclt Orders Under the Insolvency and Bankruptcy Code, 2016) / Judgment Appeals Disposed of by Supreme Court on 18 January 2024
Outcome
Appeals disposed of with modification of NCLAT order dated 28 August 2023
Legal Topics
Resolution Plan, Conditions Precedent, Performance Bank Guarantee, Extension of Time, Liquidation, Implementation of Resolution Plan
Insolvency and Bankruptcy Corporate Law Administrative Law Resolution Plan Conditions Precedent Performance Bank Guarantee Extension of Time Liquidation +1 more

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Parties

State Bank of India and Ors

Appellants / Consortium of Lenders

The Consortium of Mr Murari Lal Jalan and Mr Florian Fritsch and Anr

Respondents / Successful Resolution Applicant (sra)

Procedural Posture

Civil Appeal (arising From Nclat/nclt Orders Under the Insolvency and Bankruptcy Code, 2016) / Judgment Appeals Disposed of by Supreme Court on 18 January 2024

Legal Issues

  1. 1 Whether NCLAT was justified in permitting adjustment of the Performance Bank Guarantee (PBG) of Rs 150 crores against the SRA’s obligation to infuse the last tranche of Rs 150 crores as part of Rs 350 crores infusion required by lenders’ affidavit dated 16 August 2023
  2. 2 Whether the expression 'infuse' in SBI's affidavit could be satisfied by adjustment of the PBG rather than cash payment
  3. 3 Whether the NCLAT could permit adjustment and release of the PBG at the interlocutory stage

Ratio Decidendi

The NCLAT was not justified in permitting the SRA to adjust the PBG of Rs 150 crores in lieu of the required cash infusion of Rs 350 crores as envisaged by SBI's affidavit dated 16 August 2023; the SRA must deposit the outstanding Rs 150 crores in cash by the date directed by this Court and the PBG shall remain in operation pending final disposal of the appeal before NCLAT.

Court Disposition

Appeals disposed of with modification of NCLAT order dated 28 August 2023

Orders

  • SRA to deposit Rs 150,000,0000 (Rs 150 crores) into the designated SBI account on or before 31 January 2024, failing which consequences under the Resolution Plan shall follow
  • The Performance Bank Guarantee (PBG) of Rs 150 crores shall continue to remain in operation and effect pending final disposal of the appeal before the NCLAT and shall abide by the final outcome of the appeal