ARCELORMITTAL INDIA PRIVATE LIMITED versus SATISH KUMAR GUPTA & ORS.

ARCELORMITTAL INDIA PRIVATE LIMITED versus SATISH KUMAR GUPTA & ORS.

Both sets of resolution plans submitted by AMIPL and Numetal on 2.4.2018 were hit by Section 29A(c) of Insolvency and Bankruptcy Code, 2016, as corporate debtors related to both applicants had not paid off their respective NPAs. Sale or transfer of shareholding and related rearrangements immediately before submission of plans are insufficient to avoid ineligibility if they are designed to circumvent Section 29A(c) and its proviso. Ineligibility attaches at the point of plan submission, and only payment of overdue amounts with interest removes such ineligibility.

Parties
Appellant: Arcelormittal India Private Limited; Respondent: Satish Kumar Gupta & Ors.
Jurisdiction
India
Judgment Date
04 October 2018
Procedural Posture
Civil Appeal / Final Disposition
Outcome
Appeals disposed of; both resolution applicants declared ineligible, but given one more opportunity under Article 142 to pay off NPAs within two weeks and resubmit resolution plans
Legal Topics
Resolution Applicant Eligibility, Corporate Veil, Non Performing Assets (npa), Management and Control, Payment of Debts, Committee of Creditors (co C), Section 29 a IBC, Section 3(37) IBC, SEBI Takeover Regulations, Article 142 Constitution
Insolvency Company Law Constitutional Law Resolution Applicant Eligibility Corporate Veil Non Performing Assets (npa) Management and Control Payment of Debts +5 more

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Parties

Arcelormittal India Private Limited

Appellant

Satish Kumar Gupta & Ors.

Respondent

Procedural Posture

Civil Appeal / Final Disposition

Legal Issues

  1. 1 At what point in time does the ineligibility under Section 29A(c) of the Insolvency and Bankruptcy Code, 2016 attach?
  2. 2 What is the meaning of 'management' and 'control' under Section 29A(c)?
  3. 3 Can resolution applicants avoid ineligibility under Section 29A(c) by reorganizing shareholding or management just before submitting the resolution plan?

Ratio Decidendi

Both sets of resolution plans submitted by AMIPL and Numetal on 2.4.2018 were hit by Section 29A(c) of Insolvency and Bankruptcy Code, 2016, as corporate debtors related to both applicants had not paid off their respective NPAs. Sale or transfer of shareholding and related rearrangements immediately before submission of plans are insufficient to avoid ineligibility if they are designed to circumvent Section 29A(c) and its proviso. Ineligibility attaches at the point of plan submission, and only payment of overdue amounts with interest removes such ineligibility.

Court Disposition

Appeals disposed of; both resolution applicants declared ineligible, but given one more opportunity under Article 142 to pay off NPAs within two weeks and resubmit resolution plans

Orders

  • Both AMIPL and Numetal may pay off NPAs of related corporate debtors within two weeks from date of receipt of judgment in accordance with the proviso to Section 29A(c).
  • If payments are made, both applicants may resubmit their resolution plans dated 2.4.2018 to the Committee of Creditors (CoC).