By Elton Gomes
The Supreme Court on Wednesday said it be laying down some laws as to when the adjudicating authority, appellate authority, and the apex court itself can intervene in insolvency resolution proceedings.
A bench comprising Justices Rohinton Fali Nariman and Indu Malhotra made the statement while hearing petitions filed by ArcelorMittal and NuMetal challenging each anothers eligibility to place bids for debt-ridden Essar Steel Limited. A Corporate Insolvency Resolution Process was initiated against Essar Steel in 2017.
The bench said, We have to lay down some laws here. It added, Ultimately the idea of the court is this huge financial debt is recovered. If it is possible to salvage the workers, we will do so, the Hindu reported.
Supreme Court urges IRP, CoC to intervene
The bench previously said that its ruling would oppose the continuous interference of the National Company Law Tribunal (NCLT) throughout the method for finalisation of a resolution plan for a debt-ridden company through Insolvency Resolution Professional (IRP) and Committee of Creditors (CoC). The SC bench now noted that the IRP and the CoC needed to be streamlined.
All that the IRP does it to inspect the bids, finalise it and position it for attention sooner than the CoC. IRP comes to a decision not anything. He acts as a publish administrative center after making preliminary scrutiny of resolution plans submitted through bidders. He may examine whether or not all dues have been paid through bidders. But, he can’t maintain difficult questions of legislation below IBC and take criminal opinion. It is absurd. He isn’t provided to maintain questions of legislation, Justice Nariman said, the Times of India reported.
As far as the CoC is concerned, there could be large banks in it which have fullfledged criminal departments. But still the CoC is to finalise the resolution plan submitted through the IRP. If at that time of time somebody has any objection, the problem can also be taken to quasi-judicial body NCLT, then to NCLAT and in any case to the Supreme Court, Justice Nariman added. He insisted that the SC should finalise a legislation that clearly describes the right process that will be followed under the Insolvency and Bankruptcy Code (IBC) proceedings.
Justice Nariman further said that submission of resolution plans by any bidders will not confer any statutory right on any of them.
It isn’t like arbitration process. None of the corporations, which have submitted resolution plan, will have any vested right. The IBC objective is to try recuperating the large quantity of loans the debt-ridden company owes to banks. If the company can also be salvaged thru resolution plan it’s smartly and just right. Otherwise it has to move for liquidation, Justice Nariman said, according to the Times of India.
Appearing for NuMetal, senior advocate Mukul Rohatgi requested the apex court to not lay down this kind of law as it could be “too harsh.” To which the bench replied, It has to be harsh. The lenders can’t be left striking for ever. An opportunity being given for revival of a ill company does not mean the method be allowed to move on for ever, as reported by the Times of India.
Elton Gomes is a staff writer at Qrius