Uttam Galva Metallics Ltd vs State Bank Of India
- CitationCompany Appeal (AT) (Insolvency) No. 315 of 2018
Ratio decidendi
The rule this decision rests on
The Tribunal declined to direct the Adjudicating Authority to defer pronouncement of its orders on Section 7 applications, because the claimed investor's identity and the intended settlement were not shown on the record, so no basis existed for postponing orders that were otherwise required to be pronounced within fourteen days. Where an admitted or pending Section 7 application has been decided or is to be pronounced, a Corporate Debtor may still negotiate a settlement with the Financial Creditor after admission, and if a settlement is reached the parties may move the appropriate forum for relief; such a settlement does not require the Tribunal to stay the pronouncement of the order in advance.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Uttam Galva Metallics Ltd. ...Appellant
Vs
State Bank of India ....Respondent
With
Company Appeal (AT) (Insolvency) No. 316 of 2018
IN THE MATTER OF:
Uttam Value Steels Ltd. ...Appellant
Vs
State Bank of India ....Respondent
Present: For Appellant(s): Dr. A. S. Chandiok, Sr. Advocate with Ms. Henna George, Mr. Dhiraj Mhetre, Ms. Smiti Tewari, Ms. Sweta Kakkad, Mr. Angad Baxi and Mr. Kushal Bansal, Advocates. For Respondent: Mr. Arun Kathpalia, Sr. Advocate with Ms. Ritu Bhalla, Mr. Siddhant Kant ad Mr. Vaijayant Paliwal, Advocates.
ORDER
25.06.2018: The State Bank of India (Financial Creditor) filed two separate applications both under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code'), one against the Corporate Debtor - 'Uttam Galva Metallics Ltd.' and other against the Corporate Debtor - 'Uttam Value Steels Ltd.' for initiation of Corporate Insolvency Resolution Process against the Corporate Debtors. The applications were filed in the month of December 2017 but for one or other reason order of admission or rejection was not passed by the Adjudicating Authority who after hearing the parties on 11th June, 2016 and 15th -2-
June, 2016 passed two separate orders to list the cases on 26th June, 2016 for pronouncement of order(s). Both the aforesaid orders are under challenge in these appeals.
2. Dr. A. S. Chandiok, learned senior counsel appearing on behalf of Corporate Debtors submits that the applications against the Corporate Debtors have not yet been admitted and it is open to the Corporate Debtors to take steps to pay the total dues to the Financial Creditors with request to withdraw both the applications as permissible under Rule 8 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. It is submitted that the Corporate Debtors have already negotiated the matter with a third party foreign investor who has agreed to invest money and to pay the amount on behalf of 'Uttam Galva Metallics Ltd.' to the tune of Rs.3231 crore and on behalf of 'Uttam Value Steels Ltd.' to the tune of Rs.2217 crore and if orders are not pronounced for another 4 weeks, the matter will be settled and the companies will be saved from the rigor of Corporate Insolvency Resolution Process. Prayer has been made to direct the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench to defer the pronouncement of orders for another 4 weeks.
3. Mr. Arun Kahtpalia, learned senior counsel appearing on behalf of State Bank of India (Financial Creditor) submitted that the matter is pending for last six months and there is no direct negotiation by any foreign investor to pay the amount. In such case, the Appellate Tribunal should not interfere with the impugned order(s). According to him the appeals are otherwise not maintainable against the impugned orders. It is further stated that the Financial Creditor has
Company Appeal (AT) (Insolvency) No. 315 & 316 of 2018 -3-
not even informed of the name of the investor who intend to pay the dues to verify whether the stand taken by the Corporate Debtors is correct or not.
4. From the record we find that certain correspondence has been made by letters and emails, one of which reads as follows:
"We have been informed by our distinguished investor the figures of Uttam galva metallic is 3231 Cr INR, and Uttam value steel limited is 2217 Cr INR, please confirm whether these debt values are correct and suggest way forward for purchase, as our high net worth client is very interested in closing this purchase at the earliest."
5. From the aforesaid correspondence and other records it is not clear who is the investor who intends to invest on behalf of the Corporate Debtors or intends to purchase the Corporate Debtors by paying the total outstanding dues of the Financial Creditor. In the facts and circumstances, even if it is accepted that details about investor is to be kept confidential, at this stage we are not inclined to direct the Adjudicating Authority to refrain from pronouncement of orders which otherwise were required to be pronounced within 14 days.
6. However, we make it clear that if the applications under Section 7 are admitted against one or other Corporate Debtor even then it will be open to the Corporate Debtor(s) or their promoter alongwith the proposed investor to negotiate with the Financial Creditor (State Bank of India) and settle the claim
Company Appeal (AT) (Insolvency) No. 315 & 316 of 2018 -4- and if such settlement is made it will be open to them to move before appropriate forum for appropriate relief.
7. Both the appeals are disposed of with aforesaid observations. No costs.
[Justice S. J. Mukhopadhaya] Chairperson
[Justice A. I. S. Cheema] Member (Judicial) am/nn
Company Appeal (AT) (Insolvency) No. 315 & 316 of 2018
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