Vijay Kumar Jain vs Standard Chartered Bank

2. We may take the facts of Civil Appeal No.8430 of 2018. Ruchi Soya Industries Ltd. – the corporate debtor, was incorporated on 06.01.1986. It is said to be a profit-making company in the business of processing of oil-seeds and refining crude oil for edible use. In September, 2017, Company Petition Nos.1371 and 1372 were filed by Standard Chartered Bank Ltd. and DBS Bank Ltd., being financial creditors of the aforesaid corporate debtor. These two company petitions were admitted on 8 th and 15th December, 2017, respectively, by the National Company Law Tribunal [“NCLT”]. One Shri Shailendra Ajmera of Ernst and Young was appointed as the Interim Resolution Professional in both petitions. The CoC was constituted under Section 21 of the Insolvency and Bankruptcy Code, 2016 [“Insolvency Code” or “Code”], and the appellant being a member of the suspended Board of Directors was given notice and the agenda for the first CoC meeting held on 12.01.2018, and was permitted to attend the aforesaid meeting. He alleges, which is disputed by the respondents, that subsequent meetings of the CoC were held in which he was denied participation. As a result, the 2 appellant filed Miscellaneous Application No.518 of 2018 on 07.06.2018 before the NCLT in order that the appellant be allowed to effectively participate in these meetings. It is stated before us that in the tenth meeting dated 12.08.2018, the appellant executed a non- disclosure agreement for sharing resolution plans of the corporate debtor. Under the said agreement, the appellant undertook to indemnify the resolution professional and keep information that is received as to the resolution plan strictly confidential.

3. By an order dated 01.08.2018, the NCLT dismissed the application with liberty to the appellant to attend CoC meetings but not to insist upon being provided information considered confidential either by the resolution professional or the committee of creditors. Against this order, the appellant filed an appeal before the Appellate Tribunal which recognized the appellant’s right to attend and participate in CoC meetings, but denied the appellant’s prayer to access certain documents, most particularly, the resolution plans. Thereafter, an application for modification/clarification of the Appellate Tribunal’s order was also dismissed. Aggrieved by the order dated 09.08.2018 of the Appellate Tribunal, the appellants have filed the present appeal. In the meanwhile, on 23.08.2018, the 3 resolution plan of one Adani Wilmar Limited was approved by majority of 96.86% of the committee of creditors. On 24.08.2018, the resolution professional submitted its resolution plan, as approved by the CoC, to the Adjudicating Authority. On 27.08.2018, this Court, by an interim order, stated, while issuing notice, that the bids will not be finalized by the Adjudicating Authority without the leave of this Court. On 10.09.2018, this Court clarified, in an application filed by the resolution professional, that the Adjudicating Authority could continue with the proceedings but no order could be passed on the same until this Court adjudicates on the present appeal.

(d) the location from where he is participating;

(4) The resolution professional shall ensure that the required quorum is present throughout the meeting. (5) From the commencement of the meeting till its conclusion, no person other than the participants and any other person whose presence is required by the resolution professional shall be allowed access to the place where meeting is held or to the video conferencing or other audio and visual facility, without the permission of the resolution professional.

(a) the two registered valuers appointed under Regulation 27 shall submit to the resolution 22 professional an estimate of the fair value and the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor;

(b) if in the opinion of the resolution professional, the two estimates of a value are significantly different, he may appoint another registered valuer who shall submit an estimate computed in the same manner; and

(2) After the receipt of resolution plans in accordance with the Code and these regulations, the resolution professional shall provide the fair value and the liquidation value to every member of the committee in electronic form, on receiving an undertaking from the member to the effect that such member shall maintain confidentiality of the fair value and the liquidation value and shall not use such values to cause an undue gain or undue loss to itself or any other person and comply with the requirements under sub-section (2) of Section 29. (3) The resolution professional and registered valuers shall maintain confidentiality of the fair value and the liquidation value.” “36. Information memorandum.— (1) Subject to sub- regulation (4), the resolution professional shall submit the information memorandum in electronic form to each member of the committee within two weeks of his appointment, but not later than fifty-fourth day from the insolvency commencement date, whichever is earlier. (2) The information memorandum shall contain the following details of the corporate debtor—

(e) particulars of a debt due from or to the corporate debtor with respect to related parties;

(ca) cancellation or delisting of any shares of the corporate debtor, if applicable;

(d) satisfaction or modification of any security interest;

(e) curing or waiving of any breach of the terms of any debt due from the corporate debtor;

(l) obtaining necessary approvals from the Central and State Governments and other authorities.” (emphasis supplied) “38. Mandatory contents of the resolution plan.— (1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors.

(2) A resolution plan shall provide:

21. An insolvency professional must ensure that confidentiality of the information relating to the insolvency resolution process, liquidation or bankruptcy process, as the case may be, is maintained at all times. However, this shall not prevent him from disclosing any information with the consent of the relevant parties or required by law.

xxx xxx xxx”

17. We may also mention in passing that the Bankruptcy Law Committee Report of November, 2015 stated:

18. We may indicate that the time that has been utilized in these proceedings must be excluded from the period of the resolution process of the corporate debtor as has been held in Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors., Civil Appeal Nos. 9402-9405/2018 [decided on 04.10.2018] (at paragraph 83). In each of these cases, the appellants will be given copies of all resolution plans submitted to the CoC within a period of two weeks from the date of this judgment. The resolution applicant in each of these cases will then convene a meeting of the CoC within two weeks thereafter, which will include the appellants as participants. The CoC will then deliberate on the resolution plans afresh and either reject them or approve of them with the requisite majority, 40 after which, the further procedure detailed in the Code and the Regulations will be followed. For all these reasons, we are of the view that the petition and appeal must be allowed and the NCLAT judgment set aside.

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