Merely Because Waiver Was Not Allowed By NCLT While Approving Resolution Plan, It Would Not By Itself Resurrect The Right Of Claim: Delhi HC
The Delhi High Court observed that merely because the waiver was not allowed by the NCLT while approving the Resolution Plan, it would not by itself resurrect the right of claim.
The Court was hearing an Appeal preferred under Clause X of the Letters Patent Act, 1866 assailing the judgement passed by the Single Judge thereby allowing the underlying Writ Petition in favour of the Respondent.
The bench of Chief Justice Manmohan and Justice Tushar Rao Gedela observed, “…once the claim was returned, there was no substantive claim to be included in the Resolution Plan in the absence of re- submission of the said claim…Merely because the waiver was not allowed by the NCLT while approving the Resolution Plan would not, ipso facto, resurrect the right of claim.”
CGSC Kirtiman Singh appeared for the Appellant and Senior Advocate Sandeep Sethi appeared for the Respondent.
Brief Facts-
The Respondent, OCL Iron and Steel Ltd., entered a coal mine development agreement with the Ministry of Coal for the Ardhagram coal mine which included forfeiture of a Performance Bank Guarantee in case of termination. Due to the non-renewal of the PBG, the Ministry terminated the agreement. However, a Corporate Insolvency Resolution Process already began for the Respondent. The Ministry submitted claims as a financial creditor, which the Resolution Professional denied, stating they did not meet the financial debt criteria. The Respondent’s Resolution Plan was approved but later the Ministry disqualified the Respondent from future coal mine bids over outstanding dues. The Respondent challenged the decision arguing that the approved CIRP had settled all past dues. The Single Judge ruled in favour of the Respondent. Hence, the present Appeal.
The Court mentioned the Supreme Court decision in Ghanashyam Mishra & Sons Private Limited vs. Edelweiss Asset Reconstruction Co. Ltd. (2021) where the Court laid down the theory of “clean slate” and observed, “According to said theory, the successful Resolution Applicant in order to get a fresh breath or new lease of life, is permitted to proceed in resurrecting the “on- going concern” and no surprise claims are flung or sprung upon it, lest the entire effort of revitalizing and restarting the Corporate Debtor are wasted.”
The Court found no reason to interfere with the impugned order.
Accordingly, the Court dismissed the present Appeal.