Team Code:109

INSOLVENCY AND BANKRUPTCY MOOT COURT COMPETITION

2019

IN THE MATTER OF
M/S IMPERIUM STEEL AND POWER LIMITED, CORPORATE DEBTOR

WRITTEN SUBMISSIONS ON BEHALF OF THE CONCERNED PARTIES

 TABLE OF CONTENT

TABLE OF CONTENT………………………………………………

LIST OF ABBREVIATIONS………………………………………………….

INDEX OF AUTHORITIES……………………………………………

STATEMENT OF FACT…………………………………………………………….

ISSUES RAISED…………………………………………

SUMMARY OF ARGUMENT………………………………

ARGUMENT IN ADVANCED………….

PRAYER…………………………………………………………………..

I. ARGUMENT ON BEHALF OF CORPORATE DEBTOR AND

PROMOTERS OF CORPORATE DEBTOR

ISSUES ON BEHALF OF ISPL

I. WHETHER THE INSOLVENCY PETITION SHOULD BE DISMISSED?

ISSUES ON BEHALF OF PROMOTERS OF ISPL

II. WHETHER THE APPLICATION FILED BY MR. RAJIV KUMAR AND MS. ANJALI
KUMAR FOR INITIATING BANKRUPTCY IS FIT TO BE ADMITTED?
III. WHETHER PERSONAL GUARANTEE FOR DEBT OWN BY ISPL CAN BE ENFORCE
AGAINST THE MR. RAJIV KUMAR AND MS. ANJALI AFTER APPROVAL OF
RESOLUTION PLAN?
IV. WHETHER THE APPLICATION MOVED BY MR. RAJIV KUMAR AND MS. ANJALI
KUMAR TO CHALLENGING THE APPROVED RESOLUTION PLAN IS
ADMISSIBLE?

V. WHETHER THE ADJUDICATING AUTHORITY SHALL ALLOW THE APPLICATION

FILLED BY THE PROMOTERS CHALLENGING THE VALIDITY OF CLAUSES 15 OF
THE APPROVED RESOLUTION PLAN?

A. CAN THE RIGHT OF SUBROGATION OF GUARANTORS BE EXTINGUISHED BY

INCORPORATING BYE-LAWS?

II. ISSUES ON BEHALF OF OPERATIONAL CREDITORS

I. WHETHER THE AA SHALL ALLOW THE APPLICATION OF CERTAIN

OPERATIONAL CREDITORS ON THE GROUND THAT THE PLAN PROPOSED BY
DIPL IS DISCRIMINATORY IN NATURE?

III. ISSUES ON BEHALF OF OPERATIONAL CREDITORS

ISSUES ON BEHALF OF RESOLUTION PROFESSIONAL

I. WHETHER RP CAN REFUSE THE CLAIM OF VSCL?
II. WHETHER THE RP CAN DIRECT VSCL TO CRYSTALLIZE THE AMOUNT?
III. WHETHER VSCL SHOULD CRYSTALLIZE THE AMOUNT BY APPROACHING THE
ARBITRAL TRIBUNAL?
IV. WHETHER THE APPLICATION MADE BY VSCL TO RECOGNIZE ITS CLAIM IN
ENTIRETY IS ADMISSIBLE?

IV. ISSUES ON BEHALF OF FINANCIAL CREDITORS

I. WHETHER IT IS PERMISSIBLE BY THE FINANCIAL CREDITORS TO SEEK

PERSONAL GUARANTEE AFTER THE APPROVAL OF THE RESOLUTION PLAN
COC?
 V. ISSUES ON BEHALF OF OTHER PARTIES

ON BEHALF OF DIPL AND COC

I. WHETHER ADJUDICATING AUTHORITY HAS THE POWER TO DIRECT THE
CHANGES IN THE SUCCESSFUL RESOLUTION PLAN AFTER THE APPROVAL OF THE
COC?
II. WHETHER THE ADJUDICATING AUTHORITY SHALL ALLOW THE APPLICATION
FILLED BY THE PROMOTERS CHALLENGING THE VALIDITY OF CLAUSES 15 OF
THE APPROVED RESOLUTION PLAN?
III. WHETHER THE ADJUDICATING AUTHORITY SHALL ALLOW THE APPLICATION OF
FDL ON THE GROUND THAT THE PLAN PROPOSED BY FDL IS SUPERIOR TO THAT
OF DIPL?
 Statement of Fact
Background
ISPL, a brother sister steel manufacturing company, was incorporated in the year 1994 under
companies’ act 1956 with its registered office at Delhi. Their astute ability helped them turn their
entity into profit and quarter generous creditors on account of which they managed to setup
manufacturing facilities in Odisha and Chhattisgarh.
Company’s Expansion
The company incorporated a thermal plant under the name IEL to overcome the issue of
unreliable and costly power supply. Its ability to generate power throughout the year attracted
many establishments including VSCL. VSCL entered into a mid-term PPA with IEL, endorsed
and guaranteed by ISPL containing arbitration clause. Upon the success of the company each
integral member of the company were handsomely rewarded. It notably got listed on all major
stock exchanges of India. In 2014, ISPL entered into a joint venture with an industrial
manufacturing company in Netherland and acquired 60% stake in ASL. To meet the finance and
working capital, ASL took $15M loan from African Bank in Uganda at the rate of 9% interest per
annum. In 2015, ISPL and DAC entered into a joint venture under the name, IDN where 60%
share was held by ISPL. To meet the finance and working capital, IDN took a loan of $25M from
Deutsche Bank at the rate of 7% interest per annum. In 2016, ISPL transferred 10% shareholding
in ASL to RA Inc. whose market value was Rs. 25 crores in lieu of services and consultancy. It
was registered in Mauritius with 95% of its share with Mr. Rajiv Kumar and Miss. Anjali Kumar.
Chronological Events
Over the years when all the immovable properties were mortgaged, the bank demanded
personal guarantee from the promoters to secure the loan granted. A shining record of ISPL
made them execute the personal guarantee in favor of the consortium lender without any
hesitation. In 2017, a geo-political reason triggered trade war which ISPL could not withstand.
Thus in 2018, ISPL for the first time was defaulted in securing it debts to its consortium lenders.
Apart from this it defaulted on salary payment to the workers in Odisha for 6 straight months who
were guaranteed employment at this unit based on a Rehabilitation and Resettlement Scheme
under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013.
Declaring Insolvent
ISPL moved an application under s.10 of the IBC, declaring itself insolvent. On account of which
RP was appointed against whom all creditors submitted their claims. Upon verification it found
that claim of VSCL is arising out of unliquidated damages and thus directed it to appeal arbitral
tribunal. Aggrieved by this, VSCL moved an application before the Adjudicating Authority for
admission of their claims in entirety. On the other hand IDN too was hit hard by trade war and
consequently defaulted in 2018. To satisfy the loan obligation, a cross border insolvency claim
was executed by the court appointed administrator, Mr. Heinrich Dexter, of IDN.
Meanwhile for the purpose of Resolution Plan, RP wanted control over the ISL in Uganda but
since ISL had already defaulted to African Bank in Uganda. The Bank sought administration over
the estate of ISL. Thus, despite the AA in India had passed suitable order, Uganda authorities
refused to recognize it.
Resolution Process
Total Due Amount as at 15.04.2018, inclusive of interest stood at 1620 crores. Upon invitation
for resolution plan, several company approached upon which two companies were shortlisted
for final negotiations i.e. FDL, US based company and DIPL, an Indian Company. The CoC
approved the resolution plan submitted by the DIPL to which FDL objected before the
Adjudicating Authority of India stating that their plan is far more superior than the plan submitted
by the DIPL and the sought direction to the CoC to re-examine the plan. Apart from them certain
operational creditors also approached the AA alleging the approval of resolution plan to be
discriminatory in nature. To which the Adjudicating authority passed an order directing some
changes to the approved resolution plan which was not welcomed by the CoC and DIPL as
according to them it does not have the power to negotiate the terms of the resolution plan.
Issue Before Adjudicating Authority
While on the other hand Financial creditors of ISPL served notice and moved application before
the AA on Mr. Rajeev Kumar and Miss. Anjali Kumar. They challenged the validity of clause 15
stating that once the resolution plan is approved all the liabilities of the corporate debtor is
deemed to be extinguished and subsequently filed separate individual application under section
94 of the IBC, 2016 to initiate insolvency resolution process for themselves.
ARGUMENT ON BEHALF OF CORPORATE DEBTOR AND PROMOTER OF CORPORATE
DEBTOR

ISSUES ON BEHALF OF CORPORATE DEBTOR

ON BEHALF OF MR. RAJIV KUMAR AND MISS ANJALI KUMAR
I. WHETHER THE APPLICATION FILED BY MR. RAJIV KUMAR AND MS. ANJALI
KUMAR FOR INITIATING BANKRUPTCY IS FIT TO BE ADMITTED?

ARGUMENTS ON BEHALF OF OPERATIONAL CREDITOR

 ISSUE ON BEHALF OF OPERATIONAL CREDITOR
I. WHETHER THE RP CAN DIRECT VSCL TO CRYSTALLIZE THE AMOUNT?

ARGUMENT ON BEHALF OF RESOLUTION PROFESSIONAL

ISSUES ON BEHALF OF RESOLUTION PROFESSIONAL

ON BEHALF OF ROSEMARY JOSEPH

I. Whether RP can refuse the claim of VSCL?
II. WHETHER THE RP CAN DIRECT VSCL TO CRYSTALLIZE THE AMOUNT?
III. WHETHER VSCL SHOULD CRYSTALLIZE THE AMOUNT BY APPROACHING THE
ARBITRAL TRIBUNAL?

IV. WHETHER THE APPLICATION MADE BY VSCL TO RECOGNIZE ITS CLAIM IN

ENTIRETY IS ADMISSIBLE?

ARGUMENTS ON BEHALF OF OPERATIONAL CREDITOR

ISSUES ON BEHALF OF OPERATIONAL CREDITOR

I. WHETHER THE AA SHALL ALLOW THE APPLICATION OF CERTAIN

OPERATIONAL CREDITORS ON THE GROUND THAT THE PLAN PROPOSED BY
DIPL IS DISCRIMINATORY IN NATURE?

ARGUMENT ON BEHALF OF HEINRICH DEXTER

 ISSUES ON BEHALF OF HEINRICH DEXTER
I. WHETHER THE STAY ORDER GRANTED BY DUTCH BANKRUPTCY COURT
CAN BE RECOGNIZED IN INDIA?

ARGUMENTS ON BEHALF OF FINANCIAL CREDITORS/CREDITORS COMMITTEE

ISSUES ON BEHALF OF FINANCIAL CREDITORS/CREDITORS COMMITTEE

I. WHETHER IT IS PERMISSIBLE BY THE FINANCIAL CREDITORS TO SEEK
PERSONAL GUARANTEE AFTER THE APPROVAL OF THE RESOLUTION PLAN
COC?

ARGUMENTS ON BEHALF OF OTHER PARTIES

ISSUES ON BEHALF OF OTHER PARTI

ON BEHALF OF DIPL AND COC
IV. WHETHER ADJUDICATING AUTHORITY HAS THE POWER TO DIRECT THE
CHANGES IN THE SUCCESSFUL RESOLUTION PLAN AFTER THE APPROVAL OF THE
COC?
V. WHETHER THE ADJUDICATING AUTHORITY SHALL ALLOW THE APPLICATION
FILLED BY THE PROMOTERS CHALLENGING THE VALIDITY OF CLAUSES 15 OF
THE APPROVED RESOLUTION PLAN?
VI. WHETHER THE ADJUDICATING AUTHORITY SHALL ALLOW THE APPLICATION OF
FDL ON THE GROUND THAT THE PLAN PROPOSED BY FDL IS SUPERIOR TO THAT
OF DIPL?

CROSS BORDER
I. WHETHER MR. HEINRICH DEXTER CAN FILE AN INSOLVENCY
APPLICATION BEFORE THE AA IN INDIA FOR FILING OF CROSS BORDER
INSOLVENCY CLAIM?
 II. RECOGNITION OF APPLICATION BY MR. HEINRICH DEXTER AND THE
RELIEF BY ADJUDICATORY AUTHORITY IN INDIA
III. WHETHER THE DUTCH BANKRUPTCY COURT WAS IN
CAPACITY TO GRANT A STAY ORDER?

ISSUES ON BEHALF OF CORPORATE DEBTOR

ON BEHALF OF MR. RAJIV KUMAR AND MISS ANJALI KUMAR
II. WHETHER THE APPLICATION FILED BY MR. RAJIV KUMAR AND MS.
ANJALI KUMAR FOR INITIATING BANKRUPTCY IS FIT TO BE ADMITTED?
1. It is humbly submitted that the application filed under §94 1 of the Insolvency and Bankruptcy
Code, 2016 should be accepted. This will be further substantiated on the following grounds
A. Failure to serve the debts of the corporate debtor
2. It is evident that after the approval of the resolution plan, personal guarantors cannot step into
the shoes of the creditor2 as per clause 153. The amount thus written down to nil in addition to
the left amount which is expected that it won’t be recovered by redeeming the CCPSs, exceeds
the value of the assets possessed by Mr. Rajiv Kumar and Miss Anjali Kumar.
3. It is for this reason that they are filling their insolvency application before the Adjudicating
Authority. Hence, pertaining to the above stated facts the application thus filed is liable to be
accepted under §94.

. ISSUES ON BEHALF OF OPERATIONAL CREDITORS

1
I&B Code 2016.
2
EDITORIAL TEAM INSOL INDIA, In a resolution plan under IBC, personal guarantors cannot step into creditor’s shoes-
NCLAT, (4th Sept, 2019 8:00 PM) http://www.insolindia.com/news/in-a-resolution-plan-under-ibc-personal-guarantors-
cannot-step-into-creditors-shoes-nclat
3
Moot Proposition Pg. 9
 I. WHETHER THE AA SHALL ALLOW THE APPLICATION OF CERTAIN
OPERATIONAL CREDITORS ON THE GROUND THAT THE PLAN
PROPOSED BY DIPL IS DISCRIMINATORY IN NATURE?
1. It is humbly submitted that the plan proposed by DIPL is discriminatory in nature. The proposed
resolution plan proposed by DIPL only 60 crores were for operational creditors. Out of which
Employees and Workmen were given full claim amount, i.e., INR 6 crores, whereas raw material
suppliers were promised a payment of 90% of their claim amounts, i.e., INR 45 crores. While all
other operational creditors were paid only the liquidation value.4

2. According to §53(1)(b)5 of IBC workmen’s dues and debts of a secured creditor shall rank equally.
But in this resolution plan workmen’s dues are fully paid while secured creditors are not fully paid.
So it is violative of §53(1)(b)6 and discriminatory for operational creditors. Also other operational
creditor claimed for 60 crore but only 9 crore is proposed in the plan,i.e. Liquidation value. Among
operational creditors employee and workmen as well as the raw material suppliers were proposed
to be paid more in view of the fact their continued cooperation is crucial for the revival of the
corporate debtor. Such reason is not satisfactory because cooperation of other operational creditor
and secured creditor is equally important. Hence, the plan stands discriminatory in nature.

ISSUES ON BEHALF OF RESOLUTION PROFESSIONAL

ISSUE ON BEHALF OF ROSEMARY JOSEPH

I. Whether RP can refuse the claim of VSCL?

The claim of VSCL arises out of breach of contract for loss of business and not performing the PPA
agreement.7 The agreement did not contain any fixed amount for compensation for breach of
contract. In such a situation the claim made by VSCL was not within the due process of law. A

4
Moot Proposition Pg.9
5
Ibid.
6
I&B Code 2016.
7
Moot Proposition Pg. 5
 person, who claims to be a stakeholder, shall prove his claim for debt to him, including interest,
if any, as on the liquidation commencement date.8

4. Pertaining to the above stated facts it made it impossible for the resolution professional to accept
the claim. Also, the claim made must be rejected by the RP as it does not fulfill the reg. 19 read
with reg. 299. §40 of IBC also authorizes resolution professional (liquidator) to admit or reject
the claim after verification under §39 of IBC. VSCL also failed to furnish any record that would
make the RP believe that it had any stake in the said company.

II. WHETHER THE RP CAN DIRECT VSCL TO CRYSTALLIZE THE AMOUNT?

5. According to section 25 of the IBC, it shall be the duty of the resolution professional to preserve
and protect the assets of the corporate debtor. §25(2)(b)10 says that resolution professional can
represent and act on behalf of the corporate debtor with third party and exercise rights for the
benefit of the corporate debtor in arbitration proceedings. S. 25(2)(e)11 also imposes duty on
resolution professional to maintain an updated list of claim.
III. WHETHER VSCL SHOULD CRYSTALLIZE THE AMOUNT BY APPROACHING THE
ARBITRAL TRIBUNAL?

1. It is to bring to your kind notice that VSCL submitted its claim as one of the Creditors which arises
out of breach of contract and loss of business under the PPA.12 In the case of Jharkhand Bijli
Vitran Nigam v IVRCL Ltd. & others13, the NCLAT was with the opinion to continue/institute
the arbitration proceeding. Claim of the VSCL can be determined only after the determination of
counterclaim of corporate debtor in the same very arbitral proceedings. Arbitrations involving
claims of VSCL and counterclaim of corporate debtor is not violative of section 14(1)(a) of IBC
during the pre-award stage. The moratorium may come into effect after passing of award by

8
The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, reg 15
9
The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, reg 20
10
The Insolvency and Bankrupcy Code, 2016
11
The Insolvency and Bankrupcy Code, 2016
12
Moot Proposition Pg.5
13
Jharkhand Bijli Vitran Nigam Ltd. v. IVRCL Ltd. & Anr. Company Appeal (AT) (Insolvency) No. 285 of 2018
 arbitration proceeding. Consecutively, if award is not in favour of corporate debtor then
moratorium will apply and no recovery can be made during the period of moratorium.
2. Similarly, in the case of Power Grid Corporation of India Ltd. v. Jyoti Structures Ltd.14, the
court held that the ‘proceeding’ under s. 14 of IBC does not include all proceedings. The meaning
of ‘proceeding’ depends on the nature of action. Whether the proceeding is for the benefit of
corporate debtor. §14 of the IBC is intended to prohibit debt recovery action against the assets of
the corporate debtor. And continuation of proceedings which do not result in debt recovery action,
endangering, adversely impacting or diminishing the assets of corporate debtor are not prohibited
under s.14 of IBC.
3. In arguendo, the claim thus arose must first be crystalized by the arbitrational tribunal and then a
formal claim should be submitted else otherwise the claim will fall down.

IV. WHETHER THE APPLICATION MADE BY VSCL TO RECOGNIZE ITS CLAIM IN

ENTIRETY IS ADMISSIBLE?

4. It is humbly submitted that the application made by VSCL to recognize its claim in entirety is not
admissible. The claim of VSCL is not crystallized and due to which resolution professionals
directed VSCL to arbitration proceeding. There is dispute on amount of debt on ISPL claimed by
VSCL. Submission of claim of VSCL is incomplete and not in accordance with due process of
law.
5. In the case of Mobilox Innovation Pvt. Ltd. v. Kirusa Software Pvt. Ltd.15, the NCLT held that
if there is any dispute between the corporate debtor and the operational creditor then adjudicating
authority may reject the application under IBC. The apex court further held that dispute under s.
5(6) of IBC includes a suit or arbitration proceedings related to amount of debt and breach of a
representation or warranty. Meaning of dispute is inclusive in nature. The apex court affirmed
NCLT decision by saying that NCLT acted mechanically.

14
Power Grid Corporation of India Ltd. v. Jyoti Structures Ltd.O.M.P.(COMM.) 397/2016
15
Mobilox Innovation Pvt. Ltd. v. Kirusa Software Pvt. Ltd.CIVIL APPEAL NO. 9405 OF 2017
 ON BEHALF OF MR. HEINRICH DEXTER

I. WHETHER THE STAY ORDER GRANTED BY DUTCH BANKRUPTCY COURT

CAN BE RECOGNIZED IN INDIA?
1. The counsel would like to humbly submit that the application made for stay order must be
accepted by the Adjudicating Authority.16 As it was held in State Bank of India v. Jet
Airways (India) Limited that, “Jet Airways in the Netherlands had commenced and if the
NCLT passes an order of commencement of CIRP in India, a peculiar situation would
emerge where the same company has two parallel insolvency proceedings in different
jurisdictions, which could lead to complications and delays. This will further create
uncertainty and impair the chances of attracting potential resolution applicants for Jet
Airways”17. Hence, if such proceeding is not observed then the sole purpose of insolvency
i.e. maximization of assets will be defeated.
A. Centre of main interest pertaining to IDN lies in INDIA
2. It is a settled principle of corporate law that Company is a separate legal entity even though
the relations between the two are of parent & subsidiary.18 Presently, concerned parties in
IDN i.e. ISPL & DAC should be treated as separate entities & their COMI should be
determined separately.19 Presently, former proceeding is deemed to take place in the State
where Debtor has COMI and the later is where Debtor has an establishment.20
3. In Arguendo, for determination of COMI, there is absence of particular formula.21 Rather,
the Court may place reliance on a variety of factors which are both objective and

16
UNCITRAL Model Law, Art 15,19.; Moot Proposition, Pg 7.
17
State Bank of India v. Jet Airways (India) Limited, Mumbai bench , 20 th june 2019
18
Vodafone International holding BV v Union of India [2012] 17 taxmann.com 202 (SC); Salomon v A Salomon Co Ltd
(1897) AC 22 (HL); Catherine Lee v Lee's Air Farming Ltd [1960] UKPC 33; Ban Hashem v Ali Shayif (2008) EWHC 2380.
19
Re Lightsquared LP (2012) ONSC 2994 [29]; Case C-341/04 Re Eurofood IFSC Ltd [2006] ECR I-3813, 37
20
United Nation Commission on International Law, UNCITRAL Model Law on Cross-Border Insolvency: The
Judicial Perspective’ (The Judicial Perspective UN 2014) 17 [45].
21
Re Betcorp Ltd (in liquidation) 400 B.R. 266 (Bankr D Nev 2009).
 ascertainable by third parties.22 These factors include the “place where Debtor was
incorporated, location of Debtor primary bank, the law governing the Company, the
location of the main creditors”.23 In the present case, the fact that IDN’s holding company
is ISPL as it hold more than 50% share, hence the proceeding in India against ISPL is liable
to be admitted. It is also pertinent to note that the adjudicating authority has not passed the
resolution plan and thus it can stay the insolvency proceeding as it has not taken into account
the claims of Mr Heinrich Dexter.

ISSUES ON BEHALF OF FINANCIAL CREDITORS/CREDITORS COMMITTEE

I. WHETHER IT IS PERMISSIBLE BY THE FINANCIAL CREDITORS TO SEEK

PERSONAL GUARANTEE AFTER THE APPROVAL OF THE RESOLUTION PLAN
COC?
I. An arrangement in which a person becomes liable for the debts of another party, in case the
other party fails to clear their dues on time is a personal guarantee.24 The amended §14(3) (b)
states that the provisions of sub-section (1) shall not apply to a surety in a contract of guarantee
to a corporate debtor.25 The moratorium has no application on the properties beyond the
ownership of the Corporate Debtor. §128 creates a co-extensive liability between the surety
and the debtor so in case a proceeding is initiated against the principal debtor guarantors

22
Re Eurofood IFSC Ltd (n 110)
23
UNCITRAL Model Law with Guide to Enactment and Interpretation, [144], [147]; Re Bear Stearns HighGrade Structured
Credit Strategies Master Fund Ltd 389 BR 325 (SDNY 2008); Re Probe Resources Ltd (2011) 79 CBR (5th) 148 [28].
24
Black’s Law Dictionary, 2nd Edition.
25
IBC, (Second Amendment) Act, No, 26 of 2018.
 conduct will be governed by it.26 It empowers the creditor to proceed against the principal-
debtor and the guarantor.27
II. In State Bank of India v. Ramakrishnan and Ors.28 held that, Ҥ14 refers only to debts due
by corporate debtors, …… The object of the Code is not to allow such guarantors to escape
from an independent and co-extensive liability to pay off the entire outstanding debt, which is
why §14 is not applied to them.” The term “its” u/s 14(1)(c) of the Code refers only to the
property of the corporate debtor undergoing a CIRP.29
III. Mr Rajiv Kumar and Miss Anjali Kumar, promoters of ISPL, had provided personal guarantee
to obtain loan from bank which is now seeking to enforce by filing an application. The very
object of the guarantee is defeated if the creditor is asked to postpone his remedies against the
surety30 and the security will become useless if his rights against the surety can be so easily cut
down.31

ISSUES ON BEHALF OF OTHER PARTIES

ON BEHALF OF DIPL AND COC
I. WHETHER ADJUDICATING AUTHORITY HAS THE POWER TO DIRECT
THE CHANGES IN THE SUCCESSFUL RESOLUTION PLAN AFTER THE
APPROVAL OF THE COC?
IV. Counsel would like to humbly submit that the Adjudicating Authority does not have the power
to direct changes in the successful resolution plan. The Adjudicating Authority only has the
power to satisfy itself that the resolution plan approved by the CoC meets the requirements of

26
NAMRATA DUBEY, THE NEW CONUNDRUM: GUARANTOR IN INSOLVENCY REGIME, (3rd September, 2019,
22.47) http://www.ibbi.gov.in/2ndPrizeNamrataDubeyILNUAhmedabad.pdf
27
Subankhan v. Lalkhan AIR 1947 Nag. 643.
28
State Bank of India v. Ramakrishnan and Ors. Civil Appeal No. 3595 Of 2018, [2018] 9 SCALE 597.
29
Alpha & Omega Diagnostics (India) Ltd. Vs. Asset Reconstruction Company of India Ltd. & Ors, Company Appeal (AT)
(Insol.) No. 116 of 2017.
30
Lacchman Joharimal v. Bapu Khandu and Tukaram Khandoji, 1869) 6 Bombay High Court Reports 241.
31
Industrial Investment Bank of India Ltd. vs. Biswanath Jhunjhunwala,, SC, CIVIL APPEAL NO. 4613 OF 2000.
 Section 30(2) and do not violates the provisions of any law, including Section 29A of the
Code.32
V. The NCLAT in Bhaskara Agro Agencies v. Super Agri Seeds33 held that the Adjudicating
Authority cannot revisit the decision of CoC to determine the viability and feasibility of a
resolution plan. Similarly, in the case of Darshak Enterprise Pvt. Ltd. v. Chhaparia
Industries Pvt Ltd34, NCLAT held that in absence of any discrimination or perverse decision,
it is not open to the Adjudicating Authority or this Appellate Tribunal to modify the plan. Also
it is in accordance with sec 30(2) of I&B Act, 2016.

II. WHETHER THE ADJUDICATING AUTHORITY SHALL ALLOW THE APPLICATION

FILLED BY THE PROMOTERS CHALLENGING THE VALIDITY OF CLAUSES 15 OF
THE APPROVED RESOLUTION PLAN?

VI. It is humbly submitted that the IBC has prescribed powers to committee of creditors to approve
the resolution plan with such modifications as it deems fit under the CIRP.35 Clause 15 was
inserted in the resolution plan upon request of the committee of creditors before approving it36.
It is also noted in the decisions of the Supreme Court in Arcelor Mittal India Pvt. Ltd. v
Satish Kumar Gupta & Ors.37 and Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India38
have laid emphasis on the responsibilities of the CoC to inter alia: ascertain the legality of a
resolution plan and the eligibility of the resolution applicants; make all endeavors for
insolvency resolution with liquidation being the last resort; and safeguard interests of other
creditors and that resolution plans must provide fair equitable treatment to operational

32
Arcelor Mittal India Private Limited v. Satish Kumar Gupta, CIVIL APPEAL NOs.9402-9405 OF 2018
33
Bhaskara Agro Agencies v. Super Agri Seeds, Company Appeal (AT) (Insolvency) No. 380 of 2018
34
Darshak Enterprise Pvt. Ltd. v. Chhaparia Industries Pvt Ltd, Company Appeal (AT) (Insolvency) No. 327 of 2017
35
Regulations 39, nsolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016.
36
Moot Propositio Pg.9
37
Arcelor Mittal India Pvt. Ltd. v Satish Kumar Gupta & Ors. (2019) 2 SCC 1
38
Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India 2019 SCC OnLine SC 73
 creditors. It was also noted that the commercial decision of the CoC in evaluating a resolution
plan is protected from judicial scrutiny.39
VII. In Lalit Mishra & Others vs Sharon Bio Medicine Limited & Others, held that, “as on
approval of the ‘Resolution Plan’, the claim of the entire stakeholders stand cleared and the
‘Personal Guarantor’ thereafter cannot claim that they have been discriminated.”40

VIII. In Arguendo, There is no such provision in IBC to challenge the decision of the committee of
creditors. The decision is absolute and final. A suit can only be instituted in a situation where
the act of the committee of creditors is violative of § 60. 41 Thus it could be inferred from the
above facts that here in this case the application filed by the promoter of ISPL in is not
admissible.

VII. WHETHER THE ADJUDICATING AUTHORITY SHALL ALLOW THE APPLICATION

OF FDL ON THE GROUND THAT THE PLAN PROPOSED BY FDL IS SUPERIOR TO
THAT OF DIPL?
IX. The application filed by the FDL is not maintainable as Adjudicating Authority has no
authority or jurisdiction to intervene when CoC rejects the Resolution Plan.42 Also the SC in
the case of K. Shashidhar vs. Indian Overseas Bank and Ors (2018) , held that under Section
33(1) of the Code, Adjudicating Authority has nothing more to do than to order for liquidation
if it receives a rejected Resolution Plan. It fuither went on to state that the wisdom of CoC is
of paramount importance and is not subject to judicial intervention. The legislature nowhere
authorises Adjudicating Authority to analyse or evaluate the justness of rejection of the
commercial decision taken by the CoC
X. Unlike the plan proposed by DIPL, FDL didn’t pay much heed to all its creditors. Also its plan
is violative of sec 53(1)(b)(i) and 53(1)(c) of I&B Act, 2016.

CROSS BORDER INSOLVENCY

39
K. Sashidhar vs. Indian Overseas Bank & Ors. Civil Appeal No. 10673 OF 2018 (2019)
40
Lalit Mishra & Others vs Sharon Bio Medicine Limited & Ors. Company Appeal (AT) (Insolvency) No. 164 of 2018
41
I&B Code 2016.
42
Innoventive Industries Ltd vs. ICICI Bank and Ors (SC)
 I. WHETHER MR. HEINRICH DEXTER CAN FILE AN INSOLVENCY
APPLICATION BEFORE THE AA IN INDIA FOR FILING OF CROSS BORDER
INSOLVENCY CLAIM?
1. The counsel would like to submit that the application made by Mr. Heinrich Dexter, the court
appointed administrator of IDN, for insolvency proceedings in INDIA had applied for
recognition of same in India as per the Model Law.43
2. The present proceeding under Art. 11 read with A. 1244 should be recognized as the Model
Law prescribes provisional relief to the foreign appointed representative and also proceedings
fall within the State as Centre of Main Interest (COMI)45 of the Debtor which is INDIA.
3. It is worthy to appreciate the main factors for determination of COMI which include, the place
where central administration of Debtor takes place which is also ascertainable by third
parties46. Herein, the term central administration means the place from where the Company
relevant organ i.e. Director, according to its own constitution document takes decisions which
are essential for the operations of Company.47 In the present case, India can be construed as a
place for central administration.
4. Furthermore, the concept of lex concursus, which is accepted globally, shall be dealt here as
well which states that the law applicable to insolvency (lex concursus) shall be the law of the
jurisdiction where the company has its centre of main interest (COMI). This is where the
insolvency proceedings (main insolvency proceedings) should be initiated and conducted.
5. In Arguendo, the present proceeding must be recognized in India as ISPL is the major
shareholder in IDN with 60% and also the registered office of the Debtor is in India. Thus it

43
Moot Proposition Pg.7
44
UNCITRAL Model Law with Guide to Enactment and Interpretation.
45
United National Commission on International Trade Law ‘Interpretation and application of selected concepts
of the UNCITRAL Model Law on Cross-Border Insolvency relating to center of main interests (COMI)’ 41 session, UN Doc
A/CN.9/WG.V/WP.103 (28 February 2012) 8 [37A].
46
Case C-341/04 Re Eurofood IFC Ltd [2006] ECR I-3813, para 32; Council Regulation (EC) 1346/2000 of 20 May 2000 on
insolvency proceeding [2000] OJ L160/1, recital 13; Re Massachusetts Elephant & Castle Group Inc (2011) 81CBR (5th)102
[30]-[31]; Re Angiotech Pharmaceuticals Ltd (2011) 76 CBR (5th) 317 [7].
47
Young v Anglo American South Africa Ltd & Ors [2014] EWCA Civ 1130, [2014] 2 CLC 143 (CA) 157 [45]
 principally satisfy all the requisite criteria to maintain its claim for filing cross border
insolvency application before the Adjudicating Authority of INDIA.

III. RECOGNITION OF APPLICATION BY MR. HEINRICH DEXTER AND THE

RELIEF BY ADJUDICATORY AUTHORITY IN INDIA
1. The relief is available under Article 1248 of the Model law whereby the judgment regarding the
insolvency has not yet been declared. Such relief is urgently needed to preserve the possibility
of recognizing and enforcing an insolvency-related judgment, the court may, at the request of
an insolvency representative or other person entitled to seek recognition and enforcement under
article 11, paragraph 1, grant relief of a provisional nature, including:
a. Staying the disposition of any assets of any party or parties against whom
the insolvency-related judgment has been issued; or
b. Granting other legal or equitable relief, as appropriate, within the scope of
the insolvency-related judgment.49
2. Such a relief is terminated if the judgment regarding the insolvency is made.
3. In Arguendo, it is pertinent to note that since the insolvency proceeding is still in progress and
also the plan has not been accepted by the Adjudicating Authority, relief here above stated can
be granted.

IV. WHETHER THE DUTCH BANKRUPTCY COURT WAS IN CAPACITY TO

GRANT A STAY ORDER?

4. It is humbly submitted that after the appointment of Mr. Henerich Dexter as the administrator
of IDN, he filed an insolvency applications before AA in India. In such circumstances the
Dutch Bankruptcy Court granted a stay order for its recognition in INDIA because if until the
proceeding gets concluded, the stay order thus granted would stand ineffective.
5. Moreover, Bankruptcy Act 1893 is applicable in Netherlands and it states that, occasionally
companies incorporated in Netherlands can enter into insolvency proceeding in other

48
UNCITRAL Model Law with Guide to Enactment and Interpretation.
49
UNCITRAL Model Law onRecognition and Enforcement ofInsolvency-Related Judgments with Guide to Enactment
 jurisdictions. In this regard, the following observation in the case of Farrell v. Fences & Kerbs
Ltd.50 becomes relevant:
6. “It is a generally accepted principle of insolvency law that collective action is more efficient
in maximising the assets available to creditors than a system that leaves creditors free to
pursue their individual remedies and that it requires all creditors to receive the same
treatment.”
7. Therefore, the Hon’ble Bankruptcy Court has granted the relief of stay order that is expected
to be recognized in INDIA. Hence, for the benifit of the company i.e. maximization of assets
such grant issued by DUTCH BANKRUPTCY COURT stands justifiable.

50
Farrell v. Fences & Kerbs Ltd., [2013] NZCA 91