Puissant Global Pvt. Ltd. vs Bank Of India

Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial):

The brief facts as it engages consideration in the instant Company Appeal (AT) (CH) (INS) No. 452 / 2025 are that;

A proceeding under Section 7 of I & B Code, 2016, stood initiated as against the Corporate Debtor (CD) i.e. M/s. Splendid Metal Products Limited (later on rechristened as M/s. Thalaivar Steels Limited) and Corporate Insolvency Resolution Process (CIRP) stood commenced as against the Corporate Debtor by an order of 04.04.2019 that, was passed in CP (IB) No. 666 / 7 / HDB / 2018, by the Ld. Adjudicating Authority. Subsequently, the Interim Resolution Professional (IRP) was appointed and the IRP issued a public announcement in `Form A’, on 17.04.2019 inviting claims from the Creditors and other Stakeholders in respect of the CD. Thereafter, in accordance with the provisions of Regulation 27 of IBBI (Insolvency Resolution Process for Corporate Persons Regulations, 2016), the RP appointed two registered Valuers to determine the fair value and the liquidation value of the Corporate Debtor, in accordance with Regulation 35 of Regulations, 2016.

The RP also constituted the Committee of Creditors. The CoC in its 3^rd Meeting dated 09.07.2019, approved the proposal of the RP to invite the Expression of Interest (EoI) and to issue necessary Form G. Form G was published by RP on 15.07.2019. 4 prospective Resolution Applicants (PRAs) submitted EoI and the RP placed list of 4 PRAs for its consideration before the CoC in its meeting which was held on 21.08.2019. After several rounds of negotiations and conduct of due diligence by the RP with respect to the eligibility of PRAs, the final Resolution Plan as submitted by Invent Assets Securitization Comp. App (AT) (CH) (Ins) No. 452 / 2025 Page 2 of 8 and Reconstruction Pvt. Ltd. (IARC), the Respondent No. 2 to the Interlocutory Application IA (IBC) (Liq) / 8 / 2025 along with Triterras Holding Pte Ltd (THPL), later renamed as M/s. Anatanium Holdings Pte. Ltd., was placed before the CoC members, by way of circulation, and was placed in the CoC meeting which was conducted on 28.09.2020.

After due consideration of the aforesaid Plan, the Resolution Plan was approved by 91.1% of the voting of the CoC which was held in the 24^th Meeting of the CoC, that was held on 08.10.2020. The final Resolution Plan, as submitted, was also approved by Ld. Adjudicating Authority by an order dated 08.04.2021.

The approved Resolution Plan had a financial outlay of Rs.700 Crore out of which Rs.4,47,10,60,000/- was to be paid to the Financial Creditors in seven instalments, effective from 18.06.2021. However, out of the schedule instalments, that were required to be paid, the Appellant remitted only the first three instalments and that too, with considerable delay. The 3^rd instalment of Rs.50 Crore due to be paid on 18.06.2023 was paid on 21.11.2024 and thereafter no further instalments have been paid even though the same were to be paid on 18.06.2024 (Rs.50 Crore), 18.06.2025 (Rs.62 Crore), 18.06.2026 (Rs.62 Crore) and 18.06.2026 (Rs.110.306 Crore) respectively.

The Financial Creditors, to the Corporate Debtor also executed an Assignment Agreement dated 29.04.2022, with IARC (Assignee) whereby Punjab National Bank, Bank of India, State Bank of India, Indian Overseas Bank, Union Bank of India Stressed Assets Stabilization Fund, IDBI Bank Limited, Indian Bank, DBS Bank India, Edelweiss Asset Reconstruction Company Limited & Invent Assets Securitization Company Limited (Assignors) assigned their respective debts to IARC, the Assignee. Under the said Agreement dated 29.04.2022, upon payment of amounts as agreed upon by the Assignee, the Assignors were to relinquish all charges over the properties of the CD in a phased manner.

Since the SRA defaulted on the payment of 4^th & 5^th instalments, the Respondent Bank of India representing the erstwhile CoC of M/s. Splendid Metal Products Limited (now known as Thalaivar Steels Ltd.), filed an application dated 13.05.2025, seeking an order for the liquidation of the Corporate Debtor, now known as Thalaivar Steels Limited.

In the said application IA(IBC) (Liq)/08/2025, the present Appellant, the Successful Resolution Applicant based on the approved Resolution Plan dated 08.04.2021 was not made a party.

When the matter was placed before the Ld. Tribunal, the Tribunal passed the impugned order dated 07.08.2025 observing that, since Application IA (IBC) (Liq) / 08 / 2025, had been preferred by Bank of India (Respondent herein) as a representative of the CoC seeking initiation of liquidation proceedings, there is no need to issue notice to the Appellant because, they were not the necessary party in the liquidation proceedings.

It is against this order that the instant Company Appeal has been filed. The Appellant contends that any order passed on IA (IBC) (Liq) / 08 / 2025 would affect their rights, as the Plan had already been approved in their favour by the CoC on 28.09.2020 and by the Ld. Adjudicating Authority on 08.04.2021. Hence, they argue that they were entitled to a hearing, failing which the action would violate principles of natural justice.

The said request has been strongly opposed by the Respondent on the ground that the initiation of liquidation proceedings was necessitated due to the Appellant’s default as the Successful Resolution Applicant. As such, the Respondent submits that the Appellant was not required to be heard in the liquidation proceedings, since the issue pertained exclusively to the liability of the Corporate Debtor arising from the Appellant’s default as SRA.

He has further argued that Liquidation can always be ordered and Liquidator be appointed by the Ld. Tribunal on the basis of material placed by the Respondent, the representative of the CoC, and for this purpose the Successful Resolution Applicant need not be heard, particularly given the Appellant’s own default.

The Respondent further opposed the Appeal on the ground that certain pleadings made by the Appellant, particularly in Para 11 to 15 of the Memorandum of Appeal, contained allegations against the Respondent, which were baseless and unsupported by any evidence.

The Ld. Counsel for the Respondent submitted that the allegations made by the Appellant in the Appeal are unjustified and unsupported by any material. Upon objection, the Ld. Counsel for the Appellant submitted during arguments that he was willing to withdraw the allegations made in Para 11 to 15 of the Memorandum of Appeal, accordingly permission to withdraw the said allegations was granted, and no cognizance is to be taken of them.

Regarding the correctness of the impugned order under challenge, it is to be taken into account that, the Appellant, being the Successful Resolution Applicant, was expected to remit the entire amount in seven instalments, as agreed under the Plan, that he has admittedly defaulted, after remitting 3 instalments only and that due to this default, liquidation proceedings have been initiated.

Since only three instalments were paid and the remaining instalments are yet to be paid with 4^th and 5^th instalments being clearly overdue in spite of reminders by Banks, this default justifies the filing of the liquidation application. Hence, the Appellant being in clear default, was not required to be made a party or heard in the proceedings for appointment of the Liquidator.

The Appellant’s contention that he was entitled to be heard in the liquidation application because his rights are being affected and the default is also due to certain actions of the Financial Creditors, is not acceptable. The appointment of a Liquidator is exclusively a matter between the creditor and the Ld. Adjudicating Authority, relating to whether financial liability existed, whether the Resolution Plan was being implemented properly and whether default in implementation necessitated liquidation. The Appellant’s prior status as Successful Resolution Applicant does not grant him an enforceable right to be heard at this stage.

Since the issue of liquidation and appointment of the Liquidator does not assign any specific role or legal right to the Appellant, he cannot be considered a necessary party whose presence is essential for an effective adjudication.

For these reasons, the non-issuance of notice to the Appellant in the impugned order cannot be faulted, particularly in view of the Tribunal’s statutory powers under Section 33(3) of the I&B Code, 2016. Further, considering the age of the proceedings, the commencement of CIRP on 04.04.2019, the approval of the Resolution Plan on 08.04.2021, delay in implementation of the Resolution Plan and the Appellant’s continued default in paying the instalments after the 3^rd instalment, the Appellant was correctly treated as ``not a necessary party’’.

Nevertheless, in the interest of justice, the Appellant is permitted to intervene in the proceedings of IA (IBC) (Liq) / 08 / 2025 and will be heard at the time the Ld. Adjudicating Authority passes final orders. No formal notice is required, and the Appellant will only have a limited right of audience as an intervener. Subject to the above, the Company Appeal stands rejected, except to the extent that the Appellant may be heard without any liberty to file pleadings, and only during the final hearing stage of IA (IBC) (Liq) / 08 / 2025.

Subject to the aforesaid exception, the Company Appeal (AT) (CH) (INS) No. 452 / 2025, would stand dismissed. The connected pending Interlocutory Applications, if any, would stand closed.