Khaitan & Co represented Agile Metaliks Private Limited on proposed acquisition under IBC
The leading law firm in India, Khaitan & Co, represented Agile Metaliks Private Limited before the NCLT, Kolkata Bench and the National Company Law Appellate Tribunal (NCLAT) and successfully protected the client’s interests by avoiding liability regarding the disputed land, resulting in the rejection of the resolution plan due to the main asset of the corporate debtor being unavailable.
The client had submitted a resolution plan and was declared as the successful resolution applicant for the acquisition of the corporate debtor by the Committee of Creditors (CoC). However, after approval of its resolution plan by the CoC, multiple parties challenged the title of the primary asset of the corporate debtor, being land admeasuring 344.915 acres situated in District Kodarma, on grounds of fraud and forgery.
The State Bank of India representing the CoC and the Resolution Professional challenged the order and judgment of the Adjudicating Authority on the premise that question of fraud and forgery cannot be gone into by Adjudicating Authority in IBC proceedings while deciding Plan approval application.
The Hon’ble NCLAT while deciding the issue in favor of the client and dismissing the appeals of the CoC and RP held that it is well settled that fraud and forgery are issues, which require evidence to be taken for returning any finding of fraud and forgery. The Adjudicating Authority conducts the IBC proceedings in accordance with the IBC and CIRP Regulations and it cannot act as a Civil Court to enter into issues of fraud and forgery, take evidence and return any findings.
However, whether an asset, which is claimed by the CD is asset of the CD, is a question, which needs to be considered and answered by the Adjudicating Authority and Adjudicating Authority has ample jurisdiction to decide the issue whether the particular asset, which is claimed by the CD as its asset can be treated to be asset of the CD or not. However, above is with a caveat that while deciding such question, the Adjudicating Authority cannot embark upon the issues pertaining to fraud and forgery. Any document, which is alleged to have been obtained by fraud or manipulation, becomes a voidable document, which requires a declaration to lose its enforceability. However, when a document can be established as void or unenforceable, it does not require any declaration. Thus, the limited jurisdiction, which can be exercised by the Adjudicating Authority is as to whether any document claimed in the proceedings is void or unenforceable.
The NCLT has rejected a resolution plan approved by the committee of creditors of the corporate debtor on account of unavailability of assets due to questions of fraud and forgery. The NCLAT has delivered a landmark judgment in IBC law upholding the jurisdiction of the NCLT to determine whether an asset is actually a part of the corporate debtor or not based on a prima facie conclusion of whether a deed is a void or unenforceable document, and has consequentially, upheld the rejection of the resolution plan on account of unavailability of assets of the corporate debtor.
The Khaitan & Co team was led by Shounak Mitra (Partner) and Dipen Chatterjee (Partner), supported by Saptarshi Mandal (Principal Associate), Shreyas Edupuganti (Principal Associate), and Keshav Tibarewalla (Senior Associate).
This case is notable for the landmark judgment under IBC law, wherein the NCLAT upheld the jurisdiction of the NCLT to determine whether an asset is part of the corporate debtor’s estate based on whether a document is void or unenforceable, thereby setting a significant precedent.
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