COMMITTEE OF CREDITORS OF AMTEK AUTO LIMITED THROUGH CORPORATION BANK versus DINKAR T VENKATASUBRAMANIAN & ORS.

Citation: [2021] 3 S.C.R. 1015 · Decided: 23-02-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed

Judgment (excerpt)

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COMMITTEE OF CREDITORS OF AMTEK AUTO LIMITED
THROUGH CORPORATION BANK
v.
DINKAR T VENKATASUBRAMANIAN & ORS.
I.A.No.58156 of 2020
With
Contempt Petition (C) No. 524 of 2020
(Civil Appeal No. 6707 of 2019)
FEBRUARY 23, 2021
[DR DHANANJAYA Y CHANDRACHUD AND
M. R. SHAH, JJ.]
Insolvency and Bankruptcy Code, 2016 – ss. 7, 12(3) and 31
– Contempt of Courts Act, 1971 – s.2(b) – On 24.09.2019, the
Supreme Court directed the Resolution Professional (RP) to invite
fresh offers for resolution plans – Fresh Resolution plans were invited
– The third respondent-DVI submitted financial proposal on
04.11.2019 and was declared the highest resolution applicant – On
17.01.2020, DVI submitted its resolution plan together with a
performance bank guarantee of INR 150 crores – DVI filed
application before the Court seeking grant of a period of two months
to examine and understand the impact of the onset of COVID-19
and to re-evaluate the resolution plan – On 18.06.2020, the
application was rejected by the Supreme Court – RP called upon
DVI to submit a performance bank guarantee for INR 150 crores –
On 30.06.2020, DVI moved rectification application before the
Supreme Court on the ground that (i) No application was ever filed
by DVI seeking withdrawal of the order; (ii) DVI never approached
the Supreme Court for extension of time – On the other hand, NCLT
approved resolution plan of DVI – DVI filed appeal before the
NCLAT – DVI addressed an e-mail invoking clause 8.7 (event of
Force Majeure) of the resolution plan to seek its termination – CoC
filed contempt petition – Both rectification application and contempt
petition are before the Supreme Court – Held: In rectification
application, the record as it stands leaves no manner of doubt that
DVI was seeking to renege on its commitments – The plea to re-
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SUPREME COURT REPORTS
[2021] 3 S.C.R.
examine the impact of pandemic and to re-negotiate the terms of the
resolution plan makes it abundantly clear that DVI was not willing
to fulfill the terms of obligation – As far as extension of time is
concerned, as DVI was found highest evaluated resolution applicant
– Extensions were sought and granted also – Who sought an
extension of time is beside the point and is of subsidiary importance
– Formally, it may be true that the extensions were applied by CoC,
however, DVI was the beneficiary of the extensions which were
granted by the Court, as process of seeking extensions led to
approval of its resolution plan – Accordingly, the rectification
application is dismissed – In contempt petition, the conduct of DVI
lack bonafide, however, the Court must be circumspect about invoking
the contempt jurisdiction as setting untenable plea should not in
and by itself invite penal consequences which emanate from the
exercise of the contempt jurisdiction – Therefore, it would not be
appropriate to exercise the contempt jurisdiction.
Dismissing both the rectification application and the
contempt petition, the Court
HELD: Application for Rectification
1. The order of this Court dated 18 June 2020 must be
understood in the context of the IA which was moved by DVI.
When the three judge Bench in its order dated 18 June 2020
observed that the “application made by the applicant for
withdrawal of the offer is hereby rejected” it must be understood
in the context of the plea which was setup by DVI. There can be
no mistaking the fact that DVI, despite having submitted a
resolution plan which had undergone discussion and revision
before the CoC before being approved in the meeting of the CoC
of 11 February 2020, was seeking to renege its applications to
fulfill the resolution plan. The plea for being allowed to re-
examine the impact of the pandemic and to re-negotiate the terms
of the resolution plan makes it abundantly clear that DVI was not
willing to fulfill the terms of the obligations which it had agreed.
This is evident from the fact also that though DVI was obliged to
furnish the second tranche of its performance bank guarantee of
INR 150 crores, it was not ready to do so. On the contrary,
apprehending a threat of the invocation of the first tranche of the
bank guarantee of INR 150 crores, DVI pleaded special equities
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and sought a direction allowing it to keep the bank guarantee
alive until the process of re-negotiation was completed in two
months. This again was to overcome the consequence of the
invocation of the bank guarantee a

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