KRIDHAN INFRASTRUCTURE PVT. LTD. (NOW KNOWN AS KRISH STEEL AND TRADING PVT LTD) versus VENKATESAN SANKARANARAYAN & ORS.

Citation: [2021] 2 S.C.R. 520 · Decided: 01-03-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 2 S.C.R.
KRIDHAN INFRASTRUCTURE PVT. LTD.
(NOW KNOWN AS KRISH STEEL AND TRADING PVT LTD)
v.
VENKATESAN SANKARANARAYAN & ORS.
(Civil Appeal No. 3299 of 2020)
MARCH 01, 2021
[DR. DHANANJAYA Y CHANDRACHUD AND
M.R. SHAH, JJ.]
Insolvency and Bankruptcy Code, 2016 – The appellant
submitted a resolution plan for a company which was undergoing
the Corporate Insolvency Resolution Process (CIRP) under the 2016
Code – The Resolution Plan was approved by the Committee of
Creditors (CoC) and National Company Law Tribunal (NCLT) –
Accordingly, the appellant deposited an amount of Rs.5 crores in
an escrow account of the corporate debtor – However, further
obligations were not fulfilled by the appellant under the Resolution
Plan despite numerous opportunities – As a result on 11.11.2019,
the CoC voted for the liquidation of the corporate debtor – The
same was allowed by the NCLT – In appeal, the NCLAT permitted
appellant to deposit Rs.15 crores in the escrow account and
appellant agreed to the stipulation that the amount of Rs.15 crores
would be forfeited if it failed to deposit the payment of Rs. 50 crores
– On 08.09.2020, the appeal was dismissed and NCLAT upheld the
order of liquidation – Before the Supreme Court on 09.10.2020,
the appellant stated that an amount of Rs.50 crores would be
deposited on or before 10.01.2021 – The appellant was specifically
informed that if it failed to do so in whole or in part, the entire
amount of Rs.20 crores deposited earlier would be forfeited –
Thereafter, the time for making the deposit was extended until
25.02.2021 – However, several months elapsed after extension of
time and no payments were made – Appellant submitted that it has
moved to term lenders for finance – However, before finance can
be made available to the appellant, the term lenders insisted that
the status of the company must be altered from that of a company
under liquidation, to an active company – Held : The appellant was
unable to raise the funds – The fact of the matter emerges that the
[2021] 2 S.C.R. 520
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appellant will be unable to raise funds from the term lenders, who
were insisting on changing the status of company from under
liquidation to an active status – The order of liquidation was not set
aside – What the request of the appellant reduces itself to, is that it
would raise funds on a mortgage of assets of the company and
unless the company is bought out of liquidation, it would not be in
a position to raise the funds – This cannot be accepted – The order
of liquidation was stayed and a final view is yet to be taken –
Sufficient opportunities were granted to the appellant and it was
not able to deposit Rs.50 crores – The appellant has failed to abide
by its obligations – The consequence envisaged under the order of
the Supreme Court accordingly ensue the forfeiture of the amount
of Rs.20 crores – As a consequence, the management directed to
revert to the liquidator for taking steps in accordance with law.
Dismissing the Civil Appeal, the Court
HELD: 1. The appellant has been unable to raise the funds.
The fact of the matter, as it emerges from appellant’s submission,
is that the appellant will be unable to raise funds from the Term
Lenders who are insisting that the status of the Company should
change from a company under liquidation to an active status. The
order of liquidation has not been set aside. Ultimately, what the
request of the appellant reduces itself to, is that it would raise
funds on a mortgage of the assets of the Company and unless the
Company is brought out of liquidation, it would not be in a position
to raise the funds. This is unacceptable. At this stage, the order
of liquidation has only been stayed, but a final view was, thus, to
be taken by this Court. Sufficient opportunities were granted to
the appellant earlier during the pendency of the proceedings both
before the NCLT and NCLAT. The orders of the NCLT and
NCLAT make it abundantly clear that despite the grant of
sufficient time, the appellant has not been able to comply with
the terms of the Resolution Plan. Since 9 October 2020, despite
the passage of almost five months, the appellant has not been
able to deposit an amount of Rs 50 crores. Time is a crucial facet
of the scheme under the IBC. To allow such proceedings to lapse
into an indefinite delay will plainly defeat the object of the statute.
A good faith effort to resolve a corporate insolvency is a preferred

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