JSA advised and represented State Bank of India (“SBI“) on behalf of the Committee of Creditors of Dunar Foods Limited (“Corporate Debtor”) in an appeal filed by the Resolution Applicant before the Hon’ble National Company Law Appellate Tribunal (“NCLAT“) against the order of the Hon’ble National Company law Tribunal (“NCLT”) dated April 30, 2021.
The key issues in the matter arising pursuant to the order of the Hon’ble NCLT are as under:
- Whether the Resolution Applicant is liable to pay interest for delay in making payments as per the approved Resolution Plan;
- Whether the Resolution Applicant is entitled to all the assets of the Corporate Debtor to be transferred free of all encumbrances.
The Hon’ble NCLT had directed the Resolution Applicant to pay interest at the rate of 12% per annum for delay in implementation of the Resolution Plan from the date the payment became due until the entire payment is made. Further, the NCLT granted liberty to the Resolution Applicant to approach concerned Governmental Authority of Central and State Government for getting lifted the attachment / removal of prohibitory orders or encumbrances (for the period prior to CIRP) over the assets of the Corporate Debtor.
The Resolution Applicant challenged the said NCLT order before the Hon’ble NCLAT. The Hon’ble NCLAT after hearing the parties vide its order dated June 10, 2022 held as under:
- On the issue of payment of interest, the Hon’ble NCLAT upheld payment of interest for delayed period (i.e. January 27, 2020 to November 15, 2021) at RBI base rate for lending to Banks + 2% margin as per the rate of interest applicable subject to a limit of 12% p.a.;
- In relation to the issue of transfer of assets free of encumbrances, it was held that Resolution Applicant cannot suddenly be faced with undecided claims. After the Resolution Plan is approved, it is the responsibility of the Resolution Professional to compile the claims submitted to him or observed from record and put the same in the information memorandum so that the PRA have full idea of its own liability. The Resolution Applicant is to start on a fresh slate. Therefore, the Hon’ble NCLAT directed the Resolution Professional and members of the Monitoring Committee to assist the Resolution Applicant in sorting out the issues pending at various forums.
The amount claimed by State Bank of India from the Dunar Foods Limited is approximately INR Approx. 783.2 Crores (US$ 100 million). The total amount claimed by the Financial Creditors is Approx. INR 978.6 crores (US$ 124 milllion).
JSA team comprised Lead Partner – Varghese Thomas, Partner – Fatema Kachwalla, and Senior Associate – Vishrutyi Sahni.