Factual Background 

In the matter of Trimex Industries (P) Ltd. v. Sathavahana Ispat Ltd. According to S. 60(5) of the Insolvency and Bankruptcy Code, 2016 read with R. 11 of the NCLT Rules, 2016, the applicant-Operational Creditor (Trimex Industries (P) Ltd.) has preferred an application to set aside the “Letter of Intent” dated 19-10-2022 issued by the Resolution Professional confirming Jindal Saw Ltd. as the Successful Resolution Applicant. The application further requested that Jindal Saw Limited, its related companies, or its alter egos not be permitted to participate in the new CIRP process and that a longer period for CIRP is used to ask for new Resolution Plans with regard to the Corporate Debtor.

Issue 

Whether the purchase of debt by JC Flowers ARC (P) Ltd. from banks and the raising of money from Hexa Securities & Finance Ltd. and Siddeshwari Tradex (P) Ld. to complete the deal had any ties to SRA as claimed by the applicant?

Argument Advanced 

The applicant claimed that SRA-Jindal group firms are the main source of funds utilised to pay for the account and financial debt of the Corporate Debtor. In addition, the applicant claimed that the CoC Sole Member JC Flowers also acted in an opaque way by failing to disclose to this Tribunal that it had chosen SRA and that it would cover its repair price as part of CIRP costs. The applicant further stated that because Jindal Saw does not meet S. 29A of the IBC’s standards, it is not eligible to be an SRA.

The respondents stated that The applicant had previously requested that the CoC not even examine the Resolution Plan of SRA, but that request was denied by this Tribunal. The applicant subsequently filed an appeal with the NCLAT, which is now pending. The respondents argued that the applicant preferred the present application over waiting for NCLAT’s ruling on identical grounds. The respondents further argued that the applicant had used a proxy to file an SLP before the Supreme Court on the same basis, which the Supreme Court had rejected. The defendants argued that the applicant repeatedly failed to demonstrate its locus standi or justification for initiating these proceedings. The respondents’ final argument was that the application is invalid under the res judicata and constructive res judicata grounds.

Conclusion of Court 

The NCLT noted that the applicant’s claim is untrue since the relationship upon which it is founded has not existed for more than 13 years and because issuing debentures and buying them is a relatively normal way for businesses to raise capital. By failing to object to SRA’s inclusion as a prospective resolution applicant (PRA) when given the chance, the applicant waived its right to object in accordance with Regulation 36A (11) of the CIRP Regulations, the NCLT remarked that the applicant lacks bona fide in approaching this Tribunal. The operational Creditor’s request to set aside the Resolution Professional’s letter of intent dated 19-10-2022 was denied by NCLT, with fees of Rs. 5,00,000/- due to the Prime Minister’s Relief Fund 15 days from the order’s date.