Judgment Summaries (NCLT) – In the matter of Coastal Projects Limited

  December 22, 2021

In the matter of Coastal Projects Limited (Kolkata Bench (06.12.2018))

 

Facts

This application was filed by the State Bank of India (FC) for initiating CIRP against Coastal Projects Ltd. (CD) under Section 7 of the Code. The application was admitted through an order dated 5 January 2018, and an IRP was appointed, who invited prospective RAs. However, resolution plan was submitted only by Mantena Engitec Private Ltd. (RA), and no other entity showed an interest. Despite several rounds of negotiations, the resolution plan submitted by the RA was ultimately rejected by majority in a COC meeting. Resultantly, the RP was unsuccessful in securing the approval of the only resolution plan received. Meanwhile, the extended CIRP period expired on 1 October 2018.

In CA (IB) No. 965/KB/2018, the RA sought exclusion of the time taken by the RP and the CoC to finalise the plan, as such exclusion would give them one more opportunity to submit their revised resolution plan.

Order

At the outset, the Tribunal refused to consider the request since the CoC had already decided to proceed to liquidation, and the CIRP period had also expired. The Tribunal observed that as per Section 12, the Adjudicating Authority should not extend the CIRP period more than once. This application was filed after the expiry of 270 days, and hence no further extension was granted. The Tribunal noted that the CoC’s reason for rejection of the plan was not sound, and that the RP and the CoC had failed to exercise adequate care during the negotiations to arrive at a viable resolution plan. Therefore, the chance of revival of the CD had been blocked. Consequently, the Tribunal ordered liquidation of the CD, and dismissed CA(IB)No. 965/KB/2018.

 

Full text of the order accessible here.

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