NCLAT sets aside NCLT orders approving resolution plan for Ricoh India

The National Company Law Appellate Tribunal (NCLAT) has set aside NCLT orders approving the bids of a consortium comprising two investors Kalpraj Dharamshi and Rekha Jhunjhunwala for the IT peripherals and services firm Ricoh India.

Allowing the plea of Kotak Investment Advisors, a three-member NCLAT bench has directed the Committee of Creditors (CoC) of Ricoh India to decide afresh within ten days from the date of the order, which is August 5, 2020.

Failing to this, Ricoh India would face liquidation as the mandated timeline of Corporate Insolvency Resolution Period (CIRP) under the Insolvency & Bankruptcy Code has already lapsed, the appellate tribunal further said.

The NCLAT direction has come over a plea filed by Kotak Investment Advisors, which had challenged the order passed by the Mumbai bench of the National Company Law Tribunal (NCLT) on November 28, 2019, approving the resolution plan.

The NCLT had also rejected the plea of Kotak Investment Advisors raising objections against the alleged illegalities committed in the conduct of CIRP.

"The CoC is directed to take a decision afresh in the light of the directions given above for consideration on the resolution plans already submitted within the stipulated timeline within ten days from the date of this order," said an NCLAT bench headed by Acting Chairperson Justice B L Bhat.

"If no decision is communicated to the Adjudicating Authority (NCLT) and the timeline for completion of CIRP has already expired, then the Adjudicating Authority is to pass an order for liquidation of the corporate debtor (Ricoh)," the appellate tribunal said. 

The NCLAT also pointed out that the resolution professional of Ricoh India accepted the bids from the successful applicants Dharamshi and Jhunjhunwala after the expiry of the deadline, which was a "grave error". 

The NCLAT said that NCLT failed to appreciate the illegalities and irregularities pointed out by the appellant.

The plea filed by Kotak Investment Advisors, one of the four resolution applicants, had challenged the order passed by the NCLT Mumbai bench.

The NCLT had also rejected the plea of Kotak Investment Advisors raising other objections.

According to the petitioner, two resolution plans were filed for Ricoh India on time by Phoenix Asset Reconstruction Company and Karvy Group, and both were opened by CoC on January 10, 2019.

In addition to that two more resolution plans were accepted by the resolution professional of the company after expiry of the deadline for submission — one from "WeP" Peripherals on January 13, 2019, and another January 28, 2019, by the consortium of Dharamshi and Jhunjhunwala.

Kotak Investment contended that the successful resolution applicant was allowed to submit its bid after the expiry of the deadline for submission when the bids by other resolution applicants had already been opened and deliberated upon by the CoC.

It said that bid submitted was opened on January 9, 2019 and offers made by it was disclosed to all the participants, including the resolution professional.

After this, no further fresh bid or offer could have been accepted or considered. But the RP illegally and unlawfully received EOI from Kalpraj Dharamshi and Rekha Jhunjhunwala on January 27, 2019, which was unlawful.

However, RP contended before the NCLAT that correct procedure was followed as prescribed under the IBC.