Justice Mukhopadhaya at NCLAT: Steering the major cases

Since the inception of the Insolvency and Bankruptcy Code (IBC) and the National Company Law Appellate Tribunal (NCLAT) in 2016, NCLAT Chairman Justice Sudhansu Jyoti Mukhopadhaya has presided over the majority of insolvency resolution cases, and more importantly, has been presiding over all the significant ones.

Known for being tough against actions which delay the resolution process, Justice Mukhopadhaya has time and again retierated his stand that operational and financial creditors should be treated with fairness.

An example of his quest for just and early resolution of cases is the NCLAT's latest directive in the Jaypee Infratech (JIL) matter, whereby the bench headed by the Chairman directed the major lender IDBI Bank and NBCC, the bidder of the stressed asset, to resolve the issues among themselves.

The JIL's Committee of Creditors had rejected the state-run NBCC's bid on the ground that it was conditional. The bank's voted against the bid although home buyers were in its favour.

Emphasising that the NCLAT's priority is to take care of the interest of the home buyers, the bench on July 2 asked the representatives of the banks, NBCC and home buyers to appear before it in the next hearing to find how the NBCC's plan could be modified in every concerned party's interest.

During the hearing on the matter, the three-member bench headed by Justice Mukhopadhaya also said that it was not keen on considering Adani Group's bid and pulled up the banks for back-door negotiations with the business conglomerate.

Several lawyers say that the former Supreme Court judge quickly comes to grips with the issue at hand, and is quite vocal and straightforward about his views.

In the Essar Steel case, while rejecting its promoter Prashant Ruia's plea against the ArcelorMittal bid, a bench led by Justice Mukhopadhaya ruled that operational creditors of Essar Steel were to be treated on a par with financial creditors at the time of settling claims. The ruling is expected to have a significant impact as it would improve the recoveries for operational creditors.

"Instead of rejecting the resolution plan submitted by ArcelorMittal India Pvt Ltd, we modify the plan to safeguard the rights of the operational creditors and other financial creditors," said the NCLAT Chairperson.

The bench also noted that the Committee of Creditors does not have the authority to decide on the distribution of the bid amount, and it is the insolvency resolution professional who will decide on it.

Speaking at an event organised by the National e-Governance Services Ltd in Mumbai in May, Justice Mukhopadhaya said: "Operational creditors cannot be discriminated against and financial creditors cannot act like selfish cells. These cells are what cause cancer."

"I can understand that operational creditors are smaller, but it does not mean there is nothing for them (in a resolution plan). The NCLAT has a duty to operational creditors to give them the same treatment. It may not be the same amount of money, but the same treatment."

Mukhopadhaya was educated in Bihar and practised at the Patna and Ranchi benches of the Patna High Court. He later became a judge of the Patna High Court in 1994.

He also served as Chief Justice of the Gujarat High Court from December 2009 to September 2011.

( With inputs from IANS )