THE NATIONAL INSOLVENCY & BANKRUPTCY LAW MOOT COURT

COMPETITION 2024
TEAM CODE : P12

NATIONAL INSOLVENCY & BANKRUPTCY LAW MOOT COURT

COMPETITION 2024
23rd – 25th February 2024
BEFORE THE HON’BLE SUPREME COURT OF INDIA
SLP Civil) No. 246 Of 2022
Natural Foods Limited ( “NFL” ) ……Petitioner
Versus
Organic Dried Fruits and Spices Private Limited
( “ODFSL” ) ……Respondent
Along with:
W.P. (Civil) No. 135 Of 2022
Natural Foods Limited ( “NFL” ) ……Petitioner
Versus
Competition Commission Of Xandar & Anr. ……Respondent
Along with:
Civil Appeal No. 567 Of 2023
Natural Foods Limited ( “NFL” ) ……Petitioner
Versus
State Bank Of Xandar And ORS. ……Respondent

ON SUBMISSION TO THE REGISTRY OF THE COURT OF THE

HON’BLE SUPREME COURT OF INDIA
MEMORIAL FOR THE PETITIONER – NATURAL FOODS PRIVATE
LIMITED

[MEMORIAL FOR THE RESPONDENT]

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TABLE OF CONTENT
Contents Pg. No.

INDEX OF AUTHORITIES ................................................................................. 3

STATEMENT OF JURISDICTION .......................................................………...4

STATEMENT OF FACTS ..................................................................................... 5

STATEMENT OF ISSUES ................................................................... .……….7

SUMMARY ASGUMENTS .................................................................................. 8

ARGUMENTS ADVANCED ................................................................................ 9

PRAYER ..................................................................................................... ……...24

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INDEX OF AUTHORITIES

STATUTES REFERRED
The Insolvency and Bankruptcy Code, 2016
The Companies Act, 2013
The Indian Contract Act, 1872
The Arbitration and Conciliation Act, 1996
The Securities and Exchange Board of India Act, 1992
The Competition Act, 2002

RELEVANT CASE LAWS

Kalpraj dharamshri V. Kotal investment advisors………………………………………….9
Steel India limited vs. Satish Kumar Gupta and Ors………………………………………..10
Resurgence ARC Pvt. Ltd vs. Amit metaliks limited and Anr. …………………………….10
Binani industries ltd v. Bank of Baroda and another ……………………………………….10
Ghanshyam Mishra and sons Pvt ltd v. Edelweiss asset reconstruction co ltd ……………..11
Ashish Sharaf v. Bhuvan Madan ……………………………………………………………11
Hari babu thotee v. Others ………………………………………………………………….12
Bipin Chandra parshottamdash Patel v. State of Gujrat …………………………………….13
Thampanoor Ravi v. Charvpara Ravi ……………………………………………………….14
Arceler Mittal India Pvt ltd v. Satish Kumar Gupta …………………………………………..14
Shreeram e techno school Pvt ltd. V. Blans and Nore hospitality Pvt ltd ………………………14
Arun Kumar jagatramk v. Jindal steel power ltd ……………………………………………..14
Ramkrishna forgings limited v. Ravindra loonkar & Anr …………………………………….14
RBL bank limited v. MBL infrastructure limited …………………………………………….14
Alchemist Asset Reconstruction Co. Ltd. v. Hotel Gaudavan (P) Ltd.,16 ……………………16
P. Mohanraj & Ors. Vs. M/S. Shah Brothers Ispat Pvt. Ltd ……………………………………..16
K.S. Oils Ltd. v/s State Trade Corporation of India ……………………………………………17
Ms. Anju Agarwal v. Bombay Stock Exchange ………………………………………………18
M/s. Innoventive Industries Limited. vs. ICICI Bank Limited ……………………………….18
Dreams Infra India Private Limited v. The Competent Authority ………………………………..18
Bhanu Ram and Ors. v. HBN Daries and Allied Ltd ………………………………………………18
Chitra Sharma vs Union of India …………………………………………………………………21

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Ribbons (P) Ltd. v. Union of India …………………………………………………………………..22

STATEMENT OF JURISDICICTION

The Petitioner humbly submits this memorandum in response to the petition filed before this
Hon’ble Supreme Court. The petition invokes its writ jurisdiction under Article 136 and Article
32 of the Constitution of India. It sets forth the facts and the laws on which the claims are
based.

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STATEMENT OF FATCS

1. Organic Dried Fruits and Spices Private Limited ( ODFSL ) is a company that is involved in
producing dried fruits, nuts, spices And Natural Foods Limited ( NFL ) is a `listed company
based in Xandar, NFL has largest market share for the distribution of dried fruits and spices.
It’s has been largely dependent on imports of dried fruits.
2. There were multiple festivals from October to December in Xandar, Therefore, the demands
for the dried fruits, nuts and spices skyrocketed. To fulfil these demands NFL on 02.09.2022,
placed an order to ODFSL of 10 loads of dried fruits and nuts and 12 loads of spices for total
consideration of INR 10,15,50,000/- and made a sale-purchase agreement with ODFSL.
3. While goods were in transit , on 15.09.2022, NFL placed an another order to ODFSL of 20
loads of dried fruits and nuts, and 10 loads of spices for a total consideration of INR
20,17,30,000/- . with the same terms of previous agreement.
4. To pay the rest of the amount NFL applied for the loan from the State Bank of Xandar and a
consortium of financial institution.
5. In 2022, NFL acquired Connaught Foods Private Limited and after the acquisition NFL’s
business expanded by 15%, by which NFL surpassed Plaza foods.
6. So Plaza foods made filed a complaint to the Competition Commission of Xandar, stating that
NFL has indulged in anti-competitive practices by abusing its dominant position in the
market. Competition Commission of Xandar accepted the complaint and initiated an inquiry
under Section 20 of Competition Act, 2002.
7. NFL could not receive the goods due to lack of funds, NFL intimated to ODFSL Via e-mail
that they will receive the goods soon. In its reply ODFSL stated new terms that if NFL fails to
receive the goods within next 15 days, then ODFSL shall sell the goods to some other buyer
and shall recover all costs and expenses from NFL.
8. NFL could not receive the goods even the after of 15 days, as the result ODFSL sold that
goods to another company but could not sold at the profitable price. Therefore, ODFSL tried
to recover the loss from NFL according to terms of the agreements by the means of mediation
but no response was given by the NFL. Then ODFSL invoked the dispute resolution clause
which was given in the agreement and proceed.
9. NFL initiated the Corporate Insolvency Resolution Process under section 10 of the Insolvency
and Bankruptcy Code, 2016 due to protect the integrity of company and to handle the rising

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[STATEMENT OF FACTS]
financial crunch. The application was admitted to the Adjudicating Authority. Accordingly,
vide order dated 12 .11.2022 moratorium was issued under Section 14 of the Insolvency and
Bankruptcy code, 2016.
10. On 30.11.2022 Arbitral tribunal conclude the proceeding and passed an arbitral award in
favour of the Claimant (ODFSL) directing NFL to compensate ODFSL for loss and injury.
NFL failed to Comply with the directions of the tribunal.
11. ODFSL approached the Hon’ble High court to enforce the arbitral award passed against NFL.
The Hon’ble High Court allowed the execution petition and directed NFL to comply with the
directions of the Tribunal within 15 days.
12. NFL filled a Special Leave Petition [SLP (Civil) No. 246 of 2022] under Article 136 before
the Hon’ble Supreme Court on the Ground of section 14 and it’s extant of IBC. The Hon’ble
Supreme Court issued notice and directed the NFL to file the counter affidavit within 4 (four)
weeks from the date of order.
13. On 13.11.2022, Securities Board provisionally attached an immovable property of NFL and
obtained an order from the special court for the confirmation of such attachment. On
15.11.2022, The Competition Commission directed NFL to pay a penalty of RS. 1 Crore due
to indulged in anti-competitive practice.
14. NFL refused to Comply with both the directions and Filled a writ Petition under Article 32 of
Constitution [W.P. ( Civil ) No. 135 of 2022] to seek direction from the Hon’ble Supreme
Court that all inquiries, investigations and orders shall be stayed.
15. In the Corporate Insolvency Resolution Process, the resolution plan was prepared and
submitted to the Resolution Professional and approved by the financial creditors with the
majority votes of 67%.
16. The resolution plan was submitted before the Adjudicating Authority, the Adjudicating
Authority refused to accept the plan vide its order dated 02.12.2022. The Authority also
directed liquidation of the corporate debtor.
17. NFL filed an appeal under 61 of the IBC before the National Company Law Appellate
Tribunal, however vide order dated 30.12.2022, NCLAT upheld the order dated 02.12.2022
passed by the Adjudicating Authority. Then NFL filed an appeal before the Hon’ble Supreme
Court [Civil Appeal No. 567 of 2023] against the order dated 30.12.2022.
18. The Hon’ble Supreme Court tagged all the three cases filed by NFL before the same bench
for the sake of convenience and brevity.

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[STATEMENT OF FACTS]
19. During the pendency of petitions, the Operational creditors filed an invention application the
Civil Appeal No. 567 of 2023 to be impleaded as Respondent.

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STATEMENT OF ISSUES

ISSUE 1. Whether it was in the remit of the Adjudicating Authority to reject the

Resolution Plan approved by 67% of the Financial Creditors?

ISSUE 2. Whether the Resolution Applicant in the present case ineligible to submit the

Resolution Plan?
ISSUE 3. Whether the canvass of moratorium under Section 14 of IBC extends to

execution of international arbitral award, inquiry and proceedings initiated

by Securities Board and Competition Commission?
ISSUE 4. Whether NFL had fraudulently initiated CIRP and has submitted the

Resolution Plan at the behest of a related party in order to seek undue benefit
of moratorium in various proceedings and inquiries pending before other
forums?

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SUMMARY OF ARGUMENTS

ISSUE 1. Whether it was in the remit of the Adjudicating Authority to reject the Resolution
Plan approved by 67% of the Financial Creditors?

The counsel for the petitioner would like to humbly submit that approval of resolution
plan is a commercial wisdom of COC. Hence it was not in the remit of the adjudicating
authority to reject the resolution plan approval by 67% of the financial creditors.

ISSUE 2. Whether the Resolution Applicant in the present case ineligible to submit the
Resolution Plan?

The counsel for the petitioner would like to humbly submit that the persons which are
not specified under section 29A of the code are eligible to submit resolution plan. Hence
the resolution applicant in the present case is eligible to submit the resolution plan.
ISSUE 3. Whether the canvass of moratorium under Section 14 of IBC extends to execution of
international arbitral award, inquiry and proceedings initiated by Securities Board
and Competition Commission?

The counsel for the petitioner would like to humbly submit that Section 14(1)
prohibits all the proceeding given in the sub clause (a), (b), (c), and d of Section 14(1) of
the Insolvency and Bankruptcy Code. Therefore Section 14 of IBC extends to execution
of international arbitral award, inquiry and proceedings initiated by Securities Board and
Competition Commission.
ISSUE 4. Whether NFL had fraudulently initiated CIRP and has submitted the Resolution
plan at the behest of a related party in order to seek undue benefit of moratorium in
various proceedings and inquiries pending before other forums?

The counsel for the petitioner would like to humbly submit to the hon’ble court that
process of initiating of CIRP process has been followed by the Petitioner and Petitioner
had initiated the process under section 10 of IBC. The allegation that resolution plan has
submitted at the behest of related party is absolutely false and baseless.

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ARGUMENTS ADVANCED

ISSUE 1. Whether it was in the remit of the Adjudicating Authority to reject the Resolution
Plan approved by 67% of the Financial Creditors?

It is submitted that the adjudicating authority was not in the remit to reject the resolution
plan approved by 67% of the financial creditors as approval of resolution plan is a commercial
wisdom of committee of creditors (A). Further, adjudicating authority shall by order approve the
resolution plan which satisfies the requirements of section 30(2) of the code. (B)
1.1 A) Approval of resolution plan is a commercial wisdom of committee of creditors
1.1.1 Section-30 of the code prescribes the manner in which a resolution plan may be submitted by
a resolution applicant and approved by a committee of creditors.
a. Resolution plan by resolution applicant
b. Examination by resolution professional
c. Resolution plans to be submit to Committee of creditors
1.1.2 Resolution plan by resolution applicant- Resolution plan may be submitted by resolution
applicant along with affidavit that he is eligible under section 29A to the resolution
professional.
1.1.3 Examination by resolution professional- Section 30(2) provides that the resolution plan
shall be examined by resolution professional on grounds that it
a. Provides payment of insolvency resolution costs in priority.
b. Provides for the payment of operational creditors, which shall not be less than the amount
to be paid in the event of liquidation of corporate debtor.
c. Provides for the management of the affairs of corporate debtor.
d. Provide the implementation and supervision of resolution plan.
e. Does not contravene any provisions of the law for the time bling in force
1.1.4 In case of KALPRAJ DHARAMSHRI V. KOTAL INVESTMENT ADVISOR 1 the Supreme
Court stated that commercial wisdom is not to be interfered with except in accordance with
the grounds stated under Section 30(2) and 61 of the Code.

1
C.A. No. 003410 of 2023

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1.1.5 Resolution plan to be submitted to committee of creditors- The resolution professional

shall submit all resolution plans to the COC which confirm the requirements referred under
section 30(2) of the code.
1.1.6 Approval by committee of creditors- As per section 30(4) of the code, Committee of
Creditors may approve a resolution plan by a vote of not less than sixty-six percent of voting
share of financial creditors, after considering its feasibility and viability, the manner of
distribution proposed including order of priority made under Section 53 of the Code and such
other requirement as may be specified by the Board.
1.1.7 In the given case the resolution plan was prepared by resolution applicant and submitted to
the resolution professional. Resolution plan was put to vote before committee of creditors and
the same was approved by 67% of financial creditors.
1.1.8 In case of STEEL INDIA LTD VS SATISH KUMAR GUPTA AND ORS 2, the Supreme
Court held that the COC’s decision to approve a resolution plan must be based on commercial
wisdom and court can’t interfere with it unless there is violation of any provision of IBC.
1.1.9 In case RESURGENCE ARC PVT LTD VS AMIT METALIKS LTD AND ANR 3. Approval
of resolution plan is business decision of COC unless a class of creditors is denied fair and
equitable treatment.
1.1.10 In case of BINANI INDUSTRIES LTD V. BANK OF BARODA AND ANOTHER 4 the
supreme court of India held that resolution plans are expected to be structured in the
following order of priority –
 For resolution
 For value maximization of debtors’ asset for all of creditors and
 For balancing the interest.

1.2 Adjudicating authority shall by order approve the resolution plal which satsfies the
requirement of section 30(2) of the code
1.2.1 Submission of approved resolution plan- The resolution professional shall submit
resolution plan before the adjudicating authority which was approved by COC.
1.2.2 Approval or rejection by adjudicating authority-

2
CIVIL APPEAL NO. 8766-67 OF 2019
3
CIVIL APPEAL NO. 1700 OF 2021
4
Company Appeal(AT) (Insolvency) No. 82 of 2018

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1.2.2.1 Approval

Section 31(1) provides that if the Adjudicating Authority is satisfied that the
resolution plan is approved by the Committee of Creditors under Section 30(4) meets the
requirements as referred under Section 30(2), it shall by order approve the resolution plan and
such resolution plan shall be binding on the corporate debtor and its employees, members,
creditors including government.
1.2.2.2 Rejection

Section 31(2) states that the Adjudicating Authority is satisfied that the resolution plan does
not confirm to the requirements referred under Section 31(2), it may by an order reject the
resolution plan.
1.2.3 In the case of GHANSHYAM MISHRA AND SONS PVT LTD V. EDELWEIS ASSET
RECONSTRUCTION CO LTD, the Supreme Court held that commercial wisdom of
Committee of Creditors has been given paramount importance and scope of judicial review is
limited to the extent as provided under section 31 and 61 of the Code.
1.2.4 The Supreme Court in ASHISH SHARAF V. BHUVAN MADAN upheld the decision of
NCLT where the Appellate Authority stated that the Committee of Creditors holds the
responsibility of making business decision regarding approval or rejection of resolution plan.
1.2.5 In the given case, the resolution plan was approved by COC and submitted before
adjudicating authority. The adjudicating authority refused to accept the resolution plan. The
adjudicating authority shall approve resolution plan which was approved with requisite
majority by COC.
1.3. It is humbly submitted by petitioner that in the present case the resolution plan is approved by
67% of financial creditors and none of the provision of the Code has been violated and hence
it was not in remit of adjudicating authority to reject a resolution plan approved by 67% of
financial creditors as the approval of resolution plan is a commercial wisdom of Committee of
Creditors.

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ISSUE 2. Whether the Resolution Applicant in the present case ineligible to submit the
Resolution Plan?
2.1 The counsel for the petitioner would like to humbly submit that the resolution applicant
in the present case is eligible to submit resolution plan. A mere mention of that the
resolution applicant once held the Key Managerial Positions of NFL along with the
promoter is not sufficient to held person disqualified under section 29A of IBC.
2.2 The purpose of the insertion of section 29A of IBC is to place a statutory bar on certain
classes of persons from submitting a resolution plan during corporate insolvency
resolution process (CIRP). Certain promoters who are responsible for insolvency of
corporate debtor should not get a chance to begin on a ‘clear slate’ by submitting a
resolution plan. Being a disqualification provision under section 29A has to be strictly
construed i.e. party can’t be disqualified on grounds not stated in section 29A.
2.3 In case of HARI BABU THOTEE V. OTHERS, The Supreme Court held that promoter
of company is not disqualified per say under section 29A of code to dis-entitle him from
presenting the resolution plan. Thus, promoters are eligible the submit resolution plan.
2.4 Section 29A

A person shall not be eligible to submit a resolution plan, if such person, or any other
person acting jointly or in concert with such person.

a) Is in undercharged insolvent.

b) Is a willful defaulter in accordance with the guidelines Reserve Bank of India issued
under the banking resolution Act, 1949

c) At the time of submission of the resolution plan has an account of CD under control of
person or whom such person is a promoter, classified as non-performing asset as per
guidelines of Reserve bank of India or financial sector regular for the time being in
force and at least a period of 1 year has lapsed from such classification till the date of
commencement of the corporate insolvency resolution process of corporate debtor.

d) Is disqualified to act as a director under the companies act,2013

e) Has been convicted for any offence punishable with imprisonment-

• For two years or more under any act specified under the twelfth schedule or

• For seven year or more under any law for the time being in force

f) Is prohibited by the securities and exchange board of India from trading in securities
or accessing the securities market.

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g) Has been a promoter or management or control of corporate debtor in which a

preferential transaction, or fraudulent transaction has taken place and in respect of
which an order has been made by the adjudicating authority under this code.

h) Has executed a guarantee in the favor of a creditor in respect of a corporate debtor

against which an applicant for insolvency made by such creditor has been admitted
under this code and has been invoked by the creditor and remain unpaid in full or part.

i) Is subject to any disability, corresponding to classes (a) to (h) under any law a
jurisdiction outside India or

j) Has a connected person not eligible under clauses (a)to (j)

From the reading of the section 29A it is clear that merely being a promoter of a person
shall not be held ineligible to be a resolution applicant.
The counsel for the petitioner submits that section 29A (j) disqualifies a person from
submitting the resolution plan if he has a connected person not eligible under section 29A
clauses (a) to (j). The connected person as defined under explanation (i) to section 29A (j)
as follows:

29A (j): has a connected person not eligible under clauses (a) to (j).

Explanation – for the purpose of the clause, the expression connected person means-

i. Any person who is the promoter or in the management applicant; or

ii. Any person who shall be the promoter or management or control of the
business of the corporate debtor during the implementation of resolution plan or

iii. The holding company, subsidiary company, associate company or a related

party of a parson referred in clauses (i) and (ii)

2.5 In the case of BIPINCHANDRA PARSHOTTAMDASH PATEL V. STATE OF

GUJRAT, Supreme Court held that a leading to disqualification should be clear and
unambiguous like a panel law, recourse to strict interpretation must be made for
construction thereof.
2.6 The mere fact that someone was a promoter if a corporate debtor going through the
corporate insolvency resolution process (CIRP) does not make that person ineligible to
submit a resolution plan. The present case is not a case where any of the clauses of
section 29A are being pressed for ineligibility of resolution applicant. The mere fact that
resolution applicant was the promoter shall not make him ineligible to submit resolution
plan.

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2.7 In the case of THAMPANOOR RAVI V. CHARVPARA RAVI, the Supreme Court held
that the conditions for the disqualification cannot be enlarged by imparting it any
meaning other than permissible or a strict interpretation of expression used there in. The
court observed that whenever any disqualification is imposed, the right of a citizen is cut
down and in that event, a narrow interpretation is required.
2.8 The definition of “control” as per section 2 (27) of companies act, 2013 has to be read
along with landmark decision of the Hon’ble supreme court passed in case of ARCELER
MITTAL INDIA PVT LTD V. SATISH KUMAR GUPTA, Hon’ble Supreme Court held
that the control has two elements de facto and de jure. For the purpose of section 29A it
was held that de-jure control i.e. control on paper or through an agreement etc. positive or
proactive control” over actual management or policy decision. In present case, no control
was passed over to the resolution applicant and hence he is not ineligible under section
29A of code.
2.9 In the case of SHREERAM E TECHNO SCHOOL PVT LTD. V. BLANS AND NORE
HOSPITALITY PVT LTD THRAUGH R.P PRABHJIT SINGH SONI 5, The National
company law appellate tribunal (NCLAT) held that IBC has no bar for the “promoter” to
file resolution applicant even otherwise not eligible in terms of section 29A.
2.10 Further, there is nothing on record to suggest that the corporate debtor is an undercharged
insolvent or a willful defaulter is accordance with the guidelines of the reserve Bank of
India, issued under the banking regulations act, 1949 or at the time of submission of the
resolution plan has an account classified as no- performing asset in accordance with the
guidelines of reserve bank of the guidelines of reserve bank of India or that the director or
promoters have imprisonment or is disqualified to act as director under companies act,
2013 or was prohibited by the securities and exchange board of India or made any
preferential transaction, an undervalued transaction or granted extortionate credit
transaction or entered into a fraudulent transaction etc.
2.11 The judgment of the Supreme Court in ARUN KUMAR JAGATRAMKA V. JINDAL
STEEL POWER LTD6, is also relied upon wherein it was held that section 29A of IBC is
a part of resolution mechanism, the object and purpose of which is to prevent a back-door
entry to the promoter who should not be allowed to have advantage of their own wrong.

5
Company Appeal (AT) (Insolvency) No. 936 of 2019
6
Civil Appeal No. 9664 of 2019

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2.12 In the case of RAMKRISHNA FORGINGS LIMITED V. RAVINDRA LOONKAR &

ANR7 the Supreme Court concluded that NCLT while exercising its power under section
31(2) of the code while rejecting the resolution plan must record cogent reasons in its
order the Supreme Court highlighted that the courts and tribunals are duty bounds in
record reasons while passing an order. The Supreme Court stressed that “Reason is the
heartbeat of every conclusion without the some, it becomes lifeless. In the present case,
Adjudicating Authority refused to accept the resolution plan on grounds that resolution
applicant was not eligible under section 29A. The reason of rejection of resolution plan
granted by Adjudicating Authority is not sufficient to held that the resolution applicant
ineligible, as merely being a promoter does not fall under Section 29A of the Code.
2.13 In case of RBL BANK LIMITED V. MBL INFRASTRUCTION LIMITED 8, The
NCLAT held that the resolution applicant, who was also a promoter of the corporate
debtor, doesn’t fall within the ambit of section 29A of IBC. It can be allowed to file its
resolution plan in the CIRP of the corporate debtor.
2.14 The counsel for the petitioner submits that there is no absolutely bar for the resolution
applicant to submit the resolution plan in respect of corporate debtor as the applicant is
not in violating of any of the provisions of the IBC. Hence, the resolution applicant is
eligible to submit resolution plan.

7
CIVIL APPEAL No.1527 OF 2022
8
CP(IB)NO.170/KB/2017

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ISSUE 3. Whether the canvass of moratorium under Section 14 of IBC extends to

execution of international arbitral award, inquiry and proceedings initiated by
Securities Board and Competition Commission?
To understand the extent of moratorium, firstly understand the objective and purpose of
moratorium, in essence the idea of a moratorium has been conceptualized by the legislature to ensure
that the assets of a Corporate Debtor are not diminished/ adversely impacted, and this was sought to
be achieved by imposing a blanket prohibition on institution or continuation of any
proceedings against a Corporate Debtor, i.e., any proceedings which are adversarial to the Corporate
Debtor is only hit by the moratorium.
3.1. Canvas of moratorium under Section 14 of IBC extends to execution of international
arbitral award?
3.1.1. Section 14(1)(a) “The institution of suits or continuation of pending suits or
proceedings against the corporate debtor including execution of any judgment, decree or
order in any court of law, tribunal, arbitration panel or other authority;” clearly states
about the arbitral award.
3.1.2. Section 14 makes clear that the arbitration proceedings must be stayed by an order of
moratorium.9 Commenting on the impact of moratorium on arbitration proceedings, the
Supreme Court of India in Alchemist Asset Reconstruction Co. Ltd. v. Hotel Gaudavan
(P) Ltd.,16 (Alchemist) held that,10 “The mandate of the new Insolvency Code is that the
moment an insolvency petition is admitted, the moratorium that comes into effect under
Section 14(1)(a) expressly interdicts institution or continuation of pending suits or
proceedings against corporate debtors.”
3.1.3. Hon'ble Supreme Court in landmark judgment, P. Mohanraj & Ors. Vs. M/S. Shah
Brothers Ispat Pvt. Ltd.11 held that the expression “or” occurs twice in the first part of
Section 14(1)(a) – first, between the expressions “institution of suits” and “continuation
of pending suits” and second, between the expressions “continuation of pending suits”
and “proceedings against the corporate debtor...”. The sweep of the provision is very
wide indeed as it includes institution, continuation, judgment and execution of suits and
proceedings. An award of an arbitration panel or an order of an authority is also included.

9
Section 14, Insolvency and bankruptcy code 2016
10
(2018) 16 SCC 94....
11
AIR 2021 SUPREME COURT 1308

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3.1.4. In Alchemist Asset Reconstruction Company Limited v M/s Hotel Gaudavan Private
Limited and Others12. The Supreme Court held that the moratorium expressly interdicts
the institution or continuation of any pending proceedings against corporate debtors. It
was also observed that an arbitration instituted after declaration of a moratorium is non-
est in law.
3.1.5. In K.S. Oils Ltd. v/s State Trade Corporation of India (KS Oils) 13. The National Company
Law Appellate Tribunal (NCLAT) relied on Alchemist to observe that arbitral
proceedings pending at the date of commencement of CIRP cannot proceed during the
moratorium. It was clarified that Section 238 of the IBC will prevail over the Arbitration
and Conciliation Act 1996 (Arbitration Act).
3.1.6. It’s humbly submitted that the International arbitral award cannot be awarded during the
moratorium.
3.2. Canvas of moratorium under Section 14 of IBC extends to execution of inquiry and
proceedings of Security Board and Competition Commission.
3.2.1. SEBI Act and IBC both are special laws. Section 28A of the SEBI Act makes SEBI’s
enforcement powers meaningful and empowers it to recover dues from defaulters as well.
[Similar provisions also exist in terms of Section 23JB of the Securities Contracts
(Regulation) Act, 1956 and Section 19-IB of the Depositories Act, 1996.] Introduced in
2014 (with retrospective effect from 2013), this provision contemplates recovery action
being taken by SEBI when a person fails to pay a penalty imposed, fails to pay any dues,
or “fails to comply with any direction of the Board for refund of monies or fails to
comply with a direction of disgorgement order issued under section 11B.” At that stage,
the regulator is empowered to recover proceeds in certain prescribed ways, including:-
 Attachment and sale of the person’s movable and immovable property;
 Attachment of the person’s bank accounts;
3.2.2. Section 28A (3) of the SEBI Act also brandishes a non-obstante clause of its own and
states that “Notwithstanding anything contained in any other law for the time being in
force, the recovery of amounts by a recovery Officer under sub-section (1), pursuant to
non-compliance with any direction issued by the Board under section 11B, shall have
precedence over any other claim against such person.” As we know, Section 11B is
SEBI’s trusted brahmastra, one that empowers it to take any action in the interest of the

12
CIVIL APPEAL NO. 16929 OF 2017
13
[Company Appeal (AT) (Insolvency) No. 284 of 2017]

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market, include disgorge monies, illegal gains as well as seek refunds in investor interest.
Section 28A provides the means through which such recoveries can be effected.
3.2.3. Ms. Anju Agarwal v. Bombay Stock Exchange, the NCLAT decided that section 14 of
the IBC will take precedence over section 28A of the SEBI Act due to the non obstante
clause in section 238 of the IBC.14
3.2.4. The conflict between SEBI’s authority to recover monies, which may include seizing
assets of the corporate debtor, and the moratorium provisions of IBC that directly prohibit
such actions during the pendency of the moratorium, raises the question of which law
(SEBI Act or IBC) should be given priority?
3.2.5. Supreme Court’s views in M/s. Innoventive Industries Limited. vs. ICICI Bank
Limited, where it held that any proceedings under any law against a corporate debtor
cannot be proceeded once moratorium is in effect. In extenso, once a moratorium has
been declared under section 14, SEBI cannot proceed under the SEBI laws against a For
the execution of section 28A of SEBI there should be a direction.15
3.2.6. Karnataka High Court in the matter of Dreams Infra India Private Limited v. The
Competent Authority, Dream Infra India Private Limited & Others, REED 2021 Kant
05520 vide its judgment held that the provisions of the Insolvency and Bankruptcy Code,
2016 have an overriding effect over other laws and the same would prevail in view of
Section 238 of IBC.
3.2.7. In Bhanu Ram and Ors. v. HBN Daries and Allied Ltd16, the SEBI attached the properties
of the corporate debtor. As a result, NCLT overturned the SAT’s judgement and directed
SEBI to release the corporate debtor’s assets.
3.2.8. Upon the declaration of the moratorium, SEBI can only make a claim for the penalty
amount owed to it in accordance with Regulation7 of the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016,
as an operational creditor.

14
Company Appeal (AT) (Insolvency) No. 734 of 2018
15
Subrata roy vs Uoi&oth Air 2014 SC 3241
16
Ca-128(PB) 2018

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4. Whether NFL had fraudulently initiated CIRP and has submitted the Resolution plan
at the behest of a related party in order to seek undue benefit of moratorium in various
proceedings and inquiries pending before other forums?
4.1. The initiation of CIRP by the NFL was not fraudulent?
4.1.1. That is Petitioner (NFL) initiated the CIRP as per the section 10 of IBC. Section10(1)
here a corporate debtor has committed a default, a corporate applicant thereof may file an
application for initiating corporate insolvency resolution process with the Adjudicating
Authority”.
4.1.2. Section 4 of the IBC provides a locus standi to the Corporate Applicant to initiate a CIRP
against itself. The cause of action arises when a Corporate Applicant defaults in
repayment of the debt.
4.1.3. That is there was no intention of corporate debtor to initiate the CIRP process without any
reasonable causes, to protect the interest of company’s debtor, creditor, and investors
CIRP as per the laws had initiated by the corporate debtor under section 10 of IBC.
4.1.4. There are two ways to determine whether or not a company is insolvent.
 Cash flow test- if the company is unable to pay its debt in future within the stipulated
time.
 Balance sheet test- if the company’s liabilities are increasing and becoming smaller than
its assets, also taking into consideration its future liabilities.
4.1.5. That is, if a debtor fails to pay a creditor within the specified time, the IBC allows to
launch the CIRP.
4.1.6. That is, in this situation the NFL itself initiate the CIRP because of the increasing of the
liabilities more than its assets and also future liabilities such as payment to ODFSL and
working capital for upcoming festivals.
4.1.7. It is humbly submitted that the petitioner had followed all the rules and regulation with
the bona fide intention to initiate the CIRP.
4.2. There is no behest of any related party?
4.2.1. IBC prohibits inclusion of related party financial creditors into the COC, therefore
petitioner also does not include any person who is against the prohibited under the IBC.
4.2.2. Section 25(2) (h) requires the resolution professional to invite resolution plans from
prospective resolution applicants who fulfill criteria as laid down by the resolution
professional with the approval of committee of creditors, having regard to the complexity

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and scale of operations of the business of the corporate debtor and such other conditions
as may be specified by the Board.
4.2.3. That is Section 29A is a restrictive provision- any person falling in the negative list is not
eligible to submit a resolution plan.
4.2.4. That is Section 5(24) of IBC defines “Related party”, in relation to a corporate debtor.
(a) A director or partner of the corporate debtor or a relative of a director or partner of the
corporate debtor;
(b) Key managerial personnel of the corporate debtor or a relative of key managerial personnel
of the corporate debtor;
(c) A limited liability partnership or a partnership firm in which a director, partner, or manager
of the corporate debtor or his relative is a partner;
(d) A private company in which a director, partner or manager of the corporate debtor is a
director and holds along with his relatives, more than two per cent. of its share capital;
(e) A public company in which a director, partner or manager of the corporate debtor is a
director and holds along with relatives, more than two per cent. of its paid-up share
capital;
(f) Anybody corporate whose board of directors, managing director or manager, in the ordinary
course of business, acts on the advice, directions or instructions of a director, partner or
manager of the corporate debtor;
(g) Any limited liability partnership or a partnership firm whose partners or employees in the
ordinary course of business, acts on the advice, directions or instructions of a director,
partner or manager of the corporate debtor;
(h) Any person on whose advice, directions or instructions, a director, partner or manager of the
corporate debtor is accustomed to act;
(i) A body corporate which is a holding, subsidiary or an associate company of the corporate
debtor, or a subsidiary of a holding company to which the corporate debtor is a
subsidiary;
(j) Any person who controls more than twenty per cent. of voting rights in the corporate debtor
on account of ownership or a voting agreement;
(k) Any person in whom the corporate debtor controls more than twenty per cent. of voting rights
on account of ownership or a voting agreement;
(l) Any person who can control the composition of the board of directors or corresponding
governing body of the corporate debtor;

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(m) Any person who is associated with the corporate debtor on account of—
(i) Participation in policy making processes of the corporate debtor; or
(ii) Having more than two directors in common between the corporate debtor and such person; or
(iii) Interchange of managerial personnel between the corporate debtor and such person; or
(iv) Provisions of essential technical information to, or from, the corporate debtor;

4.2.5. That is there is nothing in this section which confirms that there is a related party which
influenced the corporate debtor to initiate the CIRP.
4.2.6. The allegation that the applicant is a related party is absolutely worthless allegation.
Section 29a of IBC only defines that who shall not be eligible to submit a resolution plan.
4.2.7. Person not eligible to be resolution applicant. --A person shall not be eligible to submit a
resolution plan, if such person, or any other person acting jointly or in concert with such
person-
has been a promoter or in the management or control of a corporate debtor in which a
preferential transaction, undervalued transaction, extortionate credit transaction or
fraudulent transaction has taken place and in respect of which an order has been made by
the Adjudicating Authority under this Code;
[Provided that this clause shall not apply if a preferential transaction, undervalued transaction,
extortionate credit transaction or fraudulent transaction has taken place prior to the
acquisition of the corporate debtor by the resolution applicant pursuant to a resolution
plan approved under this Code or pursuant to a scheme or plan approved by a financial
sector regulator or a court, and such resolution applicant has not otherwise contributed to
the preferential transaction, undervalued transaction, extortionate credit transaction or
fraudulent transaction;]
4.2.8. In Chitra Sharma vs Union of India, it was stated that Section 29A(g) provides that a
person who is engaged in a fraudulent transaction should not be allowed to bid for
another company as such a person may again engage in fraudulent transactions.
4.2.9. As per the section 29A (g) does not disqualify only because of resolution applicant was
engaged with company a long time ago.
4.2.10. We humbly submitting that there is no fraudulent activity or step has been taken to
initiate the CIRP process.
4.3. There was no undue benefit had been sought of moratorium in various
proceedings and inquiries pending before other forums.

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4.3.1. There is no undue benefit was sought of the moratorium, only the objective of
moratorium was taken into consideration as well as in effect.
4.3.2. In the Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17 states that It can thus be seen
that the primary focus of the legislation is to ensure revival and continuation of the
corporate debtor by protecting the corporate debtor from its own management and from a
corporate death by liquidation. The Code is thus a beneficial legislation which puts the
corporate debtor back on its feet, not being a mere recovery legislation for creditors. The
interests of the corporate debtor have, therefore, been bifurcated and separated from that
of its promoters/those who are in management. Thus, the resolution process is not
adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium
imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving
the assets of the corporate debtor during the resolution process. The timelines within
which the resolution process is to take place again protects the corporate debtor's assets
from further dilution, and also protects all its creditors and workers by seeing that the
resolution process goes 35 through as fast as possible so that another management can,
through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these
ends.”
4.3.3. That is petitioner humbly submitted that all the steps were taken in the process of CIRP
were bona fide and there was no behest of any related party and also there is no undue
benefit was sought of moratorium.

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PRAYER

WHEREOF IN THE LIGHT OF FACTS OF THE CASE ISSUES RAISED, ARGUMENTS

ADVANCED, AND EVIDENCES PRODUCED AND AUTHORITIES CITIED, THIS HON’BLE
COURT MAY BE PLEASED TO:

FIND THAT:
1. The present appeal is maintainable.
2. The Adjudicating Authority was not in the remit to reject the resolution plan approved by
requisite majority i.e. 66%.
3. The resolution applicant is eligible to submit resolution plan under section 29A of IBC.
4. The canvass of moratorium is very well valid under Section 14 of IBC.
5. The CIRP initiated by NFL under Section 10 of IBC is not fraudulent.

AND/OR

Pass any other order as it may deem it, in the interest of justice, equity and good conscience.
All of which is most humbly and respectfully submitted.

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