Resolution winner is bound by plan, SC rules in Metalyst Forgings case

Mumbai: The resolution plan approved by the committee of creditors for an Amtek Auto subsidiary will be binding on the winning bidder that wanted to withdraw, India's apex court has reiterated in its latest ruling on the Arvind Dham-promoted insolvent company.

The Supreme Court overturned orders from a bankruptcy court and an appellate tribunal allowing the successful resolution applicant, Deccan Value Investors, to withdraw a ₹1,500-crore resolution plan for Metalyst Forgings over allegations the resolution professional had failed to provide information critical to decision-making.

After the order, lenders put on hold a Swiss challenge auction (originally scheduled on March 15) of Metalyst Forging triggered by an offer from the National Asset Reconstruction Company of India (NARCL). Its ₹510 crore offer to lenders to acquire ₹3,338.5 crore debt of the auto component maker is less than half of what Deccan Value had proposed.


In 2021, the Supreme Court passed a landmark order in the Ebix Singapore versus Committee of Creditors (CoC) case wherein it ordered that the winning bidder cannot modify or withdraw a plan approved by a CoC.

Deccan Value appealed that it wanted to withdraw the proposal, claiming discrepancies between the information shared by the RP and what existed on the ground. Deccan Value claims that EY-backed RP Dinkar Venkatasubramanian withheld critical information. The RP has denied these charges.

Rejecting Deccan Value's appeal to withdraw the plan, the two-member bench comprising Sanjiv Khanna and Dipankar Datta said, "This is not a case where misinformation or wrong information was given to the resolution applicants."

The apex court noted that lay persons do not prepare and submit resolution plans. It said that the plans are submitted after the financial statements are examined by domain experts, who scan, and evaluate the material as available for its usefulness, with caution and scepticism.

"Inadequacies and paltriness of data are accounted for and chronicled for valuations and the risk involved. It is strange to argue that the superspecialists and financial experts were gullible and misunderstood the details, figures or data. The assumption is that the resolution applicant would submit the revival/resolution plan specifying the monetary amount and other obligations after an in-depth analysis of the fiscal and commercial viability of the corporate debtor," the order said.

"Pointing out the ambiguities or lack of specific details or data, post acceptance of the resolution plan by the CoC, should be rejected, except in an egregious case where data and facts are fudged or concealed. Absence or ambiguity of details and particulars should put the parties to caution, and it is for them to ascertain details and exercise discretion to submit or not submit a resolution plan," it added.

The court directed parties to be present before NCLT on April 9 for further hearing.