Sicom challenges NCLT decision to dismiss Alok Industries’ liquidation

Sicom Ltd, a financial creditor to Alok Industries has challenged the decision of the NCLT to retrospectively apply the Insolvency and Bankruptcy Ordinance, 2018..An appeal has been filed at the NCLAT..Alok Industries is one of the twelve cases in RBI’s list which were referred to the NCLT for insolvency proceedings. By the end of the insolvency resolution period, Alok Industries received just one plan, from a consortium of Reliance Industries and JM Financial ARC. This plan, however, was only able to gather around 70% vote of the Committee of Creditors, just 5% short of the statutory 75%. The resolution professional for Alok Industries, accordingly, applied for liquidation..While the liquidation application was pending at the NCLT, the Ordinance was promulgated, which lowered the CoC approval to 66%. As a result of this, the NCLT called for a fresh round of voting and the CoC this time voted with 72% majority. The NCLT then dismissed the liquidation application and asked the resolution professional to submit the resolution application..Sicom Ltd, a part of the dissenting financial creditors, has now opposed this decision of the NCLT to dismiss the liquidation application for applying the Ordinance retrospectively. It is being argued that such retrospective application is against well-settled principles of law; that a legislation is deemed to be prospective unless made retrospective, either expressly or by necessary intention..The NCLAT has not stayed the proceedings so far and has also allowed the resolution professional to submit the resolution plan for approval to NCLT. It has also said that any decision of the NCLT, will be subject to the outcome of the appeal..Sicom is being represented by Advocate Ankur Kashyap.