6TH ARUN JAITLEY INTERNATIONAL INSOLVENCY AND BANKRUPTCY MOOT

COMPETITION, 2023

TEAM CODE: 203

6TH ARUN JAITLEY INTERNATIONAL INSOLVENCY AND BANKRUPTCY MOOT

COMPETITION, 2023

IN THE MATTER OF

FAIRDEAL INDUSTRIES LIMITED, CORPORATE DEBTOR

WRITTEN SUBMISSION ON BEHALF OF FAIRDEAL GROUP COMMITTEE OF

CREDITORS, RESOLUTION PROFESSIONAL, AMAR DEV AND FGE

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS………………………………………………………………….V

INDEX OF AUTHORITIES……………………………………………………………..VIII

STATEMENT OF FACTS……………………………………………………………....XII

ISSUES RAISED……………………………………………………………………..…..XIV

SUMMARY OF ARGUMENTS………………………………………………………..XV

ARGUMENTS ADVANCED………………………………………………………………1

PART A……………………………………………………………………………………….1

ISSUE 1: WHETHER THE NCLT WRONGFULLY REJECTED THE APPLICATION

OF MULDOWNY………………………………………………..1

[1.1] That the COMI of the corporate debtor lies in India……………..1

[1.1.1] Central administration of the corporate debtor takes place in India..1

[1.2] That English proceedings can at most be classified as foreign non main
proceeding………………………………………………………………………2

ISSUE 2: WHETHER THE INSOLVENCY PROCEEDINGS OF FIL AND FGE CAN BE

CONSOLIDATED…………………………………………………………………………..3

[2.1] That the companies are inextricably intertwined, interdependent and

interlinked…………………………………………………………………..3

[2.1.1] Common Directors and Common Control…………………4

[2.1.2] Common interest and ownership between the corporate debtors……4

[2.1.3] Operational, Financial and Existential interdependence……………4

[2.2] That consolidation is essential for achieving maximization of value of

assets………………………………………………………………………..5

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[2.2.1] Corporate debtors will get lesser value if consolidation is not done….5

[2.2.2] Possibility of companies going into liquidation will increase if the

consolidation is not done…………………………………………………..6

[2.3] That the lenders treated all the companies as a single economic entity………6

[2.4] That consolidation will increase the efficiency of the insolvency resolution
process……………………………………………………………………………..7

ISSUE 3: WHETHER THE GROUP STRATEGY/ RESOLUTION PLAN APPROVED

BY THE COC MEETS THE REQUIREMENTS OF IBC?...........................................8

[3.1] That the resolution plan adheres to the object and provisions of the IBC code
and other subsequent regulations……………………………………………..8

[3.2] That the operational creditors inclusion in the selection and discussion process
of RP is not viable ……………………………………9

[3.3] That the commercial wisdom of the CoC is not bound to be challenged….10

[3.4] That equitable considerations cannot influence the approval of the resolution
plan, once the same has been approved by the CoC……………10

ISSUE 4: CHALLENGE BY THE WORKMEN AND EMPLOYEES BEFORE THE

NCLAT……………………………………………………………………………………..11

[4.1] That the transfer of properties to Fateh Chand Trust and Quess Holdings LLP
constitutes preferential transaction and wrongful trading…………..11

[4.1.1] Quess holdings LLP is deemed to be guarantor of the FIL….11

[4.1.2] The transactions constitutes wrongful trading………….12

[4.2] That the successful resolution applicant cannot be the sole beneficiary in the
avoidance application ………………………………………………………………12

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ISSUE 5: WHETHER THE SUIT FILED BY THE BARCLAYS BANK AGAINST

GUARANTOR AMAR DEV IN BOMBAY HIGH COURT IS MAINTAINABLE?...13

[5.1] Security interest cannot be enforced by Barclays bank after the approval of the
resolution plan of FGE……………………………………………………..13

[5.2] Security action cannot be enforced on CD assets as the ownership of the

company was transferred to the resolution applicant……………………..14

PRAYER…………………………………………………………………………………15

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LIST OF ABBREVIATIONS

SYMBOLS MEANING

& And

$ Dollar

% Percent

ABBREVIATIONS EXPANSIONS

AA Adjudicating Authority

AIR All India Reporter

BLRC Banking Law Reforms Committee

CBIR Cross Border Insolvency Process

CD Corporate Debtor

CIRP Corporate Insolvency Resolution Process

Civ. Civil

Co. Company

CoC Committee of Creditors

Corp Corporation

COMI Centre of Main Interest

CPC Civil Procedure Code, 1908

Ed. Edition

EU European Union

EWCA England and Wales Court of Appeal

FC Financial Creditors

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FGE Fairdeal Global Enterprises PLC

FIL Fairdeal Industries Limited

HC High Court

Hon’ble Honourable

IBBI Insolvency and Bankruptcy Board of India

IBC Insolvency and Bankruptcy Code of India,

2016
ILC Insolvency Law Committee on Cross Border

JV Joint Venture

LLP Limited Liability Partnership

Ltd. Limited

MLCBI Model Law on Cross- Border Insolvency

MoU Memorandum of Understanding

NCLAT National Company Law Appellate Tribunal

NCLT National Company Law Tribunal

NPA Non- Performing Assets

OC Operational creditors

Ors. Others

p. Page

Para Paragraph

PB Principal Bench

PPIRP Pre-Package Insolvency Resolution Process

Pvt. Private

Reg Regulations

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RP Resolution Applicant

SBI State Bank of India

SRA Successful Resolution Applicant

UK United Kingdom

UNCITRAL United Nations Committee on International

Trade Law
UOI Union of India

v. Versus

US United States

WOS Wholly Owned Subsidiary

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INDEX OF AUTHORITIES

List of Cases
1. Adams v. Cape Industries [1990] Ch 433, 459 (Scott J).
2. Adams v. National Bank of Greece SA, [1961] AC 255.
3. Akai Pty Ltd v People’s Insurance Co Ltd [1998] 1 Lloyd’s Rep 90, 96-97 (Thomas J)
4. Antony Gibbs & Sons v Société Industrielle et Commerciale des Métaux, (1890) 25 QBD
399, 405 (Gibbs).
5. Anuj Jain v. Axis Bank, 2019 SCC Online SC 1775.
6. Atlas Bulk Shipping case, Larsen v Navios International [2011] EWHC 878 (Ch), [2012]
1 BCLC 151 [23].
7. AWB Geneva SA v North America Steamship Ltd, 2007 EWHC 1167 (Comm).
8. Bakhshiyeva ex rel. Int'l Bank of Azerbaijan v. Sberbank of Russia [2018], EWCA (Ch)
59.
9. Bakshiyeva v Sverbank of Russia, (2018) EWCA Civ 2802.
10. Bank of Baroda v. Mandhana Industries Ltd., 2017 SCC OnLine NCLT 11201.
11. Bhaskara Agro Agencies v. Super Agri Seeds Pvt. Ltd., 2018 SCC OnLine NCLAT 340.
12. Binani Industries Limited v Bank of Baroda & Anr, CA(AT)(Insolvency) No 82 of 2018.
13. Committee of Creditors of Essar Steel India Ltd v. Satish Kumar Gupta & Ors, (2020) 8
SCC 531.
14. Edelweiss Asset Reconstruction Company Limited v. Sachet Infrastructure Pvt. Ltd. &
Ors., 2019 SCC OnLine NCLAT 592.
15. Essar Steel (India) Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC
531.
16. Fibria Celulose S/A v. Pan Ocean Co. Ltd., (2014) EWHC 2124.
17. Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021)
9 SCC 657.
18. Global Distressed Alpha Fund 1 Ltd. P'ship v. PT Bakrie Investindo, (2011) EWCA
(Comm) 256 [2] (Eng.).
19. Heritable Bank plc v. Winding-Up Board of Landsbanki Islands hf
MANU/UKSC/0062/2013.

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20. In re Bank of Credit and Commerce International SA (No.10) [1997] Ch 213.

21. In re Eurofood IFSC Ltd, (2006).
22. In re Kaupthing Singer and Friedlander Limited, (2011) UKSC 48 (UK).
23. In re OJSC International Bank of Azerbaijan, Bakhshiyeva v. Sberbank of Russia et al
[2018] EWHC 792.
24. In Re Vecco Const, Industries, Inc., 4 B.R. 407 (Bank E.D. Va 1980).
25. Indian Oil Corporation Limited v. EPC Constructions India Limited, 2019 SCC OnLine
NCLT 583.
26. Innoventive Industries Ltd. Vs. ICICI Bank and Ors, (2018) 1 SCC.
27. Interedil Srl v. Fallimento Interedil Srl, (2012) Bus LR 1582.
28. K Sashidhar vs India Overseas Bank (2019) 12 SCC 150.
29. Maharashtra Seamless Limited v. Padmanabhan Venkatesh, (2020) 11 SCC 467.
30. Murphy v. Town of Harrison (In re Murphy), 331 B.R. 107 (Bankr. S.D.N.Y. 2005).
31. National Bank of Greece and Athens SA v Metliss, (1958) AC 509.
32. New Cap Reinsurance Corpn Ltd v Grant [2011] EWCA (Civ) 971 (Eng.).
33. New Zealand Loan and Mercantile Agency Co v Morrison (1898) AC 349; Re Indah Kiat
International Finance Company BV (2016) BCC 418.
34. Pratap Technocrats (P) Ltd. v. Monitoring Committee of Reliance Infratel Limited, 2021
SCC OnLine SC 661.
35. Re Prosafe SE; Chang Chin Fen v Cosco Shipping (Qidong) Offshore Ltd., (2021) CSOH
94.
36. Re T&N Ltd [2005] Pens LR 1.
37. Renaissance Steel India Pvt Ltd and Ors v Electrosteels Steel India Ltd. and Ors, (2018)
146CLA216.
38. Rubin v. Eurofinance, S.A., (2012) UKSC 46, (2013) 1 AC 236.
39. SBI v. Videocon, 2019 SCC OnLine NCLT 745.
40. Smith v. Buchanan (1800) 1 East 6.
41. Standard Chartered Bank and Ors v Satish Kumar Gupta and Ors, (2019) 154SCL584.
42. State of W.B. vs. Anwar Ali Sarkar, AIR 1952 SC 75.
43. Swiss Ribbons Pvt Ltd & Anr v Union of India & Ors., (2019) 4 SCC 17.

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44. The Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v.
Olympic Airlines SA, (2015) UKSC 27.
45. Venugopal Dhoot v. State Bank of India & Ors, CA- 1022(PB)/2018- decision dated
24.10.2018.
46. Venus Recruiters Private Ltd. V. Union of India, 2020 SCC OnLine Del 1479.
47. Young v. Anglo American South African Ltd. & Ors., [2014] EWCA Civ 1130 (UK).

Reports and Guidelines

1. IBBI, Report of The Working Group on Group Insolvency (2019).
2. Ministry of Corporate Affairs Government of India, Report of The Insolvency Law
Committee, February 2020.
3. UNCITRAL Legislative Guide on insolvency law Part 3
4. UNCITRAL, Model Law on Cross-Border Insolvency (1997) with Guide to Enactment
and Interpretation (2013)
5. United Nations Commission on International Trade Law, UNCITRAL Legislative Guide
on Insolvency Law Part three: Treatment of enterprise groups in insolvency, 2012.
Journals/Articles
1. Amy Edwards, Effect of Foreign Insolvency on English Law Governed Guarantee,
ALLEN & OVERY (2011).
2. Cross-Border Restructuring Conundrum: The Current Position For Restructuring
Professionals Following The OJSC International Bank Of Azerbaijan, NORTON ROSE
FULBRIGHT, (Oct. 23, 2018).
3. Dhananjay Kumar, Indian Insolvency Regime without Cross-border Recognition – A
Task Half Done?, CYRIL AMARCHAND MANGALDAS BLOG.
4. Henry Philips, Artificial Intelligence in English Law, SOUTH SQUARE (2019).
5. IBBI, Discussion Paper on “Strengthening Regulatory Framework of Liquidation
Process”.
6. IBBI, Discussion paper on Code of Conduct of Committee of Creditors.
7. James Brady, Investor Protections in England: The Non-Recognition of the Foreign
Discharge of English Law-Governed Deb, EMRJ, (2018).

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8. James Roome, Tom Bannister, Emma Simmonds and Lauren Pflueger, Akin Gump LLP,
Restructuring and insolvency in the UK (England & Wales): overview.
9. Simon Camilleri and Fred Hobson , Foreign restructurings and English law debts: the
limits to cross-border assistance, Butterworths Journal of International Banking and
Financial Law, 167, (2003).
10. Stephan Madaus, The Rule in Gibbs, or How to Protect Local Debt from a Foreign
Discharge, OXFORD BUSINESS LAW BLOG (2018).

Books
1. Ashish Makhija, Insolvency and Bankruptcy Code of India, Part II, p 1089,1090.
2. Dicey and Morris, comment following rule 172 (12th edn).
3. Kristin Van Zwieten, Goode on Principles of Corporate Insolvency Law (5th edn, Sweet
and Maxwell 2018) P. 616.
4. Sumant Batra, Corporate Insolvency: Law and Practice, Chapter 33, pg. 540.

Statutes
1. The Companies Act, 2013.
2. Insolvency and Bankruptcy Code, 2016.
3. Indian Contract Act, 1872.
4. Constitution of India, 1956.
5. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate
Persons) Regulations, 2016.
6. Cross Border Insolvency Regulations, 2006.
7. UNCITRAL Legislative Guide on Insolvency Law (2005).
8. UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and
Interpretation (2012).
9. UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and
Interpretation (2014).

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STATEMENT OF FACTS

Background

FIL- Founded in 1956 by Mr. Fateh Chand, it has a network of diverse business interests spanning
across Cement, Aluminium foils, iron ore, coal, and retail, amongst others. After Fateh Chand’s
demise, his son, Mr. Amar Dev found tremendous support and assistance in his son and daughter,
Mr. Benny and Ms. Babli. Mr. Amar Dev was able to establish and run FIL’s businesses with a
formidable reputation and soon found a place in the list of the top conglomerates in the country.

Vijaya Cement- A WOS of FIL, a prominent cement manufacturer, having its registered office in
Vijayavada with plants at Vijayavada (Andhra Pradesh) and Malaysia.

Hafnium Ltd.- A WOS of FIL, founded in 2008, it is into business of Aluminium foils and retail.
Hafnium raised approximately INR 20,000 crore from the consortium of 6 lenders, led by Axis
Bank, in the form of term loans to finance its project activities in setting up the business. Due to
limited assets of FHL, lenders were provided corporate guarantees by FIL and personal guarantee
by Mr. Amar Dev.

FGE- It was incorporated in UK in 2011, the entire retail and fashion business of the Fairdeal
group in Europe was housed in FGE. Between 2011 and 2019, FGE raised financing to the tune of
GBP One billion (approx. Rs. 10,000 crore) from various banks in Europe led by Barclays. The
securities for the said financing were the Pledge over the shareholding of Quess Holdings LLP in
FGE and the floating charge created in favour of debenture holders over the undertaking of FGE
in UK.

HOLDING STRUCTURE OF FAIRDEAL GROUP

The entire operations of Fairdeal group are controlled by the Promoter family from their corporate
offices corporate offices headquartered at Pune. A core group of senior managers assisted the
family in controlling the operations. All family members are the board members of FIL. Mr. Benny
and Ms. Babli are also directors in Hafnium and FGE respectively, among other directors in each
company. Fateh Chand Trust holds 55% shares in FIL and Ms. Ayesha is the trustee of the said
trust. The beneficiaries of the trust are Quest Holdings LLP that has Mr. Amar Dev, Mr. Benny

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Dev and Ms. Babli Dev, as partners with their respective partnership shares being 51%, 24.5% and
24.5%. In FGE, Quest Holdings LLP is the 99.99% shareholder.

FACTORS LEADING TO THE INITIATION OF CIRP OF FAIRDEAL GROUP

The onset of Covid-19 Pandemic in January 2020 caused a major economic crisis resulting in a
massive decrease in the demand and production related issues, which led to a huge loss of business
for FIL. Post the commencement of CIRP of FIL, FGE also started to default on their repayment
obligations to their respective lenders. FIL’s loan accounts being in India became overdue for more
than 90 days, after which they were classified as NPA as per the extant RBI guidelines.

APPLICATIONS FILED

Against FGE and Amar Dev: Post the defaults in repayment, European lenders of FGE initiated
CIRP under UK law. Mr. Muldowny, the IA, filed for the recognition of the English proceedings
of FGE at NCLT Delhi. This application was disallowed as the NCLT felt that the British action
did not qualify as an ‘insolvency proceeding’. This decision was appealed in the NCLAT.

Against FIL: Lenders of FIL initiated CIRP under S. 7 of IBC before the NCLT PB. Upon its
admission, Karan Nath was appointed as IRP, who was later confirmed as RP. He, having
concluded the forensic audit of FIL, has also filed an application under S. 43 and 66 of IBC for
avoidance actions and wrongful trading with respect to properties in name of Quess Holdings LLP,
which seem to have been acquired via routing the funds from FIL, Hafnium.

Against Hafnium: Axis Bank, as lead consortium banker, filed a petition under Section 7 of the
I&B Code, 2016, to initiate CIRP of Hafnium. Mr. Milan was appointed as the IRP, who was
confirmed as the RP at the Committee of Creditors meeting. Milan, filed an application, at the
Adjudicatory Authority at Indore, for consolidation of the insolvency proceedings to be conducted
as a group for efficient resolution, value maximization.

Against CoC by Fidelities Co. (SRA) - Fidelities Co. filed application to become a party in the
avoidance applications that had already been filed by Mr. Karan Nath and claimed as the sole
beneficiary.

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ISSUES RAISED

PART-A

ISSUE 1: Whether the NCLT wrongfully rejected the application of Muldowny? [Parties:
Muldowny V/s CoC/ RP, at NCLAT]

ISSUE 2: Whether the consolidation of insolvency proceedings of FIL, Hafnium and FGE is
legally valid? [Muldowny V/s CoC (of all companies) and RP & CoC of Hafnium at NCLAT].

ISSUE 3: Whether the group strategy/ Resolution Plan approved by the CoC meets the
requirements of IBC? [Workmen and Employees vs RP AND Muldowny vs RP].

ISSUE 4: Whether the order passed by the Ld. Adjudicating Authority on avoidance applications
is sustainable filed under S.43 and 66 of IBC? [Parties: OC, Promotor and SRA vs CoC,
NCLAT].

ISSUE 5: Whether the suit filed by the Barclays Bank against the Guarantor Amar Dev in
Bombay High Court is maintainable?

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SUMMARY OF ARGUMENTS

1. Whether the NCLT wrongfully rejected the application of Muldowny?

It is humbly submitted before this Hon’ble Tribunal that the Hon’ble NCLT has rightfully applied
the provisions of Part Z of the IBC, 2016 because the CoMI of CD lies in India as the primary
operation of the enterprise group and pledged assets were located in India. The central
administration of the corporate debtor also lies in India. Also, the Insolvency Proceedings so
initiated under the U.K. Insolvency Law can only be treated as foreign non main proceedings.

2. Whether the consolidation of insolvency proceedings of FIL, Hafnium and FGE is

legally valid?

It is humbly submitted that the Hon’ble NCLT Indore had rightly consolidated all the insolvency
proceedings with respect to the FIL, Hafnium and FGE, due to the seemingly inter-dependencies
between businesses, into one consolidated proceeding. The decision of the Hon’ble NCLT Bench
must be upheld and the insolvency proceedings must be consolidated because the companies are
inextricably intertwined, interdependent and interlinked with each other, and that can be observed
from, the Common Control and Common directors, the Shareholding Pattern clearly shows unity
of interest and ownership between the Corporate Debtors and, operational, financial and existential
interdependence. Consolidation is essential for achieving maximization of value of assets. The
lenders treated all the companies as a single economic entity, and consolidation will increase the
efficiency of the insolvency resolution process.

3. Whether the Group Strategy/Resolution Plan approved by the CoC meets the
requirements of IBC?

It is humbly submitted that the Resolution Plan as approved by the COC meets the requirements
of IBC because it adhered to the object and provisions of the IBC Code. The operational creditors’
contention for inclusion in the selection and discussion process of the resolution plan was not
feasible as it would have delayed the resolution process considerably. Also, the resolution plan
had already been approved by the COC whose commercial wisdom is not bound to be challenged
and the equitable considerations cannot influence the approval of the Resolution Plan, once the
same has been approved by the CoC.

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4. Whether the order passed by Ld. Adjudicating Authority on avoidance applications

is sustainable filed under S.43 and 66 of IBC?

It is humbly submitted on behalf of respondents that the decision of the ld. Adjudicatory authority
in favour of financial creditors is totally sustainable under the law.It is further submitted by the
CoC that the various transactions related to properties in the name of Quess Holdings and Fateh
Chand Trust are preferential transaction and liable to adjudication because Quess Holdings is
deemed to be a guarantor of FIL and the transactions constitute part of wrongful trading. Secondly,
it is submitted that the sole objective of identifying suspicious transactions is to maximize the pool
asset of the creditors. This is one of the main objectives of the Insolvency and Bankruptcy code.
Hence, even after the approval of resolution plan, the benefits arising out from the avoidance
transactions must go to the financial creditors and not the successful resolution applicant.
Therefore, the SRA cannot be considered as sole beneficiary in the avoidance transactions.

5. Whether the suit filed by the Barclays Bank against Guarantor Amar Dev in Bombay
High Court is maintainable?

It is humbly submitted before the hon’ble court that the court proceedings initiated by the Barclays
Bank and European lenders to enforce security interest should be dismissed by the hon’ble court
as firstly, a Security interest cannot be enforced by Barclays Bank after the approval of the
resolution plan of FGE, secondly, Security action cannot be enforced on FGE’s assets as the
ownership of the company was transferred to the SRA.

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ARGUMENTS ADVANCED

PART- A

ISSUE 1: WHETHER THE NCLT WRONGFULLY REJECTED THE APPLICATION OF

MULDOWNY? [PARTIES: MULDOWNY V/s CoC/ RP, AT NCLAT]

1. It is humbly submitted before this Hon’ble Tribunal that the Hon’ble NCLT has rightfully
applied the provisions of Part Z of the IBC, 2016, while passing the order dated 25.02.2022. The
said order does not warrant any modification/interference by this Hon’ble Tribunal and the
Insolvency proceedings initiated in India ought to be recognized as the foreign ‘main’ proceedings,
on the grounds that firstly the CoMI of the CD lies in India [1.1] and secondly the English
proceedings can at most be classified as foreign non-main proceedings [1.2].

[1.1] That the CoMI of the corporate debtor lies in India.

2. Part Z of the code provides that for a foreign proceeding to be classified as the foreign main
proceedings, there is a rebuttable presumption in favor of the place of the CD’s register office, but
a deviation from such presumption can be made in case the central administration of the CD takes
place India [1.1.1].
[1.1.1] Central administration of the CD takes place in India.
3. It is humbly submitted that the CoMI of a CD ought to correspond with the place where the
debtor conducts the administration of his interests on a regular basis and in a manner which is
ascertainable by third parties. 1 The central administration of the CD has to be determined by use
of factors which are both objective and ascertainable by third parties enabling such third party to
established that an actual situation exists which is different from that which locating it at that
registered office. Despite being incorporated in the UK the management of CD was effectively
done at New-Delhi2 by the promoter family. A group of Senior Managers assisted the family in
overseeing and controlling the entire operations of the group. This core group led by the Promoter
family would, in turn, assist the Board of Directors and senior management of its group companies
in setting targets and goals and providing assistance in implementing short-term as well as long

1
In re Eurofood IFSC Ltd, [2006] Ch 508.
2
Moot Proposition, para 5.
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term plans.
4. Moreover, CoMI is the place of central administration where the senior management takes the
decisions which are essential for the operations of the company. 3 In the present case FGE is the
part of Fairdeal group which is entirely controlled and operated by the promoter family which was
taking the main decisions from there corporate offices headquartered at Pune, also the CD also
operates a garments manufacturing unit at Gandhi Nagar, New Delhi along with an office, which
shows that there are existing objective factors to determine the CoMI in India. 4Also, in the present
case it could be objectively ascertained by the creditors that the CoMI of the CD lies in India,
because primary operations of the enterprise group were located in India, and also the pledged
assets were located in India.5 Therefore it can be reasonably be concluded that the CoMI of the
FGE lies in India as it is the place of central administration of FGE.
[1.2] That english proceedings can at most be classified as foreign non-main proceedings.
5. A “foreign non-main proceeding” means a foreign proceeding, other than a foreign main
proceeding, taking place in a country where the corporate debtor has an establishment.6 It is
submitted that the insolvency proceeding so initiated under the UK Insolvency Law regards, FGE,
can only be treated as foreign non main proceedings. The CD though incorporated in the UK is
only an establishment in the UK jurisdiction, wherein, the CD carries out (i) “economic”, (ii) “non-
transitory”, activity (iii) carried on from a “place of operations”, and (iv) using the debtor’s assets
and human agents.7 Thus, satisfies the criterion for being called an establishment.
6. The interests and the authority of a representative of a foreign non-main proceeding are typically
narrower than the interests and the authority of a representative of a foreign main proceeding, who
normally seeks to gain control over all assets of the insolvent debtor. 8 Moreover, (a) the relief
granted in a foreign non-main proceeding should be limited to assets that are to be administered in
that non-main proceeding, and (b) that, if the foreign representative seeks information concerning
the debtor’s assets or affairs, the relief must concern information required in that non-main
proceeding. Relief if provided should not give unbridled powers to the foreign representative and

3
Young v. Anglo American South African Ltd. & Ors., [2014] EWCA Civ 1130 (UK).
4
Interedil Srl v. Fallimento Interedil Srl, [2012] Bus LR 1582.
5
Moot Proposition, para 4.
6
Clause 2(f) of Part Z.
7
The Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v. Olympic Airlines SA, [2015]
UKSC 27.
8
Paragraph 3, UNCITRAL, Model Law on Cross-Border Insolvency.
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such relief also should not interfere with the administration of another insolvency proceeding, in
particular the main proceeding. 9
ISSUE 2: WHETHER THE CONSOLIDATION OF ISOLVENCY PROCEEDINGS OF
FIL, HAFNIUM AND FGE IS LEGALLY VALID?

7. By an order of consolidation, the separate proceedings merge into a single proceeding as well
as merging all assets and liabilities. The need for substantive consolidation is a direct result of
proliferation of an entity.10 The Hon’ble NCLT Indore had rightly consolidated all the insolvency
proceedings with respect to the FIL, Hafnium and FGE, due to the seemingly inter-dependencies
between businesses, into one consolidated proceeding 11 which is being challenged by the appellant
in the present matter. The Respondents humbly submits that the decision of Hon’ble NCLT Bench
must be upheld and the insolvency proceedings must be consolidated on the grounds that firstly,
the companies are inextricably intertwined, interdependent and interlinked [2.1], secondly,
consolidation is essential for achieving maximization of value of assets [2.2], thirdly, the lenders
treated all the companies as a single economic entity [2.3] and lastly, consolidation will increase
the efficiency of insolvency resolution process [2.4].
[2.1] That the Companies are inextricably intertwined, interdependent and interlinked
8. The NCLT, at several instances, has recognized the principle of “substantial consolidation”. The
courts in cases of subsidiaries under one corporate umbrella have opted for a more liberal approach
in allowing consolidation of proceedings. 12 In the landmark case of SBI v. Videocon, it was held
that consolidation becomes necessary when “business operations are so dove-tailed that their
management, deployment of staff, production of goods, distribution system, arrangement of funds,
loan facilities etc. are so intricately interlinked that segregation may result in an unviable
solution”13. The hon’ble tribunal also laid out certain parameters presence of one or more of which
would be considered for “substantive consolidation”. 14
9. In the present matter, the business activities of FIL, Hafnium and FGE are highly inter dependent
and interlinked with each other, such that segregation may result in an unviable solution. This can

9
Ibid.
10
Food Fair Inc. Debtor.
11
Moot Prposition, Para 20.
12
In Re Vecco Const, Industries, Inc., 4 B.R. 407 (Bank E.D. Va 1980).
13
SBI v. Videocon 2018 SCC OnLine NCLT 13182.
14
Ibid.
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be observed from firstly, the Common Control and Common directors [2.1.1], secondly, the
Shareholding Pattern clearly shows unity of interest and ownership between the Corporate Debtors
[2.1.2] and lastly, operational, financial and existential interdependence [2.1.3].
[2.1.1] Common Control and Common Directors
10. The appointment of common directors or officers and the holding of combined board meetings
is an essential element to determine the necessity for consolidation of insolvency proceedings both
under UNCITRAL rules15 and in the domestic judgements16. In the present matter, all the three
companies FIL, Hafnium and FGE of the Fairdeal Group are majorly controlled by the same family
i.e., by Mr. Amar Dev, Mr. Benny Dev and Ms. Babli Dev through a core group of Senior
Management who are led by the same promoter family through their corporate offices in Pune 17.
While all the members of the family are members of the board of FIL, Mr. Benny Dev and Ms.
Babli Dev are also directors in Hafnium and FGE, thereby serving as common directors in all the
three companies.
[2.1.2] Common interest and ownership between the corporate debtors
11. An enterprise group has been loosely defined in Part III of the UNCITRAL Legislative Guide
on Insolvency18 as ‘two or more enterprises that are interconnected by control or significant
ownership’. FGE has Quess Holdings LLP as 99% Shareholder in it 19, which is owned by the
Promoter Family of FIL Group as Mr. Amar Dev, Ms. Benny Dev and Ms. Babli Dev have their
respective partnership share being 51%, 24.5% and 24.5% 20. Hafnium is a wholly owned
subsidiary of FIL21, meaning that FIL has 100% share in it. This co-mingled shareholding pattern
clearly shows that promoter family can be categorized as ‘shadow directors’22 and that there is
unity of interest and ownership between the Corporate Debtors.
[2.1.3] Operational, Financial and Existential Interdependence
12. The FIL, FGE and Hafnium engaged in business activities under the common umbrella of the
‘Fairdeal group’ name, which established an operational interdependence among themselves. They

15
United Nations Commission on International Trade Law, UNCITRAL Legislative Guide on Insolvency Law Part
three: Treatment of enterprise groups in insolvency, 2012.
16
Videocon, Supra note 12.
17
Moot Proposition, Para 5.
18
UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation (2012).
19
Ibid, Para 4.
20
Ibid, Para 1.
21
Ibid, Para 2.
22
The Companies Act, 2013, § 2(60), No. 18, Act of Parliament, 2013 (India).
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also engaged in pooling of human resources and utilized the goodwill of the promoters for market
outreach. The existence of intra-group loans and cross-guarantees on loans is one of the key
determining factor under UNCITRAL rules 23 and Indian judgements24 for substantive
consolidation. FIL provided a major part of security as well as corporate guarantees to the lenders
of FHL as it had limited assets25. FIL had also provided financial assistance to FGE and FHL in
the year 2018 by way of inter-corporate deposits, clearly showing the financial interdependence
between the enterprises.
[2.2] That consolidation is essential for achieving maximization of value of assets
13. It is humbly submitted before this hon’ble tribunal that the preamble of the insolvency and
bankruptcy states the objective of the act which is maximization of value of assets and thus
balancing the interests of all the stakeholders. 26 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. 27 The code is thus a beneficial legislation
which puts the corporate debtor back on its feet not being mere recovery legislation for creditors.28
14. If a substantive consolidation of the Corporate Debtor takes place, the assets of all or a group
of the Corporate Debtors will be able to be offered to a Resolution Applicant under a
comprehensive Resolution Plan. This may result in realization of best value for each of the
Corporate Debtors, which in turn will benefit the stake holders of the Corporate Debtors.29 The
Respondent hereby submits that this object of the code will be defeated in case consolidation does
not take place as firstly, Corporate debtors will get lesser value if consolidation is not done [2.2.1],
and secondly, Possibility of companies going into liquidation will increase if the consolidation is
not done [2.2.2].
[2.2.1] Corporate debtors will get lesser value if consolidation is not done
15. It is believed that if a substantive consolidation of the Corporate Debtor takes place, the assets
of all or a group of the Corporate Debtors will be able to be offered to a Resolution Applicant
under a comprehensive Resolution Plan. This may result in realization of best value for each of

23
UNCITRAL Legislative Guide on insolvency law, Part 3.
24
Videocon, supra note 12.
25
Moot Proposition, Para 3.
26
IBC, 2016, Pmbl., No. 31, Act of Parliament, 2016 (India).
27
Arcelor Mittal (India) (P) ltd. vs Satish Kumar Gupta, (2019) 2 SCC 1.
28
Swiss Ribbons Pvt. Ltd. v. UOI, (2019) 4 SCC 17, p.39.
29
Videocon, supra note 12.
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the Corporate Debtors, which in turn will benefit the stake holders of the Corporate Debtors. It is
humbly submitted that there have been instances at the global level where the consolidation have
been supported and one such e.g. is the US Bankruptcy laws where the substantive consolidation
have been supported.
16. Lack of substantive consolidation may result in lesser value being derived for the Corporate
Debtors which are expected to receive Resolution Plans, thereby traversing the object of the Code
i.e. maximization of the value of the assets of the Corporate Debtor, which is spelled out in the
Preamble30. The potential benefit of the substantive consolidation during CIRP may far outweigh
any potential harm to interested parties.
[2.2.2] Possibility of companies going into liquidation will increase if the consolidation is not
done
17. Consolidation is a measure nothing but for protecting the substantive rights and it can be
questioned only when there is a possibility of any unfair treatment and in determining that there
should be a proper yardstick so that the rights of stakeholders could be measured. Consolidation
becomes necessary where it becomes difficult to segregate between the individual assets and
liabilities because of the interdependencies between various corporate entities. 31 The object of the
Code is resolution and rehabilitation of the Corporate Debtors as going concern as opposed to
liquidation. In the absence of consolidation, companies might not be able to get any resolution plan
such as FHL (as explained previously) and it may result into automatic liquidation for such
Corporate Debtor for which no Resolution Plan is submitted. Thereby, defeating the purpose of
the code of resolution and rehabilitation as opposed to liquidation.
18. Moreover, as per the report by ForensicTech, the future projections of Hafnium appear better
only if it invests further in Aluminium, as the adverse effect of pandemic was decreasing and there
was high probability of increased trade and commerce activities. 32But Hafnium does not have
sufficient leverage to raise financing for the new capital investments33. Therefore, there is a
possibility that it might not get a standalone Resolution Plans unless it is clubbed together and
offered as a group with FIL and FGE.
[2.3] That the lenders treated all the companies as a single economic entity

30
IBC, Pmbl., No. 31, Act of Parliament, 2016 (India).
31
Videocon, supra note 12.
32
Moot Proposition, para 16.
33
Id.
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19. It is humbly submitted before this hon’ble tribunal that the creditors always relied on the group
identity of Fairdeal group while extending credit and treated all the Corporate Debtors as one
‘single economic unit’. This can be observed from the fact that the lenders relied on the group’s
goodwill while extending loans to Hafnium and FHL. Similarly, as explained above they relied on
the personal guarantees of Promoter Family of FIL and relied on the co-mingled shareholding
pattern to extend the loans and always treated them as a single economic unit. It has been
recognized under the UNCITRAL Model Law34 and also, in recent judgement of SBI v.
Videocon35, that when corporate debtors are extended credit as a single economic unit, then to
yield maximum benefit and offset the harm, the consolidation of insolvency proceedings is the
way to proceed.
20. Because of the nature of enterprise groups and the manner in which they operate, there may
be a complex web of financial transactions between group members, and creditors may have
dealt with different members or even with the group as a single economic entity rather than
with members individually. 36 Disentangling the ownership of assets and liabilities and identifying
the creditors of each group member may involve a complex and costly legal inquiry. 37
[2.4] That consolidation will increase the efficiency of the insolvency resolution process
21. IBC aims to maximize the value of assets of corporate persons and balance the interests of
all the stakeholders.38 It is furthermore recognized that separate insolvency proceedings may be a
feasible option where there is a low degree of integration in the group and group members are
relatively independent of each other, but "for many groups, cooperation may be the only way to
reduce the risk of piecemeal insolvency proceedings that have the potential to destroy going
concern value and lead to asset ring-fencing, as well as asset shifting or forum shopping by
debtors".39 In the event wherein the affairs of the individual entities in a group are inextricably
interlinked, the assets as well as liabilities are consolidated to facilitate efficient insolvency
proceedings, in order to prevent conflicting orders and ensure maximization of asset value. 40

34
UNCITRAL Legislative Guide on Insolvency Law on ‘Treatment of enterprise groups in insolvency’.
35
Videocon, supra note 12.
36
UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation (2012), Para
92.
37
Id.
38
Preamble, IBC 2016.
39
UNCITRAL Legislative Guide on Insolvency Law — Part three, 'B. Promoting cross-border cooperation in
enterprise group insolvencies', p. 86, para 7.
40
Videocon, supra note 12.
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Therefore, it is humbly submitted that the consolidation of the concerned proceedings will lead to
value maximization of the assets, thereby benefitting all the stakeholders.
ISSUE 3: WHETHER THE GROUP STRATEGY/ RESOLUTION PLAN APPROVED BY
THE CoC MEETS THE REQUIREMENTS OF IBC?

22. It is humbly submitted that the Resolution Plan as approved by the COC meets the requirements
of IBC because, firstly, it adhered to the object and provisions of the IBC Code, secondly, the
operational creditors’ contention for inclusion in the selection and discussion process of the
resolution plan was not feasible as it would have delayed the resolution process considerably. Also,
the resolution plan had already been approved by the COC whose commercial wisdom is not bound
to be challenged. Lastly, the equitable considerations cannot influence the approval of the
Resolution Plan, once the same has been approved by the CoC.
[3.1] That the resolution Plan adheres to the object and provisions of the IBC Code and
other subsequent regulations.
23. In the present case, the resolution plan of Fidelities Co., as passed by the adjudicating authority
after its approval by the COC, on 10.01.202341 meets the requirements of IBC. The instant
resolution plan meets the requirements of Section 30(2)42 and 29A43 of the Code and Reg. 3744,
38, 38(1A), and 39(4)45 of the CIRP Regulations. It is, therefore, in accordance with the law and,
thus, cannot be challenged by operational creditors. The Hon’ble SC, in the matter of Pratap
Technocrats Limited,46 held that the NCLT and the NCLAT are duty-bound to abide by the
discipline of statutory provisions envisaged under the IBC Code, 2016 and once the requirements
of the IBC have been duly fulfilled, the decisions of the AA are in conformity with the law. Thus,
it can be safely concluded that the RP of Fidelities Co. has been approved by the NCLT only after
its adequate conferment to the statutory provisions of the IBC.
24. Further, once the AA approves the resolution plan, then according to section 31(1) of the Code,
the RP shall be binding on the CD and its employees, members, creditors, guarantors, and other

41
Moot Proposition, para 22 & 23.
42
IBC, 2016, §30(2), No. 31, Act of Parliament, 2016 (India).
43
IBC, 2016, § 29A, No. 31, Act of Parliament, 2016 (India).
44
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations,
2016, Regulation 37.
45
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations,
2016, Regulation 39(4).
46
Pratap Technocrats (P) Ltd. v. Monitoring Committee of Reliance Infratel Limited, 2021 SCC OnLine SC 661.
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stakeholders involved in the resolution process. 47 Therefore, the resolution plan, meeting the
requirements of IBC and as approved by the NCLT cannot be challenged by the operational
creditors as they are bound by the decisions of the CoC and NCLT, due to the binding nature of
the plan, irrespective of their exposure in the company. Thus, the resolution plan meets all the
requirements of the statutory provisions of IBC and is, therefore, binding on all stakeholders
involved in the resolution process.
[3.2] That the Operational Creditor’s inclusion in the selection and discussion process of RP
is not viable.
25. In the present case, the OCs contention for their inclusion in the selection and discussion
process of the RP is not viable and feasible as the same would delay the efficiency and speed
of the entire resolution process. Section 21(2)48 of the IBC, which provides for the composition of
the CoC, states that the CoC shall comprise all the financial creditors of the CD. The composition
of CoC is very strict 49 and thus any inclusion of a third party would go against Section 21 of the
IBC and the intent of the Parliament. It must be noted that there exists reasonable classification
between FCs and OCs in an IRP and there is also a rational nexus behind the non-inclusion of OCs
in the selection and discussion process of RP. 50 This can be corroborated by the fact that FCs are
actively involved in the reorganization of the business of the CD since the main objective of FCs
is to assess the viability and feasibility of CD unlike OCs are only seeking the recovery of their
dues.51
26. In Swiss Ribbons, 52 the SC specifically considered the issue of whether the lack of
representation of the OCs on the CoC was violative of Art. 14 of the Constitution and for this,
relied on the report of the Bankruptcy Law Reforms Committee (hereinafter "BLRC"), and held
that OCs are neither able to decide on matters regarding the insolvency of the entity nor willing to
take the risk of postponing payments for better future prospects for the entity and thus held that
classification between FC and OC neither discriminatory, nor arbitrary, nor violative of article 14
of the Constitution of India’. 53Furthermore, the OCs cannot be included in the selection process of

47
Essar Steel (India) Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531.
48
IBC, 2016, §21 (2), No. 31, Act of Parliament, 2016 (India).
49
Discussion paper on Code of Conduct of Committee of Creditors, https://ibbi.gov.in/Discussionpaper-CIRP-
27Aug2021.pdf.
50
State of W.B. vs. Anwar Ali Sarkar, AIR 1952 SC 75.
51
MINISTRY OF FINANCE, The Report Of The Bankruptcy Law Reforms Committee 29(2015).
52
Swiss Ribbons Pvt Ltd & Anr v Union of India & Ors., (2019) 4 SCC 17.
53
Nikhil Shah, Khushboo Vaish and Anshul Dhanuka, Creditor Rights under IBC, IBBI, 149 (2020),
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CIRP as their voting share is nil and therefore the OCs do not have a say regarding the allowance
or refusal of the resolution plan.
[3.3] That the Commercial Wisdom of the CoC is not bound to be challenged
27. The resolution plan submitted by Fidelities Co. was found suitable by the CoC, whose
commercial wisdom cannot be challenged as the CoC has the technical expertise to judge the
viability and feasibility of a plan. 54 Therefore, the appeal filed by the operational creditors
against the approved RP does not hold ground. The primacy of the commercial wisdom of CoC
had been upheld by the Court in K. Sashidhar55, where the Court had considerably restricted the
scope of judicial scrutiny over a commercial decision taken by the CoC. In this matter, the SC
noted that the legislature, while enacting the IBC, has consciously not provided any ground to
challenge the commercial wisdom of the CoC before the NCLT/NCLAT and that the decision of
CoC's commercial wisdom has been made non-justiciable.
28. The consistent principle of law which has been laid down is that neither the Adjudicating
Authority nor the Appellate Authority can enter into the commercial wisdom underlying the
approval granted by the CoC to the resolution plan. 56 The scope of judicial scrutiny over the
commercial wisdom of the CoC has also been considerably restricted in Essar Steel,57 where the
Court held that the will of the CoC cannot be disregarded. In the present case as well, the
commercial wisdom of the CoC in approving a certain percentage of the operational creditor’s
claim cannot be disregarded by the NCLAT.
[3.4] That equitable considerations cannot influence the approval of the Resolution Plan,
once the same has been approved by the CoC
29. It is humbly submitted before this hon’ble tribunal that in the case of Reliance Infratel58, it was
held that equitable considerations cannot influence the approval of the Resolution Plan, once the
same has been approved by the CoC. In the present case, the resolution plan has been duly
approved by a requisite majority of the CoC in conformity with Section 30(4). Whether or not
some of the financial creditors were required to be excluded from the CoC is of no consequence,

https://vidhilegalpolicy.in/wp-content/uploads/2020/10/2020-10-01-210733-43cms-
9224c9b668aac0d6149a5d866bfb4c79-1.pdf.
54
Bhaskara Agro Agencies v. Super Agri Seeds Pvt. Ltd., 2018 SCC OnLine NCLAT 340.
55
Committee of Creditors of Essar Steel India Ltd v. Satish Kumar Gupta & Ors, (2019) 12 SCC 150.
56
K Sashidhar vs India Overseas Bank (2019) 12 SCC 150.
57
Essar Steel (India) Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531.
58
Pratap Technocrats (P) Ltd. & Ors. v. Monitoring Committee of Reliance Infratel Limited & Anr., (2021)
ibclaw.in 148 SC.
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once the plan is approved by a 100 per cent voting share of the CoC. The jurisdiction of the
adjudicating authority is confined by the provisions of Section 31(1) to determine whether the
requirements of IBC have been fulfilled in the plan as approved by the CoC and it cannot deal with
equitable considerations.
ISSUE 4: WHETHER THE ORDER PASSED BY LD. ADJUDICATING AUTHORITY ON
AVOIDANCE APPLICATIONS IS SUSTAINABLE FILED UNDER S.43 AND 66 OF IBC?

[4.1] That the transfer of properties to Fateh Chand Trust and Quess Holdings LLP
constitutes preferential transaction and wrongful trading

30. As per section 4359 of the Insolvency and Bankruptcy code, any transaction through which the
corporate debtor has tried to give preference to any creditor, guarantor or surety such that to put it
in a beneficial position than what it would have been under the ordinary distribution of assets as
per section 5060 of the code. It is humbly submitted by CoC that the transactions related to various
properties in the name of Quess holdings and Fateh Chand Trust in the present case are preferential
transactions and liable to avoidance adjudication because [4.1.1] Quess holdings is a guarantor of
the FIL. [4.1.2] The transaction constitutes wrongful trading.

[4.1.1] Quess holdings LLP is deemed to be guarantor of the FIL.

31. As per the provisions of section 3(8)61 of the code, a ‘corporate guarantor’ is defined as a
corporate person who is the surety in a contract of guarantee to a corporate debtor. In the present
case, it is clearly stated in the facts of the case that one of the securities for the financing taken by
FGE from various banks in Europe was a pledge over the shareholding of Quess Holdings vide
pledge agreement.62 This implies from these facts that although there is no direct contract of
guarantee between Quess holdings and FIL but Quess holdings is a surety of FGE ltd. which is a
susbsidiary of FIL. This shows that Quess holdings is a surety of FIL and can be taken under
avoidance application. Placing reliance on the decision of NCLT, Mumbai Bench in the matter
of SREI Infrastructure Finance Ltd. v. Sterling International Enterprises Ltd63., held the

59
Insolvency and Bankruptcy code, s. 43
60
Insolvency and Bankruptcy code, s. 50
61
Insolvency and Bankruptcy code, s. 3(8)
62
Moot prop Para 4
63
[2020] 122 taxmann.com 242 (NCLT - Mum.)
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mortgagee of the Corporate Debtor, who had an advanced loan to a third party, in that case, is
given the status of a Financial Creditor of the Corporate Debtor. Hence, it is submitted that the
pledgee, in the present case should also be treated as a Financial Creditor.

[4.1.2] The transactions constitutes wrongful trading.

32. As per the provisions of section 66 64 of the code, if any business of the corporate debtor is to
defraud the creditors then the person associated with the debtor in such business can be made liable
to make such contribution to the assets of corporate debtor as the adjudicatory authority deems fit.
A wrongful trade occurs when corporate debtor engages in transaction “with intent to defraud
creditors of the corporate debtors” or “any fraudulent purpose”. 65 In the present case, the forensic
audit report has found several suspected transaction related to various properties held in the name
of Fateh Chand Trust and Quess Holdings LLP out of the funds of FIL. 66 Since the company has
already failed to discharge its liabilities and has been put towards CIRP, such transfer of properties
to group companies shows the pure intent of defrauding the creditors by reducing the asset
contribution in the insolvency process.

[4.2] That the successful resolution applicant cannot be the sole beneficiary in the avoidance
application

33. It is submitted on behalf of CoC that even after the approval of resolution plan, it is the secured
creditors who are entitled to the benefits of avoidance transactions and the resolution applicant as
corporate debtor in its new avatar. The provisions pertaining to suspicious transactions are
primarily aimed at swelling the asset pool for the creditors. The primary aim of enhancing the
assets of the corporate debtor is for the equitable distribution to the creditors. Also the ending of
CIRP process does not ends the avoidance proceedings as has been clarified by the Insolvency law
Committee by their report of 2022 67. As per Chapter 2 clause 22 of the report, it has been clarified
that by the committee that not allowing the avoidance proceedings to continue will lead to
undesirable outcomes. Hence, allowing it to continue would be more sufficient. It follows that RP

64
Insolvency and Bankruptcy code, s. 66
65
IBC, § 66; Sumant Batra, Corporate Insolvency: Law and Practice, Chapter 33, pg. 540
66
Moot prop Para 19
67
Law Committee, Report of the Insolvency Law Committee (2022)
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and CoC will not be functus officio with respect to adjudication of avoidance applications even
after the approval of resolution plan.

34. Moreover, the recent judgement of Delhi High Court in this regard has cleared all the
ambiguituies regarding these issue pertaining to adjudication of avoidance applications after the
approval of resolution plan. In this case of Tata Steel BSL Ltd. v. Venus Recruiter (P.) Ltd68., it has
been held by the honorable court that “The benefit arising out of the adjudication of the avoidance
application is not for the corporate debtor in its new avatar since it does not continue as a debtor
and has gone through the process of resolution. This amount should be made available to the
creditors who are primarily financial institutions and have taken a haircut in agreeing to accept a
lesser amount than what was due and payable to them.”

35. Also, a Resolution Applicant cannot file an avoidance application under section 43 of the IBC
after his or her Resolution plan has been adopted.69 Since IBC envisages increasing the credit
availability in the country as its main objectives, it is imperative that the benefits out of suspicious
transactions should go in the hands of creditors who have taken a huge haircut in order to complete
the resolution process of the corporate debtor. Henceforth, in the present case also the benefits
arising out of the adjudication of avoidance applications must go to the financial creditors and not
to the successful resolution applicant in its new avatar.

PART- A1

ISSUE 5: WHETHER THE SUIT FILED BY THE BARCLAYS BANK AGAINST

GUARANTOR AMAR DEV IN BOMBAY HIGH COURT IS MAINTAINABLE?
36. It is humbly submitted before the hon’ble court that the court proceedings initiated by the
Barclays Bank and European lenders to enforce security interest should be dismissed by the
hon’ble court as firstly, a Security interest cannot be enforced by Barclays Bank after the approval
of the resolution plan of FGE, secondly, Security action cannot be enforced on FGE’s assets as the
ownership of the company was transferred to the SRA.
[5.1] Security interest cannot be enforced by Barclays Bank after the approval of the
resolution plan of FGE.

68
[2023] 146 taxmann.com 300 (Delhi)
69
Venus Recruiters (P.) Ltd. v. Union of India 2020 SCC OnLine Del 1479; State Bank of India v. Adhunik Steels
Ltd. 2020 SCC Online NCLAT 552.
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37. It is submitted that the resolution plan has been approved by AA for FIL (along with FGE as
consolidated).70 The plan was approved only after it was found suitable by COC. After initiating
the CIRP the IRP constitutes the COC with regard to all the claims that he received from the
financial creditor.71It is submitted that Barclays Bank and other European leaders had an
opportunity to be a part of CIRP by submitting their claims before the Resolution Plan was
accepted by AA but they did not do so. IBC was implemented to achieve the objective of
addressing all claims that the CD faces from in a single umbrella process as it was noticed that
there was extensive litigation causing undue delays resultantly hampering the value
maximization.72 Claims that are not part of the resolution plan do not survive once the resolution
plan gets approved by AA. If the security interest gets enforced it will be derogatory with respect
to the objective that this act tries to achieve. 73
[5.2] Security action cannot be enforced on CD assets as the ownership of the company
was transferred to the Resolution Applicant.
38. It is submitted that after the resolution plan gets approved by the AA, the resolution applicant
whose plan gets approved becomes the successful resolution applicant. 74 Once the plan gets
approved it becomes binding on COC and SRA. It is important here to mention that it becomes
binding on all the stakeholders. In Essar Steel vs. Satish Gupta and Ors,75 Hon’ble SC held that "a
successful resolution applicant cannot suddenly be faced with 'undecided' claims after the
resolution plan submitted by him has been accepted as this would throw into uncertainty amounts
payable by a prospective resolution applicant who successfully takes over the business of the
CD66”. This can be well inferred that when the resolution applicant’s plan becomes successful, he
takes over the business of CD. It has been mentioned that Quess Holdings LLP had a majority
stake over the business of FIL and FGE. 76 The pledge agreement that FGE signed with Barclays
Bank was with regard to the stake that Quess Holding had in FGE. Now the present situation is as
AA has approved the Resolution plan that stake stands to be transferred to the successful resolution
applicant. Hence the hon’ble high court should dismiss the suit.

70
Moot Proposition, para 11.
71
IBC, 2016, §18. (b), No. 31, Act of Parliament, 2016 (India).
72
IBC, 2016, Pmbl., No. 31, Act of Parliament, 2016 (India).
73
Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657.
74
Bank of Baroda v. Mandhana Industries Ltd., 2017 SCC OnLine NCLT 11201.
75
Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531.
76
Moot Proposition, para 1 and 4.
14
Memorial On Behalf of the Respondents
 6TH ARUN JAITLEY INTERNATIONAL INSOLVENCY AND BANKRUPTCY MOOT
COMPETITION, 2023

PRAYER

Wherefore, in the light of the issues raised, cases referred, arguments advanced and authorities
cited, it is most humbly prayed and implored before:

1. The Hon’ble NCLAT that it may be kindly be pleased to:

ON BEHALF OF COC OF FIL GROUP

1. Hold that the hon’ble NCLT rightfully rejected the application.

2. Declare that the Indian Insolvency proceedings as the foreign main proceedings.
3. Hold that the insolvency proceedings of FIL, HAFNIUM and FGE be consolidated.
4. Hold that the approved Resolution Plan is in consonance with the provisions of the code.
5. Dismiss the application of SRA, OC and Promoter.

1. The Hon’ble High Court of Bombay that it may be kindly be pleased to:

ON BEHALF OF AMAR DEV

1. Declare that the suit filed against the guarantor is not maintainable.

And any other relief that this Hon’ble Tribunal/Court may be pleased to grant

All of which is respectfully submitted

Sd/-

Respective Counsels on behalf of FIL Group CoC, Resolution Group, Amar Dev and FGE.

15
Memorial On Behalf of the Respondents