# In the matter of Facor Alloys Limited and Anr. Vs. Mr. Bhuvan Madan Resolution Professional of Ferro Alloys Corporation Limited CA(AT)(Ins)No. 340 of 2020

> NCLAT judgment dated 2020-11-25. Citation: TCN-2020-NCLAT-00034. The case involves two appeals against the Impugned Order dated 30th January 2020, passed by…

- **Court:** NCLAT
- **Order date:** 25 Nov 2020
- **Citation:** TCN-2020-NCLAT-00034
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/facor-alloys-limited-and-anr-vs-mr-bhuvan-madan-resolution-professional-of-ferro-a086828d

## Summary

### Background

The case involves two appeals against the Impugned Order dated 30th January 2020, passed by the Adjudicating Authority/National Company Law Tribunal, Cuttak Bench, Cuttak in Company Petition (IB) No.157/C.T.B./2019. The Adjudicating Authority approved the Resolution Plan filed by Respondent No.3, Sterlite Power Transmission Limited (SPTL). The appeals challenge the approval of the resolution plan, primarily on the grounds that it encompasses assets of third parties (including the Appellants) and not just the Corporate Debtor, violating the I&B Code, 2016. The Appellants also contend that the Resolution Plan does not factor in the value of shares of Facor Power Limited (FPL), a subsidiary and principal borrower, and that the plan extinguishes the bonafide claims of

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## Facts

Facor Alloys Limited and Vineet Infin Private Limited filed appeals against the approval of a resolution plan for Ferro Alloys Corporation Limited (FACL). The resolution plan, approved by the Adjudicating Authority, was filed by Sterlite Power Transmission Limited (SPTL). The Appellants argued that the resolution plan was flawed because it included assets of a third party, Facor Power Limited (FPL), in which the Appellants held shares. They claimed the plan did not properly value FPL's shares and extinguished their claims against FPL. REC Ltd, Sterlite Power Transmission Ltd, and Ferro Alloys Corporation Ltd were respondents in the case. The Appellants contended that the resolution plan discriminated against dissenting financial creditors by offering them less

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## Issues and analysis

### Issue 1: Whether a third party company, i.e. Facor Power Limited (FPL) can be dealt with in a Resolution …

**Ratio:** The shareholding pattern in any company demonstrates the extent of control that a

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**Reasoning:** The court reasoned that the Corporate Debtor holds 86.09% shares in FPL. In terms of

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**Interpretation:** This issue concerns the scope of a resolution plan and whether it can extend to

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**Application:** The court applied this ratio to the facts by noting that the Corporate Debtor

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## Parties

- **Judges:** Jarat Kuma…; Balvinder…; +1 more
- **Appellants:** Facor Alloys…
- **Respondents:** Ferro Alloys…; Mr Bhuvan…

## Timeline

- **2020-01-30 — Impugned…**: The Adjudicating Authority/National Company Law Tribunal, Cuttak Bench, Cuttak passed the…
- **2020-02-02 — Appellant's Alleged…**: The Appellant contends that it became aware of the Resolution Plan on 2nd February 2020…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 30(2) — Submission of resolution plan](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-30)

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