# In the matter of Divya Jyoti Sponge Iron Private Limited I.A.(IB) No. 207, 280 & 1010-KB-2019 in CP (IB) No. 363-KB-2017

> NCLT judgment dated 2022-03-08. Citation: TCN-2022-NCLT-03837. The case involves three I.A.s (I.A. (IB) No. 207/KB/2019, I.A. (IB) No. 280/KB/2019, and I.A.…

- **Court:** NCLT
- **Order date:** 8 Mar 2022
- **Citation:** TCN-2022-NCLT-03837
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/divya-jyoti-sponge-iron-private-limited-iaib-no-207-280-1010-kb-2019-in-cp-ib-no-55e7398b

## Summary

### Background

The case involves three I.A.s (I.A. (IB) No. 207/KB/2019, I.A. (IB) No. 280/KB/2019, and I.A. (IB) No. 1010/KB/2019) filed under section 74 of the Insolvency and Bankruptcy Code, 2016, read with section 60(5) of the Code. The applicants, who are operational creditors of Divya Jyoti Sponge Iron Private Limited (the Corporate Debtor), sought the invocation of section 74(3) of the IBC against the Corporate Debtor and related parties for negligence in non-implementation of the approved resolution plan. The resolution plan, approved on 13 March 2018, stipulated payments to operational creditors within six months. The applicants claimed that these payments were not made. The approved Resolution Plan was challenged by the suspended Board of Directors before the Hon'ble NCLAT

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## Facts

Divya Jyoti Sponge Iron Private Limited (Corporate Debtor) underwent Corporate Insolvency Resolution Process (CIRP). C.P. Ispat Private Limited became the Resolution Applicant after the approval of the resolution plan by the Committee of Creditors (CoC) on 14 February 2018, and subsequent approval by the Adjudicating Authority on 13 March 2018. Maan Steel & Power Limited, Al Ahad Traders Private Limited, and Dhanbad Fuels Limited, filed applications (I.A.s) claiming non-implementation of the resolution plan and seeking penalties under section 74(3) of the Insolvency and Bankruptcy Code (IBC). Maan Steel & Power Limited, an operational creditor, claimed a due of ₹11,61,404 for supplying iron ore. Al Ahad Traders Private Limited, another operational creditor,

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## Issues and analysis

### Issue 1: Whether the Resolution Applicant should be penalized under Section 74(3) of the Insolvency and …

**Ratio:** Section 74(3) of the IBC provides for penalties for contravention of the resolution plan.

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**Reasoning:** The court noted that the Resolution Applicant was willing to make payments to the

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**Interpretation:** Section 74(3) should be interpreted considering the intent of the parties and

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**Application:** The court relieved the Resolution Applicant from section 74(3) of the Code, as

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## Parties

- **Judges:** Rajasekha…; Balraj…
- **Appellants:** Maan Steel &…
- **Respondents:** Divya Jyoti…

## Timeline

- **2018-02-14 — Resolution Plan…**: The Committee of Creditors (CoC) approved the Resolution Plan submitted by C.P. Ispat…
- **2018-03-13 — Resolution Plan Approval by Adjudicating…**: The Adjudicating Authority approved the Resolution Plan submitted by C.P. Ispat Private…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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