Tribunal allows withdrawal of application, imposes cost on Liberty House, directs matter to COC

The Tribunal allowed the withdrawal of IA No. 823(PB)/2018, imposed a cost of Rs. 1,00,000 on Liberty House to be paid to the Corporate Debtor, and directed the Resolution Professional to place the matter before the COC for further decision. The applications were disposed of accordingly.

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Issues Involved:
1. Withdrawal of IA No. 823(PB)/2018
2. Requirement of Performance Bank Guarantee
3. Conduct of Liberty House and its implications
4. Exclusion of time period from CIR Process

Issue-wise Detailed Analysis:

1. Withdrawal of IA No. 823(PB)/2018:
The application was filed by the Resolution Professional, authorized by the Committee of Creditors (COC), to withdraw IA No. 823(PB)/2018, which sought approval of the Resolution Plan submitted by Liberty House. The Liberty House, initially declared as the H-1 Bidder, later showed reluctance to proceed with its Resolution Plan, leading the COC to direct the Resolution Professional to file for withdrawal.

2. Requirement of Performance Bank Guarantee:
The Liberty House opposed the withdrawal application, arguing that the Resolution Plan approved by the COC did not include a clause for furnishing a performance bank guarantee. However, the Resolution Professional contended that the performance bank guarantee was a sine qua non, as stipulated in the 'Process Note' dated 18.05.2018, modified on 21.06.2018. Clause 1.9.1 required the successful applicant to furnish a performance bank guarantee of INR 60,00,00,000 within ten business days of the issuance of the Letter of Intent (LOI). Clause 1.9.3 stated that non-submission of the performance bank guarantee would render the Resolution Plan non-responsive, allowing the Resolution Professional to reject the plan and cancel the LOI.

3. Conduct of Liberty House and its Implications:
Despite the COC relaxing the requirement for the performance bank guarantee, the Liberty House refused to proceed with the Resolution Plan, demonstrating a lack of commitment and seriousness. This conduct was viewed unfavorably, as it disrupted the time-bound Corporate Insolvency Resolution Process (CIRP) and attracted adverse comments. The Liberty House's similar behavior in other cases, such as M/S. Amtek Auto Ltd. and M/S. Adhunik Metaliks Limited, further questioned its bona fides.

4. Exclusion of Time Period from CIR Process:
The application also prayed for the exclusion of the period from 04.09.2018 till the date of the order from the CIRP period of 270 days. The Tribunal referenced the Supreme Court's judgment in Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors., which upheld the maxim "Actus Curiae neminem gravabit" (the act of the court shall harm no man). Consequently, the period from 04.09.2018 till the date of the order was excluded from the CIRP period.

Conclusion:
The Tribunal allowed the withdrawal of IA No. 823(PB)/2018, imposed a cost of Rs. 1,00,000 on Liberty House to be paid to the Corporate Debtor, and directed the Resolution Professional to place the matter before the COC for further decision. The applications were disposed of accordingly.

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