2018 (12) TMI 1854 - Tri - Companies Law

Tribunal directs CoC to consider Resolution Plan, criticizes rejection based on technicalities.

ICICI Bank Limited Versus Unimark Remedies Ltd. And Omkara Asset Reconstruction Pvt. Ltd. Versus Resolution Professional of Unimark Remedies Ltd.

The Tribunal ruled in favor of the Applicant, directing the CoC to consider the Resolution Plan on its merits. Emphasizing the objective of maximizing ... Belated submission of Resolution Plan - Illegality of the decision of the CoC, refusing to open the envelop of the Resolution Plan sent by the Applicant and to return the same to the Applicant without considering the resolution plan on its merits - Direction to CoC to consider the resolution plan submitted by the Applicant on its merits as Applicant believes that its plan will maximize the asset value of the Corporate Debtor - whether the Resolution Plan of the Applicant can be considered at this belated hour or should the same be rejected even without looking into the same? - HELD THAT:- When there is a clash/ conflict between the Regulations and the Code, the object of the Code is paramount and not the Regulations which are formed only for the just implementation of the Code. Purely on the basis of technicalities, the rejection of Resolution Plan even without looking into its merits, is certainly an act which shall go against the very spirit of the Code and may even result in a huge loss to the Company. Any Regulation which does not anticipate such a situation and if the same comes in the way of proper justification and implementation of the principles of the Code, the same need not be considered nor can be treated as an impediment in the implementation of the Code. The spirit of the Code is first and then comes the other things. The rejection of the Resolution Plan by the CoC even without opening the envelope containing the Resolution Plan on the ground that the same is submitted after the expiry of the stipulated time fixed by the CoC, is certainly against the law/Code and we hereby direct the Respondent to forthwith consider the Resolution plan of the Applicant on its merits and judicious decision may be taken in the best interest of the parties concerned - the Application is allowed. Seeking exclusion of period of 15 days from the Corporate Insolvency Resolution Process - section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Hon’ble NCLAT in its order dated 08.05.2018 in the case of QUINN LOGISTICS INDIA PVT. LTD. VERSUS MACK SOFT TECH PVT. LTD., MOHD. SABIR PARVEZ AND MR. M.L. JAIN, (RESOLUTION PROFESSIONAL) [2018 (6) TMI 904 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it ws held that it is clear that if an application is filed by the ‘Resolution Professional’ or the ‘Committee of Creditors’ or ‘any aggrieved person’ for justified reasons, it is always open to the Adjudicating Authority/Appellate Tribunal to ‘exclude certain period’ for the purpose of counting the total period of 270 days, if the facts and circumstances justify exclusion, in unforeseen circumstances. This Bench, considering the warranting situation in this case, hereby excludes the period of 5 days i.e. the period of pendency of Application No. 1529 of 2018 before this bench from 17.12.2018 to 21.12.2018, considering the facts, the Resolution Professional has to carry out the certain duties and obligations with regard to the resolution plan before submission of same to the COC. In the normal course, the CIRP period will come to an end on 29.12.2018. But in view of the above extraneous circumstances warranting the interference of this Bench which is of the considered view that the period of 5 days during which the Application No. 1529/2018 was pending, is required to be excluded and consequently the CIRP period of 270 days will end on 03.01.2019. Application disposed off. Issues Involved:1. Legality of the CoC's decision to reject the Applicant's Resolution Plan without considering its merits.2. Applicability of the cut-off date for submission of Resolution Plans.3. Whether the CoC can accept Resolution Plans after the cut-off date.4. The role of the RP in presenting Resolution Plans to the CoC.5. The object of the Insolvency and Bankruptcy Code (IBC) in maximizing asset value.6. Precedents of NCLT and NCLAT permitting late submission of Resolution Plans.7. Applicability of Regulation 36A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016.8. Exclusion of time from the CIRP period.Detailed Analysis:1. Legality of the CoC's Decision to Reject the Applicant's Resolution Plan:The Applicant challenged the CoC's decision to refuse to open and consider its Resolution Plan submitted after the cut-off date. The Tribunal found that the CoC's rejection of the Resolution Plan without evaluating its merits was against the spirit of the IBC. The Tribunal emphasized that technicalities should not override the objective of the Code, which is to maximize asset value and ensure the best possible returns.2. Applicability of the Cut-off Date:The Applicant argued that the cut-off date for submitting Resolution Plans, as contemplated by the EOI, is not mandatory and can be extended. The Tribunal noted that while the CoC had set a cut-off date, the rejection of the Applicant's plan solely based on this technicality was not justified, especially when the plan was submitted before the finalization of any other Resolution Plan.3. Acceptance of Resolution Plans After the Cut-off Date:The Tribunal held that the CoC could consider Resolution Plans submitted after the cut-off date, provided the CIRP period had not elapsed and no other Resolution Plan had been accepted. The Tribunal directed the CoC to consider the Applicant's Resolution Plan on its merits, emphasizing that the primary objective is to maximize asset value.4. Role of the RP in Presenting Resolution Plans:The Applicant contended that the RP is required to present the Resolution Plan to the CoC under Section 30(3) of the Code. The Tribunal found that the RP had failed to submit the Applicant's Resolution Plan in the manner contemplated by the Code, thereby extending the period for submission and necessitating the CoC's consideration of the plan on its merits.5. Object of the IBC:The Tribunal underscored that the IBC aims to maximize the value of the assets of the Corporate Debtor and ensure the best possible returns. The CoC's action in rejecting the Applicant's plan without consideration was deemed contrary to this objective, and the Tribunal directed the CoC to evaluate the plan judiciously.6. Precedents Permitting Late Submission:The Applicant cited several cases where NCLT and NCLAT permitted the submission of Resolution Plans after the cut-off date. The Tribunal acknowledged these precedents, reinforcing the view that the CoC should consider Resolution Plans submitted before the finalization of any other plan and within the CIRP period.7. Applicability of Regulation 36A:The Applicant argued that the amended Regulation 36A, effective from 03.07.2018, did not apply to this case since the EOI was issued on 08.06.2018. The Tribunal agreed, stating that the erstwhile Regulation 36A, effective from 06.02.2018, was applicable. Moreover, the RP had not issued the EOI in terms of Form G, further supporting the Applicant's position.8. Exclusion of Time from the CIRP Period:In a separate application by the RP, the Tribunal considered the exclusion of time from the CIRP period. The Tribunal excluded five days from the CIRP period, during which the Applicant's application was pending, thereby extending the CIRP period to 03.01.2019. This exclusion was justified to allow the RP to fulfill duties and obligations concerning the Resolution Plan.Conclusion:The Tribunal allowed the Applicant's application, directing the CoC to consider the Resolution Plan on its merits. The Tribunal emphasized that the primary objective of the IBC is to maximize asset value, and technicalities should not impede this goal. The Tribunal also excluded five days from the CIRP period to accommodate the consideration of the Applicant's plan.