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of <h1>Resolution Plans Rejected, Liquidation Ordered under Insolvency Law</h1> The National Company Law Tribunal rejected the resolution plans and ordered the liquidation of the corporate debtor. The resolution plan submitted was ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to repayment of its dues - existence of debt and dispute or not - HELD THAT:- The restructuring plan which, as already indicated, cannot be reckoned as a resolution plan seeks to afford a backdoor access to the former managing director of the corporate debtor. Such an action is prohibited under law. The restructuring plan masqueraded as a resolution plan by Mr. Madhusudhan accordingly cannot be accepted, notwithstanding its approval by the CoC. Such approval cannot be said to be in conformity with section 30(2) of the Code. Restructuring plan in the garb of a resolution plan having failed to garner acceptance of this Authority, further prayer in I. A. No. 68 of 2020 by the resolution applicant to grant him sufficient time to make necessary modification to the said resolution plan cannot therefore, be acceded to. The prerogative of the CoC in not considering the resolution plan submitted by M/s. Orion Ferro Alloys P. Ltd., and Mr. Madhusudhan Raju Chintalapati cannot be evaluated by the Authority. The commercial wisdom of the CoC in accepting a resolution plan needs to be respected by the Adjudicating Authority - Having said that it would not be out of place mention here that the Adjudicating Authority can evaluate a resolution plan if it conformed to terms of section 30(2) of the Code. As already indicated the resolution plan approved by the CoC does not meet the requirements of section 30(2) of the Code. The same therefore, could not be accepted. Its non-acceptance however would not automatically render the plan submitted by M/s. Orion Ferro Alloys P. Ltd., acceptable. Application dismissed. Issues Involved:1. Extension of Corporate Insolvency Resolution Process (CIRP) period.2. Approval of resolution plans.3. Eligibility under Section 29A of the Insolvency and Bankruptcy Code (IBC).4. Settlement agreement under Section 12A of the IBC.5. Role and powers of the Committee of Creditors (CoC).6. Liquidation of the corporate debtor.Issue-Wise Detailed Analysis:1. Extension of Corporate Insolvency Resolution Process (CIRP) Period:The initial CIRP period was extended multiple times due to various circumstances, including the need for further negotiations and the impact of the COVID-19 pandemic. The extensions were granted by the National Company Law Tribunal (NCLT) through orders dated August 26, 2019, October 31, 2019, January 24, 2020, and February 12, 2020, extending the CIRP period up to May 3, 2020.2. Approval of Resolution Plans:Two prospective resolution applicants, M/s. Orion Ferro Alloys P. Ltd., and Mr. Madhusudhan Raju Chintalapati, submitted resolution plans. The CoC authorized the resolution professional to negotiate with the applicants to improve their offers. Despite negotiations, no better resolution plans were submitted. The CoC eventually approved a restructuring plan submitted by Mr. Madhusudhan, which was later contested.3. Eligibility under Section 29A of the Insolvency and Bankruptcy Code (IBC):Mr. Madhusudhan submitted an affidavit confirming his eligibility under Section 29A of the IBC, supported by a certificate from K. K. M. K. and Associates, chartered accountants. However, the restructuring plan involved the former managing director, Mr. P. Vijay Kumar, who continued to hold a substantial stake, which contravened Section 29A's intent to prevent former promoters from regaining control.4. Settlement Agreement under Section 12A of the IBC:A settlement agreement was entered into between Mr. P. Vijay Kumar, Mr. Madhusudhan, and the operational creditor, M/s. Priya Trading Co., for withdrawal of the application. This agreement was placed before the CoC but was not considered in terms of Section 12A, which allows withdrawal of the application with the CoC's approval.5. Role and Powers of the Committee of Creditors (CoC):The CoC's decision to approve the restructuring plan was influenced by an order dated February 4, 2020, which directed the RP to place the restructuring plan before the CoC. The CoC approved the plan with a 96.39% voting share. However, the restructuring plan was found to be ineligible as it provided a backdoor entry to the former managing director, violating Section 29A.6. Liquidation of the Corporate Debtor:The NCLT rejected the resolution plan submitted by Mr. Madhusudhan under Section 31(2) of the IBC, as it did not meet the requirements of Section 30(2). Consequently, the NCLT ordered the liquidation of the corporate debtor under Section 33(1)(b) of the IBC. The current resolution professional, Mr. Sisir Kumar Appikatla, was appointed as the liquidator, and the corporate debtor was to be liquidated as per Chapter III of the IBC.Conclusion:The applications in I.A. No. 64 of 2020, I.A. No. 66 of 2020, I.A. No. 67 of 2020, and I.A. No. 68 of 2020 were rejected. The resolution plan submitted in I.A. No. 64 of 2020 was rejected under Section 31(2) of the IBC. The NCLT ordered the liquidation of the corporate debtor, with the liquidator to manage the liquidation process and issue a public announcement. The order also outlined the cessation of powers of the board of directors and key managerial personnel, and the requirement for all personnel to cooperate with the liquidator.
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