2018 (8) TMI 2063 - AT - Insolvency and Bankruptcy

Appeal Dismissed: Timely Resolution Plan Key in Liquidation Process

The National Company Law Appellate Tribunal dismissed both appeals, emphasizing that the Committee of Creditors' decision for liquidation was valid due to ... Resolution plan - Committee of Creditors - liquidation - order under Section 31 of the Insolvency and Bankruptcy Code, 2016 - persons not barred under Section 29A - relief under Section 12A for withdrawal of application on satisfaction of Committee of CreditorsResolution plan - Committee of Creditors - order under Section 31 of the Insolvency and Bankruptcy Code, 2016 - Whether relief should be granted to the appellant for alleged non consideration of the resolution plan and the Committee of Creditors' decision to seek liquidation - HELD THAT: - The Tribunal noted that the resolution plan was submitted on the 178th day of the insolvency process, two days before the 180 day period elapsed. The Committee of Creditors resolved on the 179th day to request the Adjudicating Authority to initiate liquidation proceedings and an order under Section 31 was then required in the absence of any extension. In view of the lateness of the plan and lack of any pleaded or established ground for extending the time, the appellants were not entitled to the relief sought. The appellate forum therefore declined to interfere with the Committee's decision and refused to set aside or otherwise disturb the liquidation pathway adopted by the creditors and acted upon by the Adjudicating Authority.Appeals dismissed insofar as they sought relief against the Committee of Creditors' decision to seek liquidation for reasons of the late submission of the resolution plan.Persons not barred under Section 29A - relief under Section 12A for withdrawal of application on satisfaction of Committee of Creditors - Committee of Creditors - Whether any recourse remains available to a person after initiation of liquidation - HELD THAT: - The Tribunal observed that Section 12A permits, even during the liquidation period, a person who is not barred under Section 29A to satisfy the demand of the Committee of Creditors and make an offer to the Adjudicating Authority. If the Committee of Creditors, by 90% voting share, accepts such an offer and decides to withdraw the application under Section 7, the prior observations or the liquidation order will not prevent the Adjudicating Authority from passing an appropriate order effecting withdrawal. This observation preserves the statutory avenue under Section 12A without deciding any factual entitlement beyond stating the legal availability of that remedy.Observation that Section 12A remains available for eligible persons to move for withdrawal of the application if the Committee of Creditors (by 90% vote) accepts the offer; appeals dismissed subject to this legal position.Final Conclusion: Both appeals are dismissed. No interference is warranted with the Committee of Creditors' decision to seek liquidation given the late submission of the resolution plan; however, the statutory remedy under Section 12A remains available to persons not barred under Section 29A if the Committee of Creditors accepts an offer by the required 90% voting share. Issues involved:1. Submission of resolution plan and decision for liquidation without giving opportunity to the appellant.2. Timeliness of submission of resolution plan.3. Dispute regarding submission of resolution plan through a Director.4. Decision of Committee of Creditors for liquidation.5. Provision under Section 12A for satisfying Committee of Creditors during liquidation.Issue 1: Submission of resolution plan and decision for liquidation without giving opportunity to the appellantThe appellant raised a grievance that the Committee of Creditors decided on liquidation without providing an opportunity to consider the resolution plan submitted by the appellant. The Resolution Professional argued that the appellant submitted the plan on the 178th day, just two days before the completion of the 180-day period. Due to the late submission, the application for liquidation was moved before the Adjudicating Authority.Issue 2: Timeliness of submission of resolution planThe Resolution Professional stated that no resolution plan was submitted within the stipulated time, and the plan submitted by the appellant was delayed, being presented on the 178th day. The Committee of Creditors decided on liquidation on the 179th day, as the 180th day marked the deadline for passing an order under Section 31 of the Insolvency and Bankruptcy Code, 2016 (I&B Code). No extension was granted due to the absence of a valid reason.Issue 3: Dispute regarding submission of resolution plan through a DirectorThe counsel for the Central Bank of India contended that the resolution plan was submitted through a Director, a fact disputed by the appellant's counsel. This discrepancy added a layer of complexity to the submission process of the resolution plan.Issue 4: Decision of Committee of Creditors for liquidationThe Committee of Creditors decided on liquidation promptly after the submission of the resolution plan on the 178th day, leading to the application for liquidation before the Adjudicating Authority. The Tribunal, considering the timeline and lack of extension reasons, declined to provide any relief to the appellant.Issue 5: Provision under Section 12A for satisfying Committee of Creditors during liquidationSection 12A allows for a person, not barred under Section 29A, to satisfy the demands of the Committee of Creditors even during the liquidation phase. If the Committee of Creditors, with a 90% voting share, accepts an offer and decides to withdraw the application under Section 7 of the I&B Code, the Adjudicating Authority can pass an appropriate order disregarding the previous liquidation decision. Both appeals were dismissed with these observations, and no costs were imposed.This detailed analysis covers the issues raised in the judgment, providing a comprehensive understanding of the legal complexities and decisions made by the National Company Law Appellate Tribunal.