Creditors' Committee Overreach: Timelines Breached, Confidentiality Breach, Tribunal Orders Adherence to Insolvency Code

The Tribunal held that the Committee of Creditors (CoC) exceeded its authority by extending the timelines for the Request for Resolution Plan (RFRP) beyond 330 days without approval. The CoC's decision to consider a plan submitted after the deadline was deemed a breach of confidentiality. The Tribunal directed the Resolution Professional to present only the Resolution Plans submitted before the deadline for CoC's consideration, emphasizing adherence to procedural requirements under the Insolvency and Bankruptcy Code for timely resolution of stressed assets.

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Issues Involved:
1. Extension of timelines for submission of Resolution Plans.
2. Authority of the Committee of Creditors (CoC) to extend timelines beyond 330 days.
3. Maintainability and locus standi of the prospective Resolution Applicant's application.
4. Confidentiality and consideration of Resolution Plans submitted after the deadline.
5. Adjudicating Authority's jurisdiction and procedural adherence.

Detailed Analysis:

1. Extension of Timelines for Submission of Resolution Plans:
The primary issue was whether the CoC could extend the timelines for Request for Resolution Plan (RFRP) while two Resolution Plans were already submitted. The Adjudicating Authority observed that the timelines specified in Regulations 36A and 36B are mandatory. The 330-day period had completed on 08.03.2021, and the CoC extended the time at the request of another Resolution Applicant, Vedanta Limited, under the guise of value maximization of the Corporate Debtor. The CoC and the Resolution Professional extended the RFRP timelines beyond 330 days without the Adjudicating Authority's approval, which was deemed contrary to the Code and its Regulations.

2. Authority of the CoC to Extend Timelines Beyond 330 Days:
The Adjudicating Authority noted that the CoC does not have the authority to extend RFRP timelines beyond 330 days without specific approval from the Adjudicating Authority. The CoC's decision to extend the timelines was seen as stepping into the shoes of the Adjudicating Authority, which was not permissible. The CoC's action was viewed as a violation of the Code's letter and spirit.

3. Maintainability and Locus Standi of the Prospective Resolution Applicant's Application:
The Appellant contended that the Adjudicating Authority addressed the merits of the prospective Resolution Applicant's application without considering the preliminary issue of maintainability and locus standi. According to the Appellant, a prospective Resolution Applicant has no vested right to raise objections in the CIRP, as established in the Supreme Court's judgment in Arcelor Mittal’s case. The Adjudicating Authority was also criticized for not addressing whether the application was premature, given that no Resolution Plan had been approved at that stage.

4. Confidentiality and Consideration of Resolution Plans Submitted After the Deadline:
The First Respondent argued that the Resolution Professional's action of considering an additional plan submitted after the deadline compromised the confidentiality of their Resolution Plan. The Adjudicating Authority directed the Resolution Professional and CoC to consider only the two plans received before the 330-day period expired. The Tribunal emphasized that the Resolution Plan is confidential and cannot be disclosed to competing Resolution Applicants.

5. Adjudicating Authority's Jurisdiction and Procedural Adherence:
The Tribunal highlighted the importance of adhering to the procedural aspects prescribed in the relevant sections of the I&B Code. The Adjudicating Authority has the jurisdiction to determine questions of priorities, law, or facts arising out of or in relation to Insolvency Resolution. The Tribunal noted that the Adjudicating Authority should have decided the extension application (I.A. No.120 of 2021) before passing the impugned order in I.A. No.244/2021 to avoid complications.

Conclusion:
The Tribunal directed the Resolution Professional to place only the Resolution Plans of the First Respondent and Sindhu Trade Links Ltd., which were submitted before the due date, before the CoC for consideration. The Tribunal also set aside the adverse observations made by the Adjudicating Authority against the CoC and the Resolution Professional, emphasizing the need for a timely resolution of stressed assets within the framework of the I&B Code.

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