Tribunal approves resolution plan, excludes 106 days from timeline, dismisses creditor objections

The tribunal allowed the exclusion of 106 days from the CIRP timeline due to litigation and approved the resolution plan with a voting share of 78.50%. The objections raised by dissenting creditors were dismissed, and the resolution plan was deemed binding on all stakeholders. The moratorium order under Section 14 ceased to have effect, and the resolution professional was directed to forward all records to the Insolvency and Bankruptcy Board of India.

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Issues Involved:
1. Extension of Corporate Insolvency Resolution Process (CIRP) beyond 270 days.
2. Exclusion of litigation period from the CIRP timeline.
3. Reconsideration of votes by dissenting creditors.
4. Approval of the Resolution Plan under Section 31(1) of the Insolvency and Bankruptcy Code (IBC).

Detailed Analysis:

1. Extension of Corporate Insolvency Resolution Process (CIRP) beyond 270 days:
The primary contention raised by dissenting financial creditors, IDBI, and Bank of Baroda, was that the resolution plan was submitted after the extended period of 270 days, as mandated by Section 12 of the IBC. They argued that the adjudicating authority has no power to extend the CIRP beyond 270 days. The tribunal noted that the resolution applicant did not seek an extension but rather the exclusion of the litigation period from the CIRP timeline. The tribunal emphasized that the object of the IBC is to resolve the insolvency of corporate debtors and not to liquidate them. It concluded that while Section 12 prohibits the extension beyond 270 days, it does not restrict the exclusion of the litigation period from the CIRP timeline.

2. Exclusion of litigation period from the CIRP timeline:
The tribunal considered whether the period spent in litigation should be excluded from the CIRP timeline. The resolution professional argued that delays were caused by stays and appeals filed by financial creditors, which should be excluded. The tribunal cited the Supreme Court's judgment in Macquarie Bank Ltd. v. Shilpi Cable Technologies Ltd., emphasizing the importance of interpreting the IBC provisions in light of their legislative intent. The tribunal also referred to the NCLAT's decision in Quantum Ltd. v. Indus Finance Corpn. Ltd., which allowed the exclusion of litigation periods. The tribunal concluded that the period of stay and litigation should be excluded, thereby extending the CIRP timeline by 106 days.

3. Reconsideration of votes by dissenting creditors:
The tribunal addressed the objection raised by IDBI and Bank of Baroda regarding the reconsideration of votes by dissenting creditors. The tribunal observed that the reconsideration was based on an order from the adjudicating authority, which was not challenged by any financial creditors. It held that there is no legal bar preventing creditors from changing their votes upon reconsideration. The tribunal found the reconsideration of votes by dissenting creditors to be valid and permissible under the law.

4. Approval of the Resolution Plan under Section 31(1) of the Insolvency and Bankruptcy Code (IBC):
The tribunal evaluated whether the resolution plan met the requirements of Section 30(2) of the IBC. It noted that the plan received a voting share of 78.50% from financial creditors and complied with all necessary regulations. The tribunal emphasized the importance of keeping the corporate debtor as a going concern and avoiding liquidation. It concluded that the resolution plan was economically and technically viable and met all statutory requirements. Consequently, the tribunal approved the resolution plan under Section 31(1) of the IBC.

Conclusion:
The tribunal allowed the exclusion of 106 days from the CIRP timeline due to litigation and approved the resolution plan with a voting share of 78.50%. The objections raised by IDBI and Bank of Baroda were dismissed, and the resolution plan was deemed binding on all stakeholders involved. The moratorium order under Section 14 ceased to have effect, and the resolution professional was directed to forward all records to the Insolvency and Bankruptcy Board of India.

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