Tribunal denies Applicant's request in Company Petition citing CIRP commencement date and lack of merit

The Tribunal dismissed the Applicant's request to be impleaded in the main Company Petition, citing the commencement date of the Corporate Insolvency Resolution Process (CIRP) and lack of merit. The delay in submitting the Expression of Interest (EOI) and Resolution Plan was not condoned due to inadequate justification. The Applicant's failure to meet the CoC's eligibility criteria based on tangible net worth led to rejection on both delay and merit grounds. The rejection of the Applicant's EOI was upheld as compliant with regulations, and a subsequent application by another party was deemed infructuous to maintain the CIRP's integrity.

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Issues Involved:
1. Whether the Applicant should be impleaded in the main Company Petition.
2. Whether the delay in submitting the Expression of Interest (EOI) and Resolution Plan should be condoned.
3. Whether the Applicant meets the eligibility criteria set by the Committee of Creditors (CoC).
4. Whether the rejection of the Applicant's EOI was in violation of natural justice principles.

Detailed Analysis:

1. Impleading the Applicant in the Main Company Petition:
The Tribunal examined whether the Applicant is a proper and necessary party to be impleaded in the main Company Petition. The Applicant, a prospective resolution applicant, argued that their participation was essential for the Corporate Insolvency Resolution Process (CIRP). However, the Tribunal found the Applicant's claim to be untenable, as the CIRP had commenced on 27.09.2019, and the Applicant's assertion that it started only in February 2020 was patently incorrect. The Tribunal concluded that the Applicant failed to make out any case for being impleaded in the main Petition.

2. Condonation of Delay in Submitting EOI and Resolution Plan:
The Applicant contended that the delay in submitting the EOI and Resolution Plan was due to the Executive Chairman's frequent travels and ignorance of the publication calling for EOIs. The Tribunal rejected this argument, stating that the reasons provided were without merit and did not justify the delay. The Tribunal emphasized the importance of adhering to the strict timelines prescribed in the Insolvency and Bankruptcy Code (IBC), 2016, and found that the Resolution Professional (RP) had followed these timelines meticulously. Consequently, the Tribunal saw no reason to condone the delay.

3. Eligibility Criteria Set by the CoC:
The Tribunal reviewed the eligibility criteria set by the CoC, which required a Minimum Tangible Net Worth (TNW) of 100 crores for prospective resolution applicants. The Applicant's TNW, as per their Chartered Accountant's certificate, was only Rs. 38.99 Crore as of 31.03.2019, falling significantly short of the required threshold. The Tribunal noted that the Applicant's TNW had even decreased from Rs. 41.48 Crore in 2018. As the Applicant did not meet the eligibility criteria, the Tribunal concluded that no purpose would be served in condoning the delay, and the Applicant's case was rejected on both delay and merit grounds.

4. Rejection of EOI and Natural Justice:
The Applicant argued that the rejection of their EOI violated the principles of natural justice and that the RP should have considered their EOI to maximize the value of the Corporate Debtor's assets. However, the Tribunal found that the RP had acted in accordance with Regulation 36A of the CIRP Regulations, which mandates the rejection of EOIs received after the specified deadline. The Tribunal emphasized that the RP had no discretion to entertain delayed EOIs and that the process followed by the RP was transparent and within the legal framework. The Tribunal dismissed the Applicant's claim of natural justice violation.

Additional Considerations:
During the proceedings, an application was filed by another resolution applicant, M/s. Shri Sai Priya Sugars Ltd., seeking to be impleaded in the proceedings. The Tribunal noted that Shri Sai Priya Sugars Ltd.'s resolution plan had already been approved by the CoC and that allowing a new party to submit a resolution plan would prejudice the interests of the Company and its creditors. Consequently, the Tribunal disposed of this application as infructuous.

Conclusion:
The Tribunal dismissed IA No. 111 of 2020 in CP (IB) No. 43/BB/2019, finding it devoid of merits. The Tribunal also disposed of IA No. 129 of 2020 as infructuous, reaffirming that the ongoing CIRP should proceed without interference. The RP was directed to continue with the process in accordance with the provisions of the Code and the relevant regulations.

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