Tribunal limits Adjudicating Authority's jurisdiction over Resolution Plans

The Tribunal held that the Adjudicating Authority exceeded its jurisdiction by directing the COC to consider a Resolution Plan from a party not involved in the CIRP. The Authority's role is limited to ensuring compliance with Section 30(2) and cannot interfere with COC's commercial decisions. The impugned order was set aside, directing the Authority to proceed with the RP's application for Resolution Plan approval. The Appeal was allowed with no costs awarded.

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Issues Involved:
1. Powers of the Adjudicating Authority under Section 31 of the I&B Code.
2. Whether the Adjudicating Authority can direct the COC to consider the Resolution Plan of a person who was not part of CIRP.
3. Whether the conduct of the Appellant during the pendency of the CIRP can be considered in this Appeal.

Issue-wise Detailed Analysis:

Issue No. 1: Powers of the Adjudicating Authority under Section 31 of the I&B Code

The Hon'ble Supreme Court in Maharashtra Seamless Limited vs Padmanabhan Venkatesh & Ors. held that once the Resolution Plan is approved by the COC, the Adjudicating Authority's role under Section 31(1) of the I&B Code is limited to ensuring that the Resolution Plan meets the requirements of Section 30(2). This Appellate Tribunal in Sharvan Kumar Agarwal Consortium reiterated that the Adjudicating Authority has a very limited power of judicial scrutiny and cannot interfere with the commercial wisdom of the COC, even for maximization of the value of assets of the Corporate Debtor. The impugned order erroneously assumed that the Adjudicating Authority must ensure the price offer is reasonable and adequate, which led to an unauthorized quantitative analysis.

Issue No. 2: Whether the Adjudicating Authority can direct the COC to consider the Resolution Plan of a person who was not part of CIRP

The Respondent No. 1 did not submit any Resolution Plan pursuant to the expression of interest issued by the RP and was not part of the CIRP. The Adjudicating Authority directed the COC to consider the Resolution Plan of Respondent No. 1, which was not permissible. This Tribunal in Kotak Investment Advisors Ltd. held that once the Resolution Plan has been opened and disclosed, no further fresh bid or offer could be accepted or considered. The case of Chhatisgarh Distilleries Ltd. vs. Dushyant Dave & Ors. confirmed that the Adjudicating Authority cannot direct the COC to consider a new Resolution Plan submitted after the deadline, even if it offers a higher amount.

Issue No. 3: Whether the conduct of the Appellant during the pendency of the CIRP can be considered in this Appeal

The Respondent No. 1 claimed that the Appellant misrepresented facts and misled the Tribunal. It was noted that Kalinga Enterprises Ltd. (KEL), a related party to the Appellant, filed an application seeking direction for its Resolution Plan to be considered. However, the Appellant argued that the definition of a related party under Section 5(24)(d) of the I&B Code pertains to the Corporate Debtor, not the Resolution Applicant. The Tribunal found that the objection raised by the Respondent No. 1 had no relevance to the current Appeal.

Conclusion:

The Tribunal concluded that the Adjudicating Authority exceeded its jurisdiction by directing the COC to consider the Resolution Plan of Respondent No. 1, who was not part of the CIRP. The Adjudicating Authority's role is limited to ensuring compliance with Section 30(2) and cannot interfere with the commercial decisions of the COC. The impugned order was set aside, and the Adjudicating Authority was directed to proceed with the Application filed by the RP for approval of the Resolution Plan as per law. The Appeal was allowed with no order as to costs.

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