Tribunal allows withdrawal of resolution plan due to misrepresentations, orders partial guarantee forfeiture

The Tribunal allowed the withdrawal of the resolution plan due to significant misrepresentations in the Information Memorandum, rendering the plan commercially unviable. It ordered partial forfeiture of guarantees to cover Corporate Insolvency Resolution Process expenses, balancing justice interests. The application for plan approval was dismissed as infructuous, and the withdrawal application was allowed with specified conditions.

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Issues Involved:
1. Whether the Resolution Applicant can be allowed to withdraw the resolution plan after approval by the CoC and pending approval by the Tribunal.
2. Whether the EMD and the Performance Bank Guarantee deposited by the Resolution Applicant should be returned or forfeited due to withdrawal from the process.

Issue-wise Detailed Analysis:

1. Withdrawal of the Resolution Plan:
The primary issue revolves around whether the Resolution Applicant can withdraw the resolution plan after it has been approved by the Committee of Creditors (CoC) but before the Tribunal's approval. The Tribunal noted that the Resolution Applicant prepares a plan based on the information provided in the Information Memorandum (IM) prepared by the Resolution Professional (RP). The IM must be accurate and up-to-date to enable the Applicant to prepare a commercially viable plan. In this case, the Applicant discovered post-approval that the IM omitted critical information about an additional 42-acre land parcel essential for generating the projected power units. This discovery led to a reassessment of the project's viability. The Tribunal referenced the decision in *Committee of Creditors of Metalyst Forgings Ltd. v. Deccan Value Investors LP & Ors.*, where it was held that an Applicant cannot be compelled to perform a plan based on misleading information. The Tribunal concluded that the Applicant could withdraw the plan due to significant discrepancies in the IM, which affected the project's commercial viability.

2. Return or Forfeiture of EMD and Performance Bank Guarantee:
The second issue concerns whether the Earnest Money Deposit (EMD) and Performance Bank Guarantee should be returned to the Applicant or forfeited. The Tribunal acknowledged that the withdrawal of the plan resulted in the entire Corporate Insolvency Resolution Process (CIRP) coming to naught, causing financial implications. While the Applicant argued that the liquidation value of the Corporate Debtor was close to the plan's value, the Tribunal decided that the Applicant should bear part of the CIRP expenses. Consequently, the Tribunal ordered the forfeiture of Rs. 75,00,000 from the total guarantees and directed the refund of the balance amount of Rs. 2,76,32,780 to the Applicant.

Conclusion:
The Tribunal allowed the withdrawal of the resolution plan due to significant misrepresentations in the IM, which rendered the plan commercially unviable. It also ordered partial forfeiture of the guarantees to cover CIRP expenses, balancing the interests of justice. The application for plan approval was dismissed as infructuous, and the withdrawal application was allowed with the specified conditions.

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