2021 (9) TMI 388 - AT - Insolvency and Bankruptcy

Tribunal denies interim relief, approves Creditors' Committee to continue CIRP, dismisses Financial Creditor's claim

Budhpur Buildcon Pvt. Ltd. Versus Abhay Narayan Manudhane

The tribunal rejected the appellant's request for interim relief, allowing the Committee of Creditors to proceed with the Corporate Insolvency Resolution ... Rejection of claim of the Appellant to be a Financial Creditor rejected by Resolution Professional - whether or not the Appellant could be treated as the Financial Creditor looking to the Agreements which are more of Development Agreements? - HELD THAT:- It is stated that the Corporate Debtor had about 70 projects in hand and thus there were applicants who wanted to give offers of Resolution Plans project-wise, which CoC did not find practicable - When the application of Appellant was pending before the Adjudicating Authority, the Adjudicating Authority had only orally asked the CoC to delay taking decision on the question of liquidation. Now, the Adjudicating Authority has applied its mind and taken a conscious decision not accepting the Appellant as the Financial Creditor and observed in Para 16 of the impugned order that CIRP is at an advance stage and reason why it had earlier given oral direction. If for an individual person claiming to be Financial Creditor the progress of CIRP is to be stayed, it would be counter-productive according to us considering the objects of the IBC. Now, when we already have decision not in the favour of the Appellant, it is all the more reason for us to not to grant any interim orders to stay the proceedings which are taking place before the CoC. It is stated that although extension has been granted by the Adjudicating Authority vide order dated 16th August, 2021, that order also has not been uploaded. Such order has been passed is not disputed by the Resolution Professional. Fact remains that there is time available in the CIRP till 30th September, 2021. The present Appeal will not come in the way of the CoC for either rejecting or accepting any Resolution Plan or from taking any other decisions including decision with regard to liquidation, as per law, when period prescribed under Section 12 of IBC is coming to an end, if Resolution Plan is not there. List the Appeal ‘For Admission (After Notice)’ Hearing on 25th October, 2021. Issues involved:1. Leave to urge additional grounds.2. Interim reliefs and stay of impugned order.3. Status of the appellant as a Financial Creditor.4. Consideration of liquidation by the Committee of Creditors (CoC).5. Exclusion of certain periods from the Corporate Insolvency Resolution Process (CIRP).6. Acceptance of Resolution Plans.Detailed Analysis:1. Leave to urge additional grounds:The appellant filed I.A. No. 1789 of 2020 seeking leave to urge additional grounds in view of the impugned order. The application was allowed, and the appellant filed an amended memorandum of appeal, which was taken on record and treated as the amended memorandum of appeal.2. Interim reliefs and stay of impugned order:The appellant sought interim reliefs as claimed in I.A. No. 1557/2021, arguing that the impugned order should be stayed to prevent the CoC from deciding on liquidation, which would deprive the appellant of its right to participate in the CIRP. However, the tribunal found no prima facie case to justify holding up the progress of CIRP and rejected the interim relief application.3. Status of the appellant as a Financial Creditor:The appellant claimed to be a Financial Creditor based on an agreement clause stipulating interest payment for breach of obligations. The Resolution Professional (RP) rejected this claim, and the Adjudicating Authority upheld the RP's decision, stating that the appellant's claim was a mere right to recovery or entitlement and did not qualify as a Financial Debt under the relevant legal definitions.4. Consideration of liquidation by the Committee of Creditors (CoC):The appellant argued that the Adjudicating Authority had orally directed the CoC not to consider liquidation while the appellant's application was pending. However, the tribunal noted that the Adjudicating Authority had since dismissed the appellant's application and lifted the oral direction, allowing the CoC to proceed with considering liquidation.5. Exclusion of certain periods from the Corporate Insolvency Resolution Process (CIRP):The tribunal discussed the exclusion of certain periods from the CIRP, noting that the Adjudicating Authority had granted an extension, and the CIRP period was set to expire on 30th September 2021. There was a discrepancy regarding the exact expiry date, but the tribunal acknowledged the extension granted by the Adjudicating Authority.6. Acceptance of Resolution Plans:The tribunal considered the advanced stage of the CIRP and the presence of prospective Resolution Applicants. It noted that the CoC had not agreed to project-wise resolution plans and emphasized the need for the CIRP to progress without further delays. The tribunal did not grant interim orders to stay the proceedings before the CoC, allowing them to either accept or reject resolution plans or decide on liquidation as per the law.Conclusion:The tribunal rejected the appellant's request for interim relief and allowed the CoC to proceed with the CIRP, including considering liquidation. The appellant's status as a Financial Creditor was not accepted, and the tribunal emphasized the need for the CIRP to progress without further delays.