Tribunal orders liquidation of Corporate Debtor due to failed Resolution Plan within time limit

The Tribunal directed the Adjudicating Authority to pass an Order of Liquidation for the Corporate Debtor as the Resolution Plan was not implemented within the 330-day period. The Appeal partially succeeded, setting aside the Impugned Order and instructing liquidation in accordance with Sections 33(3) and 33(4) of the I&B Code, 2016, with no cost orders.

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Issues Involved:
1. Challenge to the Order of Adjudicating Authority dismissing applications for liquidation.
2. Non-implementation of the approved Resolution Plan by the Successful Resolution Applicant.
3. Request for withdrawal of the Resolution Plan and refund of Performance Guarantee.
4. Adjudicating Authority's power to order liquidation post-approval of the Resolution Plan.
5. Applicability of Section 33 of the Insolvency and Bankruptcy Code, 2016 for liquidation.

Detailed Analysis:

1. Challenge to the Order of Adjudicating Authority Dismissing Applications for Liquidation:
The present Appeal was filed challenging the Order passed by the Adjudicating Authority (NCLT, Kochi Bench) in MA No.186/KOB/2020 and IA(IBC)/16/KOB/2021, wherein the applications for liquidation of the Corporate Debtor were dismissed. The Appellant argued that the Adjudicating Authority should have ordered the liquidation of the Corporate Debtor due to the non-implementation of the Resolution Plan by the Successful Resolution Applicant.

2. Non-implementation of the Approved Resolution Plan by the Successful Resolution Applicant:
The Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor was initiated on 20th September 2019. The Resolution Plan submitted by the Resolution Applicant was approved by the Committee of Creditors (CoC) and later by the Adjudicating Authority on 10.09.2020. The Respondent was required to make specific payments within stipulated timelines, which were not adhered to. The Respondent sought additional time for payment and eventually requested the withdrawal of the Resolution Plan and refund of the Performance Guarantee of Rs. 25,00,000, citing RBI guidelines and SARFAESI Act 2002.

3. Request for Withdrawal of the Resolution Plan and Refund of Performance Guarantee:
The Respondent's request for withdrawal of the Resolution Plan was discussed in the Monitoring Committee Meetings and it was resolved that the approved Resolution Plan could not be withdrawn. The Respondent's application for withdrawal of the Resolution Plan and refund of the Performance Guarantee was dismissed by the Adjudicating Authority, which stated that the Tribunal had become functus officio after the approval of the Resolution Plan.

4. Adjudicating Authority's Power to Order Liquidation Post-Approval of the Resolution Plan:
The Adjudicating Authority observed that it could not recall its own Orders or direct the refund of the EMD after the approval of the Resolution Plan. The Tribunal noted that the Adjudicating Authority should have considered the Appellant's prayer for liquidation due to the non-implementation of the Resolution Plan and completion of 330 days since the initiation of CIRP.

5. Applicability of Section 33 of the Insolvency and Bankruptcy Code, 2016 for Liquidation:
Section 33(3) of the I&B Code, 2016 allows for a liquidation order if the approved Resolution Plan is contravened. The Tribunal determined that the Appellant rightly moved the application under Section 60(5) read with Section 33 of the I&B Code, 2016, as the Respondent failed to implement the plan. The Tribunal directed the Adjudicating Authority to pass an Order of Liquidation for the Corporate Debtor, as the mandatory 330-day period for completion of the insolvency resolution process had expired without implementation of the Resolution Plan.

Conclusion:
The Tribunal concluded that the Adjudicating Authority should have passed an Order of Liquidation due to the non-implementation of the Resolution Plan within the stipulated 330-day period. The Impugned Order dated 10.02.2021 was set aside to the extent that the Adjudicating Authority is directed to pass an Order of Liquidation as per Section 33(3) and 33(4) of the I&B Code, 2016. The Appeal succeeded in part, with no orders as to costs.

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