Enforceable Bank Guarantee & Overdue Payments Required for Successful Resolution Applicant

The Tribunal directed the Successful Resolution Applicant to submit an enforceable bank guarantee of Rs. 10 crores within 30 days and make overdue payments within two months. The Corporate Debtor, deemed a going concern with surplus cash, was to avoid liquidation. If Rs. 10 crores had already been deposited, it would be adjusted against pending amounts or refunded within 30 days. The appeals were disposed of with no order as to costs.

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Issues Involved:
1. Default in implementing the Successful Resolution Plan.
2. Request for extension of CIRP for inviting fresh EOIs or liquidation of the Corporate Debtor.

Issue-wise Detailed Analysis:

1. Default in implementing the Successful Resolution Plan:

The appellants claimed that the Successful Resolution Applicant (Respondent No. 1) failed to implement the Resolution Plan approved on 28.2.2018, causing financial damage to stakeholders and financial creditors. Specific defaults included not paying dues, failing to furnish a valid bank guarantee, and not adhering to the timeline for implementing the Resolution Plan. The Adjudicating Authority's Impugned Order gave Respondent No. 1 an additional two weeks to deposit Rs. 10 crores instead of providing a bank guarantee, which was a core requirement under the approved Resolution Plan.

The Appellant State Bank of India (SBI) highlighted that the bank guarantee issued by Banque De Luxembourg was declared "non-effective," and Respondent No. 1 failed to provide a valid bank guarantee via SWIFT. Despite several communications and opportunities, Respondent No. 1 did not comply with the requirements, leading to the appellants seeking re-initiation of CIRP and reinstating the previous Resolution Professional.

The Respondent No. 1 argued that litigation delays due to appeals in NCLAT and the Supreme Court justified the delay in implementation. They also claimed to have deposited Rs. 10 crores in the Corporate Debtor's account in lieu of the bank guarantee, which remained with the Corporate Debtor.

2. Request for extension of CIRP for inviting fresh EOIs or liquidation of the Corporate Debtor:

The appellants argued that the Adjudicating Authority's order amounted to a modification of the Approved Resolution Plan, which is not permissible. They cited several judgments to support their claim that the plan cannot be altered post-approval. They also argued that liquidation should be avoided to prevent corporate death, emphasizing the need for re-initiating the CIRP to invite fresh EOIs.

Respondent No. 1 contended that the only permissible course of action for non-implementation of the Approved Resolution Plan under IBC is liquidation. They argued that the bonafide of the Successful Resolution Applicant was established, and they had an interest in the successful resolution of the Corporate Debtor.

Judgment:

The Tribunal observed that the effective implementation of the Successful Resolution Plan started only after the Supreme Court dismissed the appeal on 5.4.2019. The failure to provide a valid bank guarantee and other payments were significant defaults. The Tribunal noted that the Corporate Debtor was a going concern with surplus cash and decided that liquidation should be avoided.

The Tribunal directed that an enforceable bank guarantee of Rs. 10 crores should be submitted by the Successful Resolution Applicant within 30 days. Additionally, overdue payments as per the Approved Resolution Plan should be made within two months. If Rs. 10 crores had already been deposited with the Corporate Debtor, it would be adjusted against pending amounts or refunded within 30 days.

The appeals were disposed of with no order as to costs.

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