Tribunal grants 30-day extension for payment of Rs. 30 crores to Financial Creditors. Liquidation may follow non-compliance.

The Tribunal allowed the appeal, granting a 30-day extension for the Appellant to make the payment of the balance amount of Rs. 30 crores to the Financial Creditors by 20th February 2022. Failure to comply would result in proceeding with the liquidation of the Corporate Debtor.

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Issues Involved:
1. Extension of time for payment by the Successful Resolution Applicant.
2. Compliance with the terms and conditions of the Resolution Plan.
3. Objection to the maintainability of the Appeal.
4. Financial commitments and payments made by the Resolution Applicant.
5. Impact of COVID-19 pandemic on the compliance of the Resolution Plan.
6. Jurisdiction of the Adjudicating Authority to extend time for compliance.

Issue-wise Detailed Analysis:

1. Extension of Time for Payment by the Successful Resolution Applicant:
The Successful Resolution Applicant filed an appeal challenging the order dated 24th November 2021 by the National Company Law Tribunal (NCLT), Cuttack Bench, which rejected their application for an extension of four weeks to make the required payment. The appeal was taken up on 09.12.2021, and an additional affidavit was filed detailing the payments made and the sources of funds for future payments, including an 'in-principle offer' from Kotak Mahindra Bank for a term loan of Rs. 20 crores.

2. Compliance with the Terms and Conditions of the Resolution Plan:
The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor. The Resolution Plan, approved by the Committee of Creditors (CoC) and the Adjudicating Authority, required payments totaling Rs. 45 crores to Financial Creditors. The Appellant made partial payments but failed to meet the schedule outlined in the Resolution Plan. Consequently, the State Bank of India filed for liquidation due to non-compliance with the terms of the approved Resolution Plan.

3. Objection to the Maintainability of the Appeal:
The State Bank of India raised objections regarding the maintainability of the appeal, questioning the authority of Rajesh Kumar Sinha to file the appeal on behalf of Tricounty Premier Hearing Service Inc. through its subsidiary Tri County Holding Pvt. Ltd. The Tribunal found that Tri County Holding Pvt. Ltd., an Indian subsidiary managing the Corporate Debtor, was authorized to represent the Appellant and had been making payments under the Resolution Plan. Therefore, the appeal was deemed maintainable.

4. Financial Commitments and Payments Made by the Resolution Applicant:
The Resolution Applicant made an upfront payment of Rs. 12 crores and an additional Rs. 3 crores in March 2021. Payments to unsecured Financial Creditors, Operational Creditors, employees, workmen, and statutory dues were partially made. However, the Applicant failed to comply with the payment schedule and sought extensions. The Adjudicating Authority granted extensions, but the Applicant still could not meet the deadlines, leading to the rejection of further extension requests.

5. Impact of COVID-19 Pandemic on the Compliance of the Resolution Plan:
The Applicant argued that the COVID-19 pandemic affected their ability to comply with the financial obligations. However, the Adjudicating Authority observed that the default occurred before the pandemic and could not be used as an excuse. Despite this, the Tribunal considered the pandemic's impact on businesses and noted the Applicant's efforts to secure funds and make payments.

6. Jurisdiction of the Adjudicating Authority to Extend Time for Compliance:
The Tribunal referred to the judgment in Ebix Singapore Private Limited vs. CoC Educomp, which emphasized that the Adjudicating Authority cannot create procedural remedies with substantive outcomes. However, the Tribunal distinguished this case from the present one, noting that the Applicant sought a short extension to comply with the financial obligations rather than modifying or withdrawing the Resolution Plan. The Tribunal found that granting a 30-day extension would not prejudice the Financial Creditors and allowed the appeal, setting aside the order dated 24th November 2021.

Conclusion:
The Tribunal allowed the appeal, granting a 30-day extension for the Appellant to make the payment of the balance amount of Rs. 30 crores to the Financial Creditors by 20th February 2022. Failure to comply would result in proceeding with the liquidation of the Corporate Debtor. No costs were awarded.

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