Successful Resolution Applicant granted extension to deposit balance amount, Monitoring Committee directed to provide clearances

The appeals were allowed, setting aside the orders dated 01.11.2021. The Successful Resolution Applicant (SRA) was granted time until 30.05.2021 to deposit the balance amount of INR 165.31 Crores with interest. The Monitoring Committee and Respondent No. 1 were directed to hand over possession of the Corporate Debtor's assets and provide clearances, with a Compliance Report due within six weeks.

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Issues Involved:

1. Challenge to orders dated 01.11.2021 by the Adjudicating Authority.
2. Implementation of the Resolution Plan by the Successful Resolution Applicant (SRA).
3. Extension of time for payment under the Resolution Plan.
4. Alleged encroachment on the land of the Corporate Debtor.
5. Payment of interest on delayed payments.
6. Forfeiture of amounts deposited by the SRA.
7. Reference for prosecution under Section 74(3) of IBC.

Issue-Wise Detailed Analysis:

1. Challenge to Orders Dated 01.11.2021:
The Successful Resolution Applicant (SRA) filed appeals against two orders dated 01.11.2021 by the Adjudicating Authority (NCLT), Principal Bench, New Delhi. The appeals challenged the disposal of C.A. No. 2357/2019 and C.A. No. 1170/2019, and the order allowing C.A. No. 1246/2019 filed by the Monitoring Professional.

2. Implementation of the Resolution Plan by the SRA:
The Corporate Debtor, M/s Allied Strips Ltd., underwent the Corporate Insolvency Resolution Process (CIRP) initiated by the Financial Creditor, M/s Oriental Bank of Commerce. The SRA submitted a Resolution Plan offering INR 233.71 Crores, which was approved by the Committee of Creditors (CoC) on 27.12.2018 and by the Adjudicating Authority on 30.05.2019. The SRA made initial payments but faced issues regarding plant inspection and alleged encroachment on the land.

3. Extension of Time for Payment Under the Resolution Plan:
The SRA requested an extension of time for payment, which was initially agreed upon by the Monitoring Committee on 29.08.2019 and approved by the Adjudicating Authority on 03.09.2019. Despite this, the SRA faced difficulties due to alleged encroachment and other issues. The Adjudicating Authority's order dated 01.11.2021, which rejected the extension request, was found to be unsustainable as it did not consider the payments made by the SRA and the genuine issues raised.

4. Alleged Encroachment on the Land of the Corporate Debtor:
The SRA claimed that approximately 7.5 Acres of the Corporate Debtor's land was encroached upon by third parties, which was not disclosed in the Information Memorandum. This claim was supported by a report from the Sub-Divisional Officer dated 21.12.2021, confirming the encroachment. The Adjudicating Authority failed to consider this issue adequately.

5. Payment of Interest on Delayed Payments:
The Monitoring Committee's decision dated 29.08.2019 included a provision for the SRA to pay interest at 11% per annum from the date of plan approval (30.05.2019) until the payment was made. The SRA was found liable to pay interest for the periods from 30.05.2019 to 28.10.2019 and from 02.11.2021 until the payment is made.

6. Forfeiture of Amounts Deposited by the SRA:
The Adjudicating Authority's order dated 01.11.2021 directed the forfeiture of INR 10.55 Crores deposited by the SRA. This order was found to be unsustainable as the SRA had deposited a total of INR 70.25 Crores by 08.11.2019, and the revised payment timelines were approved by the Adjudicating Authority on 03.09.2019.

7. Reference for Prosecution Under Section 74(3) of IBC:
The Adjudicating Authority directed a reference to the IBBI for taking appropriate action under Section 74(3) of IBC, alleging willful contravention of the Resolution Plan by the SRA. This direction was found to be unsustainable as there was no prima facie evidence or pleading of willful contravention by the SRA.

Conclusion:
The appeals were allowed, and the orders dated 01.11.2021 were set aside. The SRA was granted time until 30.05.2021 to deposit the balance amount of INR 165.31 Crores along with interest. The Monitoring Committee and Respondent No. 1 were directed to hand over possession of the Corporate Debtor's assets and provide necessary clearances. The Compliance Report was to be filed within six weeks.

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