Tribunal Cancels Warrants, Upholds Liquidation Participation Order

The Tribunal partly allowed the appeal by canceling the bailable and non-bailable warrants against the Appellant and setting aside the direction to file a complaint under Section 74(3) of the IBC. The rest of the Adjudicating Authority's order was upheld, allowing the Appellant to participate in the liquidation process.

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Issues Involved:
1. Rejection of the Resolution Plan by the Adjudicating Authority.
2. Issuance and subsequent rejection of applications for cancellation of non-bailable warrants.
3. Direction for filing a complaint under Section 74(3) of the IBC against the Resolution Applicant.

Detailed Analysis:

1. Rejection of the Resolution Plan by the Adjudicating Authority:
The Corporate Insolvency Resolution Process (CIRP) was initiated against M/s. Shivkala Developers Pvt. Ltd. The Appellant submitted a Resolution Plan, which was approved by the Committee of Creditors (CoC) in its 10th meeting on 07.11.2018. The Resolution Professional (RP) filed CA-734 of 2018 for approval of the Resolution Plan. However, the Appellant was made a party to the application only on 03.03.2021. The Adjudicating Authority issued notices to the Appellant, who failed to deposit the performance guarantee for the Resolution Plan. Consequently, bailable and non-bailable warrants were issued against the Appellant. The Adjudicating Authority observed that the Appellant had not shown any willingness to proceed with the Resolution Plan, leading to the rejection of CA-734 of 2018 and the order of liquidation. The Tribunal noted that the requirement for performance security was introduced in the CIRP Regulations only after the approval of the Resolution Plan, and the Appellant's non-compliance indicated a lack of interest in the plan's implementation.

2. Issuance and Subsequent Rejection of Applications for Cancellation of Non-Bailable Warrants:
The Appellant filed I.A Nos. 5026 of 2021, 5027 of 2021, and 5028 of 2021 for the cancellation of non-bailable warrants. The Adjudicating Authority dismissed these applications without discussing the grounds provided by the Appellant. The Tribunal found this dismissal unsustainable and allowed the applications, thereby canceling the bailable and non-bailable warrants issued against the Appellant.

3. Direction for Filing a Complaint under Section 74(3) of the IBC:
The Adjudicating Authority directed the liquidator to file a complaint under Section 74(3) of the IBC against the Resolution Applicant. Section 74(3) pertains to the punishment for contravention of the resolution plan. The Tribunal held that since the Resolution Plan was never approved by the Adjudicating Authority, there was no contravention of Section 74(3). Therefore, the direction to file a complaint under this section was deemed unsustainable and was set aside.

Conclusion:
The Tribunal partly allowed the appeal:
1. Applications I.A Nos. 5026 of 2021, 5027 of 2021, and 5028 of 2021 were allowed, and the bailable and non-bailable warrants against the Appellant were canceled.
2. The direction to file a complaint under Section 74(3) against the Resolution Applicant was set aside.
3. The rest of the Adjudicating Authority's order dated 24.11.2021 was upheld, and the liquidator was directed to proceed in accordance with the law, allowing the Appellant to participate in the liquidation process.

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