Tribunal orders Creditors to reconsider resolution plan despite delayed payment, emphasizes plan's value and prompt action

The Tribunal directed the Committee of Creditors (CoC) to reconsider the resolution plan submitted by the applicant, an Ex. Promoter of the Corporate Debtor, despite the delay in depositing the Earnest Money Deposit (EMD). The Tribunal emphasized the value of the plan and the applicant's willingness to deposit the EMD, ordering CoC to assess the plan on its merits without being influenced by the delayed EMD submission. The decision highlighted the importance of prompt action by CoC and Resolution Professional (RP) to avoid prolonging the resolution process.

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Issues:
1. Consideration of exemption for EMD deposit by MSMEs under the Insolvency and Bankruptcy Code.
2. Delay in depositing Earnest Money Deposit (EMD) by the applicant.
3. CoC's refusal to consider the resolution plan due to non-compliance with EMD requirements.
4. Legal provisions and judgments related to MSME exemption from EMD submission.
5. Relief sought by the applicant for reconsideration of the resolution plan by CoC.

Analysis:

1. The applicant, an Ex. Promoter of the Corporate Debtor, sought directions to allow EMD deposit and consider the resolution plan. The applicant claimed MSME exemption for EMD submission based on privileges extended to MSMEs in the Indian economy.

2. The applicant submitted the plan within the due date but did not deposit EMD, citing MSME exemption. The CoC refused to consider the plan due to lack of EMD. The applicant later offered to deposit EMD through a third party due to frozen bank accounts.

3. The RP and CoC emphasized the importance of EMD submission for consideration of the resolution plan. The RP represented to CoC that the applicant was ineligible due to non-compliance with EMD requirements.

4. Legal arguments included references to the Swiss Ribbons judgment and NCLAT decisions regarding MSME exemptions from EMD submission. The applicant relied on circulars and judgments supporting EMD exemptions for MSMEs.

5. The Tribunal analyzed the situation, noting the applicant's willingness to deposit EMD and the value of the resolution plan compared to others. The Tribunal reverted the matter to CoC and RP for reconsideration, subject to EMD deposit within two days, condoning the delay in depositing EMD.

6. The Tribunal directed CoC to consider the plan on its merits, without influence from the condoned delay. The order disposed of the application, emphasizing the need for prompt action by CoC and RP without extending the resolution process further.

This detailed analysis covers the key issues addressed in the judgment, providing a comprehensive understanding of the legal proceedings and decisions made by the Tribunal.

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