Tribunal Dismisses Contempt Claim, Directs CoC to Evaluate All Proposals for Maximizing Debtor's Asset Value.

The Tribunal dismissed the Contempt Application (AT) No. 25 of 2022, finding no contempt by the CoC or the Resolution Professional regarding the Order dated 04.07.2022. The Tribunal directed the CoC to consider both the Resolution Plans and the Section 12A Settlement Proposal together to maximize the Corporate Debtor's asset value. The Appellant, a suspended Director, was allowed to participate in CoC deliberations. The CIRP period was extended by 15 days beyond 28th November 2022, and the Tribunal disposed of I.A. No. 3410 of 2022, emphasizing a comprehensive evaluation of all proposals.

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Issues Involved:

1. Challenge to the Order admitting the Application under Section 7 of IBC.
2. Interpretation and implementation of the Tribunal's directions regarding Section 12A Settlement Proposal.
3. Alleged contempt of the Tribunal's Order dated 04.07.2022.

Detailed Analysis:

1. Challenge to the Order admitting the Application under Section 7 of IBC:

The Appellant, a Suspended Director of the Corporate Debtor, filed Company Appeal (AT) Ins. No. 03 of 2022 challenging the Order dated 24.12.2021, which admitted the Application under Section 7 of the Insolvency and Bankruptcy Code (IBC) filed by the Respondent- Indian Bank. The Tribunal had previously disposed of this Appeal by Judgment dated 04.07.2022, providing the Appellant an opportunity to submit a fresh Application under Section 12A of the IBC.

2. Interpretation and implementation of the Tribunal's directions regarding Section 12A Settlement Proposal:

The Tribunal's Judgment dated 04.07.2022 allowed the Appellant to submit a fresh Application under Section 12A of the IBC with an offer exceeding Rs. 81 Crores. The Committee of Creditors (CoC) was directed to consider this Application while keeping in mind factors such as the potential realization amount from the Corporate Debtor's assets, maximization of assets, and recovery of financial dues.

After the Tribunal's Order, the Appellant submitted a Settlement Proposal under Section 12A, which included three options. During the CoC meetings, there was a divergence in views regarding the interpretation of the Tribunal's Order, particularly whether the Resolution Plans should be disclosed and compared with the Settlement Proposal. The CoC eventually rejected the Settlement Proposal, citing the need for a comparative analysis of the Resolution Plans and the Settlement Proposal.

The Tribunal clarified that the CoC must weigh both the Resolution Plans and the Settlement Proposal together to achieve the objective of maximizing the value of the Corporate Debtor's assets. The Appellant, as a suspended Director, was entitled to participate in the CoC's deliberations and negotiations. The CoC could ask both the Resolution Applicants and the Appellant to revise their offers to optimize the maximum value.

3. Alleged contempt of the Tribunal's Order dated 04.07.2022:

The Appellant filed a Contempt Application, alleging that the CoC and the Resolution Professional did not comply with the Tribunal's directions. The Tribunal found no violation of its Order dated 04.07.2022. The minutes of the CoC meetings indicated a difference of opinion regarding the Order's interpretation, which did not amount to contempt. The Tribunal concluded that there was no ground to initiate contempt proceedings against the CoC.

Conclusion:

The Tribunal disposed of I.A. No. 3410 of 2022, directing the CoC to deliberate on both the Resolution Plans and the Settlement Proposal under Section 12A and take a final decision. The CIRP period was extended by 15 days beyond 28th November 2022. The Contempt Application (AT) No. 25 of 2022 was dismissed, as no contempt was found.

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