Tribunal rules on CoC's approval withdrawal and new Resolution Plan considerations

The Tribunal held that the Committee of Creditors (CoC) cannot withdraw approval of a Resolution Plan after more than two years, and the Adjudicating Authority cannot direct the CoC to consider a new Resolution Plan from a third party who was not part of the Corporate Insolvency Resolution Process (CIRP). Once a Resolution Plan is submitted for approval, it is binding and irrevocable between the CoC and the Successful Resolution Applicant, as per the provisions of the Insolvency and Bankruptcy Code. The appeal was allowed, and the Impugned Order was set aside.

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Issues Involved:
1. Whether the Committee of Creditors (CoC) can withdraw approval of a Resolution Plan after more than two years.
2. Whether the Adjudicating Authority can direct the CoC to consider a new Resolution Plan from a third party who was not part of the Corporate Insolvency Resolution Process (CIRP).
3. The binding nature of a Resolution Plan once submitted to the Adjudicating Authority.

Issue-wise Detailed Analysis:

1. Withdrawal of Approval by CoC:
The main issue in this appeal was whether the CoC, after having approved the Resolution Plan on 11.11.2019, can seek direction to consider a new Resolution Plan from a third party who was not part of the CIRP proceedings and withdraw their approval after more than two years. The Tribunal noted that the CoC had approved the Resolution Plan on 11.11.2019, and the application for approval of the Plan under Section 31 of the Insolvency and Bankruptcy Code (IBC) was filed in January 2019. The Tribunal emphasized that once the Plan is submitted to the Adjudicating Authority, it becomes binding and irrevocable between the CoC and the Successful Resolution Applicant (SRA) in terms of the provisions of the Code. The Tribunal relied on the Supreme Court's judgment in 'Ebix Singapore Pvt. Ltd. vs. Committee of Creditors of Educomp Solutions Ltd. & Anr.' which held that the existing insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC-approved Resolution Plans once submitted to the Adjudicating Authority. Therefore, the CoC cannot withdraw its approval after more than two years.

2. Consideration of New Resolution Plan:
The Tribunal assessed whether the Adjudicating Authority can direct the CoC to consider the Resolution Plan of a third party who was not part of the CIRP. It was noted that the Adjudicating Authority had previously directed the Resolution Professional (RP) to consider the new Resolution Plan of Hindustan Coils Limited (HCL), which was challenged and set aside by this Tribunal. The Tribunal reiterated that the Adjudicating Authority cannot entertain an application from a person who has not participated in the CIRP, even if such a person is ready to pay more than the SRA. The Tribunal emphasized that the maximization of the value of assets must be within the specified timelines, and considering a new Plan beyond these timelines would defeat the objective of the Code.

3. Binding Nature of Resolution Plan:
The Tribunal discussed the binding nature of a Resolution Plan once submitted to the Adjudicating Authority. It was underscored that a submitted Resolution Plan is binding and irrevocable between the CoC and the SRA, as per the provisions of the IBC and the CIRP Regulations. The Tribunal referred to the Supreme Court's judgment in 'Ebix Singapore Pvt. Ltd.' which highlighted that any modification or withdrawal of a Resolution Plan after approval by the CoC and submission to the Adjudicating Authority would lead to delays and defeat the objective of the Code. The Tribunal also noted that the Adjudicating Authority's jurisdiction is limited to interfering only if the Plan is against the provisions of the Code or involves material irregularity.

Conclusion:
The Tribunal concluded that the CoC cannot withdraw its approval of the Resolution Plan after more than two years, and the Adjudicating Authority cannot direct the CoC to consider a new Resolution Plan from a third party who was not part of the CIRP. The Tribunal emphasized that once a Resolution Plan is submitted for approval, it is binding and irrevocable between the CoC and the SRA, unless there is any material irregularity or it is against the provisions of Section 30(2) of the Code. Consequently, the appeal was allowed, and the Impugned Order dated 26.07.2021 passed by the Adjudicating Authority was set aside.

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