Appellate Tribunal Upholds Resolution Plan Approval, Rejects Reconsideration

The Appellate Tribunal held that the Adjudicating Authority erred in remitting the Resolution Plan for reconsideration before the Committee of Creditors (CoC) as the approved plan is binding. It was determined that the CoC cannot change its stance post-approval, even considering external factors like COVID-19's impact on the hotel industry. The principle of maximizing the Corporate Debtor's value does not justify reopening the Corporate Insolvency Resolution Process (CIRP) after plan approval. The Tribunal set aside the order and remitted the matter for a fresh decision within three months, allowing the appeal with no costs.

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Issues Involved:

1. Whether the Adjudicating Authority erred in remitting the Resolution Plan for reconsideration before the CoC.
2. Whether the CoC can change its stance and request reconsideration of the Resolution Plan after its approval.
3. Whether the impact of COVID-19 on the hotel industry justifies reconsideration of the Resolution Plan.
4. Whether the principle of maximization of value of the Corporate Debtor permits reconsideration of the Resolution Plan after its approval.

Issue-wise Detailed Analysis:

1. Whether the Adjudicating Authority erred in remitting the Resolution Plan for reconsideration before the CoC:

The Appellate Tribunal observed that the Adjudicating Authority committed an error by remitting the Resolution Plan for reconsideration before the CoC. The Tribunal emphasized that once the CoC has approved the Resolution Plan, it is binding inter se the CoC and the Successful Resolution Applicant. The Tribunal referred to the judgment of the Hon'ble Supreme Court in *Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited and Anr* - (2021) SCC OnLine 707, which stated that a Resolution Plan, even prior to the approval of the Adjudicating Authority, is binding between the CoC and the Successful Resolution Applicant. The Tribunal concluded that the Adjudicating Authority's decision to remit the Plan for reconsideration was not in accordance with the scheme of the IBC and CIRP Regulations.

2. Whether the CoC can change its stance and request reconsideration of the Resolution Plan after its approval:

The Tribunal held that the CoC cannot change its stance and request reconsideration of the Resolution Plan after its approval. The Tribunal noted that the CoC, during the pendency of the Application for approval of the Resolution Plan, cannot have a change of heart and cannot be permitted to contend before the Adjudicating Authority that the Resolution Plan be sent back for reconsideration. The Tribunal emphasized that the Resolution Plan approved by the CoC is binding and the CoC cannot be allowed to ask for reconsideration since it is bound by its own decision taken in approving the Resolution Plan.

3. Whether the impact of COVID-19 on the hotel industry justifies reconsideration of the Resolution Plan:

The Tribunal rejected the argument that the impact of COVID-19 on the hotel industry justifies reconsideration of the Resolution Plan. The Tribunal referred to the Hon'ble Supreme Court's observation in *Ebix Singapore*, which acknowledged the significant impact of COVID-19 on businesses but held that the legislative intent of the IBC cannot be overridden by the Court. The Tribunal concluded that the mere fact that the Resolution Plan was approved during the COVID-19 period does not justify its reconsideration.

4. Whether the principle of maximization of value of the Corporate Debtor permits reconsideration of the Resolution Plan after its approval:

The Tribunal acknowledged that the maximization of value of the Corporate Debtor is an object of the CIRP but emphasized that this objective must be achieved within the timeline provided in the scheme. The Tribunal held that the maximization of value cannot be a ground for reopening the CIRP process after its completion and the approval of the Resolution Plan by the CoC. The Tribunal stated that permitting reconsideration based on higher offers received after the approval of the Resolution Plan would lead to an unending process, which is against the scheme of the IBC.

Conclusion:

The Tribunal concluded that the Adjudicating Authority committed an error in passing the impugned order and set aside the order. The matter was remitted to the Adjudicating Authority to pass a fresh order on IA No./851/AHM/NCLT/2020 filed by the RP for the approval of the Resolution Plan within a period of three months. The appeal was allowed with no order as to costs.

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