Tribunal allows post-CIRP avoidance actions by Successful Resolution Applicant

The Tribunal held that avoidance applications can continue post-CIRP as they are distinct from the resolution process. The Successful Resolution Applicant was allowed to pursue these applications as per the approved Resolution Plan, rejecting the argument that only the RP could do so. The Tribunal also permitted avoidance applications filed after CoC's approval of the Resolution Plan, emphasizing reasonableness in timelines. All appeals were dismissed, affirming the Successful Resolution Applicant's right to pursue avoidance applications, with the Tribunal upholding the Adjudicating Authority's orders.

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Issues Involved:

1. Whether avoidance applications can continue after the completion of the Corporate Insolvency Resolution Process (CIRP).
2. Whether the Successful Resolution Applicant can pursue avoidance applications.
3. Whether avoidance applications filed after the approval of the Resolution Plan by the Committee of Creditors (CoC) can be entertained.

Summary:

Issue 1: Continuation of Avoidance Applications Post-CIRP

The Tribunal held that avoidance applications do not become infructuous after the completion of the CIRP. Section 26 of the Insolvency and Bankruptcy Code (IBC) clearly indicates that avoidance applications are a separate stream from the CIRP and can continue independently. The legislative intent is that avoidance applications can survive the CIRP, as they are aimed at enhancing the asset pool available for distribution to creditors. The Tribunal referenced the Delhi High Court's judgment in TATA Steel BSL Ltd. vs. Venus Recruiter Pvt. Ltd., which supports the continuation of avoidance applications post-CIRP.

Issue 2: Pursuit of Avoidance Applications by Successful Resolution Applicant

The Tribunal rejected the argument that only the Resolution Professional (RP) or Administrator could pursue avoidance applications. The Resolution Plan approved by the Adjudicating Authority explicitly empowered the Successful Resolution Applicant (Piramal Capital & Housing Finance Ltd.) to pursue the avoidance applications. This provision is binding on all parties involved, including the erstwhile Administrator. The Tribunal emphasized that the Successful Resolution Applicant is not exercising delegated powers of the RP but is acting based on the provisions of the approved Resolution Plan.

Issue 3: Entertaining Avoidance Applications Filed Post-Approval of Resolution Plan by CoC

The Tribunal noted that there are no provisions in the IBC or its regulations that mandate the rejection of avoidance applications filed after the CoC's approval of the Resolution Plan. The timeline for filing avoidance applications under Regulation 35A is not mandatory but should be reasonable. The Tribunal found that the avoidance applications filed by the Administrator after the CoC's approval of the Resolution Plan were rightly permitted to be pursued by the Successful Resolution Applicant. The Tribunal referenced the Division Bench of the Delhi High Court's judgment in TATA Steel BSL Ltd., which acknowledged the exigencies of delay in initiating avoidance actions and did not find such delays as grounds for rejection.

Conclusion:

The Tribunal dismissed all the appeals, affirming that the Successful Resolution Applicant (Piramal) is permitted to pursue the avoidance applications filed by the erstwhile Administrator. The Tribunal found no merit in the appeals and upheld the orders of the Adjudicating Authority.

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