Appeals allowed, orders set aside. Tribunal consolidates CIRPs of intertwined companies to maximize asset value.

The appeals were allowed, setting aside the 'Adjudicating Authority's' order. The Tribunal directed the consolidation of the Corporate Insolvency Resolution Processes (CIRPs) of the two companies, emphasizing the objective of the IBC, 2016, to maximize asset value and ensure a viable resolution. The businesses of the holding company and its subsidiary were found to be intertwined and integrated, meeting the criteria for consolidation as established in relevant case law.

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Issues Involved:
1. Whether the Appellants qualify as 'Operational Creditors'.
2. Whether the businesses of RPPL and RISPL are intertwined and integrated.
3. Whether the criteria for 'Consolidation' of CIRPs is met.
4. Whether the 'Adjudicating Authority' has the jurisdiction to order consolidation of CIRPs.

Summary:

1. Qualification as 'Operational Creditors':
The Hon'ble Apex Court in 'Consolidated Construction Consortium Limited Vs. Hitro Energy Solutions Pvt. Ltd.' established that an 'Operational Debt' includes a claim arising from a contract in relation to the supply of goods and services from the Corporate Debtor. The appellants, being purchasers of goods and services from RPPL and RISPL, fall within the ambit of 'Operational Creditors' as defined under Section 5(20) of the Code.

2. Intertwining and Integration of Businesses:
RPPL is the holding company, and RISPL is its wholly-owned subsidiary, created for operational convenience. RISPL is dependent on RPPL for servicing generators and funds. The businesses are integrated, with RPPL retaining technology and manufacturing capabilities while RISPL handles operations and maintenance. The Ministry of New and Renewable Energy mandates that manufacturers provide O&M services, reinforcing the interconnectedness of the two companies.

3. Criteria for 'Consolidation' of CIRPs:
The criteria for consolidation, as established in 'State Bank of India vs. Videocon Industries Ltd.' and 'Radico Khaitan Ltd. vs. BT & FC Pvt. Ltd.', include common control, common directors, common assets, common liabilities, interdependence, and intricate links. The businesses of RPPL and RISPL meet these criteria, as evidenced by shared directors, intertwined finances, and integrated operations. The Mediator's report also supported a single resolution plan for both companies to maximize value.

4. Jurisdiction to Order Consolidation:
Sections 60(2) and 60(5) of the IBC provide the 'Adjudicating Authority' with the jurisdiction to entertain and dispose of any application or proceeding by or against the corporate debtor or its subsidiaries. The inherent powers under Rule 11 of the NCLT Rules, 2016, allow the Tribunal to make necessary orders to meet the ends of justice. The Tribunal concluded that consolidation is not an exercise of 'Equity Jurisdiction' but a legal principle intended to maximize asset value and ensure a viable resolution.

Conclusion:
The appeals are allowed, and the 'Adjudicating Authority's' order dated 01/11/2021 is set aside. The Tribunal directed the consolidation of the CIRPs of RPPL and RISPL, emphasizing the scope and objective of the IBC, 2016, to maximize asset value and ensure a viable resolution.

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