NCLAT upholds liquidation order after resolution plan rejection for missing deadline and wrong bank guarantee under Section 29A

NCLAT dismissed appeal challenging liquidation order after rejection of resolution plan. Appellant failed to comply with RFRP conditions including 3-day delay in bank guarantee submission beyond March 1, 2021 deadline and providing ICICI bank guarantee instead of required nationalized bank guarantee. Tribunal held RFRP terms are legally binding and their evaluation falls within CoC's commercial wisdom domain. Court found no error in Adjudicating Authority's order dated February 2, 2023, confirming appellant's ineligibility under Section 29A IBC.

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Issues Involved:
1. Non-submission of bank guarantee within the stipulated last date.
2. Submission of bank guarantee in non-compliance mode.
3. The Appellant being ineligible in terms of Section 29A of the Insolvency and Bankruptcy Code, 2016.

Summary:

Issue 1: Non-submission of bank guarantee within the stipulated last date
The Appellant, Mr. Satish Dhondiram Chavan, filed an appeal to set aside the Impugned Order dated 02.02.2023, which dismissed his application IA 1899 of 2021 in CP (IB)-1852/(MB)/2019. The Appellant sought relief to direct the CoC to condone a delay of three days in submitting a bank guarantee and to consider his Resolution Plan. The Adjudicating Authority found that the Appellant failed to furnish the bank guarantee within the stipulated time, which was extended multiple times, and ultimately rejected the application. The CoC's decision to reject the Resolution Plan due to the delay was upheld, emphasizing the importance of adhering to the timelines stipulated in the RFRP.

Issue 2: Submission of bank guarantee in non-compliance mode
The Appellant submitted a bank guarantee from ICICI Bank, a non-nationalized bank, contrary to the requirement of Clause 1.8.1 of the RFRP, which mandated a bank guarantee from a nationalized bank located in India. The CoC rejected the Resolution Plan on this ground as well. The Appellate Tribunal agreed with the CoC's decision, stating that the terms and conditions stipulated in the RFRP are sacrosanct and binding, and any deviation from these terms justifies the rejection of the Resolution Plan.

Issue 3: The Appellant being ineligible in terms of Section 29A of the Code
The Appellant was also found ineligible under Section 29A of the Code due to being declared a willful defaulter and having fraud allegations against him. The Appellate Tribunal noted that the Appellant's ineligibility under Section 29A was another valid ground for rejecting the Resolution Plan, although the primary focus was on the non-compliance with the RFRP requirements.

Conclusion:
The Appellate Tribunal upheld the Adjudicating Authority's decision to reject the Appellant's Resolution Plan due to the failure to comply with the RFRP requirements and the Appellant's ineligibility under Section 29A. The appeal was dismissed, and the connected appeal in Company Appeal (AT) (Ins.) No. 219 of 2023 was also dismissed as infructuous. The Tribunal emphasized the paramount status of the CoC's commercial wisdom and the non-justiciability of its decisions.

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