NCLAT overturns direction for fresh Form-G during CIRP extension, upholds CoC's commercial wisdom over judicial interference

NCLAT set aside the Adjudicating Authority's direction to issue fresh Form-G for inviting new resolution applicants during CIRP extension. Despite four years without successful resolution and five previous Form-G issuances, when CoC decided against fresh publication and chose to consider only the appellant's resolution plan (with 86% majority support), the Adjudicating Authority exceeded its judicial review powers by substituting CoC's commercial wisdom. NCLAT affirmed the 60-day CIRP extension but reversed the fresh Form-G direction, emphasizing that CoC's commercial decisions cannot be overridden by courts absent compelling circumstances.

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Issues Involved:
1. Whether the Adjudicating Authority was justified in directing the issuance of fresh Form-G.
2. Whether the extension of the CIRP period by 60 days was appropriate.

Summary:

Issue 1: Justification of Issuance of Fresh Form-G

The Adjudicating Authority directed the Resolution Professional (RP) to issue a fresh Form-G to invite Expressions of Interest (EOIs) from other resolution applicants, which was beyond the relief prayed for. The Appellant contended that this direction was not in consonance with the commercial wisdom of the Committee of Creditors (CoC), which had already decided against issuing fresh Form-G to avoid unnecessary delays. The CoC, with a 97.56% vote share, had resolved to extend the Corporate Insolvency Resolution Process (CIRP) period solely for the consideration and voting on the Resolution Plan submitted by the Appellant. The CoC had also noted that the Resolution Plan of the Appellant was of higher value compared to the plans submitted by earlier resolution applicants. The Tribunal emphasized that the commercial wisdom of the CoC should be given paramount status without judicial intervention, as reaffirmed by the Hon'ble Supreme Court in various judgments. The Tribunal held that the Adjudicating Authority committed an error in directing the issuance of fresh Form-G, as it ran contrary to the commercial wisdom of the CoC and the stringent timelines prescribed by the Insolvency and Bankruptcy Code (IBC).

Issue 2: Extension of CIRP Period

The Adjudicating Authority extended the CIRP period by 60 days to enable the completion of the resolution process. The Tribunal affirmed this part of the order, noting that the CoC had already resolved to seek an extension of the CIRP period by 60 days to consider and vote on the Resolution Plan submitted by the Appellant. The Tribunal directed the RP to place the Resolution Plan of the Appellant before the CoC for consideration and voting and to complete the CIRP within the extended period.

Conclusion:

The Tribunal set aside the part of the impugned order directing the issuance of fresh Form-G and affirmed the extension of the CIRP period by 60 days. The RP was directed to place the Resolution Plan of the Appellant before the CoC for consideration and voting. The appeal was allowed with the aforesaid observations.

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