Resolution applicant fails to implement approved plan, liquidation order upheld under Section 33 IBC

The NCLAT dismissed an appeal where the successful resolution applicant failed to implement an approved resolution plan. The appellant failed to infuse Rs.29.34 crores as required and sought to make payment conditional upon the corporate debtor's status being made active with the Registrar of Companies. The NCLAT held that the adjudicating authority's refusal to grant waivers in the original order made implementation binding on the resolution applicant regardless of the company's status. The tribunal upheld the liquidation order under Section 33(3) read with Section 33(1)(b) of the Insolvency and Bankruptcy Code, finding the appellant's conditional approach to implementation unacceptable.

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Issues Involved:
1. Failure to Implement the Resolution Plan
2. Conditional Payment and Infusion of Funds
3. Liquidation of the Corporate Debtor
4. Extension of Timelines for Payment
5. Legal and Procedural Compliance

Detailed Analysis:

1. Failure to Implement the Resolution Plan:
The primary issue revolved around the failure of the Successful Resolution Applicant (SRA) to implement the Resolution Plan approved by the Adjudicating Authority on 25.03.2021. The SRA did not make any payments as required under the plan within the stipulated timelines. Despite being given multiple opportunities, the SRA failed to deposit the resolution money in the escrow account, leading to the conclusion that the SRA had contravened the approved Resolution Plan.

2. Conditional Payment and Infusion of Funds:
The SRA argued that it could not infuse the necessary funds as share capital because the status of the Corporate Debtor was not changed to 'active' by the Registrar of Companies. The Adjudicating Authority found this argument unconvincing, stating that the payment of resolution money was independent of the conditions put forth by the SRA. The SRA's insistence on conditional payment linked to the change of status and other approvals was rejected, as the plan was approved unconditionally.

3. Liquidation of the Corporate Debtor:
Given the SRA's failure to implement the Resolution Plan, the Adjudicating Authority directed the liquidation of the Corporate Debtor. The decision was based on the non-implementation of the plan despite the SRA being given ample opportunities to comply. The liquidation was ordered under Section 33 Sub-section (3) read with Section 33(1)(b) of the Insolvency and Bankruptcy Code (I&B Code).

4. Extension of Timelines for Payment:
The SRA sought an extension of the timelines for payment, arguing that the delay in obtaining necessary approvals affected the implementation of the plan. However, the Adjudicating Authority noted that the Resolution Plan itself allowed for an extended moratorium of up to six months in case of delays, which had already been exceeded. The Tribunal held that the timelines could not be indefinitely extended, especially when the SRA had failed to make any payments within the initial 180 days or the extended period.

5. Legal and Procedural Compliance:
The SRA's applications for various waivers and concessions, including the change of status of the Corporate Debtor and clarity on the applicability of amended provisions of the Securities Contracts (Regulations) Rules, 1959, were not granted by the Adjudicating Authority. The Tribunal emphasized that the SRA was bound by the terms of the approved Resolution Plan and could not introduce new conditions for its implementation. The Adjudicating Authority had expressly refused to grant any reliefs or concessions, and the SRA's failure to challenge this decision meant it was final and binding.

Conclusion:
The appeals were dismissed, affirming the Adjudicating Authority's decision to liquidate the Corporate Debtor due to the SRA's failure to implement the Resolution Plan. The Tribunal found no merit in the SRA's arguments for conditional payment and the need for further extensions, emphasizing that the SRA had ample opportunity to comply with the plan but failed to do so. The decision underscores the importance of adhering to the terms of the approved Resolution Plan and the limited scope for introducing new conditions post-approval.

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