2025 (1) TMI 1214 - AT - IBC

SRA gets timeline relief as NCLAT excludes restricted period from resolution plan implementation despite partial funding

Gemco Technologies Pvt. Ltd. & Ors. Versus Crown Abacus IT Park Association Successful Resolution Applicant of Crown Realtech Pvt. Ltd. & Anr. And Amarjit Singh (Suspended Director of Crown Realtech Pvt. Ltd.) Versus Crown Abacus IT Park Association Successful Resolution Applicant of Crown Realtech Pvt. Ltd. & Anr.

NCLAT dismissed appeal challenging NCLT's exclusion of period from 12.04.2023 to 01.07.2024 from resolution plan implementation timeline. SRA had infused ... Exclusion of period from 12.04.2023 until 01.07.2024 from the period of implementation of the Resolution Plan approved by NCLT - effect of interim order, which restrained the Successful Resolution Applicant (SRA) from transferring any units, in the Resolution plan - HELD THAT:- The present is not a case where after approval of the Resolution Plan, the Applicant has not taken any steps towards the implementation of the Resolution Plan and has not infused any funds. It is the case of the Appellants that although an amount of Rs.10 crores was to be infused by the SRA. The fact that SRA has infused Rs.7 crores, is not even disputed and it is an admitted fact. In the Application, which was filed before the Adjudicating Authority, the SRA has given the details of various steps taken by it towards implementation of the Plan and amount spent by the SRA towards the implementation of the Plan - Huge amount has been spent by the SRA for obtaining the renewal. As noted above the SRA has also submitted an application to the State Environment Impact Assessment Authority for securing the grant of environment clearance and amount has been deposited where on 28.05.2024, the State Environment Impact Assessment Authority has recommended for grant of environmental clearance. Electricity connection has been restored by Dakshin Haryana Vidyut Nigam, Faridabad. The present is a case where approval of Resolution Plan was challenged before this Tribunal in four Appeal(s), in which Appeal(s), interim order was also passed on 12.04.2023 and Appeal(s) could be ultimately decided on 01.07.2024, rejecting the challenge to the approval of Resolution Plan by elaborate consideration. The period, which was sought to be excluded by the SRA is period from which interim order was started operating against the SRA. When the approval of Resolution Plan is challenged in the Appeal(s), and the issues remained sub-judice and pending consideration and an interim order was also passed by this tribunal, there are no error in the order of the Adjudicating Authority, excluding the period from implementation of the Resolution Plan, during which an interim order was operating against the SRA. As noted above, the SRA has moved an Application in the Appeal(s) for vacation of the interim order, which Application could not be decided and remained pending till the dismissal of the Appeal till 01.07.2024. The substantial steps were taken by the SRA to implement the Resolution Plan and various steps were taken by the SRA to implement the Plan as has been pleaded in the Application filed by the SRA as well as in the affidavit in the present Appeal. It is also noticed above that SRA is none-else than the Association of allottees, which is representing about 250 allottees. One of the Association of the allottees had also challenged the Resolution Plan, which Appeal was also dismissed. Conclusion - i) The interim order passed by this Tribunal clearly prohibited the SRA to realize the aforesaid amount of Rs.50 crores. ii) The interim orders affecting the financial execution of a Resolution Plan justify the exclusion of time from the implementation timeline. iii) There are no error in the order passed by the Adjudicating Authority dated 28.08.2024 excluding the period from 12.04.2023 to 01.07.2024, during which the interim order passed by this Tribunal in the Appeal(s) challenging the approval of Resolution Plan was in operation. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core issues considered in this judgment include:
Whether the exclusion of the period from 12.04.2023 to 01.07.2024 from the implementation timeline of the Resolution Plan was justified.
Whether the interim order dated 12.04.2023, which restrained the Successful Resolution Applicant (SRA) from transferring any units, impacted the implementation of the Resolution Plan.
Whether the SRA took substantial steps towards implementing the Resolution Plan during the interim order period.
Whether the affidavit filed by Salil Barar, the then President of the SRA, was valid and should be considered.
Whether the objections raised by the appellants regarding the eligibility and actions of the SRA were relevant to the exclusion of time granted by the Adjudicating Authority.
ISSUE-WISE DETAILED ANALYSIS1. Exclusion of Time from Implementation Timeline
Relevant Legal Framework and Precedents: The Tribunal considered the provisions of the Insolvency and Bankruptcy Code, 2016, and the guidelines regarding the implementation of Resolution Plans within stipulated timelines.
Court's Interpretation and Reasoning: The Tribunal noted that the interim order dated 12.04.2023 prevented the SRA from transferring units, which was a significant source of funding as per the Resolution Plan. This restriction justified the exclusion of the period from the implementation timeline.
Key Evidence and Findings: The SRA had proposed to generate Rs.50 crores from the sale of unsold inventory, which was hindered by the interim order. The Tribunal found that the inability to realize this amount due to the interim order significantly impacted the implementation of the Resolution Plan.
Application of Law to Facts: The Tribunal applied the principles of equity and fairness, considering that the interim order was beyond the control of the SRA and directly affected the execution of the Plan.
Treatment of Competing Arguments: The appellants argued that the interim order did not prevent the SRA from implementing the Plan. However, the Tribunal found that the restriction on transferring units directly impacted the SRA's ability to secure necessary funds.
Conclusions: The Tribunal upheld the Adjudicating Authority's decision to exclude the period from the implementation timeline, recognizing the genuine impediments faced by the SRA.
2. Actions Taken by SRA During Interim Order Period
Relevant Legal Framework and Precedents: The Tribunal examined the obligations of the SRA under the approved Resolution Plan.
Court's Interpretation and Reasoning: The Tribunal found that the SRA had taken substantial steps towards implementing the Resolution Plan, including securing necessary licenses and clearances, despite the interim order.
Key Evidence and Findings: The SRA had spent significant amounts on various aspects of the project, including structural repairs, environmental clearances, and utility connections. The Tribunal considered these actions as evidence of the SRA's commitment to the Plan.
Application of Law to Facts: The Tribunal applied the principle that actions taken in good faith towards fulfilling contractual obligations should be recognized, even if full compliance was hindered by external factors.
Treatment of Competing Arguments: The appellants contended that the SRA had not fulfilled its financial obligations. The Tribunal noted that the SRA had infused Rs.7 crores and had made substantial progress in other areas, which justified the exclusion of time.
Conclusions: The Tribunal concluded that the SRA had acted diligently and in good faith, warranting the exclusion of the period from the implementation timeline.
3. Validity of Affidavit Filed by Salil Barar
Relevant Legal Framework and Precedents: The Tribunal considered the procedural validity of affidavits in legal proceedings.
Court's Interpretation and Reasoning: The Tribunal found that the affidavit filed by Salil Barar was valid and relevant, as it provided crucial information regarding the actions taken by the SRA.
Key Evidence and Findings: The Tribunal noted that Salil Barar was the President of the SRA at the time of the Resolution Plan approval and had the authority to file the affidavit.
Application of Law to Facts: The Tribunal applied the principle that affidavits must be considered if they provide material information relevant to the case.
Treatment of Competing Arguments: The appellants challenged the authority of Salil Barar to file the affidavit. The Tribunal dismissed this challenge, noting the ongoing legal proceedings regarding the appointment of an Administrator.
Conclusions: The Tribunal accepted the affidavit as valid and relevant to the case.
SIGNIFICANT HOLDINGS
Preserve verbatim quotes of crucial legal reasoning: The Tribunal emphasized, 'The interim order passed by this Tribunal clearly prohibited the SRA to realize the aforesaid amount of Rs.50 crores.'
Core Principles Established: The Tribunal established that interim orders affecting the financial execution of a Resolution Plan justify the exclusion of time from the implementation timeline.
Final Determinations on Each Issue: The Tribunal dismissed the appeals, affirming the Adjudicating Authority's decision to exclude the period from 12.04.2023 to 01.07.2024 from the implementation timeline of the Resolution Plan.