2025 (2) TMI 805 - AT - IBC

Resolution plan approval upheld despite timeline extension challenge under Regulation 36B provisions

Brand Steel & Power Pvt. Ltd. Versus Avishek Gupta & Ors.

NCLAT Principal Bench dismissed appellant's challenge to resolution plan approval. Committee of Creditors extended timeline for Expression of Interest and ... Rejection of application filed by the Appellant objecting to the Resolution Plan - objection against the extension of timeline or invitation to submit revised Resolution Plan - inclusion of Pinax Paper Mills Private Limited in the list of Prospective Resolution Applicants (PRAs) after the timeline extension - HELD THAT:- The voting period for the voting of the plan was allocated from 19.07.2023 to 11.08.2023 and as per e-voting result on 11.08.2023, the plan of Pinax Paper Mills Private Limited was approved with 96.05% voting share. Present is a case where CoC in its meeting held on 09.02.2023 decided to extend the timeline for submission of EoI and Resolution Plan. It is noticed that Invitation for Expression of Interest itself contemplated extension of timeline by the CoC which is reflected in Clause 6 of the EoI. Thus, all Resolution Applicants were well aware that time for submission of the EoI and submission of the Resolution Plan can be extended by the Resolution Professional with approval of the CoC. Whether extension of timeline which is contemplated in the EoI itself require a publication of fresh Form G? - HELD THAT:- Present is not a case that there was any modification in the Invitation for EoI rather only extension of timeline on same criteria and conditions as was initially provided have been made. Timeline as noticed above was already permitted to be extended by Clause 6 of the same Invitation for EoI dated 23.10.2022 by which process for receiving of EoI commenced. Clause 6 only provided for extension of last date for submission of EoI and when we read Clause 6, it does not indicate that for extension of last date of EoI revised fresh Form G was required to be issued. It is noticed that in Regulation 36 B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which is ‘request for resolution plans’ both expressions i.e. modification and extension of timeline have been used. As per sub-regulation (5), any modification in the request for resolution plan has to be treated as fresh issue whereas extension of timeline with the approval of the committee has been separately dealt. Thus, modification of request for resolution plan and extension of timeline has been separately dealt in Regulation 36B. Applying the aforesaid analogy in Regulation 36A, it is clear that although any modification in the Invitation for Expression of Interest require publication of fresh Form G but Regulation 36A on its term does not contemplate publication of fresh Form G when timeline has been extended. In any view of the matter, the present is a case where Appellant who has aggrieved by the approval of the Resolution Plan and rejection of his IA was very much part of the CIRP process, he having expressed its interest in pursuance of the issuance of Form G and after extension of timeline, it was communicated by e-mail dated 13.02.2023 and after publication of list of Prospective Resolution Applicants on 23.02.2023, neither any objection was filed by Appellant rather it participated in the process by filing a resolution plan by deleting Nippon Ispat Pvt. Ltd. from its resolution plan with whom it has earlier submitted resolution plan which was non-compliant. Applicant, thus, participated in the process and took chance to succeed without raising any objection to the extension of timeline. In the present case also, the ground taken by the Appellant is under Section 61(3)(ii) i.e. material irregularity in exercise of the powers by the Resolution Professional during the CIRP. Whether in the present case by non-publication of Form G after extension of timeline by the CoC in its 12th CoC meeting can be said to be material irregularity leading to scrapping of the entire CIRP process subsequent to the extension of timeline is the question to be considered. Conclusion - i) The CoC's decision to extend the timeline for EoI and Resolution Plan submission upheld without issuing a fresh Form G, as it was in line with the original EoI and approved by the CoC. ii) The inclusion of Pinax Paper Mills in the final list of PRAs was proper, and no objections were raised by the Appellant, who participated in the process. There is no merit in the Appeal. The Appeal is dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:- Whether the extension of the timeline for submission of the Expression of Interest (EoI) and Resolution Plan without issuing a fresh Form G was valid under the Insolvency and Bankruptcy Code (IBC) and its regulations.- Whether the inclusion of Pinax Paper Mills Private Limited in the list of Prospective Resolution Applicants (PRAs) after the timeline extension was permissible.- Whether the process followed by the Resolution Professional and the Committee of Creditors (CoC) in approving the Resolution Plan was in compliance with the relevant legal framework.- Whether there was any material irregularity in the conduct of the Corporate Insolvency Resolution Process (CIRP) that would warrant interference with the approval of the Resolution Plan.2. ISSUE-WISE DETAILED ANALYSISExtension of Timeline and Requirement of Fresh Form G- Relevant Legal Framework and Precedents: Regulation 36A (4A) of the CIRP Regulations mandates that any modification in the invitation for EoI must be made in the manner of the initial invitation. The Appellant argued that extending the timeline without a fresh Form G violated this regulation.- Court's Interpretation and Reasoning: The Tribunal interpreted that the extension of the timeline, as contemplated in the original EoI, did not constitute a modification that required a fresh Form G. The Tribunal distinguished between 'modification' and 'extension,' noting that the latter was expressly allowed under Clause 6 of the original EoI.- Key Evidence and Findings: The original EoI allowed for the extension of the last date with CoC approval, and the extension was communicated to all PRAs, including the Appellant, who participated without objection.- Application of Law to Facts: The Tribunal found that the extension was in accordance with the original EoI and the CoC's decision, thus not requiring a fresh Form G.- Treatment of Competing Arguments: The Appellant's reliance on Regulation 36A (4A) was countered by the Tribunal's interpretation that the regulation did not apply to mere extensions of timeline.- Conclusions: The Tribunal concluded that the extension of the timeline without a fresh Form G was valid and did not constitute a material irregularity.Inclusion of Pinax Paper Mills in the List of PRAs- Relevant Legal Framework and Precedents: Regulation 39(1B) of the CIRP Regulations prohibits considering a resolution plan from an applicant not in the final list of PRAs.- Court's Interpretation and Reasoning: The Tribunal noted that after the timeline extension, a new list of PRAs was published, including Pinax Paper Mills, and no objections were raised by any party, including the Appellant.- Key Evidence and Findings: The final list of PRAs published on 28.02.2023 included Pinax Paper Mills, and the Appellant did not object to this list.- Application of Law to Facts: The Tribunal found that the inclusion of Pinax Paper Mills was proper and in compliance with the regulations, as it was part of the final list of PRAs.- Treatment of Competing Arguments: The Appellant's argument that Pinax was not in the initial list was countered by the fact that the final list, after the extension, included Pinax, and no objections were raised.- Conclusions: The Tribunal concluded that there was no breach of Regulation 39(1B) as Pinax was included in the final list of PRAs.Compliance with CIRP Regulations and Material Irregularity- Relevant Legal Framework and Precedents: Section 61(3)(ii) of the IBC allows for appeal on grounds of material irregularity in the exercise of powers by the Resolution Professional.- Court's Interpretation and Reasoning: The Tribunal found that all actions of the Resolution Professional were with the CoC's approval and in line with the EoI's provisions.- Key Evidence and Findings: The Appellant participated in the process after the timeline extension and submitted a compliant resolution plan.- Application of Law to Facts: The Tribunal held that there was no material irregularity in the process as the Appellant was aware of and participated in the extended process.- Treatment of Competing Arguments: The Appellant's claims of irregularity were dismissed as they participated in the process and benefited from the timeline extension.- Conclusions: The Tribunal concluded that there was no material irregularity warranting interference with the approved Resolution Plan.3. SIGNIFICANT HOLDINGS- The Tribunal upheld the CoC's decision to extend the timeline for EoI and Resolution Plan submission without issuing a fresh Form G, as it was in line with the original EoI and approved by the CoC.- The inclusion of Pinax Paper Mills in the final list of PRAs was proper, and no objections were raised by the Appellant, who participated in the process.- The Tribunal emphasized the importance of the CoC's commercial wisdom and found no material irregularity in the Resolution Professional's actions.- The Tribunal dismissed the appeal, affirming the Adjudicating Authority's order approving the Resolution Plan.