Resolution Professional cleared of contempt charges for issuing fresh Expression of Interest under judicial authorization

The Tribunal dismissed the contempt petition against the Resolution Professional and Committee of Creditors. The appellant alleged violation of the Tribunal's 15.12.2022 order directing the RP to await disposal of a pending application before inviting fresh Expressions of Interest in the corporate insolvency resolution process. The Tribunal found no wilful contempt as the fresh EoI was issued pursuant to subsequent orders by the adjudicating authority dated 14.11.2024 and 03.12.2024, which authorized the RP to proceed despite pending litigation concerning the corporate debtor's assets. The Tribunal held that judicial authorization validated the RP's actions, and transparency regarding ongoing disputes was maintained in the fresh EoI process.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this judgment are:

(a) Whether the respondents have committed contempt of court by allegedly violating the Tribunal's order dated 15.12.2022, which directed the Resolution Professional (RP) to await the decision of a pending application (C.A. No. 01 of 2018) before inviting fresh Expressions of Interest (EoI) in the corporate insolvency resolution process (CIRP).

(b) Whether the issuance of fresh EoI by the RP and Committee of Creditors (CoC) without disposal of C.A. No. 01 of 2018 amounts to non-compliance of the Tribunal's directions and thereby warrants initiation of contempt proceedings.

(c) The implications of the pendency of litigation relating to a specific asset (the 5th floor of the hotel of the corporate debtor) on the CIRP and the process of inviting fresh EoI.

(d) The propriety of the adjudicating authority's orders permitting the RP to re-run the CIRP process, including the issuance of fresh EoI and extension of the CIRP period, despite the pendency of related applications.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) and (b): Alleged contempt for non-compliance of the Tribunal's order dated 15.12.2022

The Tribunal's order dated 15.12.2022 disposed of an earlier appeal by affirming the cancellation of approval granted to a Resolution Plan and forfeiture of the deposited amount, but set aside certain directions and requested the adjudicating authority to dispose of C.A. No. 01 of 2018 within three months. The Tribunal further directed the RP, after decision of C.A. No. 01 of 2018, to invite fresh EoI and complete the process within two months, treating the CIRP period as extended till then.

The appellant contended that the RP and CoC violated this order by inviting fresh EoI before disposal of C.A. No. 01 of 2018, thus committing contempt.

The Tribunal examined subsequent orders, including those dated 09.02.2024 and 25.07.2024, which clarified that the pendency of C.A. No. 01 of 2018 was not an impediment to issuing fresh Form-G (invitation for EoI). The 25.07.2024 order noted that an application (I.A. No. 1219/2024) filed by the RP seeking permission to re-run the CIRP process and issue fresh EoI was pending before the adjudicating authority. The Tribunal requested the adjudicating authority to decide this application at the earliest.

Subsequently, the adjudicating authority allowed I.A. No. 1219/2024 by orders dated 14.11.2024 and 03.12.2024, permitting the RP to issue fresh EoI. The Tribunal found that the fresh EoI was issued pursuant to these orders and not in violation of its 15.12.2022 order.

The Tribunal's reasoning emphasized that since the fresh EoI issuance was authorized by the adjudicating authority after due consideration of the pending applications, no wilful contempt was established.

Issue (c): Impact of pending litigation on CIRP and fresh EoI issuance

The litigation concerning the 5th floor of the hotel was central to C.A. No. 01 of 2018 and related applications. The appellant argued that the pendency of this litigation should have prevented the RP from proceeding with fresh EoI.

The Tribunal noted that the CoC and RP were ready to incorporate details of the litigation, including the pendency of I.A. No. 6139/2023 related to the 5th floor dispute, while inviting fresh EoI. This demonstrated an effort to maintain transparency and inform prospective resolution applicants of ongoing disputes.

The Tribunal found that the adjudicating authority's orders allowing the re-run of the CIRP and fresh EoI issuance took into account the litigation status and authorized the RP to proceed accordingly. Thus, the pendency of litigation did not bar the CIRP process from moving forward under judicial supervision.

Issue (d): Propriety of adjudicating authority's orders permitting re-run of CIRP and extension of CIRP period

The RP's application I.A. No. 1219/2024 sought permission to re-run the CIRP process, re-publish the invitation for EoI, extend the CIRP period by 90 days, and appoint registered valuers for fresh valuation of assets.

The Tribunal's order dated 25.07.2024 observed that the adjudicating authority had yet to decide this application but urged early disposal. The subsequent orders by the adjudicating authority allowed the application, thereby validating the RP's actions.

The Tribunal implicitly recognized the adjudicating authority's discretion and authority to manage the CIRP timeline and procedural steps in light of the complex factual matrix and pending litigations.

The Court's analysis indicated that the extension of CIRP and fresh valuation were appropriate measures to ensure a fair and transparent resolution process, consistent with the objectives of the insolvency framework.

3. SIGNIFICANT HOLDINGS

The Tribunal held that:

"No wilful contempt has been made out to initiate any proceeding against the respondent."

This conclusion was based on the following core principles and reasoning:

(i) The Tribunal's order dated 15.12.2022 directed the RP to invite fresh EoI only after disposal of C.A. No. 01 of 2018. However, subsequent judicial clarifications and orders by the adjudicating authority authorized the RP to proceed with fresh EoI despite the pendency of related applications, thereby not violating the Tribunal's directions.

(ii) The adjudicating authority's orders permitting the re-run of the CIRP process and extension of the CIRP period were valid exercises of its powers under the insolvency framework, especially considering the complexity of pending litigations affecting the corporate debtor's assets.

(iii) The RP and CoC's readiness to disclose ongoing litigation in the fresh EoI process demonstrated compliance with principles of transparency and fairness, mitigating any prejudice to prospective resolution applicants.

(iv) The Tribunal emphasized the importance of judicial supervision and timely disposal of pending applications to ensure the CIRP progresses without undue delay while safeguarding stakeholders' interests.

In sum, the Tribunal determined that the issuance of fresh EoI pursuant to the adjudicating authority's orders did not constitute contempt of court, and the contempt petition was accordingly closed.

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