2025 (9) TMI 1544 - AT - IBC

Appeal dismissed for late revised bid; multiple EoI extensions given and final extension clearly notified, CIRP timelines upheld

Giriraj Prasad and Kamla Gupta Versus Versus Reetesh Kumar Aggarwal, Committee of Creditors and M/s Pooja Marbles

NCLAT (Principal Bench) dismissed the appeal, finding no bias or unfairness by Respondent Nos.1 & 2 in the EoI process. The tribunal held that Respondent ... Respondent Nos. 1 & 2 acted in fairness to all the bidder who submitted their bid in response to EoI, or in bias - privilege and the right of the Appellants to seek multiple extensions - HELD THAT:- The Appellants sought several extensions, which were granted by the Respondent No.1. In the last extension (5th extension), the Respondent No.1 made it very clear to the Appellants that this was last extension. The Respondent No.1 also informed the Appellants that the Adjudicating Authority has not ranted any extension of CIRP timelines. Hence, we are of considered opinion that the Respondent No.1 gave ample opportunities to the Appellants, who failed to give their revised bid in time. There are no merit in the arguments of the Appellants on this account. The Adjudicating Authority has clearly recorded the sequence of events and opportunities offered to the Appellants. The Impugned Order is well reasoned order and there are no error in the same. The CIRP is time bound process and the time is of essence in order to seek resolution of the Corporate Debtor. Unnecessary delays effect the chances of revival of the Corporate Debtor adversely which may lead to liquidation of the Corporate Debtor i.e., corporate death of the Corporate Debtor. There are no bias as alleged by the Appellants in conduct of the CIRP. There are no merit in the appeal - appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Resolution Professional and the Committee of Creditors (CoC) acted with bias or denied fair opportunity to a resolution applicant by (a) refusing further extension for submission of a revised resolution plan; (b) seeking extensive clarifications on the last date for submission; and (c) convening the 12th CoC meeting in a manner that impeded participation. 2. Whether an unsuccessful resolution applicant has locus standi to challenge the CoC's commercial decision approving a resolution plan, and the extent to which judicial interference is permissible with CoC commercial wisdom under the Insolvency and Bankruptcy Code. 3. Whether the timeline constraints under Section 12 of the Code and related exclusions/extensions limited the Resolution Professional's ability to grant further extensions, and if such limitation justified denial of applicants' extension requests. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Fair opportunity, alleged bias, and timing of queries Legal framework: The Code and CIRP Regulations require that resolution applicants be given opportunity to submit and revise resolution plans; Regulation 36/Form G set timelines for submission; Regulation 19 and Section 30(2) prescribe notice requirements for CoC meetings; the CIRP is time-bound under Section 12. The Resolution Professional acts subject to CoC instructions and statutory time constraints. Precedent treatment: Decisions emphasise limited judicial interference in CoC's commercial decisions and uphold time-bound nature of CIRP. The Tribunal relied on authoritative holdings that CIRP timelines are directory but ordinarily capped (see referenced Supreme Court principle that 330 days is the outer limit, with narrow exceptions). Interpretation and reasoning: The Tribunal examined the documented timeline of requests and concessions: five separate extensions were granted to the applicant, the Resolution Professional repeatedly communicated that the last extension (to 01.06.2021) was final owing to impending CIRP expiry, and the applicant had expressly committed to that timeline. The CoC refused further extension at its 12th meeting after deliberation, citing constrained remaining CIRP period and exclusion decisions by the Adjudicating Authority. The Tribunal found that (a) the late-day queries sought by the Resolution Professional on 01.06.2021 were legitimate clarifications required under RFRP and not demonstrably mala fide, (b) the applicant's request of 02.06/03.06/04.06 invoked COVID-19 as basis but the contemporaneous communications showed inconsistent reasons for non-submission (i.e., not solely inability to answer queries), and (c) the RP provided adequate notice of the CoC meeting and had limited ability to assist with technical connectivity beyond issuing the meeting link. Ratio vs. Obiter: Ratio - the RP and CoC afforded multiple, expressly-final extensions and acted within their duties; late clarifications were permissible and did not vitiate the process. Obiter - remarks on technical assistance obligations of the RP to ensure meeting connectivity are addressed contextually but do not form the decisive legal ratio. Conclusions: No bias or unfair process was established. The RP and CoC acted fairly within statutory and regulatory confines; the applicant failed to avail the opportunities granted, and the timing and substance of queries do not invalidate the CoC's decision. Issue 2 - Locus to challenge CoC's commercial wisdom and scope of judicial interference Legal framework: Section 30 and Section 31 of the Code govern submission and approval of resolution plans; Section 61 provides limited grounds for appeal. Judicial review of CoC decisions is narrow and confined to statutory non-compliance or failure to meet Section 30(2) requirements; CoC's commercial wisdom is ordinarily non-justiciable. Precedent treatment: The Tribunal relied on established jurisprudence that unsuccessful resolution applicants lack locus to challenge the CoC's commercial decision except under narrow statutory grounds; courts should not substitute their view for CoC's commercial wisdom unless the plan fails statutory tests. Interpretation and reasoning: The Tribunal found that (a) the CoC, dominated by banks holding substantial voting share, exercised commercial judgment after considering competing plans; (b) the applicant did not demonstrate that the approved plan failed the statutory requirements of Section 30(2); (c) there is no provision permitting post facto enhancement or modification of plans once the CoC has unanimously approved a plan; and (d) permitting unsuccessful applicants to seek reconsideration based only on alleged better figures after the deadline would undermine finality and the time-bound objective of CIRP. Ratio vs. Obiter: Ratio - unsuccessful resolution applicants do not have standing to attack the CoC's exercise of commercial wisdom absent statutory infirmity; courts must respect CoC decisions except on statutory grounds. Obiter - observations on practical consequences of allowing perpetual bid improvements (process paralysis) illustrate policy concerns but are ancillary to the legal holding. Conclusions: The applicant lacked locus to challenge the CoC's commercial decision. The Tribunal will not interfere with the CoC's approval absent demonstration of statutory non-compliance or failure under Section 30(2). Issue 3 - Effect of CIRP timelines and Adjudicating Authority exclusions on ability to grant extensions Legal framework: Section 12 prescribes the 180-day CIRP timeline and mechanism for extension up to 330 days (and exceptional extensions beyond 330 days in narrow circumstances); Adjudicating Authority may exclude periods; RP cannot unilaterally extend beyond statutory limits without CoC/Adjudicating Authority sanction. Precedent treatment: Supreme Court authority treats 330 days as the outer limit subject to exceptional extension; judicial discretion may permit further extension in rare cases where delay results from court proceedings and parties are not at fault. Interpretation and reasoning: The Tribunal noted that the Adjudicating Authority had excluded a lockdown period but otherwise refused further extension; the RP repeatedly informed the applicant that further unilateral extensions could not be granted. The CoC's refusal to permit additional time was therefore constrained by statutory timelines and prior orders. Given the limited remaining CIRP period, the CoC's decision to proceed with available plans was a lawful exercise of discretion. Ratio vs. Obiter: Ratio - time-bound nature of CIRP and prior judicial exclusions constrained the RP's authority to grant further extensions; refusal by CoC to extend was justified by statutory timeline considerations. Obiter - discussion on exceptional extension beyond 330 days (as noted in Supreme Court dicta) is contextual and not applied on the facts. Conclusions: The statutory timeline and prior exclusion order justified the RP's and CoC's refusal to grant further time; no fault of the RP/CoC is established for enforcing the time-bound regime. Overall Disposition 1. The Tribunal upholds the Adjudicating Authority's decision dismissing the application challenging the approval of the resolution plan: the process afforded adequate opportunities, the RP and CoC acted within statutory bounds and commercial discretion, and the unsuccessful applicant lacked standing to challenge the CoC's commercial wisdom absent statutory infirmity. 2. Judicial intervention was found unwarranted on the facts: no failure to comply with Section 30(2) or other statutory provisions was demonstrated that would justify setting aside the CoC's decision.