TaxTMI 
TaxTMI 
2020 (11) TMI 673
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..... Ltd. was appointed as Process Advisors who issued process document on 07.06.2018 which was subsequently amended a few times. The last amendment was carried out on 06.08.2018 and date for submission of amending Resolution Plan was fixed as 20.08.2018. The CIRP period was extended by 90 days vide order of this Authority dated 01.08.2018. The Applicants submitted Resolution Plan firstly on 20.08.2018 which was revised subsequent to discussion with COC and final Plan along with addendum was submitted on 13.11.2018. The said Resolution Plan was approved by 69.87 per cent of voting share by COC on 16.11.2018 one day before expiry of 270 days. IA No. 476 of 2018 was filed by Resolution Professional on 18.11.2018 before this Authority for approval of the said Resolution Plan. The Applicants also rendered performance Bank guarantee for a sum of Rs. 75 Crores on 26.11.2018 which was valid for a period of nine months. The validity of Bank guarantee was extended from time to time and last extension of two months was done on 19.08.2020 as per the directions of this Authority on a prayer made by the Resolution Applicants. The said Resolution Plan is pending for approval of Adjudicating Authori....
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.... of 93.63 per cent. Subsequently, the Suspended Management filed an application challenging the eligibility of Resolution Applicants u/s 29-A of Code. A petition was also filed by IREDA on the same ground. These petitions were heard from time to time, however, due to pandemic situation; the matters were not listed after 16.03.2020 and are still pending. Based upon these facts, he contended that more than 600 days had lapsed since the date of approval of the said Resolution Plan by CoC on 18.11.2018 and due to such delay Resolution Plan lost its relevance. 4. Thereafter, the learned senior counsel initiated his legal arguments by stating that speed and timeliness were corner-stones of the scheme of IBC, hence, for non-compliance, thereof, the applicants were eligible to withdraw from the Plan. In this regard, he referred to Section 12 as amended by the Insolvency and Bankruptcy (Amendment) Act, 2019 and contended that the maximum period including the time taken in legal proceedings could be 330 days from the date of insolvency commencement date and in the present case, such period of 330 days expired in January, 2019. He further, contended that such period of 330 days was sacrosa....
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....the website, hence, in the present case, there was a case of mis-statement of facts as well. He also drew our attention to various letters written to the Resolution Professional to share current status of affairs so that applicant could make an assessment of materially adverse impact on the business of the Corporate Debtor due to lapse of time, however, the same was not provided. Thereafter, he took us to the relevant paragraphs of the decisions of Hon'ble Supreme Court in the case of Mobilox Innovations Put. Ltd. to support his contention that speed was the essence of the IBC as earlier experiments failed because of inordinate delays only. He also drew our attention to paragraphs 64 to 79 to the decision of Hon'ble Supreme Court in the case of Arcelormittal India Put. Ltd. wherein the Hon'ble Supreme Court had emphasized on timely completion of Resolution Process. He also drew our attention to the observations of Hon'ble Supreme Court in the Case of Surendra Trading Company vs. Juggilal Kamlapat Jute Mills Company Limited and Others reported in (2017) 16 Supreme Court Cases 143 for the same proposition and drew our attention to paragraphs 17 and 18 of the said deci....
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....ned Counsel for the applicant, thereafter, contended that the timely approval was essence of the contract, hence, delay in such approval discharged the Resolution Applicants from their obligations. He also contended that it was a case of bilateral contract and there were reciprocal promises and once RP/CoC failed to get the plan approved, the Resolution Applicants could not be forced to perform beyond such time line. For this proposition, he placed reliance on the provisions of Section 46, 54 and 55 of Indian Contract Act, 1872. He specifically referred to Section 46 and explanation thereto to contend that the performance had to be made within a reasonable time and question that what was reasonable time, was a question of fact. Thereafter, he referred to provisions of Section 54 of Indian Contract Act, 1872 to show that if some promise remains unfulfilled then the corresponding promise which is based upon the performance of such unfulfilled promise, could not be expected in law. For the concept of reasonable time, he also placed reliance on the decision of Court of Appeal in the case of United Dominions Trust (commercial) Ltd. vs. Eagle Aircraft Services Limited and referred to pag....
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....ory in cases like the present. a) The timelines under the IBC is only a guideline which is to be followed and is not mandatory in nature (Para 12 of Reply + Essar Steel Para 108 of the judgment). b) The Hon'ble Appellate Authority in the Judgment dated July, 29, 2020 (Educomp NCLAT Judgment) in the matter of Committee of Creditors of Educomp Solutions Limited vs. Ebix Singapore Pte. Ltd. & Anr. held that (Refer Para 96) 96............."delay cannot be taken advantage of by a litigant because of the fact that Actus curiae neminemgravabit' i.e. the act of Court shall harm no person which is embedded in jurisprudence (vide Jang Singh V. Brij Lal, (1964) 2 SCR Page 146 at special page 149.97" c) Thus, as such the delay in approval of the Resolution Plan would not provide any ground for the Applicant to withdraw the Resolution Plan and prejudice the CIRP of the Corporate Debtor. The Applicant even after the expiry of 330 days has until filing of the present application supported approval of the Resolution Plan. 2. IB Code as also Process document does not permit withdrawal of Resolution Plan once approved by CoC. i. The Code,....
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....". A copy of the order date 3.7.2020 is attached. vi The judgment in the case of Deccan Value Investors LP, Company Appeal No. 1276 cited by the applicant is not applicable in the facts of the present case in view of the following reasons:- a. The said judgment arose from rejection of the Resolution Plan by Hon'ble Adjudicating Authority on the ground that the plan was violative of Section 30(2)(e) of IB Code (Pg. 40) which is not in the present case. b. The said judgment has been challenged before the Hon'ble Supreme Court in Civil Appeal .....Diary No. 11299 of 2020 and by order dated 20.05.2020, the Hon'ble Supreme Court has issued notice and directed parties to maintain status quo with respect to liquidation. A copy of the order is attached. vii The Resolution Applicant has never before indicated timelines within which it was expecting approval failing which Resolution Plan would be deemed to be unviable as alleged. viii On the contrary, the RA has accepted that it will not unilaterally change/withdraw the Resolution Plan once submitted to the Resolution Professional. Clause 1.17.17 (Pg. 97) reads as under:- "1.1....
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....of the Plan (Para 14 of Reply). e) All documents pertaining to the cash flows of the Corporate Debtor and the financial statements have been provided to the Applicant at timely and regular intervals. There has been no objection by the Applicant. The Applicant has after almost 2 years filed the instant application. f) The document dated April 6, 2018 at page 36 at Annexure A of the Applicant's Rejoinder, is not the complete Information Memorandum (IM) as sought to be alleged by the Applicant. The said documents (at page 37) clearly mention that the IM shall update from time to time. Thus, the complete date on the Virtual Date Room (VDR) as uploaded and updated regularly continues the complete IM. Documents uploaded on the IM/VDR have not been properly reviewed and interpretation of documents and statistics are misinterpreted by the Applicant (Para 14.1 of Reply + 14.8 of Reply) despite all updated information being provided to the Applicant either in the form of IM/VDR or replies to specific queries and information sought on emails. g) Furthermore, MOUs/interim arrangements have been agreed with various parties whose contract had expired/termination. A....
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....basic facts. He emphasized on the fact that delay in approval of Resolution Plan caused loss to the members of CoC to the extent of 140 Crores and this fact could not be ignored while deciding the issue. It was also argued that no time period was prescribed for Adjudicating Authority to approve the Resolution Plan and, therefore, application filed by Resolution Applicant for withdrawal of plan was completely misconceived and consequently, the same was liable to be rejected. It was also pleaded that CoC's approval was not dependent on vision and assumptions of Resolution Applicant and such assumptions could not override the provisions of Code. Thereafter, it was pleaded that provisions of Section 51 and/or Section 52 of Indian Contract, 1872 were not applicable in the instant case as Resolution Applicant's performance of the contract was not dependent on Resolution Professional and CoC's performance. It was also argued that contract did not contain any reciprocal promises and for this reason, provisions of Section 53 of Indian Contract Act, 1872 were also not applicable. For these submissions, it was emphasised that neither RP nor CoC had prevented Resolution Applicant f....
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....this regard, he also relied on the observations of the Hon'ble Supreme Court in the case of Maharashtra Seamless Limited vs. Padmanabhan Venkatesh & Ors. and drew our attention to Para 29 of the said order. He distinguished the decision of Hon'ble NCLAT in the case of Deccan Value Investors LP which was relied on by RA on the ground that in that case there was a specific finding about misleading information given by Resolution Professional which was not the case here. It was also stated that the said decision had also been challenged before the Hon'ble Supreme Court and decision thereon was pending. He also vehemently argued that it was not open for the Resolution Applicants to contend that decision of Hon'ble NCLAT comprising of Two Member Bench in case of Educomp Solutions Limited was sub-silentio as earlier decision of Three Member Bench of Hon'ble NCLAT was not followed nor any discussion was made in regard to such order in the subsequent order. Thereafter, he relied on the provision of Section 238 of IBC, 2016 to submit that provisions of Section 46 of Indian Contract Act, 1872 were not applicable as these were inconsistent with the provisions of IBC, 2016.....
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....porate Debtor and business prospects are going to face severe impact in future and thus, nullifying the objects of investment proposed by Resolution Applicant. As regard to applicability of provisions of Section 46 of Indian Contract Act, 1872, the learned senior counsel vehemently argued that such provisions were clearly attracted in the present case and these were not contrary to the provisions of IBC, 2016, hence, applicable. It was also pleaded that other provisions of Indian Contract Act, 1872 relied on by the Resolution Applicant were also not inconsistent or contrary to the provision of IBC, 2016. As regard to the jurisdiction of this Tribunal u/s 60(5)(c), he specifically pointed out that this section invested the Tribunal with the authority to decide any question of law or fact arising out of or in relation to insolvency resolution or liquidation proceeding and any pleading contrary to that would, in a sense, be contrary to the scheme of IBC, 2016 itself. It was contended that the decision of Deccan Value Investors being a judgment of Three Member Bench was binding wherein jurisdiction of the Adjudicating Authority to release an unwilling Resolution Applicant from performa....
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....and it had not come forward to submit the Resolution Plan only with the objects to serve the purpose or the creditors but it had come forward with vision to revive the Corporate Debtor and make it profitable which was more important than the narrow interests of CoC who were mainly concerned with the realisation of their money at the earliest point of time. The learned senior counsel finally contended the Resolution Plan was not based on past performance of the Corporate Debtor as that was a result of mismanagement by the Corporate Debtor but according to its own vision having legitimate and reasonable expectation of approval of Resolution Plan in reasonable time but delay in such approval changed the complexion of feasibility and viability of Resolution Plan, hence, Resolution Applicant was eligible to withdraw from the same under the changed circumstances. 15. We have considered the submissions made by all parties and material on record. This application raises important question as regard to powers and jurisdiction of Adjudicating Authority to permit withdrawal of Resolution Plan approved by CoC mainly on the ground of delay in approval of Resolution Plan resulting into unviab....
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....ckground of this scheme, now, we have to consider the status and obligations of Resolution Applicant arising due to submission of Resolution Plan. Resolution Applicant has been defined in Section 5(25) of the Code which reads as under: [5(25) "resolution applicant" means a person, who individually or jointly with any other person, submits a Resolution Plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of Section 25'] This definition takes us to the provisions of Section 25(2)(h) which reads as under: [25(2)(h) "invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a Resolution Plan;] Thus, the basic responsibility of a Resolution Applicant is to submit a Resolution Plan as per criteria fixed by CoC and to comply with other requirements of IBC, 2016 and regulations thereto. 17. The Resolution Professional prepares Information Memorandum and R....
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....C in which Resolution Plan of the Applicant is considered, however, such Resolution Applicant does not have any voting right unless such Applicant is also a Financial Creditor. The Plan, if approved by CoC then submitted to Adjudicating Authority for its approval. 19. Now, we may consider relevant Regulations of IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 as amended from time to time. As per Regulations 35 fair value and liquidation is to be determined after receipt of Resolution Plan in accordance with the Code and Regulation, the same is to be provided to every member of CoC who shall maintain the confidentiality and cannot use such information for undue gains. Regulation 36 governs the preparation and contents of all Information Memorandum which can be provided to member of CoC after receipt of undertaking form that person that it shall not be used to cause an undue gain or undue loss to itself or any other person. Thereafter, as per the Regulations 36A invitation for Expression of Interest is to be published in Form G. Such Form G shall provide the last date of submission of Expression of Interest and also mention source from which the detaile....
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....ot a great significance for the disposal of issue on hand. Regulation 39 contains the process for approval Resolution Plan. As per this Regulation a prospective Resolution Applicant has to submit Resolution Plan prepared in accordance with the Code and this regulation within the time specified for submission thereof. Such plan should be accompanied by an affidavit regarding the eligibility of Resolution Applicant u/s 29A and undertaking that contents of Resolution Plan are true and correct and in case any false information being found therein, any refundable deposit may be forfeited. The Resolution Plan which does not comply with these requirements shall be rejected. 21. From the perusal of scheme of the I&B Code, and Regulations made thereunder, thus, it is apparent that prospective Resolution Applicant has got practically no role after submission of Resolution Plan in accordance with the requirements of RFRP. The prospective Resolution Applicant does not have a right to have its Resolution Plan approved. The process for approval of Resolution Plan approved by CoC involves RP and Adjudicating Authority. In this regard, it be useful to reproduce the findings of Hon'ble Supre....
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.... ground that a Resolution Plan is ineligible Under Section 29-A, is not final. The Adjudicating Authority, acting quasi-judicially, can determine whether the Resolution Plan is violative of the provisions of any law, including Section 29-A of the Code, after hearing arguments from the resolution applicant as well as the Committee of Creditors, after which an appeal can be preferred from the decision of the Adjudicating Authority to the Appellate Authority Under Section 61. 84. If, on the other hand, a Resolution Plan has been approved by the Committee of Creditors, and has passed muster before the Adjudicating Authority, this determination can be challenged before the Appellate Authority Under Section 61, and may further be challenged before the Supreme Court Under Section 62, if there is a question of law arising out of such order, within the time specified in Section 62. Section 64 also makes it clear that the timelines that are to be adhered to by the NCLT and NCLAT are of great importance, and that reasons must be recorded by either the NCLT or NCLAT if the matter is not disposed of within the time limit specified. Section 60(5), when it speaks of the NCLT having juris....
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....ion of the Code is the balance to be maintained between timely completion of the corporate insolvency resolution process, and the corporate debtor otherwise being put into liquidation. We must not forget that the corporate debtor consists of several employees and workmen whose daily bread is dependent on the outcome of the corporate insolvency resolution process. If there is a resolution applicant who can continue to run the corporate debtor as a going concern, every effort must be made to try and see that this is made possible. A reasonable and balanced construction of this statute would therefore lead to the result that, where a Resolution Plan is upheld by the Appellate Authority, either by way of allowing or dismissing an appeal before it, the period of time taken in litigation ought to be excluded. This is not to say that the NCLT and NCLAT will be tardy in decision making. This is only to say that in the event of the NCLT, or the NCLAT. or this Court taking time to decide an application beyond the period of 270 days, the time taken in legal proceedings to decide the matter cannot possibly be excluded, as otherwise a good Resolution Plan may have to be shelved, resulting in co....
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....porate persons. 60. (1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate persons located. 2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or [liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor] shall be filed before such National Company Law Tribunal. (3) An insolvency resolution process or [liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor] pending in any court or tribunal shall stand transferred to the Adjudicating Authority dealing with insolvency resolution process or liquidation proceeding of such corporat....
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....es not comply with provisions of Section 30(2) of IBC, 2016 and proviso to Section 31(1) of IBC, 2016, as the case may be. Admittedly, in this application, we are not concerned with the approval of a Resolution Plan on an application filed by Resolution Professional, which has been approved by COC but we are concerned with the application filed by the Resolution Applicant for withdrawal of plan post CoC's approval. Therefore, in our humble view, provisions of Section 31 are not at all attracted in this situation. Having said so, now, we have to look whether there is any bar, express or implied, in the IBC, 2016 or Regulations made there-under to refuse such withdrawal so that our jobs become easy and there is no need to go to Section 60(5)(c) of IBC, 2016. The RP and CoC have not been able to bring to our notice any express or implied provision which prohibits the withdrawal of Resolution Plan approved by CoC and their contentions are based solely on the provisions of Section 30 and 31 of IBC, 2016 which we have found to be inapplicable in the context of present application. 24. Having stated so, now, we go back to the provisions of Section 60(5) as reproduced hereinbefore. ....
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....n of law is whether withdrawal of Resolution Plan post CoC's is permissible. Question of fact is what would be the reasonable time required for approval of Resolution Plan by Adjudicating Authority. Thus, in our considered view, we have got the jurisdiction to consider this application. Having stated so, we are further of the view that provisions of Section 60(5), as far as, jurisdiction is concerned, override contrary provisions of all other laws which is not evident from the language of section itself. 25. It is a settled proposition and convention that no person can be rendered without any remedy. It is not in dispute that NCLT can approve or reject a Resolution Plan approved by CoC u/s 30 and 31 of IBC, 2016 which means that NCLT has jurisdiction to adjudicate upon Resolution Plan and because of that Civil Court can not have jurisdiction in respect of this matter. This position is also strengthened on account of Section 63 and Section 231 of IBC, 2016 which, for ready reference, are reproduced here under: Section 63 - Civil court not to have jurisdiction [(1) Any person aggrieved by an order of the National Company Law Appellate Tribunal may file an app....
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....ative action. The NCLT, being a creature of a special statute to discharge certain specific functions, cannot be elevated to the status of a superior court having the power of judicial review over administrative action. Judicial review, as observed by this court in Sub-Committee on Judicial Accountability vs. Union of India, flows from the concept of a higher law, namely the Constitution. Paragraph 61 of the said decision captures this position as follows: "But where, as in this country and unlike in England, there is a written Constitution which constitutes the fundamental and in that sense a "higher law " and acts as a limitation upon the legislature and other organs of the State as grantees under the Constitution, the usual incidents of parliamentary sovereignty do not obtain and the concept is one of 'limited government'. Judicial review is. indeed, an incident of and flows from this concept of the fundamental and the higher law being the touchstone of the limits of the powers of the various organs of the State which derive power and authority under the Constitution and that the judicial Ming is the interpreter of the Constitution and. therefore, of th....
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...., arising out of or in relation to insolvency resolution. But a decision taken by the government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase "arising out of or in relation to the insolvency resolution" appearing in Clause (c) of Sub-section (5). Let us take for instance a case where a corporate debtor had suffered an order at the hands of the Income Tax Appellate Tribunal, at the time of initiation of CIRP. If Section 60(5)(c) of IBC is interpreted to include all questions of law or facts under the sky, an Interim Resolution Professional/Resolution Professional will then claim a right to challenge the order of the Income Tax Appellate Tribunal before the NCLT, instead of moving a statutory appeal Under Section 260A of the Income Tax Act, 1961. Therefore the Jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. (It will be a different matter, if proceedings under statutes like Income Tax Act had attained finality, fastening a liability upon the corporate debtor, since, in such cases, the dues payable to the Go....
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....future cannot be forecast or visualised at the time of making of statute. Such omnibus provision or enabling provision is pressed into service when a fact situation so demands. However, disposal of such situation under such provision would have to be made in the light of specific provisions, if any, contained in the statute. 29. Thus, when the issue of jurisdiction of NCLT is settled, then, next question arises as regard to how such jurisdiction is to be exercised in different situations arising out of or in relation to insolvency resolution or liquidation proceedings. 30. Certain situations/matters have specifically been provided in various sections of IBC, 2016 and in those situations scope of power as well manner of decision have also been given. Thus, in those situations NCLT has to act accordingly. Whereas there are certain situation/jurisdiction is given but that mode and manner of decision making has been left open. We can have brief overview of both types of situations hereunder: i. As per Section 17 Officers and Managers of the Corporate Debtor are required to provide all assistance to IRP. As per Section 20, Management of Operations of Corporate Debtor as a....
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....escription of order has been made. Adjudicating Authority is supposed to act accordingly. viii. Under Section 60(5)(a) the Adjudicating Authority is empowered to dispose of applications filed u/s 7, 9 and 10 of IBC, 2016 in the manner specified in those sections and such order is to contain the directions which are required to be given in terms of provisions of Section 13, 14 and 15 of IBC, 2016. 31. Apart from these situations, the process of approval of Resolution Plan post CoC's approval is governed by the provisions of Section 30 and 31 of IBC, 2016 which we have already been dealt in the earlier part of this order, hence, not discussed here again. 32. Further, the Adjudicating Authority is required to pass order of liquidation in terms of provisions of Section 33 and 34 of IBC, 2016 in the situation and manner as specified therein. 33. The Adjudicating Authority is also empowered to pass order of liquidation, in case an application is made u/s 59 of IBC, 2016 in accordance with provisions of that section. Thereafter, order of dissolution is required to be passed in terms of provisions of Section 54 of IBC, 2016 which is also applicable to applications fil....
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.... necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. It is also noted that as per Rule 10 of Application to Adjudicating Authority Rules, 2016, certain provisions of NCLT Rules, 2016 are applicable to filing of applications under IBC, 2016 and by virtue of Section 420 and 424 of Companies Act, 2013, other NCLT Rules including Rule 11 are applicable for disposal of application/proceedings under IBC, 2016 by NCLT as Adjudicating Authority as no separate Rules for this purpose have yet been framed. It is a settled position of law that a rule cannot supersede the provisions of substantive law nor it could extend or curtail the scope of substantive provisions of law as such rule derives life and strength from substantive provisions. As stated earlier, that there is no specific prevision which bars Adjudicating Authority to permit the withdrawal of a Resolution Plan approved by CoC, hence, Rule 11 also comes to our aid in applying our jurisdiction u/s 60(5)(c) of IBC, 2016. Thus, both these provisions taken together, in our humble view, give us jurisdiction to allow withdrawal of approved Resolution Plan in the interests of substantial just....
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....ia Private Limited vs. Satish Kumar Gupta wherein the issue was that at what stage NCLT as Adjudicating Authority could exercise its jurisdiction u/s 60(5) and that too in the context of provisions of Section 60(5)(a) only. Hence, this decision also does not render any assistance to RP/CoC. 37. In our view, decision of Hon'ble NCLAT in the case of Educomp (supra) relied on by the RP/CoC is also not applicable in view of the fact that in that case two applications for withdrawal of Resolution Plan approved by CoC had earlier been dismissed by NCLT and in the third application permission to withdraw was granted by NCLT. Secondly, there was a clause of validity of Resolution Plan for not less than six months and because of participation by Resolution Applicant after expiry of such period in the CIRP proceedings, the Hon'ble NCLAT held it to be an act of waiver of said condition by the Resolution Applicant in that case. In the case before us it has been specified in Clause 1.7.4 that Resolution Plan is not subject to any expiry and shall remain valid and binding on the Successful Resolution Applicant, hence, participation by the Resolution Applicant and extension of Bank gua....
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....ithdrawal of Resolution Plan approved by CoC. Rather closing observations of Hon'ble Supreme Court in the above Para indicate that the question whether Resolution Applicant could be permitted to withdraw the plan approved by CoC has been left open and the wording of such finding indicates a situation of serious concern as far as Resolution Applicant is concerned. Thus, in our most humble view, the claim made by RP and CoC that withdrawal of a Resolution Plan approved by CoC cannot be permitted by Adjudicating Authority is not a closed question and, hence, their claim is rejected. 39. Now, we will look into the merits of the application. 40. In this regard, it is pertinent to mention that application for approval of such Resolution Plan in IA 476 of 2018 is also pending before us which cannot be decided now without disposal of this application. However, for the moment, if we leave the question of disposal of present application aside and pose ourselves a question whether Resolution Plan submitted by Resolution Applicant and approved by CoC meets the requirements of Section 30(2)(e) and proviso to Section 31 of IBC, 2016 or not so that a decision as regard to approval or re....
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....view, the word "term" used in the Regulation 38(2) refers to "period" only as it is not capable of any other interpretation in this context. Having stated so, we still consider it necessary to ponder a little on the meaning of this word. The word "Term" is not defined in IBC, 2016 or CIRP Regulations. Hence, we have to look for the meaning of this word as per common parlance and dictionary. In common parlance and as per general business practices, every agreement/contract has a fixed tenure which can be extended by mutual consent or contract can also be terminated even before such term expires if agreement between parties so provide. As far as dictionary meaning is concerned, the word "term" has been defined in concise Oxford English Dictionary South Asia 12th Edition as under: Term- 1. A word or phrase used to describe a thing or to express a concept. (terms) a way of expressing oneself: a protest in the strongest terms. Logic a word or words that may be in subject or predicate of a proposition. 2. A fixed or limited period for which something lasts or is intended to last. As per Black's Law Dictionary the word "term" has been defined as under: Te....
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....r and Resolution Applicant but also includes employees, operational creditors, Government and other stakeholders. No doubt, Resolution Applicant is also not coming with an object of charity. Resolution Applicant, in business sense, comes only when Resolution Applicant sees some value in the business of the Corporate Debtor. Resolution Applicant has to allocate resources for insolvency resolution as well as to keep it as going concern after taking over and earn profit. Considering this, in our view, allocation of funds for such Resolution Plan cannot be committed forever and the Resolution Applicant cannot wait forever as Resolution Applicant may employ funds earmarked for acquisition of business of Corporate Debtor elsewhere more productively which, in turn, would help in the growth of overall economy of the country and generate employment. Apart from this, inordinate delay results into erosion in the value of assets of Corporate Debtor which also goes against the object of maximization of value of assets of the Corporate Debtor. Further, insolvency resolution is a time-bound process where speed is of essence. In our view, it is because of these considerations, the legislature has ....
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....Applicant will remain tagged or bind therewith. Can this be the intention of the legislature? In our view, having regard to objects and scheme of IBC, 2016, this cannot be so by stretching our imagination to any extent. However, in the present case as can be seen from the perusal of Clause 1.7.4, Resolution Plan does not have any expiry period which, in our opinion, is not in consonance with the provisions of Regulation 38(2) of CIRP Regulations, hence, if such plan comes for approval then the same can be rejected as being in violation of CIRP Regulations and ultimately of Section 30(2)(e) of IBC, 2016. We have also perused the Resolution Plan submitted by Resolution Applicant which has been approved by CoC in which term of plan has not been specified at all and only implementation schedule has been mentioned in Clause 3 at page 25 and clause 12 at page 39 of Resolution Plan (page 229, 243 and 244 of paper book). Said clauses are reproduced hereunder for the sake of ready reference: 3. Conditions Precedent and Transfer Date The commencement of implementation of the Resolution Plan is subject to the following conditions ("Conditions Precedent"): (i) Final ....
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....can be disposed of at this stage only by passing an order permitting such withdrawal. However, considering the fact that there exists no specific provision in IBC, 2016 or Regulations made there-under as regard to this aspect, hence, question of applicability of the provisions of Indian Contract Act, 1872 in such situation is of paramount importance not only with perspective of case on hand but also for disposal of other similar cases. The first question arises for our consideration is whether any clause exists in the process document as regard to applicability of general laws? The answer to this question was in definition of term "Applicable Laws" in the definition section of process document and in clause 3.1 miscellaneous section of process document which read as under: "Applicable Laws" means, any statute, law, regulation, ordinance, rule, judgment, order, decree, clearance, approval, directive, guideline, policy, requirement, or other governmental restriction or any similar form of decisions, or determination by, or any interpretation of administration of any of the foregoing by, any Government Agency of India whether in effect as of the date of this Process Document ....
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....gagement must be performed within a reasonable time. Explanation.--the question "what is a reasonable time" is, in each particular case, a question of fact. 54. Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises.-- When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract. Illustrations (d) A promises B to sell him one hundred bales of merchandise, to be delivered next day, and B promises A to pay for them within a month. A does not deliver according to his promise. B's promise to pay need not be performed, and A must make compensation. 55. Effect of failure to perform at fixed time, in contract in which time is essential.--When a party to a contract promises to do a cer....
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....aised regarding the nature of contract require us to look into the sequence of actions involved in the transaction. The Resolution Professional first published invitation for Expression of Interest. The Resolution Applicant expressed its interest. List of proposed Resolution Applicants have been finalised by the Resolution Professional. Resolution Professional has prepared RFRP as approved by CoC. The Resolution Applicant has submitted Resolution Plan. Thereafter, the Resolution Professional has confirmed that such plan meets the relevant requirements of IBC, 2016 and submitted the same before CoC for its approval. CoC has approved such plan. Thereafter, performance security is provided by Resolution Applicant. After this, Resolution Professional is required to submit the same to Adjudicating Authority for its approval. Resolution Plan consist acts to be performed subsequent to approval by Adjudicating Authority which include implementation of Resolution Plan where in the Resolution Applicant is required to give the consideration and Resolution Professional is required to hand over the assets and management of the Corporate Debtor to Resolution Applicant through definitive agreemen....
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.... an oblige on the other's promise; a contract in which the parties obligate themselves reciprocally, so that the obligation of one party is correlative to the obligation of the other- Also termed mutual contract; reciprocal contract; (in civil law) synallagmatic contract. See COUNTER PROMISE. "In a bilateral contract a promise, or set of promises on one side, is exchanged for a promise or a set of promises on the other side. In a unilateral contract, on the other hand, a promise on one side is exchanged for an act (or forbearance) on the other side. Typical examples of bilateral contracts are contracts of sale, the buyer promising to pay the price and the seller promising to deliver the goods. A typical example of a unilateral contract is a promise of reward for the finding of lost property followed by the actual finding of the property." From the perusal of above, our view that process document is a bilateral contract gets confirmed. 51. Now, coming to the contention on behalf of CoC that the Resolution Applicant has accepted various terms and conditions of the process document on its own, hence, binding. On the other hand, it has also been stated that it was re....
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....ce of the Resolution Applicant to wait for approval of the Resolution Plan indefinitely thereby making him disentitled to withdraw from such plan in future even if the circumstances change and it also appears to Resolution Applicant that there may not be a finality to Resolution Plan in near future. This is particularly so in view of pandemic situation caused by Covid-19 and pendency of several Interlocutory Applications filed by different parties whereby various challenges have been made to the validity of Resolution Plan submitted by Resolution Applicant and approved by CoC. Such IAs are around 30 in numbers and still pending for disposal by this Authority. At this stage, we cannot escape from our contribution in the delay in disposal of the application filed by RP due to structure of processes which the Adjudicating Authority has to follow and administrative constraints. In this regard, we may also submit that even the contribution of Bar is also required to avoid frivolous litigation causing delays and, thus, saving IBC regime from failure like earlier regimes. In this regard, we further consider it appropriate to reproduce the findings given by the Hon'ble Mr. Justice Dr. ....
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....adjudication over areas in which a traditional court mechanism had little experience and expertise. In that sense, tribunalisation represents an amalgam of the old and the new: a combination of the role which was traditionally performed by the court together with new functional responsibilities, quite unlike the dispute resolution Junction which was traditionally performed by courts. Domain specialisation 3 The movement towards setting up tribunals has been hastened in many parts by the need for specialisation. Specialisation acknowledges the pool of knowledge and domain expertise of persons who discharge core adjudicatory functions within tribunals. The assumption which underlies the setting up of tribunals is that those who decide are individuals possessed of the qualities necessary for adjudication in that specific field. Acquisition of knowledge prior to appointment to a tribunal and practical experience of handling subject areas reserved for the tribunal bring together a pool of individuals possessing the qualifications and abilities to render specialised justice. In fostering specialisation, the tribunal structure emphasises the specialisation of adjudicator....
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....tribunal. Equally significant is that the tribunal must possess the ability not to allow, over a period of time, accretions of undisposed cases which had created judicial arrears in the first place. Statistical reduction of pending arrears in the judicial system occasioned by the creation of a tribunal has to be matched by the capacity of the new body to dispose of cases transferred to it from the court as well as new institutions before it. If this is not achieved, the net result is to defeat the very purpose of establishing the tribunal. Impact assessment 7 Our analysis above indicates that the actual impact of the creation of a structure of tribunals needs to be closely monitored to assess the efficacy of a tribunal as a measure of legal reform. The efficacy of the tribunal is functionally dependent on the availability of resources and capital, both human and otherwise. The tribunal must be possessed of adequate infrastructure both in terms of physical availability and the deployment of technological knowledge in the management of litigation. The procedures adopted by the tribunal must be flexible enough to allow for decision making effectively and without dela....
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....hwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor. xxxxxxxxx Section 420 of the Companies Act, 2013 states as follows: 420. Orders of Tribunal.--(1) The Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Tribunal may, at any time within two years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if the mistake is brought to its notice by the parties: Provided that no such amendment shall be made in respect of any order against which an appeal has been preferred under this Act. (3) The Tribunal shall send a copy of every order passed under this section to all the parties concerned. Rules 11, 34, and 37 of the National Company Law Tribunal Rules, 2016 [-NCLT Rules 1] state as follows: 11. Inherent Powers. --Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tr....
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....said authority before an order is made admitting the said application. What is also of relevance is that in order to protect the corporate debtor from being dragged into the corporate insolvency resolution process mala fide, the Code prescribes penalties. Thus, Section 65 of the Code reads as follows: 65. Fraudulent or malicious initiation of proceedings.--(1) If, any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees. (2) If, any person initiates voluntary liquidation proceedings with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees. Thus, it is apparent that adherence to time lines prescribed under substantive provision of Insolvency and Bankruptcy Code, 2016 is not capable of being observed in spite of Section 64 thereof w....
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....ble. 54. Although, the Resolution Applicant has specifically stated that it is not taking any shelter of the provisions of Section 56 of Indian Contract Act, 1872, still we consider it necessary to ponder a little on this aspect in view of submissions made on behalf of CoC in regard to this. It is a Settled proposition that contract is a pious obligation undertaken by parties thereto, hence, the same should be given effect to in its true sense. Thus, doctrine of absolute contract remains valid for all times. However, certain exceptions have emerged to this over last two hundred years. Initially, the party to a contract was discharged from its obligation or performance on account of physical incapacity or destruction of subject matter due to natural calamities or otherwise. Subsequently, sovereign intervention which made the performance of executory contract impossible also released party from performance due to frustration. Thereafter, permanent injunction by a Court was also found to be a ground upon which performance of contract could be cancelled. However, it goes without saying that all these factors have to be considered in view of specific terms and conditions of the contr....
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....gation has become incapable of being performed because the circumstances in which the performance is called for have rendered the performance impossible then a party may be released from its performance obligation. This is the proposition in general law and if it is so in general law then such doctrine has to be necessarily applied to a case which is governed by a law which is itself based upon adherence to timelines. Having said so, we do not consider it necessary to go into the exercise of judicial approach as regard to focus on adherence to timelines given under IBC, 2016 in much detail as this issue has already been settled by Hon'ble Supreme Court in various decisions after taking note of Reports of BLRC., Parliamentary Committee and ILC and which can also be seen from recent judicial approach coupled with statutory changes made under IBC, 2016. Thus, adherence to such timelines is mandatory in general barring a few exceptions. In this regard, in our view, the observations of Hon'ble Supreme Court in the case of Arcelormittal India Put. Ltd. in Para 86 (already reproduced at page 33 of this order) and in the case of Essar Steel India Ltd. in Para 98 to 108 are most rel....
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....ng by promoters is controlled after and before default. * The promoters can make a proposal that involves buying back the company for a certain price, alongside a certain debt restructuring. * Others in the economy can make proposals to buy the company at a certain price, alongside a certain debt restructuring. * All parties know that if no deal is struck within the stipulated period, the company will go into liquidation. This will help avoid delaying tactics. The inability of promoters to steal from the company, owing to the supervision of the IP, also helps reduce the incentive to have a slow lingering death. * The role of the adjudicator will be on process issues: To ensure that all financial creditors were indeed on the creditors committee, and that 75% of the creditors do indeed support the Resolution Plan. xxx xxx xxx Speed is of essence Speed is of essence for the working of the bankruptcy code, for two reasons. First, while the calm period can help keep an organisation afloat, without the full clarity of ownership and control, significant decisions cannot be made. Without effective leadership, the firm will tend....
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....for society is a rapid liquidation. When such arrangements can be put into place, the market process of creative destruction will work smoothly, with greater competitive vigor and greater competition." 100. The speech of the Hon'ble Minister on the floor of the House of the Rajya Sabha also reflected the fact that with the passage of time the original intent of quick resolution of stressed assets is getting diluted. It is therefore essential to have time-bound decisions to reinstate this legislative intent. It was also pointed out on the floor of the House that the experience in the working of the Code has not been encouraging. The Minister in her speech to the Rajya Sabha gives the following facts and figures: "Now, regarding the Corporate Insolvency Resolution Process (CIRP), under the Code, I want to give you data again as of 30th June, 2019. First, I will talk about the status of CIRPs. Number of admitted cases is 2162; number of cases closed on appeal, which I read out about, is 174; number of cases closed by withdrawal under Section 12A, is 101, I have given you a slightly later data; number of cases closed by resolution is 120; closed by liquidation, 47....
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....ything which is logically relevant should be admissible. In fact there are at least three decisions of this Court, one in Loka Shikshana Trust v. CIT [ (1976) 1 SCC 254 : 1976 SCC (Tax) 14 : 101 ITR 234 : 1976 LR 1], the other in Indian Chamber of Commerce v. Commissioner of Income Tax [ (1976) 1 SCC 324 : 1976 SCC (Tax) 41 : 101 ITR 796 : 1976 Tax LR 210] and the third in Additional Commissioner of Income Tax v. Surat Art Silk Cloth Manufacturers' Association [ (1980) 2 SCC 31 : 1980 SCC (Tax) 170 : 121 TTR 1] where the speech made by the Finance Minister while introducing the exclusionary clause in Section 2, clause (15) of the Act was relied upon by the Court for the purpose of ascertaining what was the reason for introducing that clause. 103. In Paripoornan (supra), the Court held as follows: "77. In support of the construction placed on Section 23(1-A) of the principal Act and Section 30(1) of the amending Act in Zora Singh [ (1992) 1 SCC 673] the learned counsel for the claimants have referred to the Statement of Objects and Reasons appended to the Bill in 1982 as well as the Bill of 1984 and have submitted that the said Statement of Objects and Reasons ....
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....ution of stressed assets is a key factor in the successful working of the Code, the only real argument against the amendment is that the time taken in legal proceedings cannot ever be put against the parties before the NCLT and NCLAT based upon a Latin maxim which sub-serves the cause of justice namely, actus curiae neminem gravabit. 106. In Atma Ram Mittal v. Ishwar Singh Punia (1988) 4 SCC 284, this Court applied the maxim to time taken in legal proceedings under the Haryana Urban (Control of Rent and Eviction) Act, 1973, holding: "8. It is well-settled that no man should suffer because of the fault of the court or delay in the procedure. Broom has stated the maxim "actus curiae neminem gravabit" -- an act of court shall prejudice no man. Therefore, having regard to the time normally consumed for adjudication, the ten years' exemption or holiday from the application of the Rent Act would become illusory, if the suit has to be filed within that time and be disposed of finally. It is common knowledge that unless a suit is instituted soon after the date of letting it would never be disposed of within ten years and even then within that time it may not be dispos....
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....axims. The provisions of this Chapter, however, are not interpreted solely on the basis of these maxims. They only serve as guiding principles." 108. Both these judgments have been followed in Neeraj Kumar Sainy v. State of Uttar Pradesh (2017) 14 SCC 136 at paragraphs 29 and 32. Given the fact that the time taken in legal proceedings cannot possibly harm a litigant if the Tribunal itself cannot take up the litigant's case within the requisite period for no fault of the litigant, a provision which mandatorily requires the CIRP to end by a certain date - without any exception thereto - may well be an excessive interference with a litigant's fundamental right to non-arbitrary treatment under Article 14 and an excessive, arbitrary and therefore unreasonable restriction on a litigant's fundamental right to carry on business under Article 19(1)(g) of the Constitution of India. This being the case, we would ordinarily have struck down the provision in its entirety. However, that would then throw the baby out with the bath water, inasmuch as the time taken in legal proceedings is certainly an important factor which causes delay, and which has made previous statutory e....
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....nsion of period, hence, delay beyond the maximum period specified in Section 12 would be a reasonable cause for excuse from performance. 57. Now, we shall deal with other contentions made by the parties. 58. The Resolution Applicant has pointed out that there were serious adverse impacts due to delay and for which he has relied on various facts such as cancelling of O&M Contracts and uncertainty regarding renewal of O&M contract, substantial portion of other income in the cash flow meaning thereby that business was not generating cash from basic operations and erosion in the value of assets. The Resolution Applicant has also claimed that claims towards workmen were to be settled as per clause 6 of part II of Resolution Plan as in relation to the workers had Daman Unit which was to be closed completely but still the same had not been closed and due to this additional liability of Rs. 40 Crores till date had arisen which may further increase and it would be a grave injustice to the Resolution Applicant, if Resolution Applicant is forced to take this liability. This plea of the Resolution Applicant has remained uncontroverted or undisputed. We are of the considered view that exc....
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....all Financial Creditor or Corporate Debtor. The Voting power of each member of the CoC is determined on the basis of financial debt owed to him. CoC in its first meeting is bound to appoint Resolution Professional by the requisite percentage of votes. It is also within its competence to replace IRP/RP in terms of provisions of Section 22 and 27 of IBC, 2016 respectively. Section 28 of IBC, 2016 provides that certain actions cannot be taken by Resolution Professional during the CIRP without the prior approval of CoC. And the important obligation of CoC is contained in Section 25(2)(h) of IBC, 2016 which provides for approval of criteria for submission of Resolution Plan and such criteria is to be fixed having regard to the complexity and scale of operations of the business of the Corporate Debtor. As far as role of CoC as regard to Information Memorandum is concerned, there is no requirement in the Code or Regulations that such Information Memorandum is to be approved by CoC. Only requirement is that such Information Memorandum be provided to members of CoC on the completion of certain formalities. Similar is case for publication of invitation for Expression of Interest i.e. only th....
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.... plan could be approved or rejected. The COC was always having power to modify. In the amended proviso w.e.f. 25.07.2019, the requirement of recording reasons has been substituted with the requirement to record its deliberations on the feasibility and viability of the Resolution Plan which is in sync with the provisions of Section 30(4) of IBC, 2016. Further, it is much wider in scope for responsibilities of CoC as compared to the earlier provisions consisting to requirement or recording the reasons. 61. Now, we reproduce the provisions of Section 30(1) to 30(4) of IBC, 2016 as under: 30. Submission of Resolution Plan (1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under section 29A to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each Resolution Plan received by him to confirm that each Resolution Plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the 4[payment] of other debts of the corporate debtor; 6[(b) provides for the....
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....o have been given and it shall not be a contravention of that Act or law.] 3) The resolution professional shall present to the committee of creditors for its approval such Resolution Plans which confirm the conditions referred to in sub-section (2). (4) The committee of creditors may approve a Resolution Plan by a vote of not less than [sixty-six] per cent, of voting share of the financial creditors, after considering its feasibility and viability, [the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor] and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a Resolution Plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the Resolution Applicant is ineligible under section 29A and may require the resolution professional to invite a fresh Resolution Plan where no other Resolution Plan is available with it: Provided further that whe....
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.... Debtor or Resolution Applicant. Accordingly, the requirement of considering feasibility and viability of a Resolution Plan by CoC in itself is a step forward to take care of interest of all stakeholders in addition to interests of CoC comprising of Financial Creditors. In a sense, it also leads to prima facie conclusion that legislature gradually thought it fit to burden CoC to give due weightage and consideration to the objects enshrined in the preamble to the IBC, 2016. This is further strengthened by incorporating words "feasibility and viability" in Regulation 39(3) of CIRP regulations as well. 62. Now, we would take note of provisions of Section 31(1) and 31(2) are also reproduced as under: 31. Approval of Resolution Plan 30(1) If the Adjudicating Authority is satisfied that the Resolution Plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the Resolution Plan which shall be binding on the corporate debtor and its employees. members, creditors, [including the Central Government, any State Government or any local authority to who....
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....enerally concerned and remain interested till debts owed to Financial Creditors are settled or repaid whereas legislature is concerned that there should not be situation of second insolvency and plan should get implemented in the best interest of all stakeholders. In this sense, there is again a curtailment of powers of CoC in a progressive manner. 67. In the case of K Sashidharan, Hon'ble Supreme Court upheld the supremacy of commercial wisdom of the CoC based upon the provision then existing. The fact that there were changes to CIRP regulations thereafter was also noted by the Hon'ble Supreme Court in that case and those changes were held to be prospective. Hon'ble Supreme Court in the case of Essar Steel Vs. Satish Kumar Gupta in Para 54 held as under: 54. This is the reason why Regulation 38(1A) speaks of a Resolution Plan including a statement as to how it has dealt with the interests of all stakeholders, including operational creditors of the corporate debtor. Regulation 38(1) also states that the amount due to operational creditors under a Resolution Plan shall be given priority in payment over financial creditors. If nothing is to be paid to operatio....
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....d attention to these key features, it must then pass the Resolution Plan, other things being equal. 68. The above findings have given power of limited judicial review to Adjudicating Authority on the various aspects which essentially emanates from preamble to the IBC, 2016. The significance of these findings is that the Hon'ble Supreme Court has settled the proposition that preamble to an Act may not only be a guide but it also prescribes certain conditions which are not mentioned in any specific provisions of that statute but would run through the Code as spirit of the Code and would have to be complied with. This decision has also imposed an obligation on CoC to ensure that corporate debtor remains a going concern and insolvency resolution is done after taking into consideration larger interests of all stakeholders. 69. It is very interesting to note that the factors which Adjudicating Authority is now capable to consider for limited judicial view are not mentioned in Section 30(2). This is a significant departure in judicial approach whereas earlier it was generally held that the role of NCLT was limited to see that Resolution Plan confirms to the requirements of Secti....
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....needs of any particular Person (defined hereinafter). Nothing in these materials is intended to be construed as legal, financial, accounting or tax advice." (b) ...."Past performance is not a guide for future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from the forward-looking statements due to various factors. No statement, fact, information (whether current or historical) or opinion contained herein should be construed as a representation or warranty, express or implied of Resolution Professional, Resolution Process Advisors, Corporate Debtor (as defined below) or the members of CoC; and none of the Resolution Professionals, Resolution Process Advisors, Corporate Debtor, the member of CoC, or any other Persons/entities shall be held liable for the authenticity, correctness or completeness of any such statements, facts or opinions. This document has not been approved and will or may not be reviewed or approved by any statutory or regulatory authority in India or by any stock exchange in India. This document may not be all inclusive and may not contain all of the information t....
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....pplicant(s) or Resolution Plans without assigning any reasons whatsoever. (Page 3 of 62 of process document). Miscellaneous Section 3.2 The Committee of Creditors, in their sole discretion and without incurring any obligation or liability, reserve the right, any time, to: i. Suspend and/or cancel the Resolution Plan Process and/or amend and/or supplement the Resolution Plan Process modify the dates or other terms and conditions set out in this Process Document; ii. Consult with any Resolution Applicant(s) in order to receive clarifications or further information; iii. Retain any information and/or evidence submitted to the Resolution Professional by, on behalf of, and/or in relation to any Resolution Applicant(s); iv. Cancel or disqualify the Resolution Plan submitted by the Resolution Applicant(s) at any stage of the Resolution Plan Process; or v. Independently verify, disqualify, reject and/or accept any and all submissions or other information and/or evidence submitted by, or on behalf of any Resolution Applicant(s). vi. Request the Successful Resolution Applicant(s) to provide any additional documents or in....
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....t caution that the Resolution Plan approved by the CoC shall not be subject to any expiry and shall remain valid and binding on the Successful Resolution Applicant.(Pg. 15 of 62 of process document) 1.7.5. A Resolution Plan submitted by a Resolution Applicant(s) shall be irrevocable and binding on the Resolution Applicant(s). No modification, alteration, amendment or change may be made to a Resolution Plan submitted by a Resolution Applicant(s) except as specifically provided in this Process Document. (Pg. 16 of 62 of process document). 1.17.17. The Resolution Applicant(s) cannot unilaterally change/withdraw the Resolution Plan once submitted to the Resolution Professional (Pg. 26 of 62 of process document). 73. Apart from these clauses, there are other provisions in process document which make it a document tilted strongly in favour of CoC and also lead to an inference that terms and conditions of process document may not be in compliance of provisions of IBC, 2016. However, we are not reproducing the same as, in our view, above discussion is sufficient to indicate about the arbitrary and unreasonable approach of CoC while formulating the process document but ....
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....ion of the provision of Section 233 of IBC, 2016. Apart from this, there is a condition that Resolution Applicant could not take any exception to the conditions specified in the process document to remain eligible applicant. Thus, this approach creates a situation of "take it or leave it" for the Resolution Applicant. However, in our considered view, in spite of such circumstances, it cannot be said that by submitting a Resolution Plan, the Resolution Applicant has committed a crime which is punishable by a term for life imprisonment. Now, the consequences of such conditions are apparent. In this regard, we may submit that initial 180 days were practically consumed in finalization of process document which was ultimately approved and finalized just few days before expiry of initial period of 180 days. Further, incorporation of such clauses create a situation where RP and CoC feel confident that once Resolution Applicant is declared successful and his plan is approved, such Resolution Applicant can never get out. Thus, as against the claim of CoC that permission to withdraw the Resolution Plan would result into serious difficulties for all stakeholders in future, we are of ....