TaxTMI 
TaxTMI 
2020 (11) TMI 673
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....o 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 Authority as various Interlocutory Applications ha....
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....ed 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 sacrosanct as a matter of policy and it could be exten....
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....s 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 decision. 6. The learned senior counsel, thereafter,....
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....at 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 page 82 to 85 of the said order. He also contended that ev....
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....ine 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, Resolution Plan itself and the Process Document accepted by the Applicant, does not provide any provisions for withdrawal....
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....ts 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:- "1.17.17 The Resolution Applicant(s) cannot unilaterally change/withdraw the Resolution Plan once submitted to the Resolution Professional." Please see also Clause 1.75 (Pg. 87), Clause 1.12.5 (Pg. 92) ix The contention based o....
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....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. Applicant will be at liberty to negotiate the contracts once their plan is approved (Para 14.2 (B) of Reply). Contracts of 187 WECs have been renewed in the period January 2020 to June 2020 (Para 14.3 of Reply). CLP Group and Renew Group have been retained (Para 14.4 of Reply). Invoices have been raised basis the rete....
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....refore, 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 from performing its promises and delay in approval of Resolution Plan by Adjudicating Authority could not be construed to mean that Resolution Applicant was prevented from performing his obligation under Resolution Plan. It was also argued that Section 54 of Indian Contract Act, 1872 was also not applicable as it provided f....
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....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. He also drew our attention to Clause 1.74, 1.75 and 1.17.17 of the process document which created limitations on the part of the Resolution Applicant to withdraw or alter Resolution Plan and contended that since Resolution Applicant had neither challenged the process document nor any specific clause thereof, allowing prayer....
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....acted 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 performance had been upheld and though this decision was pending before the Hon'ble Supreme Court but it was not stayed. It was also pleaded that in the view of subsequent decision in the case of Educomp Solutions Ltd. of the Hon'ble NCLAT, there cannot be a blanket principle that a Resolution Applicant can never be permitted ....
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....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 unviability and non-feasibility of such plan and also its implementation. In this regard, it has been vehemently contended on behalf of the CoC as well as Resolution Professional that Adjudicating Authority has no power and jurisdiction to allow the withdrawal of Resolution Plan once approved by CoC. In order to decide this issue, we ....
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....on 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 Resolution Applicant gets access to relevant information in terms of provisions of Section 29(2) which reads as under: 29 (2) the resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes-- (a) To comply with provisions of law for the time being in force rel....
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.... 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 detailed information can be obtained as regard to Corporate Debtor. The prospective Resolution Applicant can submit Expression of Interest which shall be unconditional and accompanied by documents specified Regulation 36(A)(7). As per said Regulation 36A(8) Resolution Professional shall conduct due diligence based on the material on record in order to satisfy that the prospective Resolution applicant complies with the require....
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.... 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 Supreme Court in the case of Arcelormittal India Pvt. Ltd. vs. Satish Kumar Gupta in Para 81 to 86 as under: 81. Thus, the importance of the Resolution Professional is to ensure that a Resolution Plan is complete in all respects, and to conduct a due diligence in order to report to the Committee of Creditors whether or not it is in order. Even though it is not necessary for the Resolution Professional to give reasons while su....
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....ction 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 jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person, does not invest the NCLT with the jurisdiction to interfere at an applicant's behest at a stage before the quasi-judicial determination made by the Adjudicating Authority. The non-obstante Clause in Section 60(5) is designed for a different purpose: to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or a....
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....de 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 corporate death, and the consequent displacement of employees and workers. 22. Thus, on the basis of above discussion, it can be concluded that the role of Resolution Applicant ends after the submission of a valid Resolution Plan prepared in accordance with the terms and conditions of process document which is based upon the information memorandum provided to such Resolution Applicant. It may not be out of context to mention here that Resolution Applicant, though, is liable to comply w....
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....s 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 corporate debtor. (4) The National Company Law Tribunal shall be vested with all the powers of the Debt Recovery Tribunal as contemplated under Part III of this Code for the purpose of sub-section (2). (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of-- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the co....
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....ther 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. Clause 60(5)(a) authorises NCLT to entertain or dispose of any application or proceeding by or against the Corporate Debtor or Corporate Person. This clause is applicable in regard to the applications filed u/s 7, 9 or 10 of IBC, 2016 and also to proceedings connected therewith. The Hon'ble Supreme Court in Para 86 of the order in the case of Arcelormittal India Private Limited Vs. Satish Kumar Gupta and Others as reproduced hereinbefore has opined that NCLT before quasi judicial determination of such application or proceedings will not be entitled to int....
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....ed 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 appeal to the Supreme Court on a question of law arising out of such order under this Code within forty-five days from the date of receipt of such order. (2) The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within forty-five days, allow the appeal to be filed within a further period not exceeding fifteen days.] Section 231 - Bar of jurisdiction [No civil court shall have jurisdiction in respect of any matter in which the [Adjudicating Authority or the Board] is empowered by, or under, this Code to pass any order and no injunction shal....
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....gislature 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 the limits of authority of the different organs of the State. It is to be noted that the British Parliament with the Crown is supreme and its powers are unlimited and courts have no power of judicial review of legislation. " 29. The NCLT is not even a Civil Court, which has jurisdiction by virtue of Section 9 of the Code of Civil Procedure to try all suits of a civil nature excepting suits, of which their cognizance is either expressly or impliedly barred. Therefore NCLT can exercise only such powers within the contours of jurisdiction as prescribed by the statute, the law in respect of which, it is called upon to administer. Hence, let us now see the jurisdict....
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....ssional 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 Government would come within the meaning of the expression "operational debt" Under Section 5(21), making the Government an "operational creditor" in terms of Section 5(20). The moment the dues to the Government are crystalised and what remains is only payment, the claim of the Government will have to be adjudicated and paid only in a manner prescribed in the Resolution Plan as approved by the Adjudicating Authority, namely the NCLT.) 42. Therefore in the light of the statutory scheme as culled out from various provisions of the IBC, 2016 it is clear that wherever the corporate debtor has to exercise a right that falls outside the purview of the IBC, 2016 especially in the ....
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....ope 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 going concern is also responsibility of IRP/RP. Section 19 provides where such cooperation is not extended to IRP then he can approach Adjudicating Authority and Adjudicating Authority u/s 19(3) shall direct such person to comply with the instructions of Resolution Professional and cooperate with him in efficient conduct of CIRP u/s 16 of IBC, 2016, Adjudicating Authority is bound to appoint IRP as proposed by Financial Creditors and also by Operational Creditors, though, such Operational Creditors are not mandatorily required to propose the name of IRP. Thus, there is no discretion with Adjudicating Authority in this regard. ii. CoC in its first meeting is required to confirm the appointment of suc....
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....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 filed u/s 7, 9 and 10 of IBC, 2016. It is needless to mention that all applications connected with above matters are filed u/s 60(5)(a) and 60(5)(c) of IBC, 2016 r.w. specific sections governing those issues. 34. Now, comes a situation how the Adjudicating Authority can decide the issue u/s 60(5)(c) on which, though, it has jurisdiction there under but neither specific provision has been made in a positive manner nor a specific prohibition has been made. We have already stated the limitations imposed upon by the statutory provision of Section 238 of IBC whereby the contrary law cannot be applied. Further limitation has been imposed by the Hon'ble Supreme Court in the case of Embassy Property Developments Pvt. Ltd. (supra). Barring these two limitations,....
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....ovisions. 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 justice in the present case. In our view, the Adjudicating Authority also has freedom to apply the provisions of such laws which govern the adjudication of subject matter before it. In our considered view, principles of equity and fair play can also be applied in a given set of circumstances. We most humbly feel that even principles based on customs and practices of a trade or business can also be of great help to decide the matter as it is a settled judicial view that realistic business situations should be given a preference over narrow legalistic interpretation in general and more so in the case of commercial/economic legislation. Having stated so, in our view, the dispute before us can be decide by resorting to provisions of Indian Contract Act, 1872 read with Sche....
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....iry 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 guarantee from time to time, in our view, cannot be considered as an acceptance by the Resolution Applicant that it shall remain bind with such Resolution Plan forever. This fact also distinguishes the case on hand with the case relied on by RP and CoC. Further, in that case the aspect of jurisdiction of NCLT as Adjudicating Authority to decide such issue u/s 60(5)(c) was not specifically brought to the notice of Hon'ble NCLAT, hence, plea of Resolution Professional that appeal was filed before Hon'ble NCLAT against an order passed by Adjudicating Authority, in our considered view, does not have any force. Further, Rule 11 of NCLT Rules, 2016 was also not brought to the notice of Hon'ble NCLAT. Last but not the least; we most humbly submit that as per established j....
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....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 rejection of such Resolution Plan can be taken. For this purpose, we confine ourselves to provisions of Section 30(2)(e) of IBC, 2016. In Section 30(2)(e) of IBC, 2016 it is specified that Resolution Plan should not contravene any provisions of law for the time being in force. The words "any provisions of law" also include provisions of I&B Code, hence, our exercise to check this compliance starts. Accordingly, we have to see term of Resolution Plan which is a mandatory requirement of Regulation 38(2) of CIRP Regulations. The provisions of Regulation 38 of CIRP Regulations are reproduced as under: 38. Mandatory contents of the Resolution Plan. (1) The amount payable under a Resolution Plan - (a) to the operational creditors shall be paid in priority over financial creditors; and (....
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....: 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: Term-1. A word or phrase; esp., an expression that has a fixed meaning in some filed. 2. A contractual stipulation < the delivery term provided for shipment within 30 days>.- Also termed contract term. Thus, as per dictionary meaning, the word "term" is essentially refers to period in relation to a contract. 42. Apart from above observations, we also take note that the other aspect of such 38(2) which is that Resolution Plan should also provide implementation schedule which is also in terms of specific period. Thus, both aspects, if read together, make it conclusive that there should be a specified period of validity of Resolution Plan. We also take note of explanation II to Regulation 36 B (4A) which reads as under: 36B. Request for Resolution Plans. (4A) The request for Resolution Plans shall require the resolution applicant, in case its Resolution Plan is approved under sub-section (4) of section 30, to pr....
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....so 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 required that term of the plan should be specified in the Resolution Plan mandatorily so that after the expiry of such term or before such expiry, parties to a Resolution Plan i.e. Resolution Applicant and CoC can mutually decide to extend the validity of Resolution Plan. In the event of an agreement on extension, plan certainly stands extended and if Resolution Applicant does not find it worth to continue at that point of time it may have option to back out. Here, we may also say that, in appropriate cases, where there is no agreement on the extension of term of Resolution Plan, both CoC and Resolution Applicant can approach this Authority for suitable directions u/s 60(5)(c) of IBC, 2016 and the Adjudicating Authority can settle the issue having regard to circumstances as prevailing at that point of time and, in particular, to the delay in the approval of Resolution Plan, if any, by Adjudicating Authority. It is also of great significance to n....
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.... 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 Order on the Resolution Plan in accordance with the Code has been passed. (ii) Finalization of Definitive Documents shall happen within 30 days of approval of the Resolution Plan by the CoC. Definition of Final Order- "a period of 90 days has been completed, from the date of order of the Adjudicating Authority under Section 31(1) of the Code approving this Resolution Plan, in absence of any applicable stay by any judicial authority during such period". 12. Implementation Schedule Key Highlights of the Action Plan Accordingly, it can be safely concluded that the Resolution Plan without having a period of its validity does not confirm to the requirements of 30(2)(e) IBC, 2016 and, thus, liable to be rejected. 46. Considering the legal position explained above, if we dispose of IA 476 of 2018 which has been filed for approval of Resolution Plan and is pending for our approval and in doing so, the conclusion which could be arrived by us is that such Resolution ....
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....nterpretation of administration of any of the foregoing by, any Government Agency of India whether in effect as of the date of this Process Document or thereafter and in each case as amended or modified. (Pg. 6 of 62 of process document). Clause 3.1 This process document, the Resolution Plan Process and he Resolution Plan submitted hereto shall be governed by and construed in accordance with the laws of Republic India and the Adjudicating Authority/Courts of Mumbai shall have the exclusive jurisdiction over all disputes arising under, pursuant to or in connection with this Process Document or the Resolution Plan Process. Thus, in view of the above provisions of process document, there remains no dispute as regard to applicability of provisions of Indian Contract Act, 1872 to the process document and consequently to Resolution Plan submitted in accordance with the provisions of such process document. Having said so, in our view, even in the absence of such clauses in the process document, provisions of Indian Contract Act, 1872 would still be applicable as this Act governs the field of enforcement of contracts. Though, the provisions of Indian Contract Act, 1872 would be app....
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....ch time is essential.--When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. Effect of such failure when time is not essential.--If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. Effect of acceptance of performance at time other than that agreed upon.--If, in case of a contract voidable on account of the promisor failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of s....
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.... to Resolution Applicant through definitive agreements to be executed between the parties. The funds received are to be distributed by Resolution Professional to various stakeholders in terms of provisions of Section 53 r.w. 52 of IBC, 2016. Thus, as per sequence of events, it is clear that all three parties are involved in this process and they have got some obligation to perform at every stage and subsequent performance is dependent upon the achievement/completion of pre stage performance. Thus, in our view, process document is an instance of bilateral contract and this cannot be considered as unilateral contract as pleaded on behalf of the CoC. For such view, we also draw strength from the definition of both unilateral contact and bilateral contract as per Black's law dictionary. The term "Unilateral contract" is defined as under: Unilateral contract A contract in which only one party makes a promise or undertakes a performance. "[M]any unilateral contracts are in reality gratuitous promises enforced for good reason with no element of bargain." P.S. Atitya, an Introduction to the Law of Contract 126(3d. ed. 1981) "If says to B, 'if you walk across the Brooklyn Br....
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....o be done so by Resolution Applicant otherwise his offer would have become conditional and, therefore, it would have been rejected at the stage only by CoC. Thus, it means that such conditions have been accepted by Resolution Applicant to remain in fray and, therefore, such acceptance cannot lead to an interference that there is no expectation on the part of the Resolution Applicant that such Resolution Plan would be approved in a reasonable time and could be implemented thereafter, particularly when timelines for each step are well defined IBC, 2016 and there is no clause in the process document which indicates about possibility of inordinate delay or delay beyond a reasonable period in the whole process so that Resolution Applicant could foresee the same at the time of submitting Resolution Plan. As far as the aspect of reasonable period is concerned, in the background of legislation under which we are dealing, completion of proceedings in a time-bound manner is its hall mark and having regard to delays occurring in completion of insolvency resolution due to the legal process, the legislature also intervened to amend the provisions of Section 12 of IBC, 2016 to include time consu....
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....rachud vide order dated 13.11.2019 in the case of Rojer Mathew V/s. South Indian Bank Limited in Civil Appeal No. 8588 of 2019 as under: A. Introduction A.1 Challenges of the tribunal structure A global trend 1. India is no exception to the global trend towards the tribunalisation of justice. World over, tribunals have been constituted both in regulatory and adjudicatory areas. Tribunals act as adjudicators of disputes. This movement has in part been occasioned by new legislation governing modern societies as they confront the challenges thrown up by the complexities of social and economic orderings. The engagement of law with economics and technology has been shaped by social, cultural and historical contexts. While many of them may reflect the shared aspirations of societies governed by a common legal tradition, it would be simplistic to assume that the challenges thrown up by the layered adjudication through tribunals are common to all societies. Hence, as we analyse the impact of the growing movement towards tribunalisation - a feature which is common to all societies - it is important to bear in mind the context in which our problems have arisen as we attempt to find a....
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.... of those who appear before the tribunals. A specialised Bar is an invaluable input towards the efficiency of institutional adjudication. Together, this contributes to an adjudicatory process which is cognisant of the special features, needs and requirements of the subject areas carved for the tribunal. 4 The extent to which the purpose of setting up tribunals is realized is often a projection of ground realities. These realities, including the manner and extent to which provisions of the law governing a tribunal are enforced, directly impact upon the efficacy of the tribunal. Critical to the purpose of having a specialised tribunal is the presence of specialised adjudicators on decision-making posts. For, it is their domain expertise which defines the quality of outcomes in the adjudicatory process. Collectively, the presence of specialised adjudicators depends upon well-trained and qualified persons and their availability in a source pool. This factor has often been lost sight of in the selection of judges to specialised tribunals. Absent the requisite degree of expertise, the procedure and functioning of the tribunal may only replicate a conventional adjudication in a court of....
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....g from retirement or unforeseen causes. The presence of large-scale vacancies can render tribunals defunct. This defeats the cause of justice in the area of the jurisdiction of the tribunal. This problem becomes particularly acute where a jurisdiction of a conventional court has been transferred to the tribunal under the provisions of an operating enactment. Absent a recourse to traditional courts for the resolution of conflicts, a litigant is virtually denied access as a result of an unavailable adjudicator to resolve a dispute. In other words, the process for appointment and selection has a direct bearing on the efficacy of tribunalisation. Keeping vacancies unfilled, either as a matter of tardy procedures or for other reasons, has the tendency to denude the efficacy of the tribunal as a dispute resolution mechanism. The surest way to deny access to justice is to keep a large number of vacancies." Thereafter, flaws of current format of tribunal structure such as lack of were highlighted, which were hampering the achievement of objectives of tribunalisation. Thus, it is apparent that causes for delay need to be addressed by making suitable structural changes and active positive ....
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....in these rules, the Tribunal may, for reasons to be recorded in writing, determine the procedure in a particular case in accordance with the principles of natural justice. (2) The general heading in all proceedings before the Tribunal, in all advertisements and notices shall be in Form No. NCLT 4. (3) Every petition or application or reference shall be filed in form as provided in Form No. NCLT 1 with attachments thereto accompanied by Form No. NCLT 2 and in case of an interlocutory application, the same shall be filed in Form No. NCLT 1 accompanied by such attachments thereto along with Form No. NCLT 3. (4) Every petition or application including interlocutory application shall be verified by an affidavit in Form No. NCLT 6. Notice to be issued by the Tribunal to the opposite party shall be in Form NCLT 5. xxx xxxxxx -- 37. Notice to Opposite Party.- (1) The Tribunal shall issue notice to the respondent to show cause against the application or petition on a date of hearing to be specified in the Notice. Such notice in Form No. NCLT 5 shall be accompanied by a copy of the application with supporting documents. (2) If the respondent does not appear on the date specified ....
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....Form-3 being notice of demand under Section 8 of Insolvency and Bankruptcy Code, 2016 r.w. rule 5 of Insolvency and Bankruptcy (Adjudicating Authority) Rules, 2016 contains particulars of debt and default along with supporting documents and Corporate Debtor is obliged to reply to this notice within the specified period of 10 days from the receipt of such notice. When it is not done so then there is no need to give any opportunity of hearing to such Corporate Debtor and to file pleadings in support of its claim of pre-existing dispute, if any, subsequently. Further, time lines may be provided for completion of all pleadings and provisions for imposition of costs may also be made. 53. Apart from this, if we strictly go by legal provisions of section 60(5)(a) and section 60(5)(c) of IBC, 2016, in our considered view, time required for completing pleadings in such IAs and disposal thereof should not have come in the way of approval of Resolution Plan because all such IAs could be considered by the Appellate Authority u/s 61 or 61(3) of IBC, 2016 in an appeal against our order either approving or rejecting the Resolution Plan or order of dismissal of the same as pre-mature or without a....
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....ing of such delay or which should be beyond the control of the party. We also agree with the contention made on behalf of CoC that commercial hardship by itself is not a sufficient ground to release a party from its contractual obligations. Having stated such general principles, we submit that provisions of Section 56 of Indian Contract Act, 1872 are an instance of positive law which applies only when contract does not prescribe for the situations/events of frustration. In the present case, there is a provision in process document which says that Resolution Applicant cannot unilaterally withdraw but no circumstances have been prescribed in the process document whereby even by mutual consent, Resolution Applicant could withdraw. On the contrary, in other clause 1.7.4 of process document it has been prescribed that Resolution Plan is without any expiry. In this situation, we are of the view that no significance can be given to clause 1.17.17 relating to withdrawal. Accordingly, we hold that provisions of Section 56 of Indian Contract Act, 1872 would be applicable. In terms of provisions of section 56, the word "impossible" does not mean only physical impossibility but it also connote....
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....ch is equal to 270 days). But this 330-day period includes the time taken in legal proceedings in relation to such resolution process of the corporate debtor. This provision is to get over what is stated in the Judgment in Arcelormittal India(supra) at paragraph 86, that the time taken in legal proceedings in relation to the corporate resolution process must be excluded from the timeline mentioned in Section 12. Secondly, the third proviso added to the Section also mandates that where the period of 330 days is over on the date of commencement of the Amending Act of 2019, a further grace period of 90 days from such date is given, within which such process shall either be completed or the corporate debtor be sent into liquidation. 99. The raison d'etre for this provision comes from the experience that has been plaguing the legislature ever since SICA was promulgated. The problems of SICA and other successor enactments was stated in graphic detail in Madras Petrochem Limited v. BIFR (2016) 4 SCC 1 at paragraphs 17 to 23. It will be seen from these paragraphs that though SICA, the Recovery of Debts Act of 1993 and the Securitisation and Reconstruction of Financial Assets and Enfo....
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....ation, there is value destruction. Further, even in liquidation, the realisation is lower when there are delays. Hence, delays cause value destruction. Thus, achieving a high recovery rate is primarily about identifying and combating the sources of delay. This same idea is found in FSLRC's treatment of the failure of financial firms. The most important objective in designing a legal framework for dealing with firm failure is the need for speed. Identifying and addressing the sources of delay Before the IRP can commence, all parties need an accurate and undisputed set of facts about existing credit, collateral that has been pledged, etc. Under the present arrangements, considerable time can be lost before all parties obtain this information. Disputes about these facts can take up years to resolve in court. The objective of an IRP that is completed in no more than 180 days can be lost owing to these problems. Hence, the Committee envisions a competitive industry of information utilities who hold an array of information about all firms at all times. When the IRP commences, within less than a day, undisputed and complete information would become available to all persons involve....
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....r of days' pending includes time, if any, excluded by the tribunals. So, that gives you a picture on what is the kind of wait and, therefore, why we want to bring the Amendments for this speeding up." 101. Mrs. Madhvi Divan also pointed out that the Hon'ble Minister's speech had also adverted to the strengthening of the NCLT as follows: "In view of the increasing number of cases, the Government has increased the number of benches of NCLT from 10 to 15, during just the last one year. In one year, we have increased it from 10 to 15. The number of members has also been increased in a phased manner. Recently, 26 new members have joined bringing the total number of members to 52. Sir, more than one court has been operationalised in the benches where a large number of cases are pending, such as, in Mumbai, Delhi, Chennai and Kolkata. The projects like e-governance and e-courts have also been implemented for faster and speedier disposal of the cases." 102. Shri Sibal vehemently objected to any reliance on the speech of the Minister and cited K.P. Varghese v. ITO (1982) 1 SCR 629 and K.S. Paripoornan v. State of Kerala (1994) 5 SCC 593. In Varghese (supra) this Court held....
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....dopted. We are unable to accept this contention. As regards the Statement of Objects and Reasons appended to the Bill the law is well settled that the same cannot be used except for the limited purpose of understanding the background and the state of affairs leading to the legislation but it cannot be used as an aid to the construction of the statute. (See Aswini Kumar Ghosh v. Arabinda Bose [1953 SCR 1, 28 : AIR 1952 SC 369]; State of W.B. v. Subodh Gopal Bose [1954 SCR 587, 628 : AIR 1954 SC 92] per Das, J.; State of W.B. v. Union of India [ (1964) 1 SCR 371, 383 : AIR 1963 SC 1241] .) Similarly, with regard to speeches made by the members in the House at the time of consideration of the Bill it has been held that they are not admissible as extrinsic aids to the interpretation of the statutory provisions though the speech of the mover of the Bill may be referred to for the purpose of finding out the object intended to be achieved by the Bill. (See State of ravancore-Cochin v. Bombay Co. Ltd. [1952 SCR 1112 : AIR 1952 SC 366] and swini Kumar v. Arabinda Bose [1953 SCR 1, 28 : AIR 1952 SC 369] .) On a perusal of the Bills of 1982 and 1984 we find that they did not contain the provi....
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....ion 468 of the Code of Criminal Procedure, 1973 the relevant date is the date of filing of the complaint and not the date on which the Magistrate takes cognizance, applying the aforesaid maxim as follows: "39. As we have already noted in reaching this conclusion, light can be drawn from legal maxims. Legal maxims are referred to in Bharat Kale [Bharat Damodar Kale v. State of A.P., (2003) 8 SCC 559 : 2004 SCC (Cri) 39], Japani Sahoo [Japani Sahoo v. Chandra Sekhar Mohanty, (2007) 7 SCC 394 : (2007) 3 SCC (Cri) 388] and Vanka Radhamanohari [Vanka Radhamanohari v. Vanka Venkata Reddy, (1993) 3 SCC 4 : 1993 SCC (Cri) 571]. The object of the criminal law is to punish perpetrators of crime. This is in tune with the well-known legal maxim nullum tempus aut locus occurrit regi, which means that a crime never dies. At the same time, it is also the policy of law to assist the vigilant and not the sleepy. This is expressed in the Latin maxim vigilantibuet non dormientibus, jura subveniunt. Chapter XXXVI Cr.P.C. which provides limitation period for certain types of offences for which lesser sentence is provided draws support from this maxim. But, even certain offences such as Section 384 or....
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....e completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. However, on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate Tribunal to extend time beyond 330 days. Likewise, even under the newly added proviso to Section 12, if by reason of all the aforesaid factors the grace period of 90 days from the date of commencement of the Amending Act of 2019 is exceeded, there again a discret....
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....s document i.e. clause 1.17.14, was available to the Resolution Applicant and, in fact, that process/facility had been accessed to before submitting the Resolution Plan. As regard to the contention of the CoC/RP that they had approved the Resolution Plan which envisaged 80 % (eighty per cent) hair-cut, the Resolution Applicant has submitted that Resolution Plan submitted by such applicants was twice the liquidation value, hence, fact of such hair-cut cannot go against the Resolution Applicant for withdrawal of such application. Be that as it may, we are of the view that this fact, as such, have got no relevance for determination of the issue of withdrawal because it is not the claim of the CoC that Resolution Applicant had made a wrong bargain, hence, it was seeking an exit opportunity nor such a case has been made out. 59. It has been contended on behalf of CoC that if Resolution Applicant is allowed to withdraw then it would set a bad precedent and may result into filing of number of applications seeking same relief. It has also been claimed that Financial Creditors had already suffered loss due to such delay and would be saddled with huge losses if it Resolution Plan is withdra....
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....r, w.e.f. 03.07.2018 Regulation 39(3) reads as under: 39. Approval of Resolution Plan. 3) The committee shall evaluate the Resolution Plans received under sub-regulation (1) strictly as per the evaluation matrix to identify the best Resolution Plan and may approve it with such modifications as it deems fit Simultaneously, following proviso was added to Regulation 39(3) w.e.f. 03.07.2018: "Provided that the committee shall record the reasons for approving or rejecting a Resolution Plan." This proviso was amended w.e.f. 25.07.2019 and amended proviso read as under: "Provided that the committee 'shall' record its deliberations on the feasibility and viability of the Resolution Plans." However, w.e.f. 07.08.2020 such Regulation has again been restructured. Amended regulation 39(3) now reads as under: 39. Approval of Resolution Plan. 3) The Committee shall- a. Evaluate the Resolution Plans received under sub-regulation (2) as per evaluation matrix; b. record its deliberations on the feasibility and viability of each Resolution Plan; and c. vote on all such Resolution Plans simultaneously. 60. Now, when we analyze the Regulations 39(3) of CIRP Regulations....
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....be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1.-For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.-For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a Resolution Plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a Resolution Plan;} (c) provides for the management of the affairs of the Corporate debtor after approval of the Resolution Plan; (d) the implementation and supervision o....
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....solution Applicant who has not submitted Resolution Plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. Before amendment by Act of 2018 Section 30(4) stood as under: "(4) The Committee of Creditors may approve a Resolution Plan by a vote of not less than seventy five percent of voting share of voting share of the Financial Creditors." Thus, thereafter w.e.f. 06.06.2018 percentage of voting was reduced from seventy-five to sixty-six per cent. Amendments were also made as regard to examination of aspect of eligibility of Resolution Applicant u/s 29A of IBC, 2016. Thereafter, another amendment was carried out w.e.f. 16.08.2019 which provided for manner of distribution amongst the creditors. From the prospective of present case, the incorporation of words "after considering its feasibility and viability" are important as these two words impose onerous obligation on part of CoC to take care of interest of all stakeholders. These words, in our view, results into two proposition, namely, firstly, that the feasibility and viability of a plan is to be seen not only at the stage of its submission but Resolution Plan should also be feas....
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....he perusal of Section 30(2), 30(3) and 30(4) it is noted that Resolution Professional submits such Resolution Plans to CoC which confirm to the conditions referred in sub-section 30(2). As per Clause 30(2) RP is entrusted with the responsibility to see that Resolution Plan provides for the implementation and supervision of the Resolution Plan, though, the words "provides for" are missing therein. Thereafter, CoC has to consider its feasibility and viability amongst other things as per provisions of Section 30 and evaluate the Resolution Plan as per evaluation matrix as approved by CoC u/s 25(2)(h) of the IBC, 2016. 65. It is noted that a number of amendments were carried out through second amendment Act of 2018 on the basis of recommendations of the committee appointed by the government to review functioning and implementation of the Code on the basis of consensus that further fine tuning of the code was required. The committee recommended for incorporation of this proviso with a view to enable NCLT to give direction regarding implementation of the plan while approving it to ensure that a proper implementation strategy has been included in the Resolution Plan, for example, a provi....
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....tee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the Resolution Plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may s....
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....nd CoC should not only be in accordance with the provisions of IBC, 2016 but should also not be arbitrary or unreasonable. The above proposition has also been statutorily recognized by way of amendment of Regulation 39(3) of CIRP Regulations. It is also noteworthy provision of simultaneous voting on Resolution Plan has been brought in this regulation which also goes to show the legislative intent as regard to transparent process be followed by RP/CoC. 71. In the background of above discussion, now, we would see as to how the process of obtaining Resolution Plan has been designed and what the major terms are. For this purpose, we look into the following paragraphs of disclaimer section of process document (We have done the numbering on our own for the sake of convenience) and miscellaneous Section thereof. (a) ...."This document is neither an agreement nor an offer by the members of CoC to the prospective Resolution Applicant(s) or any other person. The purpose of this document is to provide the Resolution Applicant(s) with information that may be useful to them in submitting heir Resolution Plan(s) pursuant to this document. This document does not constitute any recommendation t....
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....n this document or otherwise, including the accuracy, adequacy, authenticity, correctness, completeness or reliability of the information or opinions contained in this document and any assessment, assumption, statement or information contained therein or deemed to form part of this document, and Resolution Professional Resolution Process Advisors, Corporate Debtor, members of CoC, affiliates, directors, employees, agents and representatives do not have any responsibility or liability for any such information or opinions and therefore, any liability or responsibility is expressly disclaimed", (page 3 of 62 of process document). (d) .... the CoC may in its absolute discretion, but without being under any obligation to do so, update, amend or supplement the information, assessment or assumptions contained in this document. Further, the Resolution Applicant(s) must specifically note that the CoC reserves the right to change, update, amend, supplement, modify, add to, delay or otherwise annual or cease the Resolution Plan Process at any point in time, for any reason determined in their sole discretion in accordance with the Insolvency and Bankruptcy code, 2016(IBC)." (page 3 of 62 of ....
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....ut it still refers to provisions of IB Code. Now, when we see the clause (e) which gives CoC an authority to reject at any stage all or any of the Resolution Applicant or Resolution Plan without assigning any reason whatsoever. The use of the words "at any stage" leads to prima facie conclusion that the CoC even after approval of a Resolution Plan can reject that and that too without assigning any reason there for. Similar power has been given in Clause 3.2 of process document. This means as on date CoC need not to come before Adjudicating Authority if it wishes to reject such approved plan of the Resolution Applicant. This is not the end of story. On the contrary, there are provisions which are contained in clause 1.7.4, 1.7.5. and 1.17.17 which make it impossible for the Resolution Applicant to unilaterally withdraw or change plan once submitted to the resolution professional under any circumstances. These clauses are reproduced as under: 1.7.4. A Resolution Plan once made/submitted shall be valid for not less than 6(six) months from the Resolution Plan Submission Date including any revision to such Resolution Plan Submission Date ("Plan Validity Period''). In case of e....
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....te, rules, or regulations, even if any loss or damage is caused to any of the Resolution Applicant(s) by any act or omission on their part. The Resolution Applicant(s) is required to make its own assessments of the information provided in the Information Memorandum or the Data Room (Pg. 4 of 62 of process document). Similar disclaimer has been made in clause 1.6.1 of process document which reads as under: Clarification 1.6.1 While the data/information provided in this Process Document & Virtual Date Room (VDR) has been prepared and provided in good faith, the Resolution Professional, Resolution Process Advisor and the members of Committee of Creditors shall not accept any responsibility or liability, whatsoever, in respect of any statement or omissions herein, or the accuracy, correctness, completeness or reliability of information provided, and shall incur no liability under any law, statute, rules or regulations as to the accuracy, reliability and completeness of the information provided, even if any loss or damage is caused to any of the Resolution Application(s) by any act or omission on their part. (Pg. 15 of 62 of process document). The conditions made in process docu....