TaxTMI 
TaxTMI 
2021 (10) TMI 1293
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....dvocate., Mr. Ramji Srinivasan, Sr. Advocate, For Mr. Edward James, Advocate Mr. Bishwajit Dubey, Advocate JUDGMENT (Virtual Mode) M. Venugopal (J) Company Appeal (AT) (CH) (INS.) No. 166 of 2021 Preface: 1. The Appellant/ Committee of Creditors of Meenakshi Energy Limited, Hyderabad through State Bank of India has preferred the instant Company Appeal (AT) (CH) (INS.) No. 166 of 2021 being dissatisfied with the impugned order dated 24.06.2021 in I.A. 244 of 2021 in CP(IB)No.184/HDB/7/2019 passed by the 'Adjudicating Authority' (National Company Law Tribunal, Bench-II, Hyderabad). Company Appeal (AT) (CH) (INS.) No. 174 of 2021 2. The Appellant / Resolution Professional of Meenakshi Energy Limited, Hyderabad has filed the present Company Appeal (AT) (CH) (INS.) No. 174 of 2021 as an 'aggrieved person' in respect of the certain observations and findings made against the Appellant/ Resolution Professional and the Second Respondent / Committee of Creditors of Meenakshi Energy Limited that they had acted in a manner inconsistent with the Code and 'CIRP' Regulations etc., in the impugned order dated 24.06.2021 in I.A. 244 of 2021 in CP(IB)No.184/HDB/7/2019 (filed ....
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....B(7) empowers the resolution professional to re-issue request for resolution plan with the approval of the committee, if the resolution plans received in response to an earlier request are not satisfactory, subject to the condition that the request is made to all prospective resolution applicants in the final list. 16. Regulation 36A and Regulation 36B(2) clearly speaks that timelines specified are mandatory. In the instant case, the 330 days period completed on 08.03.2021. The Applicant claimed that two resolution plans were placed before the CoC for consideration as per the timelines specified in RFRP and before the timelines expired, the Resolution Professional has further extended the time at the request of another Resolution Applicant viz Vedanta Limited, who is qualified as prospective Resolution Applicant in final list of EoI. The Two Resolution Plans pending before the committee were deliberated at length and the contents known to all the CoC members. The CoC in its commercial wisdom has requested the Resolution Professional to extend the RFR timelines beyond 330 days with a view to given an opportunity to Vedanta Limited to submit their Resolution Plan in the name....
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.... untenable in law, against equity and it is an erroneous one in the eye of law. 5. The Learned Counsel for the Appellant/ Second Respondent contends that the 'impugned order' of the 'Adjudicating Authority' had addressed the First Respondent/ 'Prospective Resolution Applicants' Application on merits directly, without even addressing the preliminary issue of 'Maintainability' and 'Locus-standi' of the First Respondent/ 'Prospective Resolution Applicant to raise any objection in the 'Corporate Insolvency Resolution Process'. 6. The Learned Counsel for the Appellant/ Second Respondent points out that the 'prospective Resolution Applicant' as per the judgment of the Hon'ble Supreme Court in Arcelor Mittal's case (vide judgment dated 04.10.2018 in Civil Appeal No.9402-9405 of 2018) reported in MANU/SC/1123/2018 has no vested right to raise the objections to the 'CIRP' seeking to (1) have its 'Resolution Plan' approved; and/ or (2) to have its 'Resolution Plan' being considered in exclusivity or in priority over the 'Resolution Plan' of other 'Resolution Applicants'. 7. The Learned Counsel for the Appellant/ Second Respondent takes a stand that the 'impugned order' passed by the....
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....onsideration of 'Resolution Plan' received subsequent to 330 days was (1) pursuant to the decision (approved by 95.71%) to reissue the request for 'Resolution Plans' in the 20th 'Committee of Creditors' meeting and (2) during the pendency and subject to the 'Extension Application', which was finally allowed on 15.07.2021. 11. Also that, it is projected on the side of the Appellant/ Second Respondent that in view of the fact that time was granted by the 'Adjudicating Authority' (National Company Law Tribunal, Bench-II, Hyderabad) in any event, the said 'Authority' had no reason to interfere with the decision of the 'Committee of Creditors' and the 'Resolution Professional' based on the binding decision of the Hon'ble Supreme Court of India in Kalpraj Dharamshi & Anr. Vs. Kotak Investment Advisors Limited and Anr. 12. It is represented on behalf of the Appellant/ Second Respondent that the decision of the 'Committee of Creditors' (arrived at by a thumping majority) was meant to provide an equal opportunity to all the 'Prospective Resolution Applicants' in the final list to submit fresh/ revised plans in accordance with the Regulation 36B(7) of the 'CIRP Regulations', because of....
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....ave a successful resolution and prevent liquidation of the Corporate Debtor. 17. The Learned Counsel for the Appellant/ Second Respondent points out that because of the delay in deciding the 'Extension Application' and considering that it was essential to keep the 'Corporate Debtor' as a 'going concern' for 'Successful Resolution', the 'Committee of Creditors' together with the 'Resolution Professional' had continued the 'CIRP' after the lapse of 330 days, subject to the Adjudicating Authority's order on the 'Extension Application'. In fact, the 'Committee of Creditors' and the 'Resolution Professional' had disclosed to all the stake holders (including the First Respondent/ 'Prospective Resolution Applicants') that such process post expiry of 330 days was subject to the order of the 'Adjudicating Authority' and indeed unless the 'Extension Application' is approved, all the stakes would not create any rights and obligations. 18. The Learned Counsel for the Appellant/ Second Respondent, for an illustration, adverts to the Form G (Re-Issue) dated 19.05.2021 which mentioned the following: "The timelines provided above are subject to receipt of approval from NCLT for exte....
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....esulted in almost 60% increase in the value that was offered by the 'Prospective Resolution Applicants' (including the First Respondent/ 'Prospective Resolution Applicant'). 22. It is the version of the Appellant/ Second Respondent that by seeking resubmission of all the 'Prospective Resolution Applicants', the 'Committee of Creditors' and the Resolution Professional had fulfilled the requirement of Regulations 36B(7) and ensured that no preference was given to anyone of the 'Prospective Resolution Applicants' over the other. Besides this, a level playing field was created for all the 'Prospective Resolution Applicants' by adhering to the due process as per the I&B Code and the 'CIRP Regulations'. 23. The Learned Counsel for the Appellant/ Second Respondent contends that the based on the invitation for 'Expression of Interest' dated 21.01.2020 and 'Expression of Interest' dated 25.01.2021 the Vedanta had submitted its 'Expression of Interest and was included in the final list of 'Prospective Resolution Applicants' published each time that it on 23.03.2020 and on 08.02.2021. Therefore, 'Vedanta' cannot be termed as just an 'outsider' which is endeavouring to submit its plan, a....
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....sions'/ 'Modifications' in its 'Resolution Plans' especially on 15.04.2021, 12.05.2021, 15.05.2021, 11.06.2021, 29.06.2021, 03.07.2021 and 10.07.2021 and since the First Respondent/ 'Prospective Resolution Applicant' had reaped the benefit of extension of timeline for submitting the 'Resolution Plan' itself, it is the contention of the Appellant that the First Respondent/ 'Prospective Resolution Applicant' is stopped from objecting to the 'Committee of Creditors' decisions to provide similar opportunities to the other 'Prospective Resolution Applicants'. 28. The Learned Counsel for the Appellant/ Second Respondent refers to the judgment of this Tribunal dated 12.08.2021 in the matter of Unicon Buildtech vs. Aishwarya Mohan Gahrana RP, Durha Virak Private Limited (vide Comp App (AT) (Ins.) No.517 of 2021) and submits that the 'Appeal' preferred by the 'Prospective Resolution Applicant' objecting to the non-grant of time and rejection of its plan by the 'Committee of Creditors' was rejected. 29. The Learned Counsel for the Appellant/ Second Respondent submits that the impugned order in the instant Appeal was passed in an unreasonable and arbitrary manner and also is indicative ....
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....sed on 31st May, 2021...." 31. The Learned Counsel for the Appellant/ Second Respondent as regards the plea that the CIRP can be extended beyond 330 days' period seeks in-aid of the decision of Hon'ble Supreme Court in The Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta and Ors. (vide judgment dated 15.11.2019 in Civil Appeal No.8766-8767 of 2019) wherein at paragraph 79 it is observed as under: 79 "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 129 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 wou....
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.... diligent complainant. Chapter XXXVI thus presents the interplay of these three legal maxims. The provisions of this Chapter, however, are not interpreted solely on the basis of these maxims. They only serve as guiding principles." 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 import....
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....rned Counsel for the Appellant cites the judgment of the Hon'ble Supreme Court in Arcelor Mittal India Private Limited vs. Satish Kumar Gupta and Ors. (vide judgment dated 04.10.2018 in Civil Appeal No.9402-9405 of 2018) reported in MANU/SC/1123/2018 wherein at paragraphs at 76, 79 to 81 76. "Given the timeline referred to above, and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudicating Authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution Professional may only invite fresh resolution plans if no other resolution plan has passed muster. .... 79. Take the next stage under Section 30. A Resolution Professional has presented a resolution plan to the Committee of Creditors for its approval, but the Committee of Creditors does not approve such plan after considering its feasibility and viability, as the requisite vote of n....
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....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 nonobstante 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 against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings." 33. The Learned Counsel for the Appellant/ Second Respondent in regard to the submission that 'Commercial wisdom' is paramount and not to be interfered with relies on the judgment dated 05.02.2019 of the Hon'ble Supreme Court in K. Shashidhar vs. Indian Overseas Bank reported in (2019) 12 SCC at page 150 wherein at paragraph 52 it is observed as under: 52. "As aforesaid, upon rece....
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....dom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. This Court clearly held, that the appellate authority ought not to have interfered with the order of the adjudicating authority by directing the successful resolution applicant to enhance their fund inflow upfront. 156. It would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code. 157. No doubt, it is sought to be urged, that since there has been a material irregularity in exercise of the powers by RP, NCLAT was justified in view of the provisions of clause (ii) of sub-section (3) of Section 61 of the I&B Code to interfere with the exercise of power by RP. However, it could be seen, that all actions of RP have the seal of approval of CoC. No doubt, it was possible for RP to have issued another Form 'G', in the event he found, that the proposals received by it prior to the date specified in last Form 'G' could not be accepted. However, it has been the consistent stand of R....
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....rt from taking into account all the citations referred to by the parties and especially the ratio enunciated in the case of 'Committee of Creditors' of 'Essar Steel of India' V. 'Satish Kumar Gupta', 2020 Vol. 8, SCC 531 which provides that while the period of 330 days is not mandatory, the same can be violated only in certain specific circumstances and not for considering the new Resolution Plans submitted after the expiry of prescribed time as well as after the lapse of 330 days. 37. The Learned Counsel for the First Respondent points out that the impugned order was passed based on due consideration of Regulations 36A and 36B of the Corporate Persons Regulation, 2016. Furthermore, it is represented on behalf of the First Respondent that the last Form G (third one) published by the 'Resolution Professional' was dated 12.05.2021 and this would exhibit that the 'Resolution Professional' had acted arbitrarily, dehors the provisions of the Code and under the false assumption that 'Form G' could be issued even beyond the 330 days' period and without securing the approval in this regard, from the 'Adjudicating Authority'. 38. The Learned Counsel for the First Respondent points out....
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....elies on the judgment of this Tribunal in Comp App (AT) (Ins) No.05 of 2020 dated 10.02.2020 Ashish Chaturvedi Vs. Inox Leisure Ltd. & Ors. wherein at paragraph 17 it is observed as under: 17. "It is to be noted that 'Speedy' is the gist for an effective, efficacious functioning of the Bankruptcy Code. As per Section 12(3) of the Code, the time period of 'CIRP is not to be extended more than once. It is to be borne in mind by the concerned authorities to adhere to the model 16 timeframe envisaged in Regulation 40(A) of IBBI (CIRP for corporate person) Regulations 2016 as far as possible. In an extraordinary circumstance(s), the 'Adjudicating Authority' can extend the 'Corporate Insolvency Resolution Process' beyond the time limit adumbrated in Section 12(3) of the Code. The extension of time can be only on an application made by the Insolvency Resolution Professional on the basis of 'Committee of Creditors' as mentioned in sub-Section 2 and 3 of Section 12 of the IBC, 2016." 42. The Learned Counsel for the First Respondent submits that the First Respondent's challenge was not founded on its rights to be approved but against an illegal procedure adopted by the 'Resolutio....
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....tted and accepted by the Resolution Professional. It is not in dispute that after invitation was called for, the Ultra Tech Cement Ltd. submitted the revised Resolution Plan on 12th February, 2018 i.e. well within the time. It is not the case of the Committee of Creditors that the Plan of the Ultra Tech Cement Ltd. was in violation of Section 30(2) of the I&B Code. The Resolution Plan having submitted by Ultra Tech Cement Ltd. within time on 12th February, 2018 it was open to the Committee of Creditors to notice the revised offer given by Ultra Tech Ltd. on 08th March, 2018. The Committee of Creditors has taken note of revised offer given by the 'Rajputana Properties Private Limited' on 07th March, 2018 but refused to notice the revised offer submitted by Ultra Tech Cement Limited on 08th March, 2018 i.e. much prior to the decision of the Committee of Creditors (14th March, 2018). 39. On a careful reading of the aforesaid clauses, it is clear that all the Resolution Plan' which meet the requirements of Section 30(2) of the 'I&B Code' are required to be placed before the 'Committee of Creditors' and the Resolution Professional' can review the Resolution Plan' and the 'Commi....
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....r coming to know of the contents of the bids of the 'First Respondent' and 'STLL'. 48. The Learned Counsel for the First Respondent refers to the judgement of this Tribunal in 'Kalinga Allied Industries Ltd. Vs. Hindustan Coils Limited (vide Comp. App. (AT)(Ins.) No. 518 of 2020 wherein it is observed as under: - "15. There is no provision in the Code or regulation which provides that while exercising the power under Section 31 of the IBC, the Adjudicating authority can direct the CoC to consider the resolution plan of such person who has not been part of CIRP. Otherwise also if such procedure adopted, then the CIRP will be frustrated. Once the resolution plan has been opened and fundamentals and financials of the plan and offer made therein were disclosed to all the participants including RP. Then anyone can enhance its offer before the Adjudicating Authority in the guise of maximisation of realization. Therefore, no further fresh bid or offer would have accepted or considered... 16. This Appellate Tribunal in the case of Chhatisgarh Distilleries Ltd. Vs. Dushyant Dave and Ors. Company Appeal (AT)(Ins.) No. 461 of 2019 in the light of the pronouncement o....
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....er dated 04.08.2021 had served the Resolution Professional with a notice of Intent to terminate the said 'PPA'. First Respondent's Citations 50. The Learned Counsel for the First Respondent relies on the decision of the Hon'ble Supreme Court in Kalpraj Dharamshi & Anr. Vs. Kotak Investment Advisors Limited and Anr., reported in (2021) SCC OnLine SC 204 wherein at paragraph 143, 145, 156, 157 it is observed and held as under:- 143 "This Court has held, that it is not open to the Adjudicating Authority or Appellate Authority to reckon any other factor other than specified in Sections 30(2) or 61(3) of the I&B Code. It has further been held, that the commercial wisdom of CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. This Court thus, in unequivocal terms, held, that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of exper....
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.... the I&B Code for completion of the process, have been consciously approved by CoC. It is to be noted, that the decision of CoC is taken by a thumping majority of 84.36%. The only creditor voted in favour of KIAL is Kotak Bank, which is a holding company of KIAL, having voting rights of 0.97%. We are of the considered view, that in view of the paramount importance given to the decision of CoC, which is to be taken on the basis of 'commercial wisdom', NCLAT was not correct in law in interfering with the commercial decision taken by CoC by a thumping majority of 84.36%." 51. The Learned Counsel for the First Respondent relies on the judgment of this Tribunal (Dated 04.02.2019) in Tata Steel Ltd. vs. Liberty House Group Pte. Ltd. & Ors., Comp App (AT) (Ins.) 198 of 2018 wherein at paragraph 32 and 39 it is observed as under: 32. "It is true that the 'Committee of Creditors' will have to ensure a time bound process, to better preserve the economic value of the asset. Simultaneously, it is duty of the 'Committee of Creditors' to ensure that the 'Resolution Plan' is viable, feasible and should maximize the assets of the 'Corporate Debtor'. 39. Similar provisions were....
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....y on business under Article 19(1)(g) of the Constitution. The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be 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 ....
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....s clear that at this stage again no application before the Adjudicating Authority could be entertained as there is no vested right or fundamental right in the resolution applicant to have its resolution plan approved, and as no adjudication has yet taken place. 81. 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....
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.... the IBC, and not the Contract Act. The voting by the CoC also occurs only after the RP has verified the contents of the Resolution Plan and confirmed that it meets the conditions of the IBC and the regulations therein. The amended Regulation 39(3) ("39....(3)The committee shall- (a) evaluate the resolution plans received under subregulation (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. (3A) Where only one resolution plan is put to vote, it shall be considered approved if it receives requisite votes. (3B) Where two or more resolution plans are put to vote simultaneously, the resolution plan, which receives the highest votes, but not less than requisite votes, shall be considered as approved: Provided that where two or more resolution plans receive equal votes, but not less than requisite votes, the committee shall approve any one of them, as per the tie-breaker formula announced before voting: Provided further that where none of the resolution plans receives requisite votes, the committee shall again vote on the resolution plan that received the highest v....
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....btor without its liabilities, for a negotiated amount of the debt that is owed by the Corporate Debtor. Typically, resolution amounts envisage payment of a fraction of debt that is owed to the creditors and the business is acquired as a going concern with its employees. The Resolution Plan is drafted in a way that it is implementable in the future and brings about a quietus to the CIRP. Enabling Resolution Applicants to seek remedies that are not specified by the IBC, by seeking recourse to the Contract Act would be antithetical to the IBC's insolvency regime. The elements of contractual interpretation can be relied upon to construe the language of the terms of the Resolution Plan, in the event of a dispute, but not to re-fashion and distort the mechanism of the IBC altogether. This Court in Laxmi Pat Surana v. Union Bank of India ((2020) SCC On Line SC 1187) has held that the IBC is a self-contained Code. Thus, importing principles of any other law or a statute like the Contract Act into the IBC regime would introduce unnecessary complexity into the working of the IBC and may lead to protracted litigation on considerations that are alien to the IBC. To give an example, the CoC can....
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....es a detailed linear process for undertaking CIRP of the Corporate Debtor to minimize any delays, uncertainty in procedure and disputes. The roles and responsibilities of the important actors in the CIRP are clearly defined under the IBC and its regulations. In Innoventive Industries Ltd v. ICICI Bank (2018) 1 SCC 407) a three judge Bench of this Court observed that "one of the important objectives of the Code is to bring the insolvency law in India under a single unified umbrella with the object of speeding up of the insolvency process". Recently, in Gujarat Urja ((2021) SCC OnLine 194, para 71) (supra) a three judge Bench of this Court observed that a "delay in completion of the insolvency proceedings would diminish the value of the debtor's assets and hamper the prospects of a successful reorganization or liquidation. For the success of an insolvency regime, it is necessary that insolvency proceedings are dealt with in a timely, effective and efficient manner". The stipulation of timelines and a detailed procedure under the IBC ensures a timely completion of CIRP and introduces transparency, certainty and predictability in the insolvency resolution process. The UNCITRAL Guide al....
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....must be exercised in such cases as a matter of prudence, since the court neither has the necessary expertise nor the power to hold consultations with stakeholders or experts to decide the direction of economic policy. A court may be inept in laying down a detailed procedure for exercise of the power of withdrawal or modification by a successful Resolution Applicant without impacting the other procedural steps and the timelines under the IBC which are sacrosanct. Thus, judicial restraint must be exercised while intervening in a law governing substantive outcomes through procedure, such as the IBC. In this case, if Resolution Applicants are permitted to seek modifications after subsequent negotiations or a withdrawal after a submission of a Resolution Plan to the Adjudicating Authority as a matter of law, it would dictate the commercial wisdom and bargaining strategies of all prospective Resolution Applicants who are seeking to participate in the process and the successful Resolution Applicants who may wish to negotiate a better deal, owing to myriad factors that are peculiar to their own case. The broader legitimacy of this course of action can be decided by the legislature alone, s....
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....n accidentally omitted, or adopting a construction which deprives certain existing words of all meaning, it is permissible to supply the words". A departure from the rule of literal construction may be legitimate so as to avoid any part of the statute becoming meaningless. Words may also be read to give effect to the intention of the Legislature which is apparent from the Act read as a whole. Application of the mischief rule or purposive construction may also enable reading of words by implication when there is no doubt about the purpose which the Parliament intended to achieve. But before any words are read to repair an omission in the Act, it should be possible to state with certainty that these or similar words would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law." In the wake of the COVID-19 pandemic, several Resolution Plans remained pending before Adjudicating Authorities due to the lockdown and significant barriers to securing a hearing. An Ordinance was swiftly promulgated on 5 June 2020 which imposed a temporary suspension of initiation of CIRP under Sections 7, 9 and 10....
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....f withdrawal or modification after submission of a CoCapproved Resolution Plan, by judicial interpretation, will have the effect of disturbing the statutory timelines and delaying the CIRP, leading to a depletion in the value of the assets of a Corporate Debtor in the event of a potential liquidation. Hence, it is best left to the wisdom of the legislature, based on the experiences gained from the working of the enactment, to decide whether the option of modification or withdrawal at the behest of the Resolution Applicant should be permitted after submission to the Adjudicating Authority; if so, the conditions and the safeguards subject in which it can be allowed and the statutory procedure to be adopted for its exercise. 159 After the amendment to Section 12 in 2019 which mandate a 330 days outerlimit for conclusion of the CIRP (which can be breached only under exceptional circumstances as held in Essar Steel (supra)), it would be antithetical to the purpose of the IBC to allow the Adjudicating Authority to use its plenary powers under Section 60(5)(c) to potentially extend these timelines to enable the CoC to either issue a fresh RFRP if the Resolution Plan is withdrawn ....
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....irst Respondent refers to the judgement of this Tribunal dated 28.06.2021 in Comp App (AT)(INS) No.233 and 333 of 2021 reported in MANU/NL/0240/2021 Between Dwarkadhish Sakhar Karkhana Ltd and Ors Vs Pankaj Joshi and Ors wherein (for Issue No. iv) whether to allow DSKL after due date to file the EOI is a commercial decision? at paragraph 28 to 41 it is observed as under:- "28. As per sub-section 30 of the IBC, when the CoC approved a Resolution Plan by a vote of not less than 66% of voting share of the Financial Creditors after considering its feasibility and viability, such decision of CoC is a commercial decision. Thus, decision taken by the CoC in the 0th CoC meeting to allow DSKL after due date to file EOI is not a commercial decision. 29. Now we have considered whether the CoC can review its own decision at any point of time in contravention of Regulation 36-A )6) of the Regulations 2016. 30. Ld. Se. Counsel for DSKL submitted that Regulation 36-A cannot override the mandate of Code i.e. maximization of value and commercial wisdom of CoC and for this contention, cited the Judgement of Hon'ble Supreme Court in the Case of Brilliant alloys Vs S. Rajago....
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.... for completion of the process, have been consciously approved by CoC. It is to be noted, that the decision of CoC is taken by a thumping majority of 8436%. The only creditor voted in favour of KIAL is Kotak Bank, which is a holding company of KIAL, having voting rights of 0.97%. We are of the considered view, that in view of the paramount importance given to the decision of CoC, which is to be taken on the basis of 'commercial wisdom', NCLAT was not correct in law in interfering with the commercial decision taken by CoC by a thumping majority of 84.36%.'' 33. In the case of Kalpraj (Supra), Hon'ble Supreme Court examining an appeal against the order u/s 61(3) of IBC, whereby this Appellate Tribunal allowed the Appeal on the ground of material irregularity where we are examining this appeal u/s 61(1) of IBC. The scope of Appeal u/s 61(3) is limited to the grounds as specified in subsection 3. However, there is no such limit for the Appeal u/s 61(1) of IBC. In the case of Kalpraj, Hon'ble Supreme Court held that all the actions of RP, including acceptance of Resolution Plan of Kalpraj after due date, albeit before the expiry of time line specified by the IBC for completion ....
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....y Pankaj Joshi by suppressing material facts. 38. At the time of 9th CoC meeting, Pankaj Joshi has suppressed the fact that he was served with the Application of DSKL and that they are going to file application before the Adjudicating Authority against the decision of 7th CoC . If such fact was disclosed by Pankaj Joshi at the time of convening 9th CoC then they might be precluded from revisitng their earlier decision on the ground that the Adjudicating Authority is seized of the matter. On the other hand, being RP, he should have advised the CoC to wait till the decision of the Adjudicating Authority. 39. Pankaj Joshi has suppressed the fact that he himself has overturned the decision of 7th CoC meeting and permitted DSKL to submit its EOI. Pankaj Joshi also misguided the CoC that he is not required to take express permission from the CoC to issue a equest for Resolution Plan to an eligible Prospective Resolution applicant. This is not the position in this case the request for submission of EOI after due date was rejected by the CoC then there is no question to issue a request for resolution plan to DSKL. 40. Pankaj Joshi in 09th CoC meeting canvassed th....
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....tion (2) of Section 25. We have already reproduced the e-mail dated 18th August, 2018. It can hardly be said to be complying with any of the requirements as provided under IBC. No doubt the RP sent the Appellant e-mail (Annexure A-10) that the CoC had discussed and found the e-mail not to be in conformity with the requirements asked for and also the provisions of IBC. We have gone through the expression of interest (Annexure A-3), it is apparent that the requirements had not been complied with. Such e-mail like (Annexure A-9) cannot at all qualify the Appellant as prospective Resolution Applicant, even if it was to be said that the Corporate Debtor is MSME. 17. At the time of arguments, the learned counsel for Respondent pointed out that the Appellant had himself moved Section 10 Application so as to invoke provisions of IBC for the Corporate Debtor and neither at that time nor at any time including when e-mail dated 18th August, 2018 was sent at any point of time, the claim was made that the Corporate Debtor is an MSME. It appears from record that such claim was made directly before the Adjudicating Authority by filing CA 259/2018. This too after more than 1 ½ mont....
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....confirmed that the Resolution Applicant therein was an MSME and was eligible under Section 29-A of IBC. That being not the case in present matter and there being disputes of facts being raised, the Appellant cannot take benefit of the said Judgement. 20.When this Appeal was filed, and the appellant claimed that the Corporate Debtor was MSME by Interim Order dated 3rd September, 2019. This Tribunal had directed that during the pendency of the Appeal, the Order will not come in the way of Appellant submitting a Resolution Plan and that uninfluenced by the Order passed by the Adjudicating Authority and in accordance with Sub-Section 4 of Section 30, Committee of Creditors may consider the same which shall be subject to the decision of this appeal. As we find that the Impugned Order where it finds that the Appellant has failed to show that it is MSME, for reasons recorded above although it is stated that the Appellant has submitted a proposed Resolution Plan, copy of which has been filed which is stated to have been sent only on 14.11.2019 (as endorsed on the copy), we do not propose to go into such plan which again has been put up only after 2 months of the September Order. T....
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....already on from July 2019 and there is always scope for Resolution Applicants to opt for Arrangements under Section 230-232 of the Companies Act, 2013, if they are eligible in accordance with provisions of Insolvency and Bankruptcy Code, 2016 along with relevant Rules. Hence there is no merit in the case to consider the relief of setting aside the impugned order of NCLT, Hyderabad Bench. We hphold the order of NCLT Hyderabad Bench and with the passing of this order, the order dated 06.03.2013 stands vacated. No order as to costs. Pleas of Second Respondent's (Resolution Professional) (In Comp App (AT) (CH) (Ins.) No.166 of 2021) and Appellant (In Comp App (AT) (CH) (Ins.) No.174 of 2021) 58. The Learned Counsel for the Second Respondent/ Resolution Professional submits that the Appellant/ Committee of Creditors of Meenakshi Energy Ltd. Through State Bank of India and the Second Respondent/ Resolution Professional had only considered the "Vedanta Resolution Plan" in accordance with the Code, with a view to achieve value maximization under the Code and further that no 'determination' vis-à-vis its approval was taken in regard to the same. 59. The Learned Counsel for t....
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....ts 'Expression of Interest' on 27.02.2020 and was also included in the final list of 'Prospective Resolution Applicant' issued by the Respondent on 08.03.2020 and later on 03.02.2021 as per 'Regulation 36A(12) r/w Regulation 36B(7) of the CIRP Regulations'. In fact, Vedanta Ltd. had an access to the 'Data Room' together with the other shortlisted 'Prospective Resolution Applicants' forming part of the final list of the 'Prospective Resolution Applicants'. As such, Vedanta Ltd. was not a 'New Resolution Applicant' in the 'Corporate Insolvency Resolution Process' of the 'Corporate Debtor'. 63. The Learned Counsel for the Second Respondent emphatically contends that there is no provision in the I&B Code, 2016 or the Regulations which mentions the last date for submission of a 'Resolution Plan' by the shortlisted persons cannot be extended and in reality, the same falls within the purview of the 'commercial wisdom of the Appellant'. 64. The Learned Counsel for the Second Respondent submits that the First Respondent had strongly objected to the consideration of the Vedanta 'Resolution Plan' through email dated 28.04.2021 and letter dated 30.04.2021, based on the reason that it was....
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.... order dated 24.06.2021 in I.A. 244 of 2021 in CP(IB) No.184/HDB/07/2019 at paragraph 16 had wrongly observed that: "...we are of the view that CoC and Resolution Professional have taken the process into their own hands even though they cannot extend timelines beyond 330 days unilaterally without the approval of the Adjudicating Authority. This action of Resolution Professional is contrary to the letter and spirit of the Code and its Regulations." and finally came to the conclusion that the 'CoC' has no business to extend RFRP beyond 330 days without the specific approval of 'Adjudicating Authority' etc. Assessment 70. Before the 'Adjudicating Authority', because of the fault committed by the Corporate Debtor (M/s. Meenakshi Energy Ltd.) in regard to the payment of the financial debt, a petition/ application (under Section 7 of the I&B Code) was filed by the Financial Creditor/ State Bank of India, and the said petition was admitted on 07.11.2019 by the 'Adjudicating Authority' in CP (IB) No.184/HDB/7/2017 and that the Second Respondent/ Ravi Shankar Devarakonda was appointed as an 'Interim Resolution Professional' of the 'Corporate Debtor'. Later, the Resolution ....
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....he Appeal 'as withdrawn'. 74. It is brought to the notice of this Tribunal that upon the extension of 'CIRP' period, as per order dated 08.01.2021 the Second Respondent/ Resolution Professional had re-issued the Form G on 25.01.2021, pursuant to the original Form G, which was earlier published on 21.01.2020. 75. In terms of the Invitation for 'Expression of Interest', a final list of 'Prospective Resolution Applicants' was drawn on 08.02.2021 and they were to furnish their respective Resolution Plan on or before 08.03.2021. Also that, as per the 'Form G' (Re-issued) the 'Successful Resolution Plan' was required to be submitted before the 'Adjudicating Authority' on 09.03.2021 for its approval. 76. The First Respondent/ Applicant submitted its 'Resolution Plan' date 06.03.2021 to the 'Resolution Professional' and the 'Committee of Creditors' before the ending of the 'CIRP' period of i.e. 08.03.2021. Indeed, the Applicant/ First Respondent made an 'Earnest Money Deposit of Rs. 1 crores as per clause 14A.1.(d) of the Request for 'Resolution Plan' dated 29.10.2020 and after the submission of the 'Resolution Plan' before the Resolution Professional, the same was presented befor....
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....e consideration of the 'Additional Resolution Plan' would be subject to the decision of the 'Adjudicating Authority'. 80. It is averred by the First Respondent/Applicant in IA 244/2021 in CP (IB)No.184/HDB/2019 that being dissatisfied with the email of the 'Resolution Professional' dated 21.04.2021, it, on 30.04.2021 had addressed a Letter/email to the 'Resolution Professional' strongly objecting to the consideration of the 'Additional Resolution Plan', for which no reply was received from the 'Resolution Professional'. Further, the deadline to submit the final 'Resolution Plan' was again extended till 05.05.2021. Also that, no extension of CIRP period beyond 08.03.2021 was granted, although an application was pending determination before the 'Adjudicating Authority'. 81. The stand of the First Respondent/Applicant is that IA No.1079/2020 and 120/2021 and the 'Appeal' filed before the NCLT, Chennai, are to the limited extent of an extension of the CIRP period after 330 days. In fact, as on date, no extension was granted by the Adjudicating Authority, because of the fact, IA No.120/2021 was not heard. 82. The plea of the First Respondent/Applicant in IA No.244/2021 in CP(IB....
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....mited Vs. Satish Kumar Gupta and Ors, (Judgement dated October 4, 2018 in Civil Appeal Nos 9402-9405 of 2018)." c) The instant Application is not maintainable and premature at this stage in as much as (a) no resolution plan has yet been approved by the CoC so far: (b) Applicant Consortium has no vested or fundamental right to raise challenge vis-àvis the CIRP at this stage: and (c) the Extension Application seeking time for completion of CIRP is pending adjudication before the Hon'ble Tribunal." 86. Before the Adjudicating Authority, the 2nd Respondent/Resolution Professional in the Reply to IA No.244/2021 in CP(IB) No.184/HDB/7/2019 had referred to the judgement of Hon'ble Supreme Court dated 04.10.2018 in the matter of Committee of Creditors of Essar Steel India Ltd V Satish Kumar Gupta and Others wherein it was observed that 'no vested right inheres in any Resolution Applicant to have its Resolution Plan considered by the Committee of Creditors' and further, it was held that no challenge can be made before the 'Adjudicating Authority' by a 'Resolution Applicant' until a 'Resolution Plan' is approved by the 'Adjudicating Authority'. 87. The stand of the Reso....
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....n to Insolvency Resolution (relating to the 'Corporate Debtor') in I.A. No.244 of 2021 in CP (IB) No.184/HDB/7/2019 and to dispose of the same on merits, of course, by passing a reasoned/speaking order. 91. At this stage, it is not out of place for this Tribunal to make a relevant mention that the 'Adjudicating Authority' on 07.11.2019 had admitted the Section 7 Application filed by the State Bank of India (Financial Creditor) under 'I&B' Code, 2016 initiating the 'CIRP' against the 'Corporate Debtor'/Meenakshi Energy Ltd., Telangana. 92. In fact, the Resolution Professional on 21.01.2020 had issued the First Form G inviting 'Expression of Interest' from prospective Resolution Applicant. The Adjudicating Authority in IA No.581 and 582/2020 in CP(IB) No.184/HDB/7/2019 filed by the 2nd Respondent/Resolution rofessional/Applicant on 25.08.2020 had excluded the period from 25.3.2020 to 30.06.2020 from the computation of 'Corporate Insolvency Resolution Process' and thus the period of 180 days of CIRP comes to an end on 11.08.2020 and also granted extension of CIRP period in the matter of M/s Meenakshi Energy Ltd beyond 180 days by a further period of 90 days with effect from 12.0....
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....ranting 45 days for completion of the CIRP process, much after the order passed by it in IA No.244/2021 in CP (IB) No.184/HDB/7/2019 (filed by the First Respondent/ Consortium of Prudent ARC and Vizag Minerals/Applicant). 99. It must be borne in mind that in IA No.244/2021 in CP (IB) No.184/HDB/7/2019 (filed by the First Respondent/ Consortium of Prudent ARC and Vizag Minerals/Applicant) an order was passed on 24.06.2021, but the said impugned order was published on the 'Adjudicating Authority' (Tribunal's website) on 09.07.2021. In this connection this tribunal adverts to Rule 150 of the National Company Law Tribunal Rules, 2016 which reads as under: 150. "Pronouncement of Order.- (1) The Tribunal, after hearing the applicant and respondent, shall make and pronounce an order either at once or, as soon as thereafter as may be practicable but not later than thirty days from the final hearing. (2) Every order of the Tribunal shall be in writing and shall be signed and dated by the President or Member or Members constituting the Bench which heard the case and pronounced the order. (3) A certified copy of every order passed by the Tribunal shall b....
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....f a Resolution passed by the 75% 'majority of the Creditors'. The timeline i.e. prescribed is for the reason that liquidation proceedings otherwise should not be for an interminable period, thereby jeopardizing the interest of all Stakeholders in the 'Corporate Insolvency Resolution Process'. Observance of Time Frame 103. Indeed, all the concerned Authorities are necessarily required to adhere to the timeline enunciated in Regulation 40A of the IBBI (Corporate Insolvency Resolution Process for Corporate Persons) Regulations, 2016. No wonder, the I&B Code, 2016 provides for the consequences of the period mentioned in Section 12 coming to an end in the event that the said period is over without the receipt of a 'Resolution Plan' or after rejection of a 'Resolution Plan' in terms of Section 31. Adjudicating Authority's Power 104. The power of the 'Adjudicating Authority' to extend further time limit cannot be extended beyond 90 days, which is the maximum period in Section 12 of the I&B Code. Section 12(3) of the Code further enjoins that any extension of CIRP under this Section shall not be granted more than once and Section 12(3) of the Code is to be read with the third p....
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....ty' for such an extension. 108. It is to be pointed out that the Tribunal/ Appellate Tribunal are showered with restricted jurisdiction mentioned in the 'I&B' Code, 2016 and they cannot function as 'Courts of Equities' or exercise plenary powers. In short, they are scrupulously bound by the 'discipline of statutory provisions' and they cannot traverse beyond the parameters of law. Resolution Professional's Duty 109. A 'Resolution Professional' is not to be made liable because his perception is incorrect unless it is unreasonable. He is required to take prudent/ reasonable care in arriving at a subjective judgment based on circumstances that the 'best price', to be permitted by him, as per decision Standard Chartered Bank Ltd. v. Walker, reported in (1982) 1 WLR 1410. One is to prove that the 'Resolution Professional' had committed an error which reasonably skilled and careful insolvency practitioner would not have made. 110 As per Section 25(h) of the 'I&B' Code, 2016 the 'Resolution Professional' has a duty to invite 'Prospective Resolution Applicants', who satisfy such criteria as may be laid down by him with the approval of 'Committee of Creditors', considering the c....
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.....04.2021 had decided to consider the 'Vedanta 'Resolution Plan' ' in the absence of any orders being obtained from the 'Adjudicating Authority' in the teeth of the ingredients of the 'I&B' Code, 2016. 114. Although, on behalf of the Second Respondent/Resolution Professional it is brought to the notice of this 'Tribunal' that since the decision of the 'Committee of Creditors' to extend the time beyond 08.03.2021 was at all times been subject to 330-390 days Extension Application and the same was also adequately recorded in the Minutes of the 20th CoC Meeting that took place on 20.04.2021 and all other correspondence exchanged with the 'Prospective Resolution Applicants' (including the First Respondent/ Applicant) and later, an extension of 45 days was granted as per order dated 15.07.2021 in I.A. 120 of 2021 in CP (IB) No.184/HDB/7/2019 (and despite the fact that on the date of passing the impugned order in I.A. No.244 of 2021 in CP (IB) No.184/HDB/7/2019, I.A. 120 of 2021 in CP (IB) No.184/HDB/7/2019 was pending on the file of the 'Adjudicating Authority') yet this Tribunal, keeping in mind of the averment made by the First Respondent/ Applicant at paragraph 21 inter alia to the fa....
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....lders' including the 'Creditor(s)', effectively balancing within the four corners of 'Law', and as per 'I&B' Code, 2016 and 'Regulations' without any further loss of time. 116. With the aforesaid observations and directions the Company Appeal (AT) (CH) (INS.) Nos.166 & 174 of 2021 stand disposed of. No costs. All connected pending IAs are closed. 117. Before parting with the case, in view fact that the Second Respondent/ Resolution Professional/ Appellant in Comp App (AT) (CH) (INS) 174 of 2021 has come out with a clear cut stand that the decision of the CoC that timeline beyond 08.03.2021 was at all times being subject to the outcome of 330-390 days Extension Application, which was adequately recorded in the Minutes of 20th CoC Meeting that took place on 20.04.2021 and all other correspondence exchanged with the 'Prospective Resolution Applicants' including the First Respondent/ Applicant (vide para 13 of the reply affidavit filed on behalf of Resolution Professional, Mr. Ravi Sankar Devarakonda, the observation of the 'Adjudicating Authority' (National Company Law Tribunal, Bench-II, Hyderabad) at para 16 of the impugned order in I.A. No.244 of 2021 in CP (IB) No.184/HDB/7/....