TaxTMI 
TaxTMI 
2022 (9) TMI 912
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....g Authority' has disposed of the said Application without any independent consideration on its merits and solely on account of the fact that the entire matter remitted back to the 'CoC' to consider a belated resolution plan submitted by the Respondents No.6 to 8, herein. Brief Facts: Appellant's Submissions: 2. The Learned Senior Counsel for the Appellant submitted that the Appellant is aggrieved by the common order dated 28.05.2021 limited to I.A. No. 161 of 2020 in CP No. 51 of 2018. 3. It is submitted that the CIR Process was initiated against M/s Associate Décor Limited, the 'Corporate Debtor' vide order dated 26.10.2018 by the 'Adjudicating Authority' ('NCLT', Bengaluru Bench). In compliance of the I&B Code and Regulations, the RP initiated the process namely issuance of 'Form-G' inviting 'Expression of Interest' (in short 'EoI') etc. In response thereto, the Respondents No. 6 to 8 herein formed as consortium submitted their 'EoI' on 06.09.2019 as consortium members and reconfirmed their interest vide e-mails dated 14.09.2019, 03.10.2019 and 12.10.2019. Accordingly, the consortium was a part of the provisional list of Resolution Applicants and the 'RP' provided the ....
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....o-time basis. The 19th 'CoC' meeting held on 11.02.2020 and the plans submitted by the PRAs decided to place before the 'CoC'. The e-voting was conducting from 13.02.2020 to 06.03.2020 and the plan submitted by the 5th Respondent was approved by all the members of 'CoC' pursuant to the voting process. After approval of the plan by the 'CoC', the Appellant RP filed an application bearing I.A. No.161 of 2020 in CP No. 51 of 2018 under Sections 30 & 31 of the I&B Code before the 'Adjudicating Authority' for approval of 5th Respondent's plan. 7. Thereafter, Respondents No.6 to 8 filed an application being I.A. No. 225/2020 for urgent hearing of I.A. No. 227/2020 and sought a direction to place its Resolution Plan before the 'CoC' for its consideration. The 'RP' filed his counter to the said I.A. The matter was heard on 28.05.2021 and the 'Adjudicating Authority' passed the impugned order. 8. It is submitted that the ''Adjudicating Authority' erred in holding that I.A. No.161 of 2020 is deemed to be disposed without considering the said I.A. on merits. The 'Adjudicating Authority' ought to have considered on merits in the interest of 'Corporate Debtor' and keeping in view the essence ....
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....cial wisdom of the 'CoC'. It is submitted that this Respondent's plan was deliberated by the member of the 'CoC' in detail in various meetings held between 07.12.2019 to 11.02.2020. Further this Respondent revised its plan after taking the suggestions of the 'CoC'. It is submitted that the impugned order directing the 'CoC' to consider the Resolution Plan submitted by the Respondents No. 6 to 8 is in clear violation of settled law as it amounts to sitting in judgment over the commercial wisdom of the 'CoC'. Further, the 'CoC' cannot change / reverse its decision of approving a Resolution Plan after expiry of the 'CIRP' period as per Section 31 of the I&B Code, 2016. Admittedly, the plan of this Respondent has been approved by the 'CoC' and there is no risk of liquidation of the 'Corporate Debtor' meriting any consideration by the 'CoC'. The 'Adjudicating Authority' without assessing the compliance of this Respondent's Resolution Plan with Section 30(2) of the Code, proceeded to dispose of I.A. No.161 of 2020 on the alleged finding that the 'Resolution Professional' has acted contrary to the provisions of the Code. 14. In view of the reasons as stated above the Learned Senior Couns....
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....s submitted that the conduct of 'CIRP' by the Appellant was riddled with irregularities which despite sufficient time from the commencement of the insolvency was never rectified by the Appellant. 19. It is submitted that the submissions of plan by these Respondents is within the 'CIRP' period and thus rightly directed the 'CoC' to consider the same along with the 5th Respondent's plan. The 'CIRP' period could not have ended on 16.03.2020 as the order of the Hon'ble Apex Court prohibiting limitation period was operative from 14.03.2020. Further, this 'Tribunal' in the case of Quinn Logistics India Private Limited Vs. Macksoft Tech Private Limited in CA (AT) (Ins) No. 185 of 2018 has observed certain time period can be excluded for the purpose of counting total 'CIRP' period. The 'Adjudicating Authority' appropriately exercised its powers and thus excluded the time from 05.03.2020 i.e. the date on which I.A. No. 134 of 2020 was filed. 20. It is submitted that the Adjudicating Authority excluded the time within its power and the same is not violative of Section 12 of the Code. Further, the Hon'ble Apex Court in the case of Committee of Creditors of Essar Steel India Limited through ....
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....f 2020 in CP No. 51 of 2018 under Section 30(6) of the I&B Code read Regulation 39(4) of 'IBBI' ('Insolvency Resolution Process for Corporate Persons') Regulations, 2016 before the 'Adjudicating Authority' ('National Company Law Tribunal', Bengaluru Bench) praying the 'Adjudicating Authority' therein to pass an order sanctioning the Resolution Plan submitted by the 'Successful Resolution Applicant' i.e. 5th Respondent herein. The aforesaid application was filed on 16.03.2020 and the 'Adjudicating Authority' vide its order dated 28.05.2021 disposed of the I.A. as under: "V. 1. (5) "I.A. No. 161 of 2020 is deemed to be disposed of and restored to the RP, for being re-considered by the CoC along with the resolution plan submitted by Swamitva Landmark, Shankeshwar Landmarks LLP and Shankeshwar Landmarks." 28. The 'Adjudicating Authority' in para 11(5) observed that the I.A. No. 227 & 225 of 2020 were filed by the Swamitva Landmark Group seeking directions to the RP to put up their Resolution Plan before the CoC for its consideration and not to approve the Resolution Plan submitted by the 5th Respondent in I.A. No. 161 of 2020. 29. The 'Adjudicating Authority' has not given any ....
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....e. Other than this the 'Adjudicating Authority' simply cannot dispose of the application without considering the same on merits. The 'Adjudicating Authority' miserably failed in exercising the powers vested in it and passed a cryptic and unreasonable order, this Tribunal is of the view that the said order is illegal and without application of mind. 32. This 'Tribunal' intend to put on record that by the common order dated 28.05.2021 the 'Adjudicating Authority' disposed of several I.As, viz. a) I.A. No. 85 of 2021 filed by State of Karnataka, b) I.A. No. 227 of 2020 filed by the Consortium i.e. Swamitva Landmarks & 2 others, c) I.A. No. 134 of 2020 filed by the Assistant Commissioner of Commercial Taxes, d) I.A. No. 225 of 2020 filed by the Consortium i.e. Swamitva Landmarks & 2 others, e) I.A. No. 248 of 2020 filed by the M/s Farooq Ali Khan, and f) I.A. No. 161 of 2020 filed by the Appellant herein. 33. Aggrieved by the same, the parties filed the following Appeals before this 'Tribunal': i) The CoC filed Company Appeal No. 159 of 2021, and ii) Company Appeal (AT) (Ins) No. 160 of 2021 against the I.A. 227 of 2020 and I.A. No. 85 of 2021. iii) The 'Success....
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....jects of the code. 38. This 'Tribunal' does not find any justification in passing the above impugned order when an application is pending for considering before the same 'Adjudicating Authority' for approval of resolution plan. When an application is filed before the 'Adjudicating Authority' seeking approval of Resolution Plan, meaning thereby the resolution process with respect to 'Corporate Debtor' is in advance stage by overcoming the engrossing process as enshrined under the I&B Code from the date of initiation of 'CIRP' against the Corporate Debtor till the approval of Resolution Plan. The resolution process in respect of Corporate Debtor is in the final stage, at such point of time directing the Appellant to consider a plan submitted by the Respondents No. 6 to 8 on 27.05.2020 and after completion of 'CIRP' period and the said Respondents are nowhere in the zone of consideration in entire CIRP process, amounting to reopening of the CIR process of the 'Corporate Debtor' and the said direction also frustrates the resolution process of the 'Corporate Debtor', which is a time bound. 39. Section 12 of the I&B Code prescribes time limit for completion of 'Insolvency Resolution Pr....
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....herwise provided in Section 33(1)(b) of the IBC when an Adjudicating Authority rejects a Resolution Plan under Section 31. In this context, we hold that the existing insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC-approved Resolution Plans, at the behest of the successful Resolution Applicant, once the plan has been submitted to the Adjudicating Authority. A Resolution Applicant, after obtaining the financial information of the Corporate Debtor through the informational utilities and perusing the IM, is assumed to have analyzed the risks in the business of the Corporate Debtor and submitted a considered proposal. A submitted Resolution Plan is binding and irrevocable as between the CoC and the successful Resolution Applicant in terms of the provisions of the IBC and the CIRP Regulations. In the case of Kundan Care, since both, the Resolution Applicant and the CoC, have requested for modification of the Resolution Plan because of the uncertainty over the PPA, cleared by the ruling of this Court in Gujarat Urja (supra), a one-time relief under Article 142 of the Constitution is provided with the conditions prescribed in Sectio....
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....er could have been accepted or considered as held by this Appellate Tribunal in the case of Kotak Investment Advisors Ltd. (Supra) (See Para 23)" 42. Further this 'Tribunal' in Shrawan Kumar Agarwal Consortium Vs. Rituraj Steel Pvt. Ltd. & Ors., reported in (2020) SCC Online NCLAT 380 para 16, had observed the following: "16. Thus it is clear that the Adjudicating Authority is having limited power of judicial scrutiny under Section 31, which has to remain within the four corners of Section 30(2) of the Code and the same cannot, in any circumstance, trespass upon the commercial wisdom of the CoC. The directions of the Adjudicating Authority for re-bidding, after the approval of Resolution Plan by the requisite majority, is not in consonance with the law laid down by Hon'ble Supreme Court in K. Shashidhar (supra) case, as a Resolution Plan is neither a sale nor an auction but it all depends on the "commercial wisdom" of the individual financial creditors or their collective decision before the adjudicating authority and 'that is made non-justiciable'. Thus, the Appeal No 1490/2019 deserves to be allowed. Conclusion 43. Having analysed the facts, legal position and the precedents....