2022 (9) TMI 951
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....n filed by METL (Appellant) and after considering both the plans by the CoC, the plan approved by the CoC shall be submitted to the Adjudicating Authority for its consideration and approval. Brief Facts: Appellant's Submissions: 2. The Learned Counsel for the Appellant submitted that the Appellant is aggrieved by the impugned order whereby it has directed the RP and the Members of CoC to consider evaluation and approval of Resolution Plans after elapse of nearly 14 months and after the resolution plan submitted by the Appellant was approved unanimously by 100% voting share of the CoC pursuant to the 19th Meeting held on 11.02.2020. 3. It is submitted that the Appellant submitted a Resolution Plan on 07.12.2019 and the plan of the Appellant was discussed and negotiated with the members of the CoC and pursuant to the discussions the Appellant submitted an amended and restated resolution plan dated 11.02.2020 and all the resolution plans were put up for the approval of the CoC by way of e-voting. The e-voting was conducted and the plan of the Appellant was approved unanimously by 100% voting share of the CoC of the Corporate Debtor. The Appellant being confirmed as the Successful ....
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....ions set out in the impugned order. 7. The Learned Counsel further submitted that the Adjudicating Authority has disposed of the Application No. 161 of 2020 seeking approval of the resolution plan without consideration on merits and without approving or rejecting Appellant's resolution plan in accordance with Section 31 of the I&B Code, 2016. 8. The Learned Counsel in the grounds of appeal submitted that the resolution process under the IBC is a time bound process where Prospective Resolution Applicants (in short PRAs) are required to submit resolution plans for the consideration of the CoC within the time lines prescribed under the IBC. The Adjudicating Authority does not have the power to direct the CoC to consider a resolution plan submitted beyond the expiry of the CIRP period. The said extension of time beyond the period of 330 days is in the teeth of the judgment of the Hon'ble Supreme Court in Committee of Creditors of Essar Steel (India) Ltd. Vs. Satish Kumar Gupta & Ors. (2020) 8 SCC 531. 9. It is submitted that the Hon'ble Supreme Court in the matter of Kalpraj Dharamshi Vs. Kotak Investment (2021) SCC Online SC 204, held that the "NCLAT was not correct in interfering ....
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....plan by these Respondents is within the CIRP period on the ground that post 14.03.2020 any day in the CIRP period would not be considered as a day passed by, by virtue of the order passed by the Hon'ble Supreme Court. The Regulation 40C of the CIRP Regulations specifically excluded the time for any activity from the CIRP period by virtue of the lockdown imposed by the Central Government in the wake of outbreak of Covid-19. The Adjudicating Authority considered all submissions and rightly concluded that the time could be extended for completion of CIRP by virtue of this Tribunals ruling in Quinn logistics India Pvt. Ltd. Vs. Macks of Softtech Pvt. Ltd., which permitted such extension of time under justified circumstances. 14. The Learned Senior Counsel relied upon the judgment of the Hon'ble Supreme Court in the case of Creditors of Essar Steel India Limited through Authorised Signatory Vs. Satish Kumar Gupta & Ors. (2020) 8 SCC 531, the Hon'ble Supreme Court held that the term "mandatorily" in Section 12 is struck down as being manifestly arbitrary under Article 14 of the Constitution of India and as being an unreasonable restriction on the litigant's right to carry on business un....
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....rporate Debtor whose plan has been approved by the Committee of Creditors on 06.03.2020 unanimously by 100% voting share. 20. It is an admitted fact that the Corporate Debtor was admitted and CIRP was initiated against it vide order dated 26.10.2018. The 1st Respondent being the RP published invitation for EoI for submission of resolution plan and the last date for submission of EoI was extended from time to time. The Appellant submitted its EoI on 04.10.2019 for submission of resolution plan. The Appellant submitted its resolution plan on 07.12.2019 and the members of CoC deliberated the said plan in various meetings of the CoC. The Appellant submitted an amended and re-stated resolution plan on 11.02.2020 and the resolution plan of the Appellant along with other resolution plans received by the 1st Respondent was put for e-voting. The e-voting took place from 13.02.2020 till 06.03.2020 and the plan of the Appellant was approved unanimously by 100% voting share of the CoC of the Corporate Debtor. The Appellant was issued a letter of intent dated 09.03.2020 in accordance with the RFRP dated 09.10.2020 (request of resolution plan). Pursuant to confirmation as Successful Resolution ....
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....st for Resolution Plan (RFRP) dated 09.10.2019, it is made clear that any resolution plan submitted beyond date would be at the sole discretion of the resolution professional and it would be considered that the plan to be considered as "non-responsive", at the sole discretion of the resolution professional. The Adjudicating Authority was of the view that the 1st Respondent had not complied with the provisions of law contained in Regulation 36(2)(b), (c), (d) and (f) of CIRP Regulation, 2016 by not providing the requisite details such as audited accounts and details of creditors as required under the above Regulation. 24. The Adjudicating Authority miserably failed to note that the Respondents No.5 to 7 have withdrew from the resolution process on 06.11.2019 and they have not submitted any resolution plan nor there is any request for asking the details of the Corporate Debtor from the RP. The Respondents No.5 to 7 have deliberately took a considerable time to submit a plan on 25.07.2020 i.e. after expiry of CIRP period i.e. 330 days. Having expired the CIRP period prior to submission of plan by the Respondents No. 5 to 7, the Adjudicating Authority excluded the period and also exte....
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....h the Corporate Debtor is to be driven into liquidation". Thus, the CIRP is to be completed in 330 days and only extension can be granted in exceptional circumstances. 28. Further, this Tribunal in Pioneer Rubchem Vs. Vivek Raheja & Ors. Company Appeal (AT) (Ins) No. 706 of 2020 at para 4 observed that "although it is directory that CIRP can be completed up to a period of 330 days or so which is largely to consider the time frame of judicial process. Hence, practically all attempts to be made to complete the CIRP within 270 days". 29. The point for consideration is whether the resolution plan submitted for approval of the Adjudicating Authority under Section 31 of I&B Code, 2016 is binding on the CoC and Successful Resolution Applicant. From the judicial precedents it is a settled position of the law that once the CoC has approved a resolution plan which has been submitted for approval under Section 31 of the Code, whether the same is binding on the CoC. It is unequivocal that Section 31 of the Code deal with approval of resolution plan and if the Adjudicating Authority is satisfied that the resolution plan as approved by the Committee of Creditors under sub-section (4) of Sect....
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....ion by the Adjudicating Authority. This clearly indicates that the statute envisages a certain level of finality before the Resolution Plan is submitted for approval to the Adjudicating Authority. Even the CoC is not permitted to approve multiple Resolution Plans or solicit EOIs after submission of a Resolution Plan to the Adjudicating Authority, which would possibly be in contemplation if the Resolution Applicant was permitted to withdraw from, or modify, the Plan after acceptance by the CoC. Regulation 36B(4A) requires the furnishing of a performance security which will be forfeited if a Resolution Applicant fails to implement the Plan. This is collected before the Adjudicating Authority approves the Plan. Notably, the regulations also direct forfeiture of the performance security in case the Resolution Applicant contributes to the failure of implementation, which could potentially include any attempts at withdrawal of the Plan." 30. In the above judgment, the Hon'ble Supreme Court clearly held that the Section 31(1) of the Code, cannot be construed to mean that the resolution plan indeterminate or open to withdrawal or modification until it is approved by the Adjudicating Autho....
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.... present case, the plan is pending for approval before the same Adjudicating Authority and the Adjudicating Authority for reasons best known to it allowed the application filed by the Respondents No. 5 to 7 in our view arbitrary and against all canons of law. 34. The other point needs to be addressed/considered is whether the Adjudicating Authority can overlook the decision of CoC which was taken in their commercial wisdom. The Hon'ble Supreme Court in K. Shashidhar Vs. Indian Overseas Bank & Ors. reported in (2019) 12 SCC 150 para 52 held as under: "52. As aforesaid, upon receipt of a rejected resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I&B Code has been enacted, it is noticed that a completely new approach has been ado....
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....res, is a collective business decision. It has been held, that the legislature has consciously not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the Adjudicating Authority and that the decision of CoCs 'commercial wisdom' is made non−justiciable." 36. From the decisions of the Hon'ble Supreme Court, it is unequivocal that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated process within the time lines prescribed by the I&B Code. Further the Hon'ble Supreme Court in Kalpraj Dharamshi (supra) at para 145 held as under: 145. This Court held, that what is left to the majority decision of CoC is the "feasibility and viability" of a resolution plan, which is required to take into account all aspects of the plan, including the manner of distribution of funds among the various classes of creditors. It has further been held, that CoC is entitled to suggest a modification to the prospective resolution applicant, so that carrying on the business of the Corporate Debtor does not become impossible, which suggestion ma....
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.... in Section K.2." 38. The Adjudicating Authority is not authorised to pass any orders which would circumvent and attempt to frustrate the resolution plan pending before it for consideration under Section 31 of the Code. The bitter truth remains that the Respondents No. 5 to 7 are completely standing outside of the CIRP and once evinced their EoI and backed out from participating in resolution process and now after completion of the CIR period their application cannot be considered. In this regard, this Tribunal in Kalinga Allied Industries Pvt. Ltd. Vs. Hindustan Coils Ltd. (2021) SCC Online NCLAT 51 para 15 held as under: "15. In pursuant to the expression of interest issued by RP on 24.08.2018 the Appellant submitted a Resolution Plan. After several rounds of deliberation by the COC revised Resolution Plan was submitted by the Appellant on 19.12.2018. The same was approved on 28.12.2018 by the COC in the 13th meeting by requisite majority. Thereafter, the RP filed an Application under Section 30 (6) of the I&B Code for approval of Resolution Plan in the month of January, 2019 and sometime in the month of February, 2020 the Respondent No. 1 filed an Application seeking directio....
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....al (supra) and affirm that there is no such provision in the Code or Regulation which provides that while exercising the power under Section 31 of the I&B Code, 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 is adopted then the CIRP will be frustrated. Admittedly, in the present case the Respondents No. 5 to 7 were not part of CIRP. 41. The reason given by the Adjudicating Authority that the 1st Respondent has not provided the documents to the Respondents No. 5 to 7 is concerned from the records, it is seen that the audited balance sheet up to a period of financial year 2014-15 was available from the data room which was accessible by all the PRAs including the Respondents No. 5 to 7. Further the financial statements for years 2015-16, 2016-17 and 2017-18 were also made available in the data room. There is no denial by the Respondents No. 5 to 7 that the above documents made available to all the PRAs. Further from the records, the audited but unsigned financial statements were also uploaded on the data room on 05.12.2019 and the signed versions were made available in Febru....