TaxTMI 
TaxTMI 
2023 (3) TMI 176
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....agar Dhawan, Advocate for R-1 Mr. Gopal Jain, Sr. Advocate with Mr. V.P. Singh, Ms. Anindita Roychoudhury, Mr. Bharat Makkar, Mr. Sushrat Garg, Advocates for R-2 Mr. Dr. Abhishek Manu Singhvi, Sr. Advocate with Mr. Mahesh Agrwal, Mr. Manu Krishnan, Ms. Niyati Kohli, Mr. Pratham Vir Agarwal, Ms. Manavi Aggarwala and Mr. Anwesh, Advocates for R-9 For Appellant: Mr. Dr. Abhishek Manu Singhvi, Sr. Advocate with Mr. Mahesh Agrwal, Mr. Manu Krishnan, Ms. Niyati Kohli, Mr. Pratham Vir Agarwal, Ms. Manavi Aggarwala and Mr. Anwesh, Advocates For Respondent: Mr. Mukul Rohatgi, Mr. Ramji Srinivasan, Mr. Arun Kathpalia, Sr. Advocates with Mr. Anoop Rawat, Ms. Shally Bhasin, Mr. Vaijayant Paliwal, Mr. Rishabh Jaisani, Mr. Sagar Dhawan, Mr. Rishabh Jaiswani, Mr. Nikhil Mathur, Ms. Shruti Pandey, Mr. Harit Lakhani, Mr. Daksh Kadian, Mr. Ahkam Khan, Ms. Samidha Mathur, Mr. Udbhav Nanda, Mr. Sagar Dhawan, Advocate for R-1 Mr. Gopal Jain, Sr. Advocate with Mr. V.P. Singh, Ms. Anindita Roychoudhury, Mr. Bharat Makkar, Mr. Sushrat Garg, Advocates for R-2 Mr. Kapil Sibal, Sr. Advocate with Ms. Pooja Dhar, Mr. Piyush Mishra, Mr. Sanjeev Kumar, Mr. Anshul Sehgal, Ms. Anusha Nagrajan, Mr. Divyanshu ....
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....onal Holding Ltd. (for short 'IIHL') participated. IIHL participated until third round of the Challenge Mechanism with final NPV of Rs.8110 Crores and Torrent Investments Pvt. Ltd. submitted bid till fourth round with final NPV of Rs.8640 Crores, each as self-certified by them subject to verification by CoC Advisors. The Administrator, on the same day, sent an email to the Resolution Applicants that highest NPV is INR 8640 Crore. (x) On 23.12.2022, 29th CoC meeting conducted on the submission of Revised Draft Resolution Plan as per Challenge Mechanism. Covering email of IIHL included additional payments totaling to Rs.9000 Crores which was in deviation from the final bid submitted by IIHL. In the minutes of the meeting, it was noted that the CoC Advisors will evaluate and compare both the plans and will share the presentation and evaluation by 28.12.2022. (xi) The Torrent sent an objection to the Administrator citing media reports with reference to revision in bid by IIHL. On 31.12.2022, Torrent filed I.A. No. 1/MB/C-I/2023 in C.P. (IB) No.1231/MB/CI/ 2021 before the Adjudicating Authority praying for various reliefs. (xii) On 03.01.2023, the Adjudicating....
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.... (xxi) On 11.01.2023, Torrent filed an additional affidavit bringing on record subsequent events. (xxii) On 12.01.2023, the Adjudicating Authority continued the interim order. Adjudicating Authority heard the parties. (xxiii) On 18.01.2023, the CoC made a statement that it will not hold the extended Challenge Mechanism till 23.01.2023. (xxiv) On 23.01.2023, the Adjudicating Authority after hearing the parties reserved the order and continued the interim order. (xxv) A Company Appeal (AT) (Ins.) No. 87-88 of 2023 was filed by Vistra ITCL (India) Ltd. against order dated 23.01.2023 which was withdrawn on 25.01.2023 noticing that order of Adjudicating Authority shall be pronounced in the week commencing 30.01.2023. (xxvi) On 31.01.2023, the Adjudicating Authority granted further exclusion of 90 days according to which last date for conclusion of CIRP comes by 17.03.2023. (xxvii) On 02.02.2023, final orders were pronounced by the Adjudicating Authority allowing the I.A. No. 1/MB/C-I/2023 and I.A. No. 99/MB/C-I/2023. The Administrator was directed to take the resolution process of the Corporate Debtor to its logical conclusion and th....
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...., of the view that CoC cannot device an illegal mechanism to circumvent the scheme of Code to indirectly be able to negotiate further with the resolution applicants post conclusion of the statutory scheme of challenge process under Regulation 39(1A). The settled legal principle of 'Quando aliquid prohibetur ex directo, prohibetur et per obliquum' dictates that one cannot do indirectly what one cannot do directly. Applying this principle in the present case, consideration of the revised financial proposal of the IIHL (revised after the conclusion of the challenge mechanism), being in gross violation of the challenge mechanism as well as Regulation 39(1A) & 39(18) of CIRP Regulations, cannot be done indirectly under the garb of declaring the result of the challenge mechanism as sub-optimal and resetting the clock back to Regulation 36B in derogation of the regulatory intent, especially when the final financial proposal of the Applicant was much above the minimum threshold set in the challenge mechanism. The proposed second round of the challenge mechanism is nothing but an act to indirectly achieve what could not have been achieved by adhering to the challenge mechanism in terms of t....
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....or (Respondent No.2). 3. Shri Kapil Sibal, learned senior counsel appearing for the Appellant - Vistra ITCL (India) Ltd. submits that the Adjudicating Authority committed serious error in interdicting the insolvency resolution process by passing interim order on 03.01.2023 which was continued till passing of the final order which effectively prohibited the CoC to exercise its jurisdiction vested in it regarding consideration of the draft resolution plans which were submitted to the Administrator consequent to the Challenge Mechanism held on 21.12.2022. It is submitted that even after conclusion of Challenge Mechanism on 21.12.2022, the jurisdiction and power of the CoC to direct for extended Challenge Mechanism or to negotiate with both the Resolution Applicants to enhance their plan value is not prohibited. Learned counsel for the Appellant has relied on Clauses, 3.17.17, 4.2.4, 4.2.9, 4.3.7, 4.4.4 and 4.4.7 of the RFRP dated 26.04.2022 in support of his submission that jurisdiction and power of CoC to discuss the resolution plans and to take any further negotiation or any further steps is fully protected by the aforesaid clauses of the RFRP in exercise of which jurisdiction Co....
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....ture stage, the Adjudicating Authority ought not to have entertained any application, which entertainment is not contemplated in the I&B Code. It is submitted that the Regulation 39(1A) Sub-clause (b) does not restrain holding of extended Challenge Mechanism or Second Challenge Mechanism. In any case, jurisdiction of CoC is in no manner is fettered by Regulation 39(1A) (b). It is submitted that within a span of 24 days, Torrent has increased value of bid from Rs.1100 Crore upfront to Rs.3750 Crore upfront and then within further two weeks from Rs.3750 Crore upfront to Rs.8640 Crore upfront, which clearly indicate that there is more value to discover and same cannot be interdicted by judicial intervention at this stage. Shri Sibal submitted that the relevant clauses of RFRP were relied and submitted before the Adjudicating Authority which has not been considered. It is submitted that value maximization is a dynamic process and when no plan is satisfactory, negotiation and discussion for discovery of price can be done until unless CoC is satisfied. It is further submitted that as per the Challenge Mechanism Process, CoC is the sole authority to determine the NPV which determination i....
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....ve a second extended round of the Challenge Mechanism is purely an attempt to give second chance to IIHL. The sub-optimal and unsatisfactory nature of the resolution plans were purely engineered to circumvent the interim order dated 03.01.2023. The decision is motivated on the revised offer given by the IIHL. Shri Mukul Rohatgi further submitted that the CoC has not chosen to file an Appeal against the order dated 02.02.2023. The Appellant - Vistra ITCL (India) Ltd. is not the CoC nor any authority has been annexed to file the present appeal. Appellant being an authorized representative of Bondholders forming part of the CoC there has to be written instructions of the Financial Creditors it represents in favour of the Appellant, hence, the appeal is not competent at the instance of Vistra ITCL (India) Ltd. and deserves to be dismissed on this count. Learned senior counsel relied on provisions of Section 25A to support his submission. It is submitted that after 03.01.2023, CoC started helping IIHL which again is unlawful. The increase of the offer made by IIHL from Rs.8110 Crore to Rs.9000 Crores is contrary to the Challenge Mechanism process. The CoC has no jurisdiction to resort t....
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....ution Applicant can change the financial proposal which was replied by the Administrator that no change in financial proposal can be allowed. As per Regulation 40A of the CIRP Regulations, within 30 days of receipt of resolution plan the CoC has to consider the plan for approval. The Adjudicating Authority has only directed that it is for the CoC to exercise its jurisdiction as required by CIRP Regulation. The power reserved to the CoC in RFRP is subject to the CIRP Regulation. The CoC did not reserve power to negotiate. The CoC adopted the Challenge Mechanism Method as negotiation mechanism. The CoC cannot go back to old negotiation, toppling bid received from IIHL of Rs.9000 Crores, has to be ignored. IIHL in the Challenge Mechanism elected not to go any higher from Rs.8110 Crores. Timelines and certainty are two most important factors in the insolvency resolution process. No increase in the final bid is permissible after conclusion of the Challenge Mechanism. The CoC cannot go endlessly to find out the maximum value of the Corporate Debtor. Regulation 39(1A) prohibit the CoC to take another course. The Regulation 39(1A) was introduced to end the uncertainty and delay in the proc....
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....ing reviewed. Administrator also informed the CoC that the plan received on 22.12.2022 had outstanding compliance issues which was addressed to both Resolution Applicants. 8. We have considered the submissions of learned counsel for the parties and perused the record. 9. From the submissions of learned counsel for the parties and materials on the record following issues arise for consideration in these appeals: I. Whether the Appellant - Vistra ITCL (India) Ltd. has no appropriate authority to pursue the present Appeal and the Appeal is not competent at its instance? II. Whether after completion of Challenge Mechanism on 21.12.2022, the Committee of Creditors was obliged to put the draft plans submitted by the Resolution Applicants on 22.12.2022 to vote without it having any other option? III. Whether after the result of Challenge Mechanism held on 21.12.2022 under Regulation 39(1A) (b) value maximization was achieved and Committee of Creditors was prohibited to take any further steps towards value maximization? IV. Whether clauses 4.2.4, 4.2.9, 4.3.7 and 4.4.7 of the RFRP permit the Committee of Creditors to negotiate, enter into discussio....
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.... office at IL. & FS Financial Centre, Plot No. C 22. G-Block, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra - 400051 ... Proposed Respondent No.2 ASSET CARE AND RECONSTRUCTION ENTERPRISE LIMITED, having its office at 2nd Floor, Mohan Dev Building, 13, Tolstoy Marg, New Delhi - 110001 ... Proposed Respondent No.3 IDBI TRUSTEESHIP SERVICES LIMITED, having its office at Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai, Maharashtra-400001 ... Proposed Respondent No.4 INDUSIND BANK LIMITED, having its office at 2401, General Thimayya Road, East St, Pune, Maharashtra - 411001. ... Proposed Respondent No.5 YES BANK LIMITED, having its office at Yes Bank House, Off Western Express Highway, Santacruz East, Mumbai, Maharashtra - 400055. ... Proposed Respondent No.6 MAZSON BUILDERS AND DEVELOPERS PRIVATE LIMITED, having its office at 70, Nagindas Master Road, Fort, Mumbai, Maharashtra - 400023. ... Proposed Respondent No.7 ARVUTAM ENTERPRISES PRIVATE LIMITED, having its office at Sun Paradise Business Plaza, 7th Floor, Tulsi Pipe Road, Lower Parel (West), Mumbai, Maharashtra - 400013. ... Proposed Responden....
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....ugh Mr. Supratik Dasgupta. When Board of Directors of the Appellant has authorised filing of the appeal by authorized person, we fail to see how the appeal filed by Vistra ITCL (India) Ltd. is incompetent. The submission of learned counsel for Respondent No.1 that Bondholders has not authorized filing of the Appeal does not commend us. The Board of Directors is fully competent to take all steps on behalf of Vistra ITCL (India) Ltd. including initiation of legal proceedings. When the Board has authorised filing of the appeal through authorised representative, the submission cannot be accepted that Appellant is not authorised by the shareholders. Interests of the shareholders are looked by the Board of Directors of the Vistra and Board having been authorized, the preliminary objection raised by Respondent No.1 cannot be accepted. The Appeal by financial creditor who is member of the Coc and as per learned senior counsel for the Appellant, holds 90% vote share in the CoC, there is sufficient locus with the Appellant to challenge the impugned order dated 02.02.2023. Appellant being Financial Creditor in the CoC which is admitted fact, there is no lack of jurisdiction in the Appellant t....
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....ist. (2) The request for resolution plans shall detail each step in the process, and the manner and purposes of interaction between the resolution professional and the prospective resolution applicant, along with corresponding timelines. (3) The request for resolution plans shall allow prospective resolution applicants a minimum of thirty days to submit the resolution plan(s). (4) The request for resolution plans shall not require any non-refundable deposit for submission of or along with resolution plan. 2[(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 provide a performance security within the time specified therein and such performance security shall stand forfeited if the resolution applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule. Explanation I. - For the purposes of this subregulation, "performance security" shall mean security of such nature, value....
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.... record at any time will render the applicant ineligible to continue in the corporate insolvency resolution process, forfeit any refundable deposit, and attract penal action under the Code. 3[(1A) The resolution professional may, if envisaged in the request for resolution plan- (a) allow modification of the resolution plan received under sub-regulation (1), but not more than once; or (b) use a challenge mechanism to enable resolution applicants to improve their plans. (1B) The committee shall not consider any resolution plan- (a) received after the time as specified by the committee under regulation 36B; or (b) received from a person who does not appear in the final list of prospective resolution applicants; or (c) does not comply with the provisions of sub-section (2) of section 30 and subregulation (1).]] 4[(2) The resolution professional shall submit to the committee all resolution plans which comply with the requirements of the Code and regulations made thereunder along with the details of following transactions, if any, observed, found or determined by him: - (a) preferential tra....
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....n order to achieve a successful resolution of RCAP with the objective of maximising the value of the Corporate Debtor for all stakeholders." 21. Learned counsel for the Appellant has also referred to various other clauses of the RFRP which clauses were also noticed by the Adjudicating Authority in its impugned order while noticing submission of Vistra ITCL (India) Ltd. Clause 4.2.4 provides as follows: "4.2.4 Notwithstanding anything contained in this RFRP, the CoC reserves the absolute right to: (a) consider, accept or vote on any Resolution Plan and/or Combined Resolution Plan, with or without modification; (b) reject any Resolution Plan and/or Combined Resolution Plan; (c) annul the Resolution Plan process and reject all Resolution Plans and/or Combined Resolution Plans and call for submission of new Resolution Plans from any Person; (d) select or approve any proposal or Resolution Plan or Combined Resolution Plan, as it may deem fit; (e) call upon the Resolution Applicant and/or the Resolution Bidder to make modifications to the plan and/or submit a revised Resolution Plan and or revised Resolution Bid and/or Combined Res....
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....tor is achieved in accordance with the provisions of the IBC, the CIRP Regulations and the FSP Rules; and (ii) maximization of value of assets of the Corporate Debtor is achieved." 23. Clause 4.3.7 reserves right to the Administrator as well as the CoC to negotiate terms of the resolution plan with one or more Resolution Applicants. Clause 4.3.7 is as follows: "4.3.7 The Administrator and the CoC shall have the right to negotiate terms of the Resolution Plan(s) and/or Resolution Bid(s) with one or more Resolution Applicant(s) and/or Resolution Bidder(s) (including Successful Resolution Applicant) to achieve the successful insolvency resolution of the Corporate Debtor and maximize the value for all stakeholders. The timelines and process for the negotiation shall be determined and/ or communicated, if necessary, at a later date. By submitting the Resolution Plan(s) and/or Resolution Bid(s), the Resolution Applicant and/or the Resolution Bidder, as the case may be, shall be deemed to have unequivocally agreed that any process of negotiation adopted by the CoC shall be binding on them and that they have no objection in following any such process. The Administrator....
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....uctions of the CoC); (iii) review of the financial and operational capability of the Resolution Applicant and/or the Resolution Bidder; (iv) any other matter, which the CoC and/or the Administrator (acting on the instructions of the CoC) may deem fit or necessary, and (v) the Resolution Applicant's and/or Resolution Bidder's ability and intent to run the Corporate Debtor under Option 1 or the relevant Cluster under Option 2 as the case may be, as a going concern as part of the implementation of the Resolution Plan. (d) During the negotiations, or post the negotiations, the Resolution Applicant(s) and/or Resolution Bidder(s) may be required to submit revised/modified financial proposals and/or revisions to ensure compliance with Applicable Law in accordance with the timelines specified by the Administrator (in consultation with the CoC)." 25. On 22.10.2022, Process Paper was issued. The process paper begins with following statement: "Date: October 22, 2022 RESOLUTION PLAN SUBMISSION PROCESS FOR RELIANCE CAPITAL LIMITED (to be read with the RFRP dated April 26, 2022 and other clarifications issued thereafter in....
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....the challenge mechanism ("Challenge Mechanism") to be conducted amongst Resolution Applicants who have submitted Resolution Plans on 28th November 2022 ("Resolution Applicants" or "Bidders" or "RA"). The Challenge Mechanism shall be read along with the terms of the RFRP. II. Key Notes: 1. By participating in the Challenge Mechanism, each Resolution Applicant accepts that it has understood the Challenge Mechanism and confirms that the process is fair and reasonable. 2. Each Resolution Applicant accepts and acknowledges that participation in the Challenge Mechanism does not in any manner confirm the eligibility or compliance of the Resolution Applicant or its resolution plan in terms of the provisions of the Code or the RFRP. 3. To ensure confidentiality, the details of the resolution plans of Resolution Applicants will not be disclosed. Only the NPV of the highest financial proposal contained in a resolution plan ("Highest NPV") at the end of each round will be disclosed. 4. The CoC is not obligated to approve the resolution plan which has the highest NPV or scared the highest as per the Evaluation Matrix and any resolution plan ....
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....e the regulations are framed in furtherance of the objectives of the Code and its provisions, a reliance on its objectives (value maximisation) for non-compliance of the procedure will go against the scheme of the Code." 29. Reliance has also been placed on the Report of the Standing Committee on Finance, Implementation of Insolvency and Bankruptcy Code - Pitfalls and Solutions. On the heading performance review of the NCLT system, following observations have been made in the report "Second, it should be noted that invited bidders are asked to submit their respective resolution plans within the specified deadlines. These resolution plans are then evaluated by the CoC. In the meanwhile, other bidders may suddenly emerge and submit their own resolution plans. These bidders typically wait for the H1 bidder to become public, and they then seek to exceed this bid through an unsolicited offer that is submitted after the specified deadline. Currently, the CoCs have significant discretion in accepting late and unsolicited resolution plans. These unsolicited, late bids create tremendous procedural uncertainty. As a result genuine bidders are discouraged from bidding at ....
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....ted resolution plans (iv) CoC and RP shall not entertain unsolicited revision to resolution plans. (v) The CoC shall decide whether it considers appropriate to opt for a swiss challenge method and if the same is decided by the CoC, then it should be provided in RFRP on ex-ante basis. (vi) The CoC to decide basis for evaluation, timelimit within which the challenge process shall be concluded and the minimum threshold for improvement over the resolution plan on ex-ante basis. Economic Analysis 31. The proposed amendment would help by allowing additional options to the CoC for resolution of a firm while under CIRP. The cap on number of extensions in RFRP would ensure that the sacrosanct timelines envisaged under the Code is practicable. Further, such an amendment would help instilling faith amongst stakeholders in the corporate insolvency resolution process and prevent potential misuse in absence of any specifications. This would also ensure that the CIRP remains timebound and value obtained is a competitive one and the maximum achievable given the market condition." 31. The insertion of Regulation 39(1A) was made in the Regulations with....
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....ion Plan is received from the Resolution Applicants and duly certified by the Resolution Professional. As noted above, the authority and jurisdiction to consider Resolution Plan for approval is vested with the CoC after considering its feasibility and viability under Section 30, sub-section (4) of the Code. 35. Regulation 36B, sub-regulation (7), empowers Resolution Professional with the approval of the CoC to re-issue request for Resolution Plans, if the Resolution Plans received in response to an earlier request are not satisfactory. Regulation 36B, sub-regulation (7) is self-explanatory even if Resolution Professional with the approval of CoC uses a Challenge Mechanism to enable Resolution Applicants to improve their Plans and consequently the Resolution Applicants submit their improved Plan, the power under Regulation 36B, sub-regulation (7) can very well be exercised by the CoC to decide to re-issue request for Resolution Plan. As noted above, request for Resolution Plans under Regulation 36B(2) is required to detail each step in the process. The RFRP issued on 26.04.2022 is referable to Regulation 36B, sub-regulation (2). Hence, we need to look into detailed steps, which a....
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....ned Counsel for Respondent No.1 that the aforesaid Clauses of RFRP are ultra vires to Regulation 39(1A) also needs to be answered. When we look into Regulation 39(1A), this was inserted empowering Resolution Professional to allow modification of the Resolution Plan, but not more than once or use a Challenge Mechanism to enable Resolution Applicants to improve their Plans. The Regulation 39(1A) cannot be read containing any fetter on the right of the CoC to take further action as per RFRP after receipt of the Resolution Plan consequent to Challenge Mechanism. We may in this context refer to a judgment of this Tribunal in Jindal Stainless Ltd. vs. Mr. Shailendra Ajmera, Resolution Professional of Mittal Corp Ltd. & Ors. - Company Appeal (AT) (Ins.) No. 1058 of 2022 decided on 18.01.2023, which was a judgment delivered by this Bench. In the above case also CoC decided to undertake a Challenge Process in order to give opportunity to Resolution Applicants to improve their Plans. The Challenge Process was conducted on 15.07.2022. The Applicants were notified that signed and compliance Resolution Plan must be submitted by 18.07.2022. The Appellant, Respondent No.1 and two other Resolution....
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.... Process. Further Clauses of RFRP of the present case clearly reserve the power of CoC to call the Applicants for negotiations or improving their Resolution Bid. Hence, the CoC is not denuded of its power to take action under RFRP in the present case and the law laid down by this Tribunal in Jindal Stainless Ltd. (supra) that there can be no fetter on the power of CoC to cancel or modify any negotiation with the Resolution Applicant including a Challenge Process is fully attracted in the present case. The Adjudicating Authority itself in its judgment has noticed that Challenge Process can be cancelled if any fraud is found in the Challenge Process. The power to cancel a Challenge Process is not confined only to the cases of fraud detected, but there may be other circumstances also, when Challenge Process may be annulled by the CoC with right to initiate fresh Challenge Process or a Revised Challenge Process. One of such circumstances under which Coc is fully justified to discard the Challenge Process is a case when CoC comes to the conclusion that there was cartelization between Resolution Applicants. The present is not a case where CoC has decided to annul the Challenge Process co....
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....ing part of the Agenda Item: "After multiple deliberation it was decided that both the draft resolution plans received by the Administrator will be evaluated by the CoC advisors and a comparison of both the plans received will be presented to the CoC members and subsequently the COC members can deliberate on how to further engage with the bidders in relation to the resolution process. The view of the COC members was sought on the approach to be followed:- LIC, EPFO, Broadpeak, JC Flower, Yes Bank, SSG, Trust Group, Vistra, Franklin, CS agreed to the said approach. It was proposed that the CoC advisors will share the presentation and evaluation by 28th December 2022 and next CoC will be scheduled on 3rd January 2023 to discuss on the same. Further, discussion can be scheduled with the Resolution Applicants subsequently basis the deliberation in that COC. The Chair apprised the members that advisors are of the view further exclusion period will be required to be sought from the NCLT as the deadline of January 31, 2023 may not be sufficient and if the CoC is also of the same view the same can be discussed and put to vote in the next CoC meeting. The....
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....ent and IIHL and the same is under review by the Administrator and advisors to the Administrator and the CoC. The legal counsel of the Administrator apprised the CoC members that the highest NPV as per the last challenge mechanism was INR 8,640 crores. The CoC discussed at length the developments since the conclusion of its challenge mechanism. It was summarized as below. That the resolution plans were first received on November 28, 2022. Comments on plans were circulated to the bidders by the Administrator and CoC's process and legal advisors on December 12, 2022. Revised drafts were received from certain bidders on December 19/20, 2022. The draft plans that were received had outstanding compliance as well as interpretational issues. CoC expressed its anguish and dissatisfaction with the outcome of the process and the events that have transpired thereafter. The COC was of the view that it demonstrates that outcome of the challenge mechanism undertaken was sub optimal and not satisfactory. The CoC discussed various options and the extant provisions of the RFRP enabling the same were set out. The COC specified that the RFRP specifically contained provisions which enabled th....
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....tioned that the CoC shall file necessary intervening application in the said matter along with the decision of the CoC to continue the bidding process. Necessary communication will be done to the PRAs in relation to the next steps. Further, details of the extended round of challenge mechanism shall be circulated to all the 4 Resolution Applicants who submitted under Option 1 as on November 28, 2022. Voting agenda 4(a): RESOLVED THAT the Challenge Mechanism note for conduct of extended round of challenge process including the thresholds and conditions of bidding and for removal of difficulties in terms of the provisions of the RFRP be approved and issued on behalf of the CoC to the resolution applicants that have submitted their Resolution Plan on the Submission Date. The Administrator raised concerns on the timeline considering the litigation that are ongoing and there is limited time available for achieving the milestone as envisaged under RFRP and for putting the compliant resolution plan for approval of the CoC, having said that it was proposed that an exclusion of 90 days be sought from the NCLT for completion of the CIR process and accordingly necess....
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....surance given by the Administrator in its letter dated 22.12.2022, and therefore any decision on second challenge motivated by the late bid, besides running foul to the process set out in Regulation 39 (1A), suffers from the same infirmity as a late bid and any subsequent thought on sub-optimal or non-satisfactory apparently motivated on this basis should not be allowed." 44. It is relevant to notice that in the Minutes of the CoC Meeting, it was noticed that bid of IIHL was not in accordance with the Bid, which was offered in the Challenge Mechanism. The decision of the CoC to go for Extended Challenge Mechanism cannot be said to be based on the bid of IIHL and further the view of the Adjudicating Authority that second Challenge Mechanism runs fouls to Regulation 39(1A) also cannot be sustained. The Adjudicating Authority has also noticed the judgment of this Tribunal delivered in Jindal Stainless Ltd. (supra) and has distinguished the said judgment on the ground that in the present case no extensive powers were reserved in the CoC in the RFRP. The relevant Clauses of the RFRP were referred to and relied before the Adjudicating Authority and even same were noticed by the Adjudi....
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....he manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of sect....
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.... or any further steps of the CoC. The view of the Adjudicating Authority that "no negotiation or value maximizatioin exercise can be individually undertaken by the CoC dehors the mandate of Regulation 39(1A)" is contrary to the Scheme delineated by the Code and CIRP Regulations. The very concept of negotiation envisages dialogue between two parties. The word 'Negotiate' and 'Negotiation' are defined in the Black's Law Dictionary to the following effect: "Negotiate, vb. (16c) 1. To communicate with another party for the purpose of reaching an understanding . 2. To bring about by discussion or bargaining . 3. To transfer (an instrument) by delivery or indorsement, whereby the transferee takes the instrument for value, in good faith, and without notice of conflicting title claims or defenses ." "Negotiation, n. (16c) 1. A consensual bargaining process in which the parties attempt to reach agreement on a disputed or potentially disputed matter. * Negotiation usu. Involves complete autonomy for the parties involved, without the intervention of third parties. 2. (usu. Pl.) Dealings conducted between two or more parties for the purpose of reach....
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.... Court. The Hon'ble Supreme Court also held in the above case that highest tenderer can claim no right to have his tender accepted. It was further observed that inadequacy of the price offered in the highest bid could be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price. In the above case, the action of the Food Corporation of India to negotiate with tenderers even after receiving of the bid of the Respondent, which was highest, was upheld. In paragraph 10 of the judgment, following was laid down: "10. From the above, it is clear that even though the highest tenderer can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet the power to reject all the tenders cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action. The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete. Procuring the highest price for the commodity is undoubtedly in public intere....
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....confer any rights or any Resolution Applicant including the Resolution Applicant with the Highest NPV." 56. Judgment of Hon'ble Supreme Court in "Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors, (2019) 2 SCC 1" also needs to be referred, where it was held that no right accrues to the highest bidder. In para 79 following has been laid down: "79. 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." 57. Thus, even if, Respondent No.1's Plan consequent to Challenge Mechanism held on 21.12.2022 was with highest NPV, it has no right to insist that the Plan should be put to vote by CoC, without taking any further steps by the CoC. ....