TaxTMI 
TaxTMI 
2024 (11) TMI 61
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....cating Authority has dismissed I.A. No. 1205 of 2021 against which CA(AT)(Ins)No. 1131 of 2024 has been preferred; dismissed IA No. 2029 of 2021 against which CA(AT)(Ins)No. 1134 of 2024 has been preferred and allowed IA No. 3914 of 2023 against which CA(AT)(Ins)No. 1128 of 2024 has been preferred. 2. All the three appeals arise out of the same facts and events which are as follows: * On 09.08.2018, the Corporate Debtor was admitted into insolvency. Interested resolution applicants were given time to submit their resolution plans to the Resolution Professional ("RP" in short) on or before 22.04.2019. * 270 days of CIRP period came to an end on 13.05.2019. On 10.06.2019, the Adjudicating Authority allowed exclusion of 91 days in the CIRP period to enable resolution applicants to approach the RP for submission of plans. * On 11.02.2020, the resolution plan of Faze-3 was rejected in the 17th CoC meeting and decision was taken by CoC to proceed with liquidation of the Corporate Debtor with 99.61% vote share. * On 18.02.2020, the Adjudicating Authority allowed MA No. 608 of 2020 filed by the Appellant to submit a resolution plan within two weeks. T....
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.... 11.06.2021 took note that clause 7.10.6 and 12.6.1 were missing from the resolution plan submitted by the SRA. Further, since timeline for unconditional acceptance of LoI as per RFRP document was over, the 29th CoC meeting on 11.06.2021 directed the RP to re-issue a fresh LoI after receiving corrected copy of the resolution plan and Addendum from the SRA. * On 15.06.2021, the SRA re-submitted the resolution plan of 31.12.2020 with inclusions and Addendum dated 05.05.2021 to include the missing two points raised in the 29th CoC discussions on 11.06.2021. The SRA however made it clear that the said inclusions were made on the instructions of RP and Union Bank of India. * On 23.06.2021, RP issued a second and fresh LoI after mentioning that the LoI of 23.05.2021 stood revoked. * On 23.07.2021 during discussions in the 31st CoC meeting, the SRA wanted to make two changes in the LoI dated 23.06.2021. The first change was with regard to deletion of clause relating to employees' dues and the second change was to add a clause providing for submission of unconditional PBG within seven days. The SRA also requested for a newly drafted LoI with the above suggested c....
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....y after disposal of Applicant's case in IA No. 1205 of 2021. 6. Since the above prayers were not granted by the Adjudicating Authority, the reliefs which have been prayed by the SRA in CA(AT)(Ins.) No. 1134 of 2024 are as follows: a) That the Hon'ble Appellate Tribunal may allow the instant appeal; b) That the Hon'ble Appellate Tribunal may quash and set aside the impugned order dated 30.04.2024 passed by the Ld. Adjudicating Authority Mumbai in IA No.2029/2021 in CP(IB) 1842 (MB-IV)/2018; c) That the Hon'ble Appellate Tribunal may direct erstwhile RP (Respondent No.2) as well as CoC (Respondent No.1) to immediately reinstate the EMD amount of Rs.1 crore for further consideration of the resolution plan as approved by CoC in accordance with the provisions of the Code and Regulations made thereunder, or refund the said EMD amount, as the case may be; 7. The prayers which had been made by the SRA in IA No. 1205 of 2021 in Company Petition No. 1842 of 2018 are as follows: a) Direct that there cannot be a conditional approval of the resolution plan submitted by the present applicant. b) Direct the Resolution Professional to rei....
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....om the admission of IA No. 3914 of 2023 filed by the RP of the Corporate Debtor seeking approval of the Adjudicating Authority for liquidation of the Corporate Debtor. 10. Making his submissions, the Ld. Counsel for SRA submitted that their resolution plan dated 31.12.2020 along with Addendum dated 05.05.2021 had been voted by the CoC with 99.90% approval on 10.05.2021. The approval of the plan by the CoC had been communicated to the SRA by e-mail dated 10.05.2021. Thereafter, the RP issued a Letter of Intent ("LoI" in short) dated 23.05.2021. However, the LoI was not an unconditional LoI as it imposed conditions which were not in conformity with the resolution plan approved by the CoC on 10.05.2021. Further, the resolution plan was also conditional as it was made subject to the outcome of IA No. 2311 and 2195 of 2020 moved by Potential Resolution Applicants ("PRA" in short) for consideration of their resolution plans. Though the RFRP did not envisage any modification in the resolution plan by way of LoIs, yet the RP sought an unconditional acceptance from the SRA to a conditional LoI. Submitting that the RP was also apprised of these lacunae and deficiencies in the LoI, however....
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....ive of the IBC is to revive a Corporate Debtor and not send it to liquidation. 12. Refuting the contentions raised by the Appellant, the Ld. Counsel for Respondent No. 1 submitted that the CIRP had come to an end on 21.02.2023 and no resolution plan as approved by the CoC was made available which could be submitted to the Adjudicating Authority for its approval within the period of CIRP. Hence in accordance with Section 33(1) of the IBC, there was no option but to send the Corporate Debtor into liquidation. It was also submitted that the CoC in its 33rd meeting held on 05.06.2023 had approved the resolution plan to send the Corporate Debtor into liquidation with 99.61% votes. It is also their contention that though multiple opportunities were given to the SRA to submit a complete resolution plan, the SRA had failed to do so. An Addendum to the resolution plan was filed by the SRA which was agreed to by the CoC. The Addendum included insertion of Clause 7.10.6 relating to ECGC benefit being extended to the Corporate Debtor and Clause 12.6.1 relating to extension of 45 days' time for furnishing PBG. Since both these clauses had been left out in the resolution plan, the SRA was ....
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.... of 2021 filed by PRAs seeking time to submit their resolution plans had been reserved for hearing by Adjudicating Authority on 21.01.2021. The Adjudicating Authority had also committed a mistake in allowing new parties to submit their resolution plans. The SRA could not be prejudiced in proceedings where they were not present as a party nor heard by the Adjudicating Authority. It is also the case of the SRA that the CoC should have approved their plan without making it conditional to the outcome of third party applications or the CoC could have expedited the pending order of 21.01.2021 passed by the Adjudicating Authority. 16. The CoC could not have imposed additional conditions of being bound by all earlier discussions and decisions during CoC meetings by way of LoI which was issued pursuant to the approval of the resolution plan. By imposing new and overarching conditions, new liability was thrust upon the SRA which was impermissible since CoC is not entitled to disturb the approved resolution plan as the same is binding on them as much as on the SRA. The resolution plan approved by the CoC is sacrosanct and cannot be subjected to any modification by way of LoI. The LoI does ....
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....lication, it is evident that the Applicant herein was present in the 15th CoC meeting wherein the resolution plans received from M/s Faze Three Ltd and M/s. Munish Kohli & Associates were discussed and deliberated upon in the backdrop of M.A. No. 2005 /2019 and M.A. No. 1618/2019 which were then pending for hearing before this Tribunal. The Applicant expressed his interest to submit a resolution plan vide Letter dated 11.02.2020 and he submitted his initial resolution plan only after passing of the Order dated 18.02.2020 by this Tribunal in MA No. 608/2020. Thus, it is evident from records that the Applicant was aware of the ongoing litigations with respect to submission of resolution plans by other resolution applicants and, therefore, it goes without saying that the Applicant herein cannot now insist on his plan being considered without subjecting it to the outcome of the decision of the Adjudicating Authority or any other court or tribunal under the laws of the land. Thus, the plea of the Applicant that the Applicant cannot be made subject to outcome of third-party applications where the Applicant is not even a party, is hereby rejected in toto as being irrational, absurd and un....
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....nd directions in the matter after going through the papers and proceeding sheets in detail, hence the same shall be binding on all, the participants agreed to the same." (Emphasis supplied) "Email dated 10th May, 2021 10th May, 2021 To, The Successful Resolution Applicant Dear Madam/ Sir "........ The details of the eVoting result on the above said resolution plan (including addendum) is as follows: Agree Disagree Abstain from voting Total 99.90 % 0.10% 0% 100. 00% As discussed in the above COC meetings, the above results are subject to the order reserved by Hon'ble NCLT in the hearing held on 21st Jan, 2021. You are requested to provide a final signed hardcopy (3 sets) of the resolution plan including the addendum along with the word documents of the same after making due corrections as discussed in the above mentioned meetings of the committee of creditors, please also attach all the revised and relevant documents including the board resolution and letter from the financial sponsors to the resolution plan in support of the final resolution amount as soon as possible so that the same ca....
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....as to be subject to the outcome of hearing dated 21.01.2021. Hence it becomes clear that it was an after-thought on the part of the SRA to raise the bogey of conditional LoI. If the SRA was so aggrieved, it could have sought impleadment in the matter before the Adjudicating Authority or taken up the matter with the RP/CoC to seek early resolution of the matter. In any case, it is an admitted fact that both the IAs filed by the PRAs stood dismissed for non-prosecution before the Adjudicating Authority took up IA 1205 for hearing. 21. We also find that the Adjudicating Authority has dealt at length in IA No. 3914 the allegation of the SRA that the LoI purportedly imposed additional conditions beyond the plan as approved by the CoC. It is an undisputed fact that the plan which had been submitted by the SRA along with Addendum was deliberated and voted upon in the 27th CoC meeting. We have already noticed that the SRA was informed by the RP on 10.05.2021 of the result of the e-voting and asked to provide three sets of hard copies of the finally approved resolution plan including the Addendum. This letter has already been extracted above at Para 19 above. The RP again sent a communic....
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....iles being shared by Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant) as follows: Quote from addendum dt. 5th May, 2021 7.10.6 The Resolution Applicant further expressly clarifies, that in case there is any amount realized from ECGC (Export Credit & Guarantee Corporation) of the corporate Debtors, then the Corporate Debtor shall, on and from the Effective Date (date of receiving the Order), be entitled to keep and have benefits of the amount, title, or interest notwithstanding that it was not reflected in the Information Memorandum no other entity or persons shall have any right of such realizations 12.6.1 The COC members allows the Resolution Applicant a period of 45 days for providing the Performance Guarantee instead of 7 days considering the overall pandemic situation in the country and lockdowns in the State. The above points was also discussed during the COC meeting held on 21 May, 2021 (28th COC Meeting) Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant). Pursuant to the approval of the Final Resolution Plan (including addendum) by the CoC, the Resolution Professional....
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....orrect the resolution plan. 24. Subsequently the SRA had also attended the 29th CoC meeting on 11.06.2021 wherein the CoC had enquired from the SRA if he had any specific objection with respect to the LoI. In this meeting, it was again pointed out that items 7.10.6 and 12.6.1 were missing from the resolution plan of SRA. Even at this stage, SRA stated that he shall provide the corrected addendum within 2 days' time as the said above points were deleted due to some misunderstanding. Even at this stage the SRA had indicated that they had no specific objections. Accordingly, the CoC called upon the SRA to submit a corrected resolution plan and a fresh LoI was circulated to the SRA on 23.06.2021 for counter signature and acceptance. The SRA again refused to accept the LoI and instead requested the RP to issue a fresh LoI. This issue was taken up again in the 31st CoC held on 23.07.2021 wherein the SRA again asked for two fresh changes relating to employees and PBG. Hence, the CoC agreed to issue a fresh draft LoI to accommodate these changes. Even after the 31st CoC meeting, the SRA remained persistent with his objections to the LoI and conditions attached thereto. Thus, we do no....
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....the SRA to the conditions in the LoI since withdrawal or modification of resolution plan after approval by the CoC is not permissible in law. 27. It is also noticed that the CoC in the 33rd meeting held on 05.06.2023 decided to liquidate the Corporate Debtor with 99.61% voting on account. The CoC had taken cognizance of the fact that the CIRP period of 180 days had ended on 12.02.2019 which kept on getting extended from time to time. It was however felt that there was no point in extending the CIRP any further since the SRA had failed to accept the LoI. No resolution plan, approved by the CoC, was available before it to place the same before the Adjudicating Authority for its approval. Since the Adjudicating Authority had not received a resolution plan under Section 30(6) of the IBC before the expiry of the maximum period of 330 days permitted for completion of CIRP, the CoC in its wisdom found this to be a fit case to order liquidation in terms of Section 33(1)(a) of the IBC. It is seen from material on record that the 33rd meeting of the CoC had deliberated at length and recorded their discussions in the meeting minutes. 28. In the given circumstances the Adjudicating Autho....
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....period or the maximum period permitted for completion of the corporate insolvency resolution process under section 12 or the fast track corporate insolvency resolution process under section 56, as the case may be, does not receive a resolution plan under sub-section (6) of section 30; or (b) rejects the resolution plan under section 31 for the non-compliance of the requirements specified therein, it shall-- (i) pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter; (ii) issue a public announcement stating that the corporate debtor is in liquidation; and (iii) require such order to be sent to the authority with which the corporate debtor is registered. (2) Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors [approved by not less than sixty-six per cent. of the voting share] to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of c....