TaxTMI 
TaxTMI 
2026 (5) TMI 1745
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....FACTS 2. The Corporate Insolvency Resolution Process (CIRP) out of which the present appeals arise, concerns the Corporate-Debtor by the name M/s. Oracle Home Textiles Limited. The CIRP was admitted on 9th August, 2018 and the Resolution Professional (RP) came to be appointed. On 6th February, 2019 a Request For Resolution Plan (RFRP) was issued by the RP. With the permission of the National Company Law Tribunal (for short, "the NCLT"), the appellant submitted a Resolution Plan. The appellant was the Promotor/Director of M/s. Oracle Homes Textiles Limited. This entity had a certificate of MSME (Micro, Small, and Medium Enterprises). On 10th May, 2021 the appellant was informed that the Resolution Plan submitted by him had been approved by the Committee of Creditors (CoC) with the voting majority of 99.90%. 3. It must be pointed out at this stage that at the time when the appellant's plan was submitted and was under consideration, certain third parties had moved the Adjudicating Authority as prospective resolution applicants (for short "PRA") seeking permission to file Resolution Plans for the Corporate-Debtor. Those applications were pending before the Adjudicating Authority.....
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....rd June, 2021. 9. This resulted in the appellant's filing of IA No.2029 of 2021 before the Adjudicating Authority on 27th August, 2021 seeking restoration of Earnest Money Deposit (EMD) contending that the forfeiture was contrary to clause 1.9.4 of the RFRP. 10. The CIRP period came to an end on 21st February, 2023. Since there was no valid Resolution Plan under Section 33 of the Code, the CoC on 5th June, 2023 voted on the liquidation of the Corporate-Debtor. The same was approved with a voting percentage of 99.61%. After the CoC voted for liquidation, the RP filed IA No. 3914 of 2023. seeking approval for liquidation based upon the decision of the CoC in its 33rd meeting. 11. Two Interlocutory Applications of the appellant being IA Nos. 1205 of 2021 and IA No.2029 of 2021 and the Interlocutory Application of the RP, namely, IA No. 3914 of 2023 were disposed of by three separate orders by the Adjudicating Authority on 30th April, 2024. While the two applications of the appellant were dismissed, the application of the RP came to be allowed. This resulted in three appeals being filed before the NCLAT by the appellant. By the impugned order of 29th October, 2024, all three C....
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....f was submitted pursuant to the order of the NCLT dated 18th February, 2020 be considered without subjecting it to the outcome of the decision of the Adjudicating Authority. The relevant findings of the adjudicating authority is reproduced below: "19.... On perusal of records, such as the minutes of the 15th CoC Meeting held on 24.01.2020 annexed at Annexure 'A' to the Application, 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 i....
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....sed for non-prosecution before the Adjudicating Authority took up IA 1205 for hearing. 26. In the present case once CoC had approved the resolution plan, the SRA stood precluded from raising any observations to the conditions stated in the LoI as these were not alien to the resolution plan as submitted by the SRA which was approved by the CoC. Present was not a case of conditional and addendum LoI but a case where the SRA was vacillating in accepting the LoI and not wanting to put his skin in the game by baselessly alleging that the LoI was conditional. The Adjudicating Authority rightly refused to entertain the objections of the SRA to the conditions in the Lol since withdrawal or modification of resolution plan after approval by the CoC is not permissible in law." ANALYSIS AND REASONING:- 19. We find that the stand of the appellant that the stipulated clauses objected to by the appellant made the LOI conditional is bereft of any merit. All that the stipulations mentioned was that the LoI would be subject to the final decision of a judicial body in a proceeding to which the CoC and RP were privy. Even if such a stipulation was not mentioned, ultimately it will be th....
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....me." Minutes of 29th COC Meeting Held on 11th June 2021 "The COC asked Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant) if he has any other query or resistance to the LOI. Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant) handed over the letter of his advocates to the COC. The COC asked Adv. U.C. Nayak (M/s M.V. Kini & Co. - Law Firm) - Advocates for Financial Creditors to read the whole letter for the benefit of all the participants. After going through the letter the COC again asked Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant) if he has any specific query or resistance to the LOI as there is nothing specifically mentioned in the letter of the advocate been submitted by him. Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant) replied in negative." 21. Equally, the condition with regard to the underwriting, the risk of staff and workers in any pending litigation, cannot be said to be a conditional one on the facts of the present case. As the discussion in the minutes indicate, the appellant in the 27th CoC meeting agreed to the sam....
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.... the resolution applicant and the resolution applicant is required to take such calculated risk and configure the same in his resolution plan and hence the same (risk and cost) shall be borne by the resolution applicant only. Mr. Sanjay Dave (Member of the suspended board & Resolution Applicant) agreed to the same." 22. In such a background, we do not accept the contention that the stipulation was in the nature as to make the LoI a conditional one to enable the appellant to renege from the CoC approved plan. 23. The third contention that the period of forty-five days as mentioned in the CoC minutes of 27th meeting dated 6th May, 2021 which resulted in the issuance of the LOI of 23rd May, 2021 was reduced to seven days in the third LOI dated 23rd July, 2021 also does not carry the case of the appellant any further. Under the RFRP, the time stipulated for the issuance of performance guarantee was seven days. What the learned counsel for the appellant contends is that, at the meeting on 6th May, 2021, a decision was taken to extend the time to forty-five days for issuance of the performance guarantee. The relevant portions of the 27th CoC meeting is extracted below:- "M....
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.... important to clarify distinction between "acquiescence" and "delay and laches". Doctrine of acquiescence is an equitable doctrine which applies when a party having a right stands by and sees another dealing in a manner inconsistent with that right, while the act is in progress and after violation is completed, which conduct reflects his assent or accord. He cannot afterwards complain. In literal sense, the term acquiescence means silent assent, tacit consent, concurrence, or acceptance, which denotes conduct that is evidence of an intention of a party to abandon an equitable right and also to denote conduct from which another party will be justified in inferring such an intention. Acquiescence can be either direct with full knowledge and express approbation, or indirect where a person having the right to set aside the action stands by and sees another dealing in a manner inconsistent with that right and in spite of the infringement takes no action mirroring acceptance. However, acquiescence will not apply if lapse of time is of no importance or consequence." (Emphasis supplied) 28. The appellant cannot be allowed to approbate and reprobate. In the celebrated case of Na....
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.... as evidenced from the minutes of the meetings, he had expressly agreed for the same. The device adopted by the appellant was an indirect attempt to renege from the plan. It was a clear subterfuge. Knowing fully well that one cannot withdraw directly from the plan approved by the CoC, an attempt was made in an indirect manner by harping on about certain stipulations as conditionalities to shift the blame on the CoC for the appellant's unwillingness to take the plan forward. This clever ploy has rightly been scotched by the fora below. If such artifices are allowed to succeed, the entire architecture of the IBC would crumble and the laudable objects sought to be achieved by the said Code would become a far cry. 31. In this light, it is also important to examine the binding nature of the resolution plan that is approved by the CoC. In Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited and Another (2022) 2 SCC 401, this Court held as under:- "166. The binding nature, as between the CoC and the successful resolution applicant, of the resolution plan submitted for approval by the adjudicating authority is further evidenced from the fact th....
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....ons of the resolution plan at the behest of the successful resolution applicant, once it has been submitted to the adjudicating authority after due compliance with the procedural requirements and timelines, would create another tier of negotiations which will be wholly unregulated by the statute. Since the 330 days' outer limit of the CIRP under Section 12(3) IBC, including judicial proceedings, can be extended only in exceptional circumstances, this open-ended process for further negotiations or a withdrawal, would have a deleterious impact on the corporate debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time...." "223. ... ... 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 analysed the risks in the business o....
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....e EMD stood forfeited:- "The representative of the Union Bank of India stated that we can go ahead with the RFRP terms & conditions of non-acceptance of the LOI dt. 23rd June, 2021, the consequences and the said provisions can be invoked and proceeded further. The representatives of Union Bank further stated that sufficient opportunities has been given to Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant), in spite of making good these opportunities he has only misused the opportunities. Since Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant) has not accepted the LOI, the consequences of non-acceptance of LOI will follow. Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant) objected to the forfeiture on the EMD on the ground for the non-acceptance of LOI, the COC asked whether there is any reason to not to proceed further with the terms & conditions stipulated in the RFRP to which Mr. Sanjay Dave (Member of the suspended board & Successful Resolution Applicant) could not give any satisfactory reply to the COC, hence in the event of noncompliance with the Conditions Subsequent the re....
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....onfirmation of the resolution plan if the Committee of Creditors so approved by not less than 66% of the voting decide to liquidate the corporate debtor, the adjudicating authority is to pass the liquidation order." (Emphasis supplied) 38. Section 33 of the Code is reproduced hereinbelow:- "Section 33: Initiation of liquidation. *33. (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 clause (b) of sub-section (1). [Explanation. - For the purpose of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, any time after its constitution under sub-section (1) of section 21 and before the confirmation of the resolution plan, including at any time before the preparation of the information mem....