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2021 (10) TMI 1293 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAIConsideration of Resolution Plan - consideration of Resolution Plan which was received belatedly post expiry of 330 days, despite, extending the period of ‘CIRP’ by 45 days - fundamental or vested rights vis-à-vis the CIRP - Appellant/ Second Respondent takes a stand that the ‘impugned order’ passed by the ‘Adjudicating Authority’ had failed to appreciate that the First Respondent/ ‘Prospective Resolution Applicant’s’ Application was a premature one at the moment, since no ‘Resolution Plan’ was approved for the ‘Corporate Debtor’ in ‘CIRP’. HELD THAT:- In the instant case, the Adjudicating Authority on 08.01.2021 in IA No.1079/2020 in CP (IB) No.184/HDB/7/2019 (filed by the 2nd Respondent/Resolution Professional) had granted another 60 days extension from 08.01.2021 expiring on 08.03.2021 and that the 330 days period was also to lapse on the same day - It transpires that the Resolution Professional had re-issued the Form G on 25.01.2021 because of the perceived increase in value of the Corporate Debtor as per Regulation 36-A read with Regulation 36(B)(7) of IBBI (Insolvency Resolution for Corporate Persons) Regulations 2016. The last date for submission of ‘Resolution Plan’ was on 24.02.2021 and further, that the said date was extended to 01.03.2021, till 06.03.2021 and then, finally till 08.03.2021. This Tribunal is of the considered opinion that application filed by the Resolution Professional on 03.03.2021 (six days before the expiry of 330 days on 09.03.2021) ought to have been determined by the ‘Adjudicating Authority’, prior to the passing of the impugned order dated 24.06.2021 (uploaded on 09.07.2021), with a view not to give room for complications and to avoid wider ramifications and implications. Unfortunately, such a course was not resorted to, which in the considered opinion of this Tribunal is not a desirable/ palatable one. Need of Speed - HELD THAT:- It cannot be gainsaid that ‘speed’ is the gist for an effective functioning of the ‘I&B’ Code. As per Section 12(2) of the Code, an application for an extension of ‘Insolvency Resolution Process’ must be made by Resolution Professional, if directed/ instructed in that regard, by means of a Resolution passed by the 75% ‘majority of the Creditors’. The timeline i.e. prescribed is for the reason that liquidation proceedings otherwise should not be for an interminable period, thereby jeopardizing the interest of all Stakeholders in the ‘Corporate Insolvency Resolution Process’. Observance of Time Frame - HELD THAT:- All the concerned Authorities are necessarily required to adhere to the timeline enunciated in Regulation 40A of the IBBI (Corporate Insolvency Resolution Process for Corporate Persons) Regulations, 2016. No wonder, the I&B Code, 2016 provides for the consequences of the period mentioned in Section 12 coming to an end in the event that the said period is over without the receipt of a ‘Resolution Plan’ or after rejection of a ‘Resolution Plan’ in terms of Section 31. Adjudicating Authority’s Power - HELD THAT:- The power of the ‘Adjudicating Authority’ to extend further time limit cannot be extended beyond 90 days, which is the maximum period in Section 12 of the I&B Code. Section 12(3) of the Code further enjoins that any extension of CIRP under this Section shall not be granted more than once and Section 12(3) of the Code is to be read with the third proviso to Section 30(4) which mentions that the maximum period of 30 days specified in the second proviso is permissible, as the only exception to the extension of the period not being granted more than once - Undoubtedly, an extension of time limit for CIRP is a grey/ critical arena. In a case, where CIRP is pending and not completed within 330 days within which the Resolution of stressed asset is to take place, only in an exceptional / extraordinary case, the outer time limit of 330 days can be extended with a view to secure the ends of justice. Effect of Non-Observance of Time Line - HELD THAT:- A Tribunal/ Appellate Tribunal is to follow the requirement and discipline of ‘I&B’ Code, 2016, enacted by the Parliament, to streamline the Resolution of Corporate Insolvencies, of course bearing in mind of the fact that the relevant provisions of the Code are well thought of in ‘public interest’ and to ensure good Corporate Governance. The repercussions in not following the timeline prescribed in IBC are that (i) maximisation of the value assets of the Corporate Debtor will weaken the realisation potential prospect of the Creditors; (ii) The promoters of the Company will remain undischarged from their obligation/liability. The individual who is to proceed against the Company, is suspended from exercising his right for moratorium remains in force till the CIRP period is continuing. It is to be pointed out that the Tribunal/ Appellate Tribunal are showered with restricted jurisdiction mentioned in the ‘I&B’ Code, 2016 and they cannot function as ‘Courts of Equities’ or exercise plenary powers. In short, they are scrupulously bound by the ‘discipline of statutory provisions’ and they cannot traverse beyond the parameters of law. Resolution Professional’s Duty - HELD THAT:- A ‘Resolution Professional’ is not to be made liable because his perception is incorrect unless it is unreasonable. He is required to take prudent/ reasonable care in arriving at a subjective judgment based on circumstances that the ‘best price’, to be permitted by him - As per Section 25(h) of the ‘I&B’ Code, 2016 the ‘Resolution Professional’ has a duty to invite ‘Prospective Resolution Applicants’, who satisfy such criteria as may be laid down by him with the approval of ‘Committee of Creditors’, considering the complexity and scale of operations of the ‘Business’ of the ‘Corporate Debtor’ and such other conditions as may be prescribed by ‘IBBI’ to project ‘Resolution Plans’, present such Plan(s) to the ‘Committee of Creditors’ etc. As per Section 30(2) of the I&B Code, the ‘Resolution Professional’ is to examine each ‘Resolution Plan’ received by him and confirm that it meets the requirements mentioned in sub-section (2). Confidentiality of Plan - HELD THAT:- The ‘Resolution Plan’ furnished by one or the other ‘Resolution Applicant’ is a ‘confidential’ one and it cannot be disclosed to any ‘Competing’ ‘Resolution Applicant’ nor any view can be taken or objection can be asked for from other ‘Resolution Applicants’ in regard to one or the other ‘Resolution Plan’. It cannot be lost sight of that the conduct of ‘Resolution Professional’ is important in deciding whether he is guilty of ‘Misfeasance’ or ‘Fraud’ or any other ‘Serious Irregularity’ in the preparation of ‘Resolution Plan’. As a matter of fact, the ‘Resolution Plan’ ‘is confidential in nature’. No wonder, the Resolution Professional is to act in an expeditious fashion. In short, an ‘Insolvency Professional’ is to perform his duties by facing challenges that he come across during CIRP. This Tribunal’ considering the entire conspectus of the attended facts and circumstances of the case in an holistic fashion and in view of the fact that as per the ingredients of Section 60(5) of the I&B Code, the facts/ points of law were raised application filed by the First Respondent/ ‘Prospective Resolution Applicant arising out of the impugned order pertaining to the Insolvency Resolution Process (concerning the ‘Corporate Debtor’) and further that the ‘Adjudicating Authority’ is to adhere to the procedural aspect prescribed in relevant sections of the I&B Code, of course depending on the question of priorities/ question of law and facts involved, and this Tribunal, by adhering to the statutory requirements of I&B Code, 2016 directs the Second Respondent/ Resolution Professional to place only the ‘Resolution Plan’ of First Respondent/ Consortium of Prudent ARC Limited & Vizag Minerals and Logistics Pvt. Ltd. (‘Prospective Resolution Applicant’) and the ‘Resolution Plan’ of ‘Sindhu Trade Links Ltd.’ (‘STLL’), which were submitted before the due date, before the ‘Committee of Creditors’ for its consideration and to complete the ‘CIRP’ keeping in mind on 07.11.2019, the C.P.(IB) No.184/7/HDB/2019 was admitted by the ‘Adjudicating Authority’ commencing ‘CIRP’ against the ‘Corporate Debtor’, a timely resolution of stressed assets is a prime factor in the successful working of the Code, the interest of the ‘Stakeholders’ including the ‘Creditor(s)’, effectively balancing within the four corners of ‘Law’, and as per ‘I&B’ Code, 2016 and ‘Regulations’ without any further loss of time. Appeal disposed off.
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