2021 (11) TMI 1019 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - non-compliances on the part of the Resolution Applicant - provision for extension of payment time provided in the implementation of the Resolution Plan, not existing - HELD THAT - Although, this Adjudicating Authority was of the view that the Resolution Applicant has grossly failed in meeting its commitments in respect of implementation of the Resolution Plan, liquidation is the last resort when all other available options fail in the CIRP. In the interest of all the stakeholders and also the implementation of the Resolution Plan, after considering all the facts and circumstances of the case, allowed one last opportunity to the Resolution Applicant to fulfil all its commitment and financial obligations stated in the Resolution Plan by 31.10.2021, clearly stating that if it fails this time, actions as may be deemed appropriate as per law, shall be taken. The Resolution Applicant was also directed to submit a Weekly Progress Report in implementation of the Resolution Plan in the Registry. In total disregard to Orders of this Tribunal the Applicant has grossly failed in its commitments. The conduct of the successful resolution applicant is completely lacking in bona fides and is therefore questionable. After such non-compliances seeking further time for the required compliances, for any reason whatsoever, is not acceptable to this Tribunal at this stage, more particularly when conduct of the applicant in its earlier commitments and compliances in response to earlier Orders of Tribunal in itself is questionable. This Application is rejected while questioning the conduct of the Resolution Applicant in the entire matter - Application dismissed.

Summary

Issues:
Application for extension of compliance of order, non-compliance by the resolution applicant, extension of time for payment, liquidation as the last resort, conduct of the resolution applicant.

Analysis:
The Tribunal received an application from the Resolution Applicant seeking an extension of compliance with a previous order, allowing an additional 30 days for fulfillment of commitments. The Applicant had previously been granted an extension till 31.01.2021 to meet financial obligations but failed to do so. Despite subsequent extensions, the Applicant continued to fall short of requirements, prompting concerns about their conduct and commitment to the Resolution Plan. The Tribunal noted the Applicant's failure to comply with instructions and deadlines, leading to doubts about their bona fides.

The Tribunal deliberated on the matter, considering representations from the Monitoring Committee and State Bank of India regarding the Applicant's non-compliance and lack of settlement talks. Despite the pandemic situation, the Tribunal granted further extensions, but the Applicant failed to meet the revised deadlines. The Tribunal emphasized that liquidation is the last resort in the Corporate Insolvency Resolution Process (CIRP) and granted a final opportunity for compliance till 31.10.2021, warning of appropriate legal actions in case of further failures.

After careful consideration of all circumstances and the Applicant's repeated non-compliance, the Tribunal dismissed the application for extension, citing the Applicant's consistent failure to adhere to timelines and submit progress reports. The Tribunal expressed strong reservations about the Applicant's conduct, questioning their intentions and commitment to the Resolution Plan. The Tribunal deemed the Applicant's behavior unacceptable and rejected the application outright, directing the Registry to communicate the decision to the concerned parties.

The Tribunal's decision to dismiss the application signifies a strict stance against non-compliance and lack of commitment by the Resolution Applicant. By emphasizing the importance of meeting obligations and timelines in the insolvency resolution process, the Tribunal aims to uphold the integrity of the resolution framework and protect the interests of stakeholders involved. The judgment serves as a reminder of the responsibilities and consequences for parties involved in insolvency proceedings, highlighting the significance of transparency, compliance, and good faith in executing resolution plans.