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2022 (9) TMI 1582 - AT - Insolvency and BankruptcyDirection to place the Respondents resolution plan before the Appellant for consideration - whether the Respondents No.1 to 3 after expressing their inability to submit the Resolution Plan vide their email dated 06.11.2019 can again submit the Resolution Plan after lapse of more than 5 months and that to after approval of the Resolution Plan by the CoC in accordance with law? - HELD THAT - In the instant case the Respondents have failed to submit the resolution plan within the time therefore there is no immunity to the respondents to file beyond the time prescribed. The RP rightly rejected the request of the Respondents - The Respondents failed to establish that the RP violated the CIRP process. It is only the case of the Respondents such averments allegations have been made and the Adjudicating Authority without going into the reality simply ratified the submissions of the Respondents which this Tribunal highly deprecate the said stand. In the present case the case of the Respondents is that despite submission of resolution plan beyond the CIRP period and much later to the last date of submission of plans sought a direction to the RP to place its / their plan before the CoC. Therefore the Respondents are not at all to be considered as PRAs since they have backed out from submission of the plan and intend to make an entry in to the CIRP belatedly even beyond the period of CIRP. In view of the decisions of the Hon ble Supreme Court in Ebix Singapore Committee of Creditors of Essar Steel India 2019 (11) TMI 731 - SUPREME COURT and this Tribunal judgment in M/s Renganayaki 2021 (4) TMI 776 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL CHENNAI and in Union Bank of India 2022 (1) TMI 1182 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI this Tribunal comes to an irresistible and inescapable conclusion that the Appellant has made out a prima-facie case to be interfered with the order passed by the Adjudicating Authority whereby the Adjudicating Authority exceeded its jurisdiction in directing the Resolution Professional to place the Resolution Plan of the Respondent Nos.1 to 3 before the Committee of Creditors amounts to interfering with the Commercial Wisdom exercised by the Committee of Creditors more particularly absence of any material irregularity and violation of any Law for the time being enforce. This Tribunal comes to a resultant conclusion that the impugned order by the Adjudicating Authority (National Company Law Tribunal Bengaluru Bench) is an illegal one and hence the same is set aside to secure the ends of justice. Accordingly the Company Appeal is allowed.
Issues Involved:
1. Whether the Respondents' resolution plan should be considered despite being submitted after the prescribed timeline. 2. Whether the Adjudicating Authority exceeded its jurisdiction by directing the RP to place the Respondents' resolution plan before the CoC. 3. Whether the Respondents were justified in submitting their resolution plan late due to the pandemic and lockdown. 4. Whether the commercial wisdom of the CoC can be interfered with by the Adjudicating Authority. Issue-wise Detailed Analysis: 1. Whether the Respondents' resolution plan should be considered despite being submitted after the prescribed timeline: The Appellant argued that the Respondents' resolution plan should not be considered as it was submitted after the prescribed timeline. The Respondents had initially shown interest but later backed out citing the non-availability of audited financial statements. The last date for submission of plans was extended to 07.12.2019, but the Respondents submitted their plan on 27.05.2020, which was more than five months late. The RP rejected this plan, stating that the CIRP period had already expired on 16.03.2020, and the plan was not submitted within the stipulated timeline. 2. Whether the Adjudicating Authority exceeded its jurisdiction by directing the RP to place the Respondents' resolution plan before the CoC: The Appellant contended that the Adjudicating Authority exceeded its jurisdiction by directing the RP to place the Respondents' resolution plan before the CoC. The Adjudicating Authority's role is limited to ensuring compliance with Section 30(2) of the IBC and cannot interfere with the commercial decisions of the CoC. The Supreme Court in "Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. (2020) 8 SCC 531" held that the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the CoC. The Tribunal found that the Adjudicating Authority misinterpreted the Supreme Court's judgment and unjustly directed the RP to consider the Respondents' plan. 3. Whether the Respondents were justified in submitting their resolution plan late due to the pandemic and lockdown: The Respondents argued that their delay in submitting the resolution plan was justified due to the pandemic and lockdown. They cited the Supreme Court's order extending the limitation period post 14.03.2020 and Regulation 40C of the CIRP Regulations, which excluded the lockdown period from the CIRP timeline. However, the Tribunal referred to the Supreme Court's judgment in "Ebix Singapore Pvt. Ltd. Vs. Committee of Creditors of Educom Solutions Ltd. & Anr. (2021) SCC Online SC 707," which clarified that the delay in CIRP due to lockdown cannot be condoned. The Tribunal held that the Respondents were not justified in submitting their plan late. 4. Whether the commercial wisdom of the CoC can be interfered with by the Adjudicating Authority: The Appellant argued that the Adjudicating Authority's direction to reconsider the Respondents' resolution plan amounted to judicial review of the CoC's commercial wisdom. The Supreme Court in "K. Sashidhar Vs. Indian Overseas Bank (2019) 12 SCC 150" and "Pratap Technocrats (P) Ltd v Monitoring Committee of Reliance Infratel Ltd (2021) SCC Online SC 569" held that the commercial decisions of the CoC are not open to judicial review by the Adjudicating Authority. The Tribunal found that the Adjudicating Authority's order interfered with the CoC's commercial wisdom and was thus unsustainable. Conclusion: The Tribunal concluded that the Adjudicating Authority exceeded its jurisdiction by directing the RP to place the Respondents' resolution plan before the CoC. The Respondents' delay in submitting their plan was not justified, and the commercial wisdom of the CoC should not be interfered with. The Tribunal set aside the Adjudicating Authority's order and upheld the RP's decision to reject the Respondents' plan. The appeal was allowed, and the interim stay granted by the Tribunal was made absolute.
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