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2019 (7) TMI 1482 - Tri - Insolvency and BankruptcyAdmissibility of petition - Initiation of CIRP - Non-consideration of resolution plan - HELD THAT - As per record, it is undisputed position in the matter that the Resolution Professional did not consider the resolution plan of the Applicant for such reason that resolution plan was filed by resolution applicant after expiry of EOI and at a very belated stage i.e. on 268th day. Hence, the main ground for not considering the resolution plan of the applicant is that there was no time left to entertain any resolution plan and to consider at this stage, as the Resolution Professional has conducted the entire process as per timeline defined under IBC and so as he was duty bound to adhere to such timeline thus he refused to consider such resolution plan. The Resolution Professional and the COC should make all possible efforts towards Insolvency Resolution of a Corporate Debtor company and its liquidation can only be lost resorts - application disposed off.
Issues Involved:
1. Rejection of the Resolution Plan by the Resolution Professional. 2. Timeliness and adherence to the prescribed deadlines under the Insolvency and Bankruptcy Code (IBC). 3. Consideration of the Resolution Plan in light of the interests of employees and stakeholders. 4. Legal precedents and judicial guidance on extending timelines and excluding periods for CIRP. Issue-wise Detailed Analysis: 1. Rejection of the Resolution Plan by the Resolution Professional: The Resolution Applicant filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, challenging the rejection of their Resolution Plan by the Resolution Professional. The Resolution Professional had rejected the plan on the grounds of it being submitted after the stipulated timelines. The Resolution Applicant argued that the rejection was without giving them an opportunity, affecting the livelihood of around 200 employees. 2. Timeliness and adherence to the prescribed deadlines under the Insolvency and Bankruptcy Code (IBC): The Resolution Professional adhered to the timelines defined under IBC and its regulations. The initial and revised Invitations for Expression of Interest (EOI) were published with specific deadlines, which the Resolution Applicant failed to meet. The Resolution Plan was submitted on the 268th day, well beyond the prescribed deadlines. The Resolution Professional, bound by these timelines, did not consider the late submission. 3. Consideration of the Resolution Plan in light of the interests of employees and stakeholders: The Tribunal emphasized the main objective of the IBC, which is to ensure the reorganization and insolvency resolution of corporate entities in a time-bound manner to maximize the value of assets and balance the interests of stakeholders. The Tribunal noted that the proposed Resolution Plan included a provision of ?14 crores for the revival of the company, which was significantly higher than the liquidation value of ?9.67 crores. The Tribunal highlighted the importance of considering the interests of employees and stakeholders, stating that the code aims for the revival of the Corporate Debtor rather than liquidation. 4. Legal precedents and judicial guidance on extending timelines and excluding periods for CIRP: The Tribunal referred to several legal precedents, including the Supreme Court's decision in "Arcelor Mittal India Pvt. Ltd. Vs. Satish Kumar Gupta and Ors.," which emphasized balancing timely completion of the CIRP with the goal of avoiding corporate death and displacement of employees. The Tribunal also cited the NCLT, Mumbai Bench's decision in "Edelweiss Asset Reconstruction Company Ltd. v. Reid Taylor (India) Ltd." and the NCLT, Hyderabad Bench's decision in "Asset Reconstruction Company (India) Ltd. v. Viceroy Hotels Ltd.," both of which supported the exclusion of time periods from the CIRP to facilitate the consideration of Resolution Plans and avoid liquidation. Conclusion: The Tribunal concluded that the Resolution Professional and the Committee of Creditors (CoC) should make all possible efforts towards the insolvency resolution of the Corporate Debtor and that liquidation should be a last resort. Considering the livelihood of approximately 200 workmen, the Tribunal allowed the application, directing the Resolution Professional to examine and scrutinize the Resolution Plan and present it to the CoC for further consideration. The Tribunal also excluded the time spent in the present proceedings and the additional 30 days for the CoC's consideration from the CIRP period. Order: The CA No. 63/2019 was allowed and disposed of accordingly, with directions for the Resolution Professional to present the Resolution Plan to the CoC within 30 days, and the time spent in these proceedings was excluded from the CIRP period.
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