2020 (10) TMI 913 - AT - Insolvency and Bankruptcy

Delay of 2 days in filing revised Resolution Plan - CIRP process still ongoing - Direction to Resolution Professional to take on record and consider the revised offer submitted by e-mail dated 14th February, 2020 - rejection on the ground that the Resolution Plan of the highest bidder has already been approved with 100% voting and the Application of Appellant suffered from latches and lacked bonafidies - HELD THAT - In the instant case, Appellants submitted the Resolution Plan only two days after the revised plan of Respondent No.4 and well within the 180 days of ordinary timelines of CIRP under I B Code . There was no justification for its rejection by the Resolution Professional who was duty bound to place the same before the Committee of Creditors especially when the ordinary CIRP period of 180 days was still subsisting. The impugned orders suffer from grave legal infirmity besides involving factual frailty. The impugned orders are accordingly set aside and the appeals are allowed. The CIRP is directed to resume from the stage of consideration of the Resolution Plans. The Resolution Professional shall place the Resolution Plans of H1 and H2 besides revised Resolution Plan of Appellants before the Committee of Creditors for consideration. The Committee of Creditors would take a call in according consideration to such Resolution Plans keeping in view the extended timelines. The period of judicial intervention shall stand excluded while computing the extended timelines of 270 days.

Issues Involved:

1. Rejection of Appellant's revised offer by the Resolution Professional.
2. Approval of the Resolution Plan by the Committee of Creditors (CoC).
3. Compliance with the Insolvency and Bankruptcy Code (I&B Code) timelines.
4. Commercial wisdom of the CoC.
5. Extension of the Corporate Insolvency Resolution Process (CIRP) period.

Detailed Analysis:

1. Rejection of Appellant's revised offer by the Resolution Professional:
The Appellant submitted a revised Resolution Plan on 14th February 2020, which was rejected by the Resolution Professional without being placed before the CoC. The Appellant argued that this rejection violated Sections 25(2)(i) and 30(3) of the I&B Code, which mandate the Resolution Professional to present all Resolution Plans to the CoC. The Appellant contended that their revised plan offered a higher upfront payment compared to the Successful Resolution Applicant's plan, thus aligning with the principle of asset maximization under the I&B Code.

2. Approval of the Resolution Plan by the Committee of Creditors (CoC):
The CoC approved the Resolution Plan of the highest bidder, Ngaitlang Dhar (H1 Bidder), with 100% voting on 12th February 2020. However, there were conflicting records regarding the approval date. The Appellant disputed this, emphasizing that the CoC's approval occurred on 6th March 2020, not 12th February 2020, as indicated in the impugned orders. The Tribunal found that the Resolution Plan was not approved on 12th February 2020, as the CoC's higher authority was still considering it, necessitating an extension of the CIRP period.

3. Compliance with the Insolvency and Bankruptcy Code (I&B Code) timelines:
The CoC's urgency to conclude the process by 12th February 2020 was based on the impending expiry of the 180-day CIRP period on 24th February 2020. However, the Tribunal noted that the Resolution Professional sought an extension of the CIRP period by 90 days, which was granted by the Adjudicating Authority on 26th February 2020. This extension indicated that the CoC had not approved the Resolution Plan by 12th February 2020, and thus, the Appellant's exclusion on the grounds of time constraints was unwarranted.

4. Commercial wisdom of the CoC:
The Respondents argued that the approval of the Resolution Plan was based on the CoC's commercial wisdom, which should not be questioned. However, the Tribunal found that the Resolution Professional's failure to present the Appellant's revised plan to the CoC constituted a material irregularity. The Tribunal emphasized that the CoC's commercial wisdom was not being interfered with, but the process conducted by the Resolution Professional was flawed.

5. Extension of the Corporate Insolvency Resolution Process (CIRP) period:
The Tribunal referred to the Supreme Court's judgment in "Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta and Ors." which allows for the extension of the CIRP period beyond the 330-day limit in exceptional cases. The Tribunal held that the Appellant's revised plan, submitted within the 180-day period, should have been considered, and the Resolution Professional's rejection was unjustified. The Tribunal directed the CIRP to resume from the stage of considering the Resolution Plans, including the Appellant's revised plan, and excluded the period of judicial intervention from the extended timelines.

Conclusion:
The Tribunal set aside the impugned orders, finding them legally and factually flawed. The CIRP was directed to resume from the stage of considering the Resolution Plans, including the Appellant's revised plan, and the CoC was instructed to consider all plans within the extended timelines. The period of judicial intervention was excluded from the computation of the extended timelines.

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