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2021 (3) TMI 667 - Tri - Insolvency and BankruptcyValidity of Resolution Plan as approved - Expression fo Interest - application of a person who has not participated in CIRP - eligibility criteria for the prospective Resolution Applicants - Section 60(5) of I B Code and Regulation 35(2) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - this application has been filed by the applicants at the 12th hour of approval of Resolution Plan by this Adjudicating Authority - HELD THAT - The Resolution Plan has been approved by this Tribunal on 22.02.2021 and as such this Tribunal cannot declare that the order passed by this Tribunal is in violation of Section 60(5) of the I B Code and the Regulation 35(2) of IBBI (Insolvency Resolution Process for Corporate persons) Regulations, 2016. Regarding the other prayer to set aside the Resolution Plan submitted by the 3rd respondent and direct the respondents to consider the Resolution Plan of the applicant, it may be noted that the Committee of Creditors is the sole authority to accept or reject a Resolution Plan and after their approval only the Adjudicating Authority can interfere in the matter, either approve or return the Plan to them for any modification as suggested by this Tribunal. This Tribunal cannot exercise the power of appellate authority to set aside a Resolution Plan approved by this Tribunal under Section 31 of IBC, 2016. Section 31(1) of the Code lays down in clear terms that for final approval of a Resolution Plan, the Adjudicating Authority has to be satisfied that the requirement of Sub-Section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on which an Adjudicating Authority has to be satisfied. This Tribunal finds no reason to entertain this Application - Application dismissed.
Issues Involved:
1. Legality of the Resolution Plan submitted by the 3rd respondent. 2. Alleged violations of Section 60(5) of the Insolvency and Bankruptcy Code (IBC) and Regulation 35(2) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 3. Consideration of the applicant's Resolution Plan. 4. Alleged collusion and breach of confidentiality by the Resolution Professional. 5. Valuation discrepancies and the status of the corporate debtor as a running concern. 6. Timing and procedural aspects of the application. Detailed Analysis: 1. Legality of the Resolution Plan Submitted by the 3rd Respondent: The applicant sought to declare the Resolution Plan submitted by the 3rd respondent as illegal, alleging violations of Section 60(5) of the IBC and Regulation 35(2) of IBBI Regulations. The Tribunal noted that the Resolution Plan had already been approved by the Committee of Creditors (CoC) and subsequently by the Tribunal itself. As such, it was too late to declare the Resolution Plan illegal or set it aside. The Tribunal emphasized that it cannot exercise the power of an appellate authority to set aside a Resolution Plan approved under Section 31 of IBC, 2016. 2. Alleged Violations of Section 60(5) of IBC and Regulation 35(2) of IBBI Regulations: The applicant argued that the Resolution Plan violated Section 60(5) of the IBC and Regulation 35(2) of IBBI Regulations. The Tribunal clarified that the scope of its review is limited and that it cannot declare its own order as a violation of these provisions after the Resolution Plan has been approved. The Tribunal reiterated that the CoC is the sole authority to accept or reject a Resolution Plan, and the Adjudicating Authority's role is limited to ensuring compliance with Section 30(2) and (4) of the Code. 3. Consideration of the Applicant's Resolution Plan: The applicant requested the Tribunal to direct the respondents to consider its Resolution Plan. However, the Tribunal noted that the application was filed at the 12th hour, after the Resolution Plan had already been approved. The Tribunal emphasized that it cannot place the applicant's Resolution Plan before the CoC for consideration at this stage. The Tribunal also highlighted that the applicant did not send any formal communication expressing interest in participating in the Resolution Plan submission process within the stipulated time. 4. Alleged Collusion and Breach of Confidentiality by the Resolution Professional: The applicant alleged collusion between the Resolution Professional and the successful Resolution Applicant, citing breaches of confidentiality under Regulation 35(2) of IBBI Regulations. The Tribunal found these allegations to be baseless and without merit. The Resolution Professional had adhered to the procedural requirements and had acted in accordance with the Code and Regulations. The Tribunal noted that the applicant's claims were unsupported by evidence and appeared to be an attempt to prolong the Corporate Insolvency Resolution Process (CIRP). 5. Valuation Discrepancies and Status of the Corporate Debtor as a Running Concern: The applicant contended that the valuation reports were flawed as they did not consider the corporate debtor as a running concern and were based on stressed assets. The Tribunal observed that the valuation was conducted by two independent Registered Valuers in accordance with internationally accepted standards. The Tribunal cited the Supreme Court's judgment in Maharashtra Seamless Limited vs. Padmanabhan Venkatesh & Ors., which held that the valuation process is meant to assist the CoC in making informed decisions and is not binding. The Tribunal found no merit in the applicant's demand for revaluation. 6. Timing and Procedural Aspects of the Application: The Tribunal noted that the application was filed after the Resolution Plan had been approved, making it impossible to grant the interim prayers sought by the applicant. The Tribunal emphasized the importance of adhering to the timelines prescribed under the Code and Regulations. The Tribunal found that the applicant's delayed filing and lack of formal communication regarding its interest in the Resolution Plan process undermined its claims. Conclusion: The Tribunal dismissed the application, finding no reason to entertain the applicant's claims. The Tribunal reiterated that the CoC is the sole authority to accept or reject a Resolution Plan, and the Adjudicating Authority's role is limited to ensuring compliance with the Code. The Tribunal's decision underscores the importance of timely and procedurally compliant actions in the CIRP.
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