2021 (7) TMI 559 - Tri - Insolvency and Bankruptcy

Allegation of Wilful and deliberate violation of Resolution Plan by the successful Resolution Applicant(Rl) - Seeking encashment of Performance Guarantee - backing out after submission of Resolution Plan - criminal punishment u/s. 74(3) of I B Code - application seeking award of criminal punishment be filed by the erstwhile RP before this Adjudicating Authority. Can the RA be accused of backing out after submission of Resolution Plan, so as to warrant criminal punishment u/s. 74(3) of the Code? - HELD THAT - In the scheme of the IBC, if a successful RA either refuses or evades the implementation of the approved Resolution Plan, it may tantamount to an offence under Section 74(3) of the Code - The rationale behind criminal punishment for breach or violation of a resolution plan is for maintaining the sanctity of the CIRP process and for deterring pseudo-bidders from delaying or sabotaging the insolvency resolution process - The RA had taken out a sum of over ₹ 40cr from their account for making DD/Bankers Cheque of equal amount for making down payment as per the Resolution Plan way back on 02.02.2021 itself, which has been allowed to be revalidated on 07.05.2021 by this Bench. The RA's conduct, thus appears bona fide and they cannot be held liable for breach of the Resolution Plan so as to warrant punishment u/s. 74(3) of the Code - question framed above in the negative. Can an application seeking award of criminal punishment u/s. 74(3) of the Code be filed by the erstwhile RP before this Adjudicating Authority? - HELD THAT - The IBC being a complete Code in itself has also incorporated a specific section for trial of offences under the Code by a Special Court - A reference to the provisions of section 236 makes it abundantly clear (I) that all offences under IBC shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 and (II) that a complaint in this behalf can only be made either by the Board or the Central Government or any person authorised by the Central Government. The applicant in the instant application on the one hand has failed in due discharge of his duties as an erstwhile RP and a Member of the MC, by absenting himself from the meeting of the MC on 29.01.2021 and on the other, he also failed in maintaining due diligence while filing the instant application before us without referring to the provisions of S. 236 of the Code according to which neither he could make a complaint seeking criminal punishment against the RA u/s. 74(3) read with Section. 236(2) of the Code without being authorised by the Central Government nor any offences under the Code could be tried by this Adjudicating Authority in view of provisions of Section 236(1) of the Code - the second question framed also answered in negative. Application not maintainable and is dismissed.

Summary

Issues Involved:
1. Alleged willful and deliberate violation of the Resolution Plan by the successful Resolution Applicant (RA).
2. Request for encashment of Performance Guarantee to meet CIRP costs.
3. Handover of management and control of assets and documents of the Corporate Debtor to the RA.
4. Replacement of the erstwhile Resolution Professional (RP) in the Monitoring Committee (MC).
5. Compliance with orders of the Adjudicating Authority.

Issue-wise Detailed Analysis:

1. Alleged Willful and Deliberate Violation of the Resolution Plan by the Successful Resolution Applicant (RA):
The erstwhile RP filed an application under Section 74(3) of the IBC, alleging that the RA failed to make the down payment as per the approved Resolution Plan, thus violating the Plan. The RP sought criminal prosecution against the RA. The Tribunal noted that the RA had taken out Bankers Cheques for ?40 crores on 02.02.2021 and was ready to hand over the payment subject to receipt of necessary documents. The Tribunal concluded that the RA's conduct appeared bona fide and did not warrant punishment under Section 74(3) of the IBC, as there was no willful contravention of the Resolution Plan.

2. Request for Encashment of Performance Guarantee to Meet CIRP Costs:
The erstwhile RP sought permission to encash the Performance Guarantee of ?2 crores to meet the CIRP costs. The Tribunal found that since the RA had not breached the Resolution Plan, the question of forfeiture or encashment of the Performance Guarantee did not arise. The Tribunal dismissed this request.

3. Handover of Management and Control of Assets and Documents of the Corporate Debtor to the RA:
The RA sought directions for the handover of management and control of all assets, documents, and records of the Corporate Debtor, including various login credentials and original property documents. The Tribunal directed the erstwhile RP to hand over all necessary documents, details, and the unit to the Monitoring Committee for the smooth implementation of the Resolution Plan within three days of the order.

4. Replacement of the Erstwhile Resolution Professional (RP) in the Monitoring Committee (MC):
The RA sought to replace the erstwhile RP in the MC, alleging non-cooperation. The Tribunal noted that the erstwhile RP had failed in his duties by absenting himself from the MC meeting on 29.01.2021 and filing the application without referring to the provisions of Section 236 of the IBC. The Tribunal did not explicitly order the replacement but directed the RA and the erstwhile RP to comply with the handover process.

5. Compliance with Orders of the Adjudicating Authority:
The Tribunal observed that the erstwhile RP had filed the application despite an earlier order directing him not to take coercive steps against the RA. The Tribunal emphasized that any failure to comply with the handover process would be deemed an attempt to derail the insolvency resolution process and would be dealt with accordingly.

Conclusion:
The Tribunal dismissed the application filed by the erstwhile RP, finding no breach of the Resolution Plan by the RA and directing the immediate handover of documents and the unit to the Monitoring Committee. The Tribunal also closed the related applications filed by the RA.