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2021 (9) TMI 1272 - AT - Insolvency and BankruptcyLiquidation of the Corporate Debtor - no Resolution Plan was approved by the Committee of Creditors within the CIRP period - Section 33(1)(a) of the I B Code - HELD THAT - In the present case, it cannot be brushed aside that the Committee of Creditors had rejected the Resolution Plan in the meeting that took place on 15.11.2019. Moreover, the Corporate Insolvency Resolution Process came to an end on 15.11.2019, which date 651 days rolled by from the commencement date of insolvency on 02.02.2018 - As a matter of fact, the Resolution Applicant, on 19.11.2019 had acknowledged the rejection of its Resolution Plan by the Committee of Creditors and had prayed for the refund of Earnest Money Deposit and subsequently had requested for a deliberation / discussion with the State Bank of India for mutual Resolution of the concerns of the Bank. Apart from that, the Resolution Professional filed CA 1077/2019 on 19.11.2019 and sought for an additional 75 days to complete the CIRP process. In the present case, it is to be borne in mind that the Resolution Applicant had acknowledged the decision of the CoC in regard to the rejection of the Resolution Plan through an email dated 19.11.2019 and claimed the refund of the Earnest Money Deposit . Further, it cannot be lost sight of that the Resolution Applicant had not furnished the revised Resolution Plan including the suggested changes and instead proposed, more modifications to the commercials and term of the Resolution Plan and later withdrew its interest in any Resolution Plan. Suffice it for this Tribunal to point out that on 19.3.2020 the Resolution Applicant withdrew its interest for pursuing the Resolution Plan, perceiving that the Committee of Creditors had not approved the Resolution Plan till date of withdrawal - In the present case, indisputably, the CIRP period came to an end on 15.11.2019 and because of the direction dated 30.10.2019 issued by the Adjudicating Authority the Resolution Professional had no option but to file an IA. No. 412/2020 praying for a Liquidation Order be passed as per Section 33(1)(a) of the Code. Moreover, liberty was prayed for to withdraw an application seeking extension of CIRP period as grounds were claiming extension and holding further CoC meeting for consideration of Resolution Plan had disappeared and the CIRP period got lapsed on 15.11.2019. This Tribunal considering the facts and circumstances of the entire conspectus of the instant case in an encircling manner, bearing in mind a primordial fact that the Committee of Creditors had not approved the Resolution Plan till 15.11.2019(viz. the final day of CIRP), the CIRP period was not extended by the Adjudicating Authority on 19.03.2020 when the Resolution Applicant / Maritime Trade Corporation had withdrew its interest for pursuing the Resolution Plan, the CoC becoming Functuous Officio and the Resolution Applicant despite the State Bank of India conveying the acceptance of Plan by its authorities subject to the inclusion of changes proposed by its legal team on 07.02.2020 and the Resolution Applicant / Maritime Trade Corporation had not submitted the modified Resolution Plan etc.; comes to a consequent conclusion that in the present case, there is no approved plan of the Committee of Creditors . Appeal dismissed.
Issues Involved:
1. Validity of Liquidation Order. 2. Approval and Withdrawal of Resolution Plan. 3. Role and Decision of Committee of Creditors (CoC). 4. Compliance with Insolvency and Bankruptcy Code (I&B Code) and Regulations. 5. Adjudicating Authority’s adherence to principles of natural justice. Issue-Wise Detailed Analysis: 1. Validity of Liquidation Order: The Appellant challenged the liquidation order dated 01.03.2021 passed by the Adjudicating Authority (NCLT, Chandigarh Bench) under Section 33(1)(a) of the I&B Code. The Appellant argued that the liquidation order was erroneous as the Resolution Plan had been approved by 96.04% of the CoC's voting share. However, the Respondent contended that no Resolution Plan was approved within the CIRP period, which ended on 15.11.2019. The Tribunal noted that the Resolution Plan was not approved by the CoC within the stipulated time, and the CIRP period had lapsed, making the liquidation order legally tenable. 2. Approval and Withdrawal of Resolution Plan: The Appellant argued that the Resolution Plan, once approved by the CoC, could not be withdrawn by the Resolution Applicant. The Tribunal referred to the decision in "Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Limited," which held that the Adjudicating Authority lacks the authority to allow the withdrawal or modification of a Resolution Plan by a successful Resolution Applicant. The Tribunal found that the Resolution Applicant had acknowledged the rejection of its Resolution Plan by the CoC and had requested a refund of the Earnest Money Deposit. The Tribunal concluded that the Resolution Applicant's withdrawal was lawful as the CoC had not approved the Resolution Plan. 3. Role and Decision of Committee of Creditors (CoC): The Appellant contended that the CoC had approved the Resolution Plan by 96.04% voting share, including the State Bank of India's approval conveyed via email on 07.02.2020. However, the Tribunal found that the CoC had not approved the Resolution Plan within the CIRP period, and the CoC became "functus officio" after 15.11.2019. The Tribunal emphasized that the CoC's commercial wisdom is paramount and cannot be interfered with, except on specific grounds under Section 32 of the Code. 4. Compliance with Insolvency and Bankruptcy Code (I&B Code) and Regulations: The Tribunal observed that the Resolution Plan must comply with Section 30(2) of the I&B Code and be approved by the CoC with a vote of not less than 66%. The Tribunal noted that the Resolution Applicant had not submitted a revised Resolution Plan incorporating the changes suggested by the State Bank of India. The Tribunal concluded that the Resolution Plan did not meet the requirements of the I&B Code and the regulations, justifying the liquidation order. 5. Adjudicating Authority’s adherence to principles of natural justice: The Appellant argued that the Adjudicating Authority's order violated the principles of natural justice. However, the Tribunal found that the Adjudicating Authority had acted within its powers under Section 33(1)(a) of the I&B Code, as no Resolution Plan was approved within the CIRP period. The Tribunal held that the liquidation order was passed following due process and was legally sound. Conclusion: The Tribunal dismissed the appeal, upholding the liquidation order dated 01.03.2021. The Tribunal emphasized that the CoC had not approved the Resolution Plan within the CIRP period, and the Resolution Applicant's withdrawal was lawful. The Tribunal also suggested that the Liquidator explore the possibility of selling the company/business as a going concern to preserve the livelihood of the workers.
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