2022 (4) TMI 943 - AT - Insolvency and Bankruptcy

Delay in implementation of the Resolution Plan - whether after the Judgment of the NCLAT dated 04.03.2021 steps have been taken by the SRA for implementation of the Resolution Plan and whether the actions and conduct of the SRA is such that Corporate Debtor ought to be sent to the Liquidation, accepting the prayers made by the Appellant for liquidation? - HELD THAT - The Adjudicating Authority has given due consideration to the principles of law and the facts in the present case and sequence of the events. The Adjudicating Authority in its Order had noted that amount of ₹ 322 Crore was already parked by the SRA in an Account which was pointed out in the course of hearing on 22nd February, 2022 which amount was directed to be transferred by the Adjudicating Authority not later than 5 days from the date of the Order i.e. five days from 07th April, 2022. Dr. Singhvi during the course of the submission has made statement that entire amount has already been transferred to the Corporate Debtor as directed by the Adjudicating Authority on 07th April, 2022. There is no lack of intention on the part of the SRA for implementation of the plan after the Judgment of the NCLAT dated 04.03.2021 including offer to deposit the entire amount in the Escrow Account, the pendency of the Appeal of the Vanguard before the Hon ble Supreme Court and further making the payment of ₹ 12.49 Crores to the CIRP Cost on 18th June, 2021 and making Payment of ₹ 7 Crores for workmen which indicate the willingness of the SRA to implement the plan. The Order of the Adjudicating Authority giving five days time as a last opportunity to transfer the amount in the Corporate Debtor s Account can in no manner be said to be contrary to the orders passed by the NCLAT dated 04.03.2021. The Appellant who is born only on 23rd April, 2021 i.e., after the Order of the Adjudicating Authority want to push the Corporate Debtor to the Liquidation to realize its dues to the maximum, cannot be the reason for allowing the Application filed by the Appellant for liquidation and Adjudicating Authority after taking into consideration entire facts and circumstances did not commit any error in giving five days further time to the SRA to deposit the amount in the Account of the Corporate Debtor which Corporate Debtor did - appeal dismissed.

Summary

Issues Involved:

1. Rejection of the application for liquidation of the Corporate Debtor.
2. Claim for compensation/interest due to delay in the implementation of the Resolution Plan.
3. Direction for implementation of the Resolution Plan.

Issue-wise Detailed Analysis:

1. Rejection of the Application for Liquidation of the Corporate Debtor:
The Appellant contested the Adjudicating Authority's decision to reject their application for liquidation, arguing that the SRA failed to implement the Resolution Plan promptly. The Appellant cited the NCLAT's order dated 04.03.2021, which directed the Monitoring Committee to initiate liquidation if the SRA did not implement the Resolution Plan. However, the Adjudicating Authority observed that the SRA had taken steps towards implementation post the NCLAT's order, including depositing significant amounts for CIRP costs and workmen dues. The Authority emphasized that liquidation should be a last resort and highlighted the Code's objective to revive and continue the Corporate Debtor. The Adjudicating Authority concluded that the SRA's willingness to implement the plan and the steps taken justified rejecting the liquidation application.

2. Claim for Compensation/Interest Due to Delay in Implementation of the Resolution Plan:
The Appellant demanded compensation/interest for the delay in implementing the Resolution Plan, arguing that the value of the money to be received by financial creditors had diminished due to the delay. However, the SRA opposed this claim, stating that the approved Resolution Plan did not provide for any additional payments beyond the stipulated amount. The Monitoring Committee meetings revealed that the Appellant made the payment of compensation/interest a pre-condition for implementing the Resolution Plan, leading to a deadlock. The Adjudicating Authority found that the Appellant's insistence on compensation/interest obstructed the implementation process. The Authority noted that the SRA had already incurred significant expenses towards the plan and was prepared to implement it without additional conditions.

3. Direction for Implementation of the Resolution Plan:
The Adjudicating Authority directed the SRA to transfer the full resolution plan amount parked in a separate account to the Corporate Debtor's account within five days. This directive aimed to ensure the efficient resolution of the Corporate Debtor, which had been under CIRP since January 2018. The Authority highlighted that the primary focus of the legislation is to revive and continue the Corporate Debtor, not to maximize value at the cost of liquidation. The SRA complied with the directive, transferring the amount as ordered. The Adjudicating Authority's decision was based on the principle that a running enterprise adds more value to the economy and stakeholders in the long term compared to liquidation.

Conclusion:
The Appellate Tribunal upheld the Adjudicating Authority's decision, noting that the SRA had shown readiness to implement the Resolution Plan and had taken significant steps towards it. The Tribunal emphasized the Code's objective to revive and continue the Corporate Debtor and found no merit in the Appellant's appeal for liquidation. The Tribunal dismissed the appeal, affirming that the Adjudicating Authority's order was consistent with the principles of the Insolvency and Bankruptcy Code, 2016.