2022 (6) TMI 345 - Tri - Insolvency and Bankruptcy

Deposit the performance guarantee immediately and in case of his failure, to forfeit the deposit given as EMD as well as partial Performance Security - HELD THAT - It is noted that though the CIRP started on 28.02.2019, precious time has been lost mainly due to the fact that the respondent has not been able to deposit the performance guarantee in time despite several accommodations made by the CoC - It is also noted that the H-2 Bidder i.e. M/s. Pioneer Facor IT Infra Developers Private Limited (PHK) Consortium has come with a resolution bid of Rs. 75.50 Crores. Records indicate that the H-2 Bidder was rejected by the CoC at the time of the original finalization of the resolution plan because his bid offer was only Rs. 74 Crores less than the H-1 Bidder. The Applicant-Resolution Professional has prayed for a direction to the respondent not only to pay the performance guarantee but also to match the revised bid of Rs. 75.50 Crores now offered by the H-2 Bidder. This Bench, however, feels that this is against the basic tenets of law of contract and performance of a contract. The respondent must pay as per the original bid of Rs. 75 Crores, failing which the original bid fails. Thus, there is no requirement for him to match the revised bid of H-2 Bidder as the original bid is now closed. The respondent is, however, directed to deposit the performance guarantee within a period of one month from the date of this order and the same should be to the satisfaction of the CoC. In the event of the failure of the respondent to comply with the conditions of the performance guarantee, the CoC is directed to first negotiate with the H-2 Bidder to explore the possibility of the resolution in a time-bound manner - Application disposed off. Rejection of Resolution Plan - HELD THAT - This application is closely linked with the IA No. 716/2020 in the sense that the present applicant was the H-2 Bidder in the CIRP of the Corporate Debtor i.e. International Mega Food Park Limited. In the present application, the applicant has made several allegations regarding the way CIRP proceedings was conducted and the respondent No. 3 - Ajay Yadav and Lata Yadav were declared H-1 Bidder over and above the offer given by the applicant - this Bench has already directed in the order of IA No. 716/2020 that the present offer given by the applicant-H2 Bidder should be considered by the CoC in case there is a failure on the part of respondent No. 3-Ajay Yadav and Lata Yadav (H-1 Bidder) to furnish the performance security within the extended time limit allowed to them by this Bench. It is again reiterated that the CIRP is strictly a time-bound process and any action causing delay will only further devalue the assets of the corporate debtor. Application disposed off.

Summary

Issues:
1. Application for deposit of performance guarantee and compliance with resolution plan terms.
2. Application for rejection of resolution plan and consideration of another bid.

Analysis:
1. Application for deposit of performance guarantee and compliance with resolution plan terms:
- The application filed under Rule 11 of the NCLT Rules, 2016 sought the respondent to deposit the performance guarantee and comply with the terms of the resolution plan approved by the CoC. The respondent failed to deposit the complete performance security as required by the resolution plan.
- The CoC approved the resolution plan submitted by the respondent, declaring them as the H-1 bidder. The respondent was obligated to deposit performance security equal to 10% of the bid amount within a specified timeframe, which they partially complied with by depositing Rs. 1.00 Crore as FDR but failed to provide the balance security.
- Despite multiple accommodations and extensions, the respondent did not fulfill the commitment to provide the required performance security, leading to delays in the CIRP process. The H-2 bidder expressed interest in taking over the corporate debtor with a revised bid of Rs. 75.50 Crores.
- The Tribunal directed the respondent to deposit the performance guarantee within a month, failing which the CoC was instructed to negotiate with the H-2 bidder. If the respondent failed to comply, the deposited amounts of Rs. 10 Lakhs and Rs. 1.00 Crore would be forfeited.

2. Application for rejection of resolution plan and consideration of another bid:
- Another application was filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, requesting the rejection of the resolution plan submitted by the H-1 bidder and consideration of the applicant's bid.
- The applicant, as the H-2 bidder, raised concerns regarding the conduct of the CIRP proceedings and the selection of the H-1 bidder over their offer. The Tribunal had already directed in a previous order to consider the applicant's bid if the H-1 bidder failed to provide the required performance security within the extended timeline.
- Considering the previous order and the ongoing CIRP process, the Tribunal deemed the second application as redundant and disposed of it, emphasizing the time-bound nature of the CIRP and the importance of avoiding delays that could devalue the corporate debtor's assets.

This detailed analysis of the judgment highlights the issues addressed by the Tribunal, the parties involved, their submissions, and the Tribunal's decisions and directives concerning the deposit of performance guarantee and the consideration of resolution plans in the context of the insolvency proceedings.