2024 (1) TMI 403 - AT - Insolvency and Bankruptcy

Eligibility of appellant to submit a Resolution Plan for the Corporate Debtor - maximisation of the value of the assets of the Corporate Debtor - Regulations 39(1-B) read with 36B(7) of the IBBI (CIRP) Regulations, 2016 - HELD THAT - The Adjudicating Authority has consistently allowed opportunity to all the resolution applicants as long as they were as per law. In the first case of M/s SEAHAWK, the order clearly states that the CoC is directed to consider the resolution plan, which is submitted by the Applicant as per law in its order in I.A. No. 3593 of 2022 and subsequently when Jindal Power Limited approached the Adjudicating Authority in I.A No. 3223 of 2023, it again acknowledged that an opportunity be given to submit the resolution plan to maximise the value of Corporate Debtor asset. However, this opportunity will be subject to compliance with the provisions contained in Regulation 39(1-B) read with Regulation 36-B(7) IBBI (CIRP) Regulations, 2016. In the first case, even though opportunity was given to M/s SEAHAWK, it is confirmed by the RP that the resolution plan was not submitted. The claim of SRA viz. SEPOL that this resolution plan was rejected by the RP/COC on the same ground that it is not in compliance with the provisions contained in Regulation 39(1-B) read with Regulation 36-B(7) IBBI (CIRP) Regulations, 2016 and now in the case of JPL they have changed their stand and recommending for resolution plan to be considered. The Regulations do not permit the proposals to be entertained which are not there in the final list of the PRAs and the Adjudicating Authority has acted as per this provisions. If unsolicited plans are obtained at any stage it will cause unnecessary avoidable delay in the CIRP process. If resolution plans are allowed to be submitted at any stage, it will make the whole CIRP process unending. To curtail the delay in the CIRP process, it is appropriate to restrain the tendency to consider resolution plans after the time as specified by the CoC and from someone not in the final list of PRAs. This has been the spirit and justification of newly inserted provisions in the Regulations in 2021 and which has been eloquently described in the Discussion Paper of the IBBI, before changes were brought in and which have also been referred to by SRA viz. SEAPOL. RP/CoC should finalize the proposal at hand which is in a sealed cover with them and was improved as per their suggestions and if it is not satisfied, as per the provisions of Regulation 36B(7) of the CIRP Regulations it can reject the resolution plan submitted by M/s SEAPOL and proceed as per the Code and Regulations. There are no merit in the present Appeal, which if allowed would mean contravention and violation of Regulation 39(1- B) read with Regulation 36-B(7) of IBBI (CIRP) Regulations, 2016 - The Appeal is, therefore, dismissed.

Summary

Issues Involved:
1. Eligibility of the Appellant to submit a Resolution Plan under Regulation 39(1-B) read with Regulation 36-B(7) of the CIRP Regulations.
2. Compliance with the provisions of the Insolvency and Bankruptcy Code (IBC) and CIRP Regulations.
3. Maximization of the value of the Corporate Debtor's assets.

Summary:

1. Eligibility of the Appellant to Submit a Resolution Plan:
The Appellant, Jindal Power Limited (JPL), challenged the orders dated 22.08.2023 and 27.07.2023 passed by the National Company Law Tribunal (NCLT), Mumbai Bench, which held that JPL is ineligible to submit a Resolution Plan for the Corporate Debtor due to the statutory bar under Regulation 39(1-B) read with Regulation 36-B(7) of the CIRP Regulations. The Tribunal emphasized that a resolution plan cannot be received from a person who does not appear in the final list of prospective resolution applicants.

2. Compliance with Provisions of IBC and CIRP Regulations:
The Tribunal noted that the Adjudicating Authority consistently allowed opportunities to resolution applicants as long as they complied with the law. The Adjudicating Authority's orders emphasized compliance with Regulation 39(1-B) and Regulation 36-B(7) of the CIRP Regulations, which restrict the submission of resolution plans to those in the final list of PRAs. The Tribunal reiterated that both the Adjudicating Authority and the Appellate Tribunal are bound by the Code and Regulations, and any deviation would be a violation.

3. Maximization of the Value of the Corporate Debtor's Assets:
The Appellant argued that accepting its resolution plan would maximize the value of the Corporate Debtor's assets, aligning with the primary objective of the IBC. However, the Tribunal held that this justification cannot override the statutory provisions. The Tribunal emphasized that the commercial wisdom of the Committee of Creditors (CoC) is paramount, but it must operate within the bounds of the Code and Regulations. The Tribunal also highlighted that allowing unsolicited plans at any stage would cause unnecessary delays in the CIRP process.

Findings and Conclusion:
The Tribunal concluded that the Adjudicating Authority acted in compliance with the relevant provisions of the CIRP Regulations by disallowing JPL's resolution plan. It was noted that the CIRP process must be conducted in a time-bound manner, and any decision to accept a resolution plan must comply with the existing regulations. The Tribunal dismissed the appeal, stating that allowing it would contravene Regulation 39(1-B) read with Regulation 36-B(7) of the CIRP Regulations. The Tribunal directed the Resolution Professional (RP) and CoC to proceed with the CIRP and decide on the resolution plan available with them.