2024 (1) TMI 733 - AT - Insolvency and Bankruptcy

CIRP - Unsuccessful resolution applicant - Locus standi to challenge the plan after its approval - HELD THAT - There is no doubt that resolution plan submitted by the Appellant was approved in I.A. No. 861 of 2020 on 01.10.2021 but there is no doubt as well that the said plan was ought to have been implemented by the Appellant within 90 days. It is also not in question that on account of its failure to implement the resolution plan, the Appellant filed I.A. No. 77 of 2022 and sought extension of 60 days but the said application was not allowed as it was dismissed on 01.02.2022. The order passed on 01.02.2022 was further challenged by the Appellant in CA (AT) (Ins) No. 86 of 2022 in which the Appellant was granted three months time for payment of residual balance amount with interest @ 8%, from the order dated 13.04.2022 till 12.07.2022 but it was still not complied with and this fact has been noticed by the Hon ble Supreme Court in its order dated 29.08.2022 passed in Civil Appeal No. 3660 of 2022 in which the order dated 13.04.2022 was challenged by one operational creditor, M/s Vishal Nirmiti Pvt. Ltd. In such circumstances, when the Appellant has miserably failed to implement the resolution plan, the RP filed I.A. No. 283 of 2022, praying therein for extension of period of CIRP of 60 days, which was allowed on 05.09.2022. The Appellant is not a stakeholder within the ambit of Section 31(1) of the Code qua the Corporate Debtor after having been unsuccessful as a resolution applicant and has no locus standi to file the present appeal and in this regard, reliance has been placed upon the judgment rendered by this Tribunal in the case of Ravi Shankar Vedam vs. Tiffins Barytes Asbestos and Paints Limited and Others 2023 (6) TMI 1250 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI where it has been held that the Promoter / Shareholder of the Corporate Debtor Company has no locus to challenge the Plan, after its approval. There is hardly any merit in the present appeal which calls for interference, therefore, the present appeal is hereby dismissed.

Summary

Issues Involved:
1. Extension of timelines for implementation of the resolution plan.
2. Alleged violation of principles of natural justice.
3. Ordering fresh Corporate Insolvency Resolution Process (CIRP).
4. Exhaustion of legal remedies by the Appellant.

Summary:

1. Extension of Timelines for Implementation of the Resolution Plan:
The Appellant's resolution plan was approved on 01.10.2021 but required implementation within 90 days. The Appellant sought extensions through I.A. No. 77 of 2022 and subsequent appeals, including CA (AT) (Ins) No. 86 of 2022, which granted an additional three months. Despite these extensions, the Appellant failed to comply with the payment schedule. Consequently, the RP filed I.A. No. 283 of 2022 for an extension of the CIRP period, which was allowed on 05.09.2022. The Appellant's appeal against this order (CA (AT) (Ins) No. 340 of 2022) was dismissed, and the decision was upheld by the Hon'ble Supreme Court when the Appellant withdrew Civil Appeal No. 1133 of 2023.

2. Alleged Violation of Principles of Natural Justice:
The Appellant contended that the Adjudicating Authority did not properly consider their I.A. No. 655 of 2022 (Impleadment Application) and I.A. No. 654 of 2022 (Direction Application). The Adjudicating Authority noted these applications as infructuous due to the Appellant's non-compliance with the extended timelines. The Tribunal found no merit in the Appellant's claim of procedural unfairness, noting that the Adjudicating Authority had addressed the relevant issues.

3. Ordering Fresh Corporate Insolvency Resolution Process (CIRP):
The term "afresh CIRP" used in the order dated 05.09.2022 was interpreted as a continuation of the original CIRP initiated on 25.02.2019. The Appellant's failure to implement the resolution plan justified the RP's request for an extension to complete the CIRP. The Tribunal upheld the Adjudicating Authority's decision, emphasizing the importance of timely resolution to preserve the value of the Corporate Debtor's assets.

4. Exhaustion of Legal Remedies by the Appellant:
The Tribunal noted that the Appellant had exhausted all legal remedies, including various interlocutory applications and appeals. The Hon'ble Supreme Court's dismissal of Civil Appeal No. 1133 of 2023, which challenged the Tribunal's order dated 25.11.2022, further confirmed this. The Tribunal concluded that no further relief could be granted to the Appellant under the I&B Code, 2016.

Conclusion:
The Tribunal dismissed the appeal, finding no error in the Adjudicating Authority's orders. The Appellant's failure to comply with the resolution plan timelines, despite multiple extensions, and the subsequent legal proceedings, justified the continuation of the CIRP and the approval of a new resolution plan submitted by Respondent No. 3. The Tribunal also held that the Appellant, having failed to fulfill its obligations, lacked the locus standi to challenge the new resolution plan.