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2024 (2) TMI 1314 - AT - Insolvency and BankruptcyImproper handling of Resolution Plan - Respondent No.1 alleges that the Resolution Professional (RP) violated the process by opening a sealed cover containing the plan without the presence of the Committee of Creditors (CoC) and Principal Resolution Applicants (PRAs). - HELD THAT - Regulation 39 of the CIRP Regulations, 2016 also requires the Resolution Professional to look into the Resolution Plan submitted by the Applicants and to place the plan before CoC which is in compliance with Section 30(2). The opening of Resolution Plan by Resolution Professional is essential for further process in the CIRP. The Resolution Professional without opening the plan cannot come to any opinion whether the plan is complaint to Section 30(2) or not. There is no regulation or law which provide that the Resolution Professional should open the plan in presence of CoC and PRAs. Learned counsel for the Respondent No.1 has been unable to show any provision of law which require that the Resolution Professional shall open the plan in presence of CoC and PRAs. The order passed by the Adjudicating Authority is unsustainable - In result, Appeal is allowed.
Issues Involved:
The issues involved in the judgment are the validity of the process followed by the Resolution Professional in handling Resolution Plans, compliance with the Insolvency and Bankruptcy Code and CIRP Regulations, and the right of Resolution Applicants to negotiate and submit fresh Resolution Plans in a fair and transparent manner. Validity of Process Followed by Resolution Professional: The Adjudicating Authority partly allowed an application filed by a Resolution Applicant, alleging that the Resolution Professional violated the process by opening a sealed cover containing a Resolution Plan in the absence of CoC and PRAs. The Adjudicating Authority directed the Resolution Professional to call for fresh bids from all PRAs and table them before the CoC for a decision on the Plan. The Resolution Professional's actions were deemed to have violated due process under the law. Compliance with Insolvency and Bankruptcy Code and CIRP Regulations: The Resolution Professional's role in examining Resolution Plans is crucial as per Section 30 Sub-section (2) and Section 30 Sub-Section (3) of the Insolvency and Bankruptcy Code. Regulation 39 of the CIRP Regulations, 2016 mandates the Resolution Professional to review the Plans and present them to the CoC for approval, ensuring compliance with Section 30(2). The Resolution Professional must open the Resolution Plan to assess its compliance with the law, and there is no requirement for the plan to be opened in the presence of CoC and PRAs. Right of Resolution Applicants to Negotiate and Submit Fresh Plans: The Respondent No.1 sought to reverse the process followed by the Resolution Professional to allow all Resolution Applicants to negotiate with the CoC Members and submit fresh Resolution Plans in a fair and transparent manner. The Adjudicating Authority's order allowing this application without notice to other Resolution Applicants was challenged as contrary to the provisions of the I&B Code and CIRP Regulations. The Appellant argued that the Resolution Plan must be opened by the Resolution Professional before being placed before the CoC. Conclusion: The Appeal was allowed, setting aside the order dated 08.02.2024. The Resolution Professional and the CoC were given the liberty to proceed further in the Corporate Insolvency Resolution Process in accordance with the law. The judgment emphasized the importance of following due process, compliance with legal provisions, and the Resolution Professional's role in evaluating and presenting Resolution Plans for approval.
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