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2024 (10) TMI 507 - AT - IBCNon-compliance with submission of Performance Bank Guarantee (PBG) by the Appellant - insertion of Clause (4-A) in the Regulation on 24.01.2019, much after submission of the Resolution Plan and approval of the Resolution Plan - Jurisdiction of Adjudicating Authority to permit participation of the Applicants, who were not part of the CIRP. HELD THAT - The Performance Bank Guarantee was not submitted by the Appellant despite dozens of reminders sent by the Resolution Professional to the Appellant. There was clear non- compliance of provisions of the RFRP Clause 1.9.3 which oblige the Resolution Applicant after approval of the Resolution Plan by the CoC to furnish the Performance Bank Guarantee of an amount equivalent to 20% of the bid consideration amount within two business days. It is also noticed that the two applications one by the State of Arunachal Pradesh and another by THDC were filed before the Adjudicating Authority praying for liberty to submit the Resolution Plan for resolution of the corporate debtor. The stand which was taken by the CoC before the Adjudicating Authority is that the Appellant did not give any heed to submit Performance Bank Guarantee and it failed to adhere to the terms and conditions. CoC in its reply, therefore, clearly stated that after deliberation CoC is not objecting to the applications filed by the State of Arunachal Pradesh and the THDC and which applications need to be allowed in the interest of the Corporate Debtor. The requirement of submission of Performance Bank Guarantee was contained in the RFRP. RFRP was dated 21.05.2018. Clause (4-A) which was inserted in Regulation 36B only made it mandatory for Request of Resolution Plan to provide a performance security within time specified therein. There is no conflict in the provisions of the RFRP in the present case and Regulation 36B (4-A). The fact that Clause (4-A) was added subsequently has no bearing in the present case since in the present case RFRP dated 21.05.2018 itself contained Clause 1.9.3 requiring submission of the Performance Bank Guarantee of an amount equivalent to 20% of the bid consideration amount within two business days. The Application for approval of the Resolution Plan being CA No. 246 of 2019 was heard by the Adjudicating Authority and by impugned order, the said application stood rejected. The application for intervention filed by the Appellant became inconsequential when the application for plan approval of the Appellant stood rejected on account of non-compliance by the Appellant - there are no substance in the submission of the Appellant that the order passed by the Adjudicating Authority is in violation of principle of natural justice. The view taken by the CoC that Resolution Applicant who has not been able to deposit the Performance Bank Guarantee of Rs.72.72 Crores it cannot be trusted for implementation of the huge project. Adjudicating Authority in the impugned order has considered all aspects of the matter and has rightly come to the conclusion that Appellant having not deposited the Performance Bank Guarantee inspite of several opportunities/reminders given to the Appellant, Adjudicating Authority has no option except to reject the application for approval of the Resolution Plan - The Adjudicating Authority by the impugned order has also clearly given liberty to the Appellant to submit a Resolution Plan in response to EoI. Thus, no grounds have been made out to interfere with the impugned order. Looking to the fact that Appellant has filed this appeal and Appellant was already permitted by the Adjudicating Authority to submit a Resolution Plan, it is inclined to grant two weeks time to the Appellant to submit a Resolution Plan before the Resolution Professional which may also be considered along with the other Resolution Plans which have already been received in the CIRP of the Corporate Debtor. Appeal dismissed.
Issues Involved:
1. Non-compliance with submission of Performance Bank Guarantee (PBG) by the Appellant. 2. Jurisdiction and authority of the Adjudicating Authority and Committee of Creditors (CoC) regarding the approval and rejection of Resolution Plans. 3. Eligibility of the State of Arunachal Pradesh and THDC to submit a Resolution Plan. 4. Alleged violation of principles of natural justice in the hearing process. Detailed Analysis: 1. Non-compliance with Submission of Performance Bank Guarantee (PBG): The core issue revolves around the Appellant's failure to submit the Performance Bank Guarantee (PBG) as required under Clause 1.9.3 of the Request for Resolution Plan (RFRP). The RFRP mandated the Successful Resolution Applicant to furnish a PBG equivalent to 20% of the bid consideration within two business days of the CoC's approval. Despite numerous reminders from the Resolution Professional (RP) from 2018 to 2023, the Appellant did not comply. The CoC, in its meeting on 04.05.2023, discussed this non-compliance and decided not to object to the applications filed by the State of Arunachal Pradesh and THDC due to the Appellant's breach of its obligations. The Adjudicating Authority found the Appellant's non-compliance as a valid ground to reject the Resolution Plan approval application. 2. Jurisdiction and Authority of Adjudicating Authority and CoC: The Appellant argued that the CoC could not withdraw from an approved Resolution Plan, citing the Supreme Court's judgment in "Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited & Anr." However, the Adjudicating Authority did not withdraw the approval; rather, it rejected the application for approval due to the Appellant's failure to submit the PBG. The Tribunal clarified that the addition of Regulation 36B (4-A) post-dated the RFRP, but the RFRP itself required the PBG, rendering the Appellant's argument moot. 3. Eligibility of the State of Arunachal Pradesh and THDC to Submit a Resolution Plan: The Appellant contended that the State of Arunachal Pradesh and THDC were not part of the CIRP and thus could not submit a Resolution Plan. The Tribunal noted that their eligibility arose only after the Appellant's plan was rejected due to non-compliance. The Adjudicating Authority directed the issuance of a fresh Expression of Interest (EoI), allowing all interested parties, including the State of Arunachal Pradesh and THDC, to submit their plans. 4. Alleged Violation of Principles of Natural Justice: The Appellant claimed that its intervention application (IA No.3163 of 2023) was not heard, violating principles of natural justice. The Tribunal found this claim unsubstantial, as the intervention application became inconsequential after the rejection of the Appellant's plan approval application. The Adjudicating Authority had provided the Appellant the opportunity to submit a new Resolution Plan in response to the fresh EoI. Conclusion: The Tribunal upheld the Adjudicating Authority's decision, affirming that the Appellant's failure to submit the PBG justified the rejection of its Resolution Plan. It granted the Appellant two weeks to submit a new Resolution Plan, which would be considered alongside others received in the CIRP process. The appeal was dismissed, with the Tribunal emphasizing the need for timely and compliant submissions to progress the resolution process effectively.
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