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2018 (5) TMI 78 - Tri - Insolvency and BankruptcyMaintainability of resolution plan submitted by the applicant on 20.02.2018 - rejection on the ground of delay - Held that - It is pertinent to mention that after the Corporate Insolvency Resolution Process is triggered then the broad time line of 180 days or extended period of 270 days is fixed by Section 12 of the Code. The term of the Interim Resolution Professional according to Section 16 (5) of the Code shall not exceed thirty days from the date of his appointment. During his tenure of 30 days he is required to make a public announcement in terms of Section 13(l)(b) of the Code immediately after his appointment. A perusal of Section 12 of the Code would show that initial time limit for completion of Corporate Insolvency Resolution Process is 180 days from the date of admission of the application which is extendable to 270 days if the Committee of Creditors by a vote of 75% of voting share passes a resolution to that effect. The provisions of Regulation 39 of CIRP Regulations as stood on 21.09.2017, postulate that a resolution applicant shall endeavour to submit a resolution plan 30 days before the expiry of the maximum period permitted under Section 12 for completion of the C1R Process. It is evident that a resolution applicant could submit its plan 30 days before expiry of the maximum period permitted under Section 12. In the present case, after issuance of public notice in print media on 21.09.2017 the Resolution Professional has not issued any other public notice notifying the criteria which might have been laid down by the Committee of Creditors. If no new public notice notifying the criteria finalized by CoC in terms of amendment is issued, then the original public notice would prevail with regard to the period for receipt of Resolution Plan application. The resolution plan in the present case was submitted on 20.02.2018. The period of 180 days was extended to 270 days on an application filed by the Resolution Professional under Section 12 (2) vide order dated 22.12.2017. The period of 270 days admittedly would be expiring on 22.04,2018. If we apply the aforesaid yardstick then the decision of the CoC in its meeting dated 21.02.2018 would not be sustainable. In the present case the process which has started on 21.09.2017 could not be concluded by 21.02.2018 on account of unnecessary complications created in conducting the process by inviting expression of interests. It is worthwhile to notice that the fashionable phenomena expression of interest is resorted to in cases where thousands of applicants are expected to participate. In a case where the number is not likely to exceed more than ten then such process seems to be un-necessary. The object of the Insolvency and Bankruptcy Code is to reorganize and evolve insolvency resolution of, inter alia, Corporate persons in a time bound manner for maximization of the value of assets of such person. The Resolution Professional shall place the unopened sealed cover apparently containing the resolution plan of the Liberty House before the next meeting of the CoC - The period spend on this litigation stands excluded. The whole process may now be concluded before 23.06.2018 - Resolution Plan of the Liberty House shall not be rejected on the ground of delay - application allowed.
Issues Involved:
1. Legality of the Committee of Creditors' (CoC) decision to reject Liberty House Group Pte. Limited's (Liberty House) resolution plan based on delayed submission. 2. Compliance with the procedural and regulatory requirements for submitting a resolution plan under the Insolvency and Bankruptcy Code (IBC), 2016. 3. Evaluation of the eligibility and qualification criteria for resolution applicants. 4. Impact of internal deadlines set by the Resolution Professional (RP) and CoC on the fairness and transparency of the Corporate Insolvency Resolution Process (CIRP). 5. Judicial review of the CoC and RP's decisions under the IBC framework. Detailed Analysis: 1. Legality of CoC's Decision to Reject Liberty House's Resolution Plan: The primary issue was whether the CoC's decision to reject Liberty House's resolution plan due to delayed submission was legal. The CoC had refused to entertain the resolution plan submitted by Liberty House on 20.02.2018, citing that it was delayed beyond the deadline of 08.02.2018. The Tribunal found that the decision of the CoC was not sustainable as the process for submitting the resolution plan was to conclude 30 days before the expiry of the maximum period provided by Section 12 of the Code. The Tribunal noted that the CoC's decision to reject the plan based on internal deadlines lacked statutory backing and was not communicated publicly, thus violating the principles of fairness and transparency. 2. Compliance with Procedural and Regulatory Requirements: Liberty House argued that it had complied with the timeline provided under the Code and Regulations. The Tribunal observed that the public notice dated 21.09.2017 did not specify a deadline for the submission of resolution plans, and no subsequent public notice was issued to amend this. The Tribunal held that the internal process documents and deadlines set by the RP and CoC did not have statutory force and could not override the provisions of the Code and the public notice. Therefore, the rejection of Liberty House's resolution plan on procedural grounds was deemed unjustified. 3. Evaluation of Eligibility and Qualification Criteria: The CoC and RP contended that Liberty House failed to submit necessary documents, including a Chartered Accountant certificate certifying its net worth, and thus did not meet the qualification criteria. However, the Tribunal found that Liberty House had provided sufficient information to establish its eligibility and that the failure to submit certain documents was a trivial issue that did not warrant outright rejection. The Tribunal emphasized that the RP had treated Liberty House as a qualified applicant and had engaged with it throughout the process, indicating that it met the eligibility criteria. 4. Impact of Internal Deadlines on Fairness and Transparency: The Tribunal criticized the internal deadlines set by the RP and CoC, stating that they were not communicated to the public and thus lacked transparency. The Tribunal highlighted that the process should have been conducted in a manner that provided a level playing field for all potential resolution applicants. The internal process documents and deadlines could not curtail the period specified in the public notice, and the rejection of the resolution plan based on these internal deadlines was deemed arbitrary and unfair. 5. Judicial Review of CoC and RP's Decisions: The Tribunal asserted its authority to review the decisions of the CoC and RP to ensure compliance with the Code and principles of natural justice. It emphasized that the commercial wisdom of the CoC must be respected, but this did not preclude judicial intervention in cases where procedural irregularities and lack of transparency were evident. The Tribunal directed the RP to place Liberty House's resolution plan before the CoC for consideration without rejecting it on the grounds of delay. Conclusion: The Tribunal allowed Liberty House's application, directing the RP to place the unopened resolution plan before the CoC and to exclude the period of litigation from the CIRP timeline. The Tribunal emphasized the importance of transparency, fairness, and adherence to statutory provisions in the CIRP, ensuring that all potential resolution applicants were given a fair opportunity to participate. The decision underscored the Tribunal's role in safeguarding the integrity of the insolvency resolution process and protecting the interests of all stakeholders.
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