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2019 (4) TMI 140 - Tri - Insolvency and BankruptcyCorporate insolvency process - Adherence to period of 270 days for completion of the Resolution Plan - HELD THAT - The approved Resolution Plan submitted by LHG is not capable of implementation due to default in adhering to the payment schedule, we dispose of this application by directing that the period from the date when DVI submitted its final plan i.e. on 05.03.2018 up to the date of the receipt of copy of this order be excluded while calculating the period of 270 days for completion of the Resolution Plan with liberty to the financial creditor and/or Resolution Professional to make appropriate complaint with the Insolvency and Bankruptcy Board of India or the Central Government on the allegation of wilful or intentional default and to pursue the appropriate remedy for the offence, if any, committed by the respondent with right to respondent No.1 to defend the action. The period of 10 days in addition would also stand excluded for serving the notice to DVI for representing its case before the Committee of Creditors and for which the Committee of Creditors is reconstituted. The Resolution Professional and the Committee of Creditors would take a final decision and report to the adjudicating authority about the final outcome Misrepresentations in the information memorandum by RP - default in implementing the Resolution Plan submitted by the applicant - HELD THAT - The application of the financial creditor has been disposed of with liberty to the Resolution Applicant or the financial creditors to file a complaint before the Insolvency and Bankruptcy Board of India or the Central Government, claiming that the LHG intentionally and wilfully contravened the terms of the Plan. No effective order therefore, can be passed in this application as the matter would be within the purview of the Competent Authority. The Adjudicating Authority under the Code without passing an effective order cannot lay down the guidelines in the exercise of its jurisdiction, which is to adjudicate the matters under the Code and the Rules and Regulations framed thereunder. We reject this application in limine.
Issues Involved:
1. Competence of Corporation Bank to file the application. 2. Jurisdiction of the Tribunal to entertain the application. 3. Allegations of misrepresentation and fraud by the Resolution Professional. 4. Failure of Liberty House Group (LHG) to implement the approved Resolution Plan. 5. Request for restarting the Corporate Insolvency Resolution Process (CIRP). 6. Exclusion of time for calculating the maximum period of 270 days for CIRP. 7. Request for guidelines for compliance by Resolution Professionals. Detailed Analysis: 1. Competence of Corporation Bank to File the Application: The Tribunal examined whether Corporation Bank, representing the Committee of Creditors (CoC), was competent to file the application. The minutes of the CoC meeting held on 19.11.2018 authorized Corporation Bank to file necessary proceedings. The Tribunal concluded that Corporation Bank, having initiated the process under Section 7 of the Insolvency and Bankruptcy Code (IBC), was competent to file the application. 2. Jurisdiction of the Tribunal to Entertain the Application: The Tribunal referred to Section 60(5) of the IBC, which grants the National Company Law Tribunal (NCLT) jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor. The Tribunal emphasized that the process cannot be kept in limbo, especially when the approved Resolution Plan has not been implemented and various objections have been raised. 3. Allegations of Misrepresentation and Fraud by the Resolution Professional: LHG alleged that there were gross misrepresentations and fraud by the Resolution Professional, which vitiated the entire Insolvency Resolution Corporate Process. LHG claimed that the information provided in the Information Memorandum was incorrect and inflated. The Tribunal noted that these allegations would be tried by the Special Court as offenses under Section 74(3) of the IBC, which are triable before a Special Court. 4. Failure of Liberty House Group (LHG) to Implement the Approved Resolution Plan: LHG failed to honor its commitment to comply with the requirements for implementing the approved Resolution Plan. The Tribunal noted that LHG did not make the upfront payment of INR 3,310 crores and failed to fulfill other financial commitments. The Tribunal concluded that there was a clear default in implementing the Plan within the stipulated time. 5. Request for Restarting the Corporate Insolvency Resolution Process (CIRP): The applicant requested the Tribunal to restart the CIRP process and grant a minimum of 90 days for the Resolution Professional to make another attempt for a fresh process. The Tribunal, however, held that restarting the process would defeat the binding timelines provided under the IBC. The Tribunal directed the CoC to reconsider the Resolution Plan submitted by Deccan Value Investors (DVI) by excluding certain periods while calculating the 270 days. 6. Exclusion of Time for Calculating the Maximum Period of 270 Days for CIRP: The Tribunal referred to the judgment in Quinn Logistics India Pvt. Ltd. vs. Mack Soft Tech Pvt. Ltd., which allows exclusion of certain periods for justified reasons. The Tribunal concluded that the period from the date DVI submitted its final plan (05.03.2018) to the date of receipt of the Tribunal's order should be excluded while calculating the 270 days for completion of the Resolution Plan. 7. Request for Guidelines for Compliance by Resolution Professionals: LHG requested the Tribunal to lay down guidelines for compliance by Resolution Professionals. The Tribunal rejected this request, stating that it cannot lay down guidelines in the exercise of its jurisdiction, which is to adjudicate matters under the IBC and related regulations. Conclusion: The Tribunal allowed the application to the extent of excluding certain periods for calculating the 270 days for CIRP completion and directed the CoC to reconsider the Resolution Plan submitted by DVI. The Tribunal also granted liberty to the financial creditor and/or Resolution Professional to file a complaint with the Insolvency and Bankruptcy Board of India or the Central Government regarding any intentional and willful default by LHG. Other prayers were declined.
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