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2020 (11) TMI 288 - Tri - Insolvency and BankruptcyUpfront Charges - arrangement of the remaining amount by way of bank finance - Applicant submits that the performance guarantee is on the higher side when the Resolution Plan itself is for ₹ 23 Crores - HELD THAT - Considering the facts and circumstance of the case and the time required for the CoC to take such a decision, in the interest of justice we order that the CoC may consider the Resolution Plan by accepting the bank performance guarantee of ₹ 3 Crores as agreed to be provided by the Resolution Applicant. Application disposed off.
Issues Involved:
1. Application for scaling down performance guarantee in a resolution plan. 2. Consideration of bank performance guarantee in lieu of higher amount fixed by the Committee of Creditors (CoC). 3. Disposal of subsequent application in view of the order passed on the initial application. Issue 1: Application for scaling down performance guarantee in a resolution plan The Tribunal addressed an application (IA 1072 of 2020) filed by the sole Resolution Applicant seeking a modification in the performance guarantee requirement set by the CoC in the resolution plan. The Resolution Applicant expressed concerns over the high performance guarantee of ?25 Crores mandated by the CoC, considering the total resolution plan amount of ?23 Crores. The Tribunal noted the CoC's stance that a scaled-down performance guarantee could be accepted if ordered by the Adjudicating Authority upon application by the Resolution Applicant. Despite acknowledging the CoC's discretion in this matter, the Tribunal, in the interest of justice, directed the CoC to consider the Resolution Plan with a reduced bank performance guarantee of ?3 Crores as proposed by the Resolution Applicant. Consequently, the application was disposed of in accordance with the Tribunal's order. Issue 2: Consideration of bank performance guarantee in lieu of higher amount fixed by the CoC The Tribunal emphasized that the CoC could have independently decided to revise the performance guarantee requirement based on commercial considerations. However, due to the circumstances and time constraints involved, the Tribunal intervened to facilitate the consideration of the Resolution Plan with a reduced bank performance guarantee. By ordering the CoC to accept the proposed bank guarantee of ?3 Crores, the Tribunal aimed to expedite the resolution process and ensure fairness in the treatment of the Resolution Applicant. This decision underscored the Tribunal's role in overseeing the resolution process and maintaining equitable treatment of stakeholders involved in insolvency proceedings. Issue 3: Disposal of subsequent application in view of the order passed on the initial application Following the resolution of the primary application (IA 1072 of 2020), a subsequent application (IA 1136 of 2020) with similar prayers was deemed redundant and dismissed. The Tribunal's decision in the initial application effectively addressed the core issue of revising the performance guarantee requirement, rendering the subsequent application unnecessary. This approach demonstrated the Tribunal's efficiency in handling related matters and avoiding duplicative proceedings, thereby streamlining the resolution process and conserving judicial resources for essential matters in insolvency cases. This detailed analysis of the judgment highlights the Tribunal's considerations regarding the modification of performance guarantee requirements in resolution plans, the role of bank guarantees in such scenarios, and the procedural efficiency in addressing related applications within insolvency proceedings.
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