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2021 (12) TMI 87 - SC - Insolvency and BankruptcyFailure to act as per approved Resolution Plan - prayer to reinstate the COC - seeking to direct the resolution professional to ensure that the Corporate Debtor remain as a going concern - prayer made to grant 90 days to the resolution professional to make another attempt for a fresh process rather than forcing the Corporate Debtor into liquidation on account of fraud committed by Liberty - HELD THAT - Under the approved resolution plan, both the parties have to fulfil their obligations. The Corporate Debtor has also to perform its obligations simultaneously so that the amount of ₹ 500 crores be transferred to the financial creditors/lenders of the Corporate Debtor. It is the case on behalf of the respective parties that the aforesaid obligations are to be performed mutually and simultaneously. It is reported that Implementation and Monitoring Committee (IMC) has been constituted comprising of resolution professional, three identified lenders of the Corporate Debtor and nominee of DVI to supervise the implementation of the resolution plan. The approved resolution plan has to be implemented at the earliest and that is the mandate under the IBC. As per Section 12 of the IBC, subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of 180 days from the date of admission of the application to initiate such process, which can be extended by a further period of 180 days - As per the third proviso to Section 12 of the IBC, which is also inserted by Act 26 of 2019, where the insolvency resolution process of a Corporate Debtor is pending and has not been completed within a period stated hereinabove, i.e., within a period of 330 days, such resolution process shall be completed within a period of 90 days from the date of commencement of the IBC amendment Act, 2019, i.e., 16.08.2019. The entire resolution process has to be completed within the period stipulated under Section 12 of the IBC and any deviation would defeat the object and purpose of providing such time limit. However, by earlier order, the time limit has been condoned in view of the various litigations pending between the parties and in the peculiar facts and circumstances of the case. Therefore, any further delay in implementation of the approved resolution plan submitted by DVI which as such has been approved by the adjudicating authority in the month of July, 2020 and even the appeal against the same has been dismissed subsequently, any further delay would defeat the very object and purpose of providing specific time limit for completion of the insolvency resolution process, as mandated under Section 12 of the IBC. All the concerned parties to the approved resolution plan and/or connected with implementation of the approved resolution plan including IMC to complete the implementation of the approved resolution plan, within a period of four weeks from today, without fail. Appeal disposed off.
Issues Involved:
1. Initiation and progression of the Corporate Insolvency Resolution Process (CIRP) against Amtek Auto Limited. 2. Withdrawal of the Resolution Plan by Liberty House Group Private Limited. 3. Reconsideration and approval of the Resolution Plan submitted by Deccan Value Investor LP (DVI). 4. Non-implementation of the approved Resolution Plan by DVI. 5. Legal proceedings and appeals related to the implementation of the Resolution Plan. 6. Contempt proceedings against DVI for non-compliance with the approved Resolution Plan. 7. Directions for the timely implementation of the Resolution Plan. Detailed Analysis: 1. Initiation and Progression of CIRP: The Corporate Insolvency Resolution Process (CIRP) was initiated against Amtek Auto Limited on 24.07.2017 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). A resolution professional was appointed, and an advertisement was published inviting prospective resolution applicants to submit a Resolution Plan by 31.08.2017. The Committee of Creditors (COC) considered the Resolution Plans submitted by Deccan Value Investor LP (DVI) and Liberty House Group Private Limited (Liberty). 2. Withdrawal of Resolution Plan by Liberty: DVI withdrew its Resolution Plan, leading the COC to consider and approve the revised plan of Liberty on 2.4.2018. However, Liberty failed to act as per the approved Resolution Plan, resulting in multiple proceedings against them. 3. Reconsideration and Approval of DVI's Plan: An application was filed under Section 60(5) read with Section 74(3) of the IBC by the COC/financial creditors, informing that Liberty failed to act as per the approved Resolution Plan. The Adjudicating Authority directed the reconstitution of the COC for reconsideration of the Resolution Plan submitted by DVI. The COC invited fresh applications, and DVI’s revised plan was eventually approved by the COC with a 70% majority. 4. Non-Implementation of DVI's Plan: Despite the approval by the Adjudicating Authority and the dismissal of appeals against the approval, DVI did not act as per the approved Resolution Plan. The COC filed a Contempt Petition against DVI, and DVI filed an application for rectification of the earlier order, which was dismissed by the Supreme Court. 5. Legal Proceedings and Appeals: The Supreme Court stayed the liquidation proceedings and permitted the resolution professional to invite fresh offers. The approved Resolution Plan by DVI was to be implemented, but DVI attempted to withdraw, leading to further legal proceedings. The Supreme Court directed that the appeal filed by DVI against the approval of the resolution plan be heard and disposed of by the appellate authority within a month. 6. Contempt Proceedings: The Supreme Court observed that DVI’s conduct was not bona fide and that their application for rectification was an attempt to renege from the resolution plan. However, the court decided not to invoke contempt jurisdiction but emphasized that DVI should not set up a plea of force majeure in the pending proceedings. 7. Directions for Timely Implementation: The Supreme Court directed that the approved resolution plan be implemented within four weeks. It was noted that DVI had transferred ?500 crores to the bank account of Amtek Auto Limited, and the Implementation and Monitoring Committee (IMC) was constituted to supervise the implementation. The court stressed the importance of completing the resolution process within the stipulated time to avoid defeating the purpose of the IBC. Conclusion: The Supreme Court directed all concerned parties to implement the approved resolution plan within four weeks, emphasizing the necessity of adhering to the timelines stipulated under Section 12 of the IBC. The appeal was disposed of with specific instructions for the transfer of funds and mutual performance of obligations by both parties.
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