2022 (8) TMI 932 - AT - Insolvency and Bankruptcy

Resolution Plan approved, with some modifications - forwarding all records relating to conduct of the corporate insolvency resolution process and the resolution plan to the IBBI to be recorded on its database - section 31(1) of I B Code - HELD THAT - Hon ble Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited Ors. 2021 (4) TMI 613 - SUPREME COURT has held that once a resolution plan is duly approved by the Adjudicating Authority Under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. This appeal is covered by the aforesaid judgement - the impugned order is hereby affirmed - appeal dismissed.

Issues Involved:
1. Approval of resolution plan with modifications by the Adjudicating Authority.
2. Dispute regarding contract for Automated Fare Collection System (AFCS) between the parties.
3. Appointment of Resolution Professional and valuation of Corporate Debtor.
4. Allegations of misrepresentation and non-adherence to contract terms.
5. Appeal challenging the approval of Resolution Plan by the Adjudicating Authority.

Issue 1: Approval of resolution plan with modifications by the Adjudicating Authority

The Appellant filed an Appeal against the order of the Adjudicating Authority approving the resolution plan with modifications. The Adjudicating Authority directed the resolution professional to forward all records to the Insolvency and Bankruptcy Board of India (IBBI) and approved the Resolution Plan under section 31(1) of the Insolvency and Bankruptcy Code. The Appellant was aggrieved by this decision and sought relief through the Appeal.

Issue 2: Dispute regarding contract for Automated Fare Collection System (AFCS) between the parties

The Appeal stemmed from a contract dispute between the parties concerning the design, development, installation, and maintenance of an Automated Fare Collection System (AFCS) for buses. The Appellant issued a tender to the Respondent, and various issues arose regarding the performance, delays, and penalties under the contract. The Respondent faced allegations of deficiencies and delays, leading to significant pre-estimated damages being levied against them.

Issue 3: Appointment of Resolution Professional and valuation of Corporate Debtor

Following a petition under Section 7 of the Insolvency and Bankruptcy Code, the Adjudicating Authority admitted the liability of the Corporate Debtor and appointed an Interim Resolution Professional (IRP). Valuers were appointed to determine the fair value and liquidation value of the Corporate Debtor. The Resolution Professional faced challenges in addressing penalty details and including the Appellant's claims in the Resolution Plan.

Issue 4: Allegations of misrepresentation and non-adherence to contract terms

The Respondent raised allegations of misrepresentation, non-adherence to compliance, and incorrect disclosure against the Appellant. Disputes arose regarding the performance of the project, payment terms, and deployment of services as per the contract. The Appellant responded to these allegations and reminded the parties of their contractual obligations.

Issue 5: Appeal challenging the approval of Resolution Plan by the Adjudicating Authority

The Appellant challenged the approval of the Resolution Plan by the Adjudicating Authority, alleging material illegality and irregularity in the submission of the Plan. The Appellant contended that the Resolution Plan failed to include the amounts owed to them by the Corporate Debtor, and they were not adequately represented in the Committee of Creditors. The Respondents argued that since the Resolution Plan was approved, there was no merit in the Appeal.

In the final judgment, the Appellate Tribunal affirmed the decision of the Adjudicating Authority based on the principles laid down by the Supreme Court regarding the approval of resolution plans. The Appeal was dismissed, and the impugned order was upheld, emphasizing the binding nature of approved resolution plans on all stakeholders involved.

← Previous Next →