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2022 (9) TMI 912 - AT - Insolvency and BankruptcySeeking consideration of belated resolution plan submitted by the Respondents No.6 to 8 - Section 31 of the I B Code, 2016 - HELD THAT - The Appellant rightly invoked the jurisdiction of the Adjudicating Authority seeking approval of Resolution Plan of the 5th Respondent which was approved by the CoC on 11.02.2020. The CoC in their commercial wisdom and by exercising the powers under sub-section (4) of Section 30 of the I B Code approved the Resolution Plan with 100% voting share, though as per the provision 66% of the voting share of the CoC, meets the requirement for approval of Resolution Plan. After approval of the Resolution Plan by the CoC, the Resolution Professional shall submit the resolution plan to the Adjudicating Authority for its approval under sub-section (6) of Section 30 of the Code. The power vested in the Adjudicating Authority, that it shall approve the Resolution Plan if it is satisfied that the plan has been approved by the CoC and meets the requirements or reject the Resolution Plan under sub-section (2) of Section 31 of the Code. Other than this the Adjudicating Authority simply cannot dispose of the application without considering the same on merits. The Adjudicating Authority miserably failed in exercising the powers vested in it and passed a cryptic and unreasonable order, this Tribunal is of the view that the said order is illegal and without application of mind. This Tribunal does not find any justification in passing the above impugned order when an application is pending for considering before the same Adjudicating Authority for approval of resolution plan. When an application is filed before the Adjudicating Authority seeking approval of Resolution Plan, meaning thereby the resolution process with respect to Corporate Debtor is in advance stage by overcoming the engrossing process as enshrined under the I B Code from the date of initiation of CIRP against the Corporate Debtor till the approval of Resolution Plan - It is apt to note that the once Resolution Plan is approved by the CoC with requisite voting share i.e. 66%, in the present case, the CoC voted with 100% voting share in approving the Resolution Plan and the same is binding and irrevocable as between the CoC and the Successful Resolution Applicant. This Tribunal unequivocally comes to a resultant conclusion that the impugned order passed is per se illegal, without application of mind, the same is set aside - Appeal allowed.
Issues Involved:
1. Whether the Adjudicating Authority erred in disposing of I.A. No. 161/2020 without considering it on merits. 2. Whether the Adjudicating Authority's directions to the RP to place the belated resolution plan by Respondents No. 6 to 8 before the CoC were justified. 3. Whether the extension of the CIRP period by the Adjudicating Authority was valid. Issue-wise Detailed Analysis: 1. Disposition of I.A. No. 161/2020 without Merits: The Appellant contended that the Adjudicating Authority erred by disposing of I.A. No. 161/2020 without considering it on its merits. The application sought approval for the resolution plan submitted by the 5th Respondent, which had been approved by the CoC with a 100% voting share. The Adjudicating Authority simply stated that the application was "deemed to be disposed of" without providing any reasons or analysis. The Tribunal found this approach to be a failure in exercising judicial powers, deeming the order cryptic and unreasonable. 2. Directions to Place Belated Resolution Plan by Respondents No. 6 to 8 Before the CoC: The Adjudicating Authority directed the RP to place the resolution plan submitted by Respondents No. 6 to 8 before the CoC for consideration, despite the plan being submitted after the CIRP period had lapsed. The Tribunal highlighted that the Respondents No. 6 to 8 had initially withdrawn from the process and submitted their plan belatedly. The Tribunal noted that once the CoC approves a resolution plan with the requisite voting share, it becomes binding and irrevocable. The Adjudicating Authority's direction to consider a new plan at this stage was seen as an attempt to reopen the CIRP, which contradicts the time-bound nature of the process. 3. Extension of the CIRP Period: The Adjudicating Authority extended the CIRP period, citing the Covid-19 pandemic and lockdowns as reasons. However, the Tribunal pointed out that the outer limit for the CIRP is 330 days, as per the IBC, and can only be extended in exceptional cases. The Tribunal found no exceptional circumstances justifying the extension in this case. The extension was deemed arbitrary and beyond the Adjudicating Authority's jurisdiction. Conclusion: The Tribunal concluded that the Adjudicating Authority's order was illegal and without application of mind. It set aside the impugned order and directed the Adjudicating Authority to consider the plan of the Successful Resolution Applicant (5th Respondent) within four weeks, in accordance with the law. The interim order granted by the Tribunal on 03.08.2021 was made absolute, and the appeal was allowed with no order as to costs.
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