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2022 (11) TMI 1193 - AT - Insolvency and BankruptcyJurisdiction - power of Adjudicating Authority to extend the time lines for making payments as per approved Resolution Plan - violation of principles of natural justice or not - validity of order for fresh Corporate Insolvency Resolution Process when the Successful Resolution Applicant has claimed to be in position to implement the Resolution Plan, albeit, beyond the schedule as stipulated in the Resolution Plan - failure to comply extended time lines permitted vide order dated 13.04.2022 as well as after dismissal of appeal filed by one Operational Creditor before the Hon ble Supreme Court of India. Whether the Adjudicating Authority has got the sufficient power to extend the time lines for making payments as per approved Resolution Plan and if so, whether in the present case this power was exercised or otherwise by the Adjudicating Authority correctly? - HELD THAT - This Appellate Tribunal consciously notes that powers of the Adjudicating Authority has been clearly defined in Section 31 of the I B Code, 2016 (discussed earlier) and there is no specific provision authorising the Adjudicating Authority to consider such extensions of time lines. This Appellate Tribunal again observes that the objective of I B Code, 2016 is Resolution as well as Maximisation the value of the assets of the Corporate Debtor and take care of interest of all stake holders and not limited to one stake holder or one set of stake holders. In view of the provisions as stipulated in the I B Code, 2016. Specific provisions of time lines of 90 days from the effective dates and subsequent additional 60 days as the outer limit provided in Resolution Plan. Specific proviso in Resolution Plan that after 90 60 days if settlement payment is not made money already been paid is liable to be forfeited. Failure to comply even extended time lines of three months given by this Appellate Tribunal. This Appellate Tribunal do not find any error in the impugned order on this aspect. While observing this, this Appellate Tribunal has also factored into the ratio provided by the Hon ble Supreme Court of India that commercial wisdom of Committee of Creditor is supreme and there is limited scope for judicial intervention by the Adjudicating Authority or the Appellate Tribunal. Hence, this Appellate Tribunal upholds the decision of the Adjudicating Authority on this issue. Whether the Adjudicating Authority violated the principals of natural justice in the present case? - HELD THAT - The Adjudicating Authority seems to be right in observing that there was no application for initiation of liquidation and the application of Appellant in I.A. No. 655 of 2022 is incorrect and accordingly was dismissed by the Adjudicating Authority - Taking into account the averments made by the both the parties and the reasons accorded by the Adjudicating Authority while disposing relevant I.A. No. 654 655 of 2022, this Appellate Tribunal do not find any reason to intervene the impugned order on this account. Whether the Adjudicating Authority could have ordered for fresh Corporate Insolvency Resolution Process when the Successful Resolution Applicant has claimed to be in position to implement the Resolution Plan, albeit, beyond the schedule as stipulated in the Resolution Plan? - HELD THAT - It is a fact that the timely resolution is very important in case the value of the Corporate Debtor is required to be preserved and in order to ensure maximisation of value of assets of the Corporate Debtor. This Appellate Tribunal has also noted that pursuant to the Adjudicating Authority order for fresh Corporate Insolvency Resolution Process, the 1st Respondent has already issued fresh Form-G on 19.09.2022 inviting fresh Expression of Interest from prospective Resolution Applicants and any interference at this stage will hamper the entire process and perhaps may lead to liquidation which is practically death knell of the Corporate Debtor. In view of all above, this Appellate Tribunal do not find any error in the impugned order on this account. Whether, the Appellant exhausted legal remedies in view of failure to comply extended time lines permitted vide order dated 13.04.2022 as well as after dismissal of appeal filed by one Operational Creditor before the Hon ble Supreme Court of India challenging this Appellate Tribunal s order? - HELD THAT - Prima-facie, it looks that the Appellant had taken all the legal remedies available to it including various Interlocutory Applications filed before the Adjudicating Authority, appeal made to this Appellate Tribunal and upholding this Appellate Tribunal order by the Hon ble Supreme Court of India filed by one of the Operational Creditor (and not the Appellant). As such, no further scope is available to this Appellate Tribunal to invoke any of the provisions available under I B Code, 2016, to give any further relief to the Appellant, at this juncture. This Appellate Tribunal is of the considered opinion that there is no error, in the impugned order dated 05.09.2022, passed by the Adjudicating Authority - Appeal dismissed.
Issues Involved:
1. Extension of timelines for making payments as per the approved Resolution Plan. 2. Violation of the principles of natural justice. 3. Ordering a fresh Corporate Insolvency Resolution Process (CIRP). 4. Exhaustion of legal remedies by the Appellant. Issue-wise Detailed Analysis: Issue 1: Extension of Timelines for Making Payments as per the Approved Resolution Plan The core issue was whether the Adjudicating Authority had the power to extend the timelines for making payments as per the approved Resolution Plan and if the power was exercised correctly. The Tribunal noted the specific provisions of the Insolvency & Bankruptcy Code, 2016 (I&B Code), which govern the submission and approval of the Resolution Plan. The objective of the I&B Code is to maximize the value of the Corporate Debtor's assets and ensure timely resolution. The approved Resolution Plan defined the "Effective Date" as the date of approval by the Adjudicating Authority, which was 01.10.2021. The Appellant argued that the effective date should be 25.10.2021, the date the order was uploaded, but this was not accepted. The Resolution Plan included a provision for interest on delayed payments and forfeiture of payments made in case of default beyond 60 days. The Appellant failed to make the required payment of Rs. 501 crores within 90 days of the effective date and even after the extended period granted by the Tribunal. The Tribunal emphasized that the commercial wisdom of the Committee of Creditors (CoC) is supreme and judicial intervention should be minimal. Therefore, the Tribunal upheld the Adjudicating Authority's decision, finding no error in the impugned order. Issue 2: Violation of the Principles of Natural Justice The Appellant claimed that the Adjudicating Authority violated the principles of natural justice by not considering their Impleadment Application (I.A. No. 655 of 2022) and Direction Application (I.A. No. 654 of 2022) properly. The Tribunal noted that the Adjudicating Authority had factored in these applications and recorded that they had become infructuous due to non-payment by the Appellant. The Adjudicating Authority observed that it did not have further power to extend the timelines once the extended period granted by the Tribunal was over. The Tribunal found that the Adjudicating Authority had provided adequate reasons for its decisions and did not violate the principles of natural justice. Issue 3: Ordering a Fresh Corporate Insolvency Resolution Process The Tribunal examined whether the Adjudicating Authority could order a fresh CIRP when the Successful Resolution Applicant claimed to be in a position to implement the Resolution Plan beyond the stipulated schedule. The Tribunal noted that the Appellant was required to settle all payments within 90 days and an additional 60 days, and even after an extended period granted by the Tribunal, the Appellant failed to comply. The Tribunal emphasized the importance of timely resolution to preserve the value of the Corporate Debtor. Given that the Appellant had not settled around 90% of its liabilities, the Tribunal found no error in the Adjudicating Authority's order for a fresh CIRP. Issue 4: Exhaustion of Legal Remedies The Tribunal considered whether the Appellant had exhausted legal remedies after failing to comply with the extended timelines. The Tribunal noted that the Appellant had taken all available legal remedies, including various Interlocutory Applications and appeals. The Hon'ble Supreme Court of India had dismissed an appeal filed by an Operational Creditor challenging the Tribunal's order, indicating that the Appellant had no further scope for relief. Consequently, the Tribunal found no basis to grant any further relief to the Appellant. Conclusion: The Tribunal concluded that there was no error in the impugned order dated 05.09.2022 passed by the Adjudicating Authority. The appeal was dismissed as devoid of merit, and all connected pending Interlocutory Applications were closed.
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