2023 (1) TMI 109 - AT - Insolvency and Bankruptcy

Restraint on Committee of Creditors from considering the Resolution Plan of the 3rd Respondent - seeking consideration of resolution plans which are already received including that of the 3rd Respondent - HELD THAT - This Tribunal, simpliciter, in the instant Appeal, without expressing any opinion on the Merits of the matter, one way or the other, and not delving deep, permits the Appellant/ Applicant to raise all available factual and legal pleas, before the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I), including the aspect of raising such necessary pleas concerning the recent Order, about which the Appellant / Applicant is aggrieved, viz., in respect of the impugned order passed by the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I). The Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I) shall expressly permit the Appellant / Applicant to raise those pleas (both on Facts and in Law), which are available to it, before the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I), at the time of Hearing in a conclusive manner and after providing an opportunity of Hearing to the other side, by adhering to the Principles of Natural Justice, is to pass a fair, just and a reasoned Order (speaking one) on Merits, by adverting to the pleas raised by countering them and to pass final Orders, of course, uninfluenced and untrammelled with any of the observations made by this Tribunal. Appeal disposed off.

Issues:
1. Validity of the impugned order dated 17.10.2022
2. Appointment of Resolution Professional and selection of successful bidder
3. Allegations of fraudulent conduct and coalition between Group businesses
4. Disagreement between members of the Adjudicating Authority
5. Challenge to the decision in the Committee of Creditors meeting
6. Judicial review of the impugned order
7. Challenge to the validity of certain sections of the Insolvency & Bankruptcy Code

Analysis:
1. The judgment concerns the validity of the impugned order dated 17.10.2022 passed by the Adjudicating Authority in a matter related to the Corporate Insolvency Resolution Process (CIRP). The Appellant challenges the legality and correctness of the order, which directed the Committee of Creditors to consider the Resolution Plan of the Third Respondent. The Adjudicating Authority dismissed the Application, allowing the Committee of Creditors to proceed with the resolution plans already received.

2. The dispute involves the appointment of a Resolution Professional and the selection of a successful bidder for the repair and maintenance work of the Corporate Debtor. Allegations were raised regarding the Resolution Professional's prior association with a specific group, leading to concerns about non-disclosure and unfair practices in the selection process.

3. The issue of fraudulent conduct and coalition between various Group businesses emerged, with one member of the Adjudicating Authority finding the Corporate Insolvency Resolution Process to be tainted. This member directed the Committee of Creditors not to consider the Resolution Plan submitted by the Third Respondent, citing fraudulent contacts.

4. The judgment highlights a disagreement between the members of the Adjudicating Authority, where the Judicial Member and the Technical Member held differing views on whether the Committee of Creditors could be restrained from considering the Resolution Plan of the Third Respondent. This divergence led to the matter being referred to a third member for resolution.

5. The Appellant also challenged the decision taken in the Committee of Creditors meeting, seeking to set aside the appointment of the Third Respondent as the successful Resolution Applicant. The Appellant requested the setting aside of the Letter of Intent issued to the Third Respondent and called for a fresh Resolution Plan for the Corporate Debtor.

6. The judgment discusses the judicial review of the impugned order and the subsequent appeal filed by the Appellant. The Adjudicating Authority was directed to permit the Appellant to raise all available defenses before it, including challenging the recent order and expressing grievances related to the decision taken in the Committee of Creditors meeting.

7. Additionally, the judgment briefly touches upon a challenge to the validity of certain sections of the Insolvency & Bankruptcy Code, raised in a separate writ petition before the Supreme Court of India. The Supreme Court dismissed the petition, emphasizing the importance of satisfying locus and bonafides in such challenges.

In conclusion, the judgment addresses multiple complex issues related to the Corporate Insolvency Resolution Process, including appointment procedures, selection of bidders, allegations of fraudulent conduct, disagreements within the Adjudicating Authority, challenges to decisions in Committee of Creditors meetings, and judicial review of orders. The detailed analysis provides insights into the legal intricacies and procedural aspects involved in the case.

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