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2023 (2) TMI 400 - AT - Insolvency and BankruptcySeeking approval of Resolution Plan - HELD THAT - When we look into the reasons given by the Adjudicating Authority for passing the impugned order, it is clear that the Adjudicating Authority has relied on the pleas taken up by several Applicants and the CoC that due to pandemic (COVID-19) large number of Applicants could not come forward to give a good offer and after pandemic, now large number of Applicants have now approached the Adjudicating Authority, showing their willingness to submit a Plan for higher value. The CoC has also expressed its no objection for receiving and entertaining the Applicants. The question whether the CIRP which was finalized during the Covid-19, is liable to be discarded on the spacious ground that Plan was approved during the Covid-19 period, has to be answered in negative. Before the Hon ble Supreme Court in Ebix Singapore 2021 (9) TMI 672 - SUPREME COURT , the Successful Resolution Applicant under the Resolution Plan wanted to withdraw from the Plan and has also raised the plea on the basis of Covid-19. The Hon ble Supreme Court noted the aforesaid submission, but held that although Covid-19 had significant impact on the business of the Corporate Debtor, but the legislative intent of the statute cannot be overridden by the Court. The present is not a case where in the process, which was completed by approval of the Resolution Plan by the CoC any breach has been committed. When after following the provisions of the Code and Regulations, the Resolution Plan has been approved by the Adjudicating Authority, the said approval by the CoC has to be respected and cannot be interfered with in exercise of judicial review by the Adjudicating Authority. More so, when there is no such ground that the Plan approved, violates any of the provisions of Section 30, sub-section (2). The object of IBC is to revive the Corporate Debtor and put it again on the track. When a Resolution Plan, has been approved after due deliberations, in exercise of commercial wisdom of the CoC, it has to be accepted that Corporate Debtor was decided to be revived by the Resolution Plan. The CoC being satisfied that financial offer given by the Applicant is satisfactory, exercise their commercial wisdom, even CoC cannot be allowed to change its view, since it is bound by its own decision taken in approving the Resolution Plan. Present is not a case where the CoC is pointing out any breach of procedure or manifest error in their approval of the Resolution Plan, which may be a ground to be pressed before the Adjudicating Authority. The CoC after full consideration has approved the Plan and the financial offer made by the Applicant in the Plan - The Corporate Debtor has to be revived with speed and in timelines, which has been prescribed in the CIRP. Once, the said object is achieved, the same shall not be allowed to frustrate on the grounds, which have been raised before the Adjudicating Authority in the present case. We may notice that in this Appeal, an interim order was passed on 21.09.2022, staying the further process in pursuance of the impugned order dated 06.09.2022, which order is still continued. The impugned order is set aside. The matter is remitted to the Adjudicating Authority to pass fresh order filed by the RP for the approval of the Resolution Plan - Appeal allowed.
Issues Involved:
1. Whether the Adjudicating Authority erred in remitting the Resolution Plan for reconsideration before the CoC. 2. Whether the CoC can change its stance and request reconsideration of the Resolution Plan after its approval. 3. Whether the impact of COVID-19 on the hotel industry justifies reconsideration of the Resolution Plan. 4. Whether the principle of maximization of value of the Corporate Debtor permits reconsideration of the Resolution Plan after its approval. Issue-wise Detailed Analysis: 1. Whether the Adjudicating Authority erred in remitting the Resolution Plan for reconsideration before the CoC: The Appellate Tribunal observed that the Adjudicating Authority committed an error by remitting the Resolution Plan for reconsideration before the CoC. The Tribunal emphasized that once the CoC has approved the Resolution Plan, it is binding inter se the CoC and the Successful Resolution Applicant. The Tribunal referred to the judgment of the Hon'ble Supreme Court in *Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited and Anr* - (2021) SCC OnLine 707, which stated that a Resolution Plan, even prior to the approval of the Adjudicating Authority, is binding between the CoC and the Successful Resolution Applicant. The Tribunal concluded that the Adjudicating Authority's decision to remit the Plan for reconsideration was not in accordance with the scheme of the IBC and CIRP Regulations. 2. Whether the CoC can change its stance and request reconsideration of the Resolution Plan after its approval: The Tribunal held that the CoC cannot change its stance and request reconsideration of the Resolution Plan after its approval. The Tribunal noted that the CoC, during the pendency of the Application for approval of the Resolution Plan, cannot have a change of heart and cannot be permitted to contend before the Adjudicating Authority that the Resolution Plan be sent back for reconsideration. The Tribunal emphasized that the Resolution Plan approved by the CoC is binding and the CoC cannot be allowed to ask for reconsideration since it is bound by its own decision taken in approving the Resolution Plan. 3. Whether the impact of COVID-19 on the hotel industry justifies reconsideration of the Resolution Plan: The Tribunal rejected the argument that the impact of COVID-19 on the hotel industry justifies reconsideration of the Resolution Plan. The Tribunal referred to the Hon'ble Supreme Court's observation in *Ebix Singapore*, which acknowledged the significant impact of COVID-19 on businesses but held that the legislative intent of the IBC cannot be overridden by the Court. The Tribunal concluded that the mere fact that the Resolution Plan was approved during the COVID-19 period does not justify its reconsideration. 4. Whether the principle of maximization of value of the Corporate Debtor permits reconsideration of the Resolution Plan after its approval: The Tribunal acknowledged that the maximization of value of the Corporate Debtor is an object of the CIRP but emphasized that this objective must be achieved within the timeline provided in the scheme. The Tribunal held that the maximization of value cannot be a ground for reopening the CIRP process after its completion and the approval of the Resolution Plan by the CoC. The Tribunal stated that permitting reconsideration based on higher offers received after the approval of the Resolution Plan would lead to an unending process, which is against the scheme of the IBC. Conclusion: The Tribunal concluded that the Adjudicating Authority committed an error in passing the impugned order and set aside the order. The matter was remitted to the Adjudicating Authority to pass a fresh order on IA No./851/AHM/NCLT/2020 filed by the RP for the approval of the Resolution Plan within a period of three months. The appeal was allowed with no order as to costs.
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