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2025 (3) TMI 851 - AT - IBCConsideration of resolution plan submitted by respondent by the Committee of Creditors (CoC) - applicability and interpretation of Regulation 36B(6) and Regulation 39(1B) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 - HELD THAT - Sub-Regulation 6 provides the RP with the approval of the committee extend the timeline for submission of the plan which pre-suppose that the CoC has to agree for extension of timeline. The present is a case where timeline was extended from 05.02.2024 to 14.02.2024 and all PRAs were informed that 14.02.2024 is the last date for last extension. In the present case after plan was sent by Respondent No. 1 the RP placed the resolution plan of the receipt from the appellant before the CoC in its meeting dated 16.02.2024. There is one more relevant fact which need to be noticed subsequent to the decision of the CoC on 16.02.2024 and 17.02.2024 CoC decided to conduct a challenge process on 23.04.2024 which was completed on 29.04.2024 in which the appellant was declared as H 1 bidder. The Respondent No. 1 had not been invited to participate in the challenge process nor he could have been invited it was already decided for not to accept the plan. Application filed by Respondent No. 1 was allowed subsequent to completion of challenge process on 29.04.2024 in which the appellant has declared as H 1 bidder. There was no sufficient ground on basis of which the Adjudicating Authority could have allowed the application filed by Respondent No. 1 and issued direction to the CoC. Conclusion - The CoC did not commit an error in considering the late receipt plan of Respondent No. 1 and deciding not to consider the plan which was in accordance with the statutory regulation. The Adjudicating Authority could not have interfered with the decision of the CoC which was taken in the commercial wisdom after considering all the relevant facts and circumstances. Sufficient ground has been made out to allow the appeal. Appeal is allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Consideration of a Late-Submitted Resolution Plan Relevant Legal Framework and Precedents: The relevant legal framework includes Regulation 36B(6) and Regulation 39(1B) of the CIRP Regulations, 2016. Regulation 36B(6) allows the resolution professional (RP), with the CoC's approval, to extend the timeline for submission of resolution plans. Regulation 39(1B) prohibits the CoC from considering any resolution plan received after the specified timeline. Court's Interpretation and Reasoning: The Tribunal noted that the CoC had extended the deadline for submission of resolution plans from 05.02.2024 to 14.02.2024. The Respondent No. 1 submitted the plan on 15.02.2024, which was after the extended deadline. The CoC, exercising its commercial wisdom, decided not to accept the late-submitted plan. Key Evidence and Findings: The CoC's decision was based on the fact that the plan was submitted after the deadline, and the Earnest Money Deposit (EMD) was also received late. The Tribunal found that the CoC had deliberated on the issue and decided against accepting the late submission. Application of Law to Facts: The Tribunal applied Regulation 39(1B), which prohibits consideration of plans received after the deadline, to uphold the CoC's decision. The Tribunal found that the CoC's decision was in compliance with the statutory regulation. Treatment of Competing Arguments: The Respondent No. 1 argued that the delay was due to not receiving necessary documents in time, and that maximizing the value of the corporate debtor should allow for consideration of the plan. However, the Tribunal emphasized the CoC's commercial wisdom and the statutory prohibition against considering late submissions. Conclusions: The Tribunal concluded that the CoC acted within its rights and commercial wisdom in deciding not to accept the late-submitted plan. The Adjudicating Authority's direction to consider the plan was set aside. Issue 2: Interference with CoC's Commercial Wisdom Relevant Legal Framework and Precedents: The Tribunal referenced the Supreme Court's decision in 'Kalparaj Dharamshi' and other relevant cases, which emphasize the limited scope of interference with the CoC's commercial decisions. Court's Interpretation and Reasoning: The Tribunal reiterated that the CoC's commercial decisions should not be interfered with unless there is a clear violation of statutory provisions or arbitrariness. Key Evidence and Findings: The CoC had considered the late submission and decided not to accept it, which was a decision based on its commercial wisdom. The Tribunal found no arbitrariness or statutory violation in the CoC's decision. Application of Law to Facts: The Tribunal applied the principle of non-interference with the CoC's commercial decisions, as established in precedent, to uphold the CoC's decision. Treatment of Competing Arguments: The Respondent No. 1's argument for considering the plan for value maximization was weighed against the statutory framework and the CoC's decision. The Tribunal sided with the statutory framework and the CoC's wisdom. Conclusions: The Tribunal concluded that the Adjudicating Authority erred in interfering with the CoC's decision, which was within its commercial discretion and aligned with statutory regulations. 3. SIGNIFICANT HOLDINGS Verbatim Quotes of Crucial Legal Reasoning: "The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code." Core Principles Established: The Tribunal reinforced the principle that the CoC's commercial decisions, particularly regarding the acceptance of resolution plans, should not be interfered with by the Adjudicating Authority unless there is a clear statutory violation or arbitrariness. Final Determinations on Each Issue: The Tribunal set aside the Adjudicating Authority's order directing the consideration of the late-submitted resolution plan by the CoC. The appeal was allowed, and the CoC's decision was upheld as compliant with the CIRP Regulations, 2016.
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