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TMI Blog2018 (5) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... ndeavour to submit a resolution plan 30 days before the expiry of the maximum period permitted under Section 12 for completion of the C1R Process. It is evident that a resolution applicant could submit its plan 30 days before expiry of the maximum period permitted under Section 12. In the present case, after issuance of public notice in print media on 21.09.2017 the Resolution Professional has not issued any other public notice notifying the criteria which might have been laid down by the Committee of Creditors. If no new public notice notifying the criteria finalized by CoC in terms of amendment is issued, then the original public notice would prevail with regard to the period for receipt of Resolution Plan application. The resolution plan in the present case was submitted on 20.02.2018. The period of 180 days was extended to 270 days on an application filed by the Resolution Professional under Section 12 (2) vide order dated 22.12.2017. The period of 270 days admittedly would be expiring on 22.04,2018. If we apply the aforesaid yardstick then the decision of the CoC in its meeting dated 21.02.2018 would not be sustainable. In the present case the process which has starte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the applicant on 20.02.2018 on the ground that it was delayed. The Liberty House has placed on record a copy of the impugned letter dated 22.02.2018 (diary No. 1024 dated 23.02.2018) after filing of the application. An additional affidavit dated 01.03.2018 placing on record copies of the affidavits, emails, copies of documents required by Resolution Professional (for brevity RP ) and confidentiality undertaking sent to the RP were placed on record. 2. In response to notice of motion having been issued reply by RP has been filed on 05.03.2018 (diary number 1178). A separate reply has been filed by Tata Steel Limited (for brevity TSL ) on 05.03.2018 (diary No. 1168). RP had also filed a Caveat application on 22.02.2018 (diary No.983). Another separate reply has been filed on behalf of the CoC on 01.03.2018 (diary No. 1156). The applicant has also filed rejoinder to the reply filed by the Resolution Plan Applicant- TSL on 05.03.2018 (diary No. 1179). 3. Before embarking upon the issues raised in the application a brief background of the events needs to be noticed for appreciating the contention raised by the parties. The main application namely CP No.(IB) 202 PB of 2017 was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Memorandum as required u/s 29 of the Code was prepared by RP which was supposed to contain all requirements concerning documents and information needed to be supplied to RP by a Resolution applicant to facilitate submission of proposals/resolution applications. The liquidation value of the assets of BPSL as per Regulation 36 was determined at ₹ 9500/- crores (approx). 6. The applicant Liberty House sent its formal EOI dated 12.11.2017 alongwith email dated 13.11.2017. In the email the applicant Liberty House has stated that it is a part of Gupta family group alliance and it would like to participate in the CIR process of BPSL in accordance with the provision of the Code; and that the formal expression of interest was forwarded with a request to RP to place it before the CoC. It was further stated that audited consolidated financial statements for the year ending 31.03.2017 and its latest corporate brochure was being sent in the next two emails due to constraint of size of those documents. It was also stated that they got confused with regard to the deadline and missed out the submission of EOI within the first deadline. Accordingly, it requested the COC to accept it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 18.11.2017 replied to the email of the Liberty House and called upon the applicant to submit documents including confidentiality undertaking, Memorandum of Association, Article of Association, Incorporation documents etc. On 20.11.2017 RP expressed his thanks to the Liberty House for submitting its EOI and asked for further information and formalities for issuance of RPF and grant of access to documents. He offered to schedule site visit confirming thereby that the Liberty House was one of the prospective resolution applicant. A copy of email dated 18.11.2017 sent by RP is on record (annexure -7) and email dated 20.11.2017 is also on record (annexure -8). 11. It is claimed by RP and CoC that the Liberty House was aware about the deadline for submissions of a resolution plan which was upto 08.02.2018. However, it had been extended from time to time and finally fixed for 08.02.2018. On 13.2.2018 Liberty House wrote a letter to RP in categorical terms informing that it was in the process of submitting viable and competitive resolution plan for CIR process. It expressed the belief that resolution plan submitted by Liberty House would be considered strongly by the COC and it would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its financial credentials and backgrounds as well as the background of the GFG Alliance. The applicant craves leave to refer to and rely on the foregoing paragraphs where details of its networth, turnover and other business expertise are set out. The GFG Alliance of which the applicant is a part, has a proven track record of developing the Steel Industry and acquiring and turning around businesses. b. The applicant meets the qualifying criteria furnished to it by the RP and that it is very well placed to act as the resolution applicant and participate in the insolvency resolution process for the BPSL. The applicant has submitted a highly competitive resolution plan and is reasonably sure that if its plan is accorded due consideration the plan would succeed in as much as the applicant is a global giant in the relevant sector of power and steel. c. The applicant had put together all information it deemed relevant and on that basis formulated a resolution plan that was submitted to the RP. It is submitted that the resolution plan conforms to all the requirements of the law to the best understanding of the Liberty House. The applicant being a foreign company incorporated in Singa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration by the CoC any further information is required to be added and/or the plan itself is required to be updated, the applicant undertakes to do so promptly. h. Whilst it was in the midst of putting finishing touches to its resolution plan, the applicant came to know that the deadline for submission of resolution plan, which had been extended from time to time, stipulated as 08.02.2018. Immediately on finding this out, on 13.02.2018, the applicant wrote a letter to the RP categorically intimating that it was in the process of submitting a viable and competitive resolution plan for the corporate debtor/respondent and that it is in a position to submit a resolution plan which the CoC would consider very viable. The applicant further stated that their plan would be in the interest of all stakeholders, in particular lenders, as the ultimate goal of the process is to have the best and most competitive resolution plan for the company in public interest. Having not received any response, the applicant extended further resources and on 20.2.2018 submitted its resolution plan. i. The period of 270 days for the corporate insolvency resolution process for the respondent shall e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 (Annexure-13) and confidentiality undertaking (Annexure-15), Reply-CoC 16. In the reply filed by COC it is claimed that COC has taken every precaution to ensure a fair, transparent and open process with the object of maximizing the value and allow for approval of a successful resolution plan within a specified timeline fixed under the Code. Every opportunity has been given to all the interested parties to put forward their interest and claim. 17. Referring to the changes, the COC has averred that some changes were brought about by IBBI with respect to the eligibility of the resolution applicants by amending the Regulation which were incorporated appropriately in the process documents and thereby it ensured compliance with the amended Regulations. It is alleged that Liberty House-applicant has failed to comply with the timeline right from the beginning and acceptance of its application would derail the entire CIR process and prejudice the interest of the existing resolution plan applicants. It will open floodgates to new resolution applicants to submit resolution plan till the last date of finalisation of resolution plan and that the existing resolution plan applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Annexure A). It has also concealed the fact of another email sent by RP on 08.12.2017. The time for submission of affidavit under section 29A and the required documents was extended for further period of 10 days and it was to end on 18.12.2018. A copy of the email is placed on record (annexure-B). No affidavit till date has been submitted by the Liberty House. It is claimed that on account of the aforesaid non-compliances the Liberty House is not eligible to submit the resolution plan, 20. The process document giving details of the terms and conditions and timelines for submission of resolution plan by the resolution applicant was issued on 14.12.2017 and it was made available to only those who were qualified resolution applicants and had submitted the confidentiality undertaking and the requisite fee of ₹ 10 lakh. The Liberty House having not submitted those documents and the demanded fee therefore, it was not allowed access the process document. 21. The CoC has also pleaded that the last date for submission of the resolution plan was fixed as 10.01.2018 which was revised to 28.01.2018 vide an addendum dated 3.1.2018. The last date was again revised to 08.02.2018 vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s favour. Reply py RP 27. A separate reply by RP has been filed which is similar to the one filed by CoC. It has been reiterated that application of the Liberty House is not maintainable for the following reasons:- (a) Fulfilment of the prescribed qualification criteria is a sine qua non for consideration of resolution plan. (b) The consideration of the resolution plan of the applicant received beyond the prescribed deadline would be a prejudicial and arbitrary act on the part of the resolution professional/Committee of Creditors. (c) No judicial intervention required as the respondent and the Committee of Creditors have followed the due process of law. (d) The applicant has not disclosed material facts and documents which clearly highlight the shortcomings on the part of the applicant. 28. It has been pleaded that consideration of the resolution plan of the applicant would be complete negation of the time line. The RP has stated that wherever stipulated deadline was matter of procedure and did not affect the propriety of the process, the adjustment were procedural matters and were duly relaxed qua the Liberty house-applicant itself. However when the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor provided the non-refundable payment of INR 10,00,000/- for access to the virtual data room, as required by the resolution professional, despite several reminders throughout the CIRP. b. The applicant s bid has come after the last date for submission which was 8.2.2018, as late as on 20.2.2018; and c. The sealed Resolution Plan were opened on 8.2.2018 as per the stipulation in the second addendum dated 26.01.2018. The applicant has, with a view to gaining an unfair advantage over other bidders (including TSL), submitted its bid after the other bids have been opened and material information regarding such other bids had already been reported in the press. 31. The whole CIR process would be prejudiced and derailed. It would set a bad precedent in IBC itself and it would in turn open floodgates to whimsical challenges to CIRP thereby leading to a complete breakdown of a time bound process. The following reasons have been given for dismissing the application: - a. Entertaining the application would penalize law abiding participants in the CIRP and reward and egregious defaulter and violator- such as Liberty House-the applicant b. Any bid now entertained after full kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isplaced. It has been submitted that conflicting and variant reports with regard to the bids amount offered by TSL have been mentioned in the press report ranging from ₹ 11,500/- crores to ₹ 24,500/- crores. Therefore, it is sought to be emphasised that the press reports do not project the correct bidding amount of the two resolution applicants and therefore the liberty house could not have taken any benefit from those process press reports. The Liberty House would not be able to submit its resolution plan based on the report in the media. The other resolution plans are also at consideration stage and no vested right has come into existence merely by submission of the resolution plan. In any case the highest amount proposed by a resolution applicant is not the sole criteria for declaring resolution applicant as a successful resolution applicant till the time CoC formally approves the resolution plan and adjudicating authority acceprthe same under section 30 of the Code. TSL cannot claim any vested right in the present process. TSL in its reply has alleged that Liberty House did not submit its financial report and therefore cannot be regarded as an eligible resolution ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The averment made in the application by the Liberty House have been reiterated and it is controverted that the Liberty House is ineligible and a non serious participant. It is claimed that non opening of resolution plan of the Liberty House is prejudicial not only to itself but to all other stakeholders as it would defeat the purpose of IBC which is to maximize the value of asset. It is also claimed that Liberty House is a turnaround specialist and world renowned player in steel industry. It has globally acquired fame for turning out distress industries while protecting employees and their jobs; and also by creating new jobs. The details of achievement have been listed in a tabulated form. It is also asserted that procedure cannot override the objective of the Code or the larger public interest. It is pleaded that procedure is handmaid of justice and procedural provisions cannot be stretched and considered as mandatory unless it causes serious general inconvenience. A doubt has been raised on the credibility of CoC by submitting that it never deliberated on the resolution plan offered by Liberty House and what was the decision taken on its letter dated 13.02.2018. A reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o been asserted that process document was never ever treated by RP and /or CoC as sacrosanct, mandatory, or binding documents nor the time lines laid down therein has been adhered to. The RP has admitted that the process document was introduced only on 14.12.2017 which is three months after the publication of notice inviting EOI and about four weeks before the resolution plan were to be submitted. Other facts have also been noted in the preceding paras and it would not warrant to repeat the same. 40. We have heard learned counsel for the parties at a considerable length. On behalf of the Liberty House Mr. A.S. Chandhiok, Mr. Anand Chibber and Mr. K. Datta, learned senior counsel have made following submissions:- (i) The Liberty House qualifies the qualification criteria and falls in Category A of the pre qualification criteria (annexure-5). In its EOI it has disclosed adequate data showing fulfilment of pre qualification criteria which shows turnover of more than ₹ 43000 crores and net worth of ₹ 3200 crores for the year ending 31.03.2017. The audited financial statement disclosed a net worth of about US$ 508,456,000 which is equivalent to Rs,3200 crores and com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 12 of the Code. The Regulation 39 was amended by the IBBI on 3 L 12.2017 w.e.f. 01.01.2018. If the provision of new regulation were to be applied then a fresh public notice was required to be issued to highlight the change in section 25(2)(h) and Regulation 39(1). According to amendments made in section 25(2)(h) the RP was required to invite prospective resolution plan applicants who fulfilled such criteria as may be laid down by him with the approval of CoC having regard to the complexity and scale of operations of the business of the corporate debtor. It further provides that such other conditions as may be specified by the IBBI were also required to be fulfilled. In the unamended provisions he was to communicate to the prospective lenders, investors and any other persons to put forward resolution plan a month before the maximum period provided by S. 12 of the Code. It was in the then prevailing regime that no timeline was fixed for submission of resolution plan in the advertisement dated 21.09.2017. The amended regulation 39(1) provides that resolution applicant submitted a resolution plan within time given in the EOI which was made under the then prevailing section 25(2)(h) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Kathpalia learned senior counsel has made following submissions:- (a) The applicant has failed to disclose material facts and documents and on that score alone the application is liable to be dismissed. The suppression of material facts and documents is intentional. According to the learned counsel the applicant has attempted to project its actions as act of good faith whereas it has miserably failed to perform its obligation under EOI. Substantiating his arguments learned counsel has submitted that Liberty House had failed to disclose the factum of submitting the EOI beyond the date prescribed in the advertisement; it has concealed its own mail dated 20.11.2017, acknowledging the email sent by RP on 18.11.2017. It was stated in its mail that RP asked the Liberty House to furnish additional documents and confidentiality undertaking in accordance with the CIRP Regulation and it had undertaken to do the needful. Liberty House failed to submit the affidavits in the format prescribed concerning the provisions of section 29A despite repeated reminders from the RP on 02-12.2017, 08.12.2017 and 16.12.2017. In this regard Mr. Kathpalia has placed reliance on para 10 of the judgment r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id documents and also requested the necessary confidentiality undertaking in accordance with section 29A of the code along with a deposit of ₹ 10 lacs to enable access to VDR containing all the documents with respect to Corporate Debtors necessary for resolution applicant to prepare his comprehensive resolution plan. For a period of 3 months from November to February 2018 no steps were taken by the Liberty House. It is only after crossing the barrier of qualification criteria that stage A of the process is completed and those who qualify were permitted to be promoted to the next stage B. A detailed process and timeline for submissions of resolution plan was to be communicated only then as per the terms of the public notice. All this was done to ensure the timeline and the evaluation matrix was examined which was set up by RP in consultation with CoC. The process document and the VDR were made available only to the serious applicants who have successfully answer the qualification criteria whereas the one who fail to fulfil the qualification criteria were not permitted to have access to process document or to VDR and other information. Liberty House even failed to submit eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan were to be submitted on or before 10.1.2018. This date was later extended twice for those who fulfilled the qualification criteria. The first addendum added with the process document was issued on 3.1.2018 and second addendum was issued on 26.1.2018 which was on account of amendments to the Code and CIRP Regulations. In that regard reference has been made to the Insolvency and Bankruptcy Amendment Ordinance, 2017 which came into force w.e.f. 23.11.2017 and Insolvency and Bankruptcy (Amendment) Act, 2018 w.e.f. 19.1.2018 along with the various corresponding amendments in CIR Regulations. (h) Mr. Kathpalia then submitted that no judicial intervention would be warranted as the RP and CoC have followed the due process of law and complied with all the requirements laid down by the Code. According to the learned counsel IBC is a complete Code and it is prerogative of RP and CoC to finalize the process condition and timelines. It is an essential Commercial Function and scope of the judicial intervention is extremely limited. According to the learned counsel the intervention by the Adjudicating Authority would be warranted if it is found that there was arbitrariness in procedure, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat regard reference has been placed on Sections 18, 25 and 28 of the Code. Referring to the judgement in the case of Divya Jyoti Manufacturing Put Ltd. (Supra)it has been argued that the aforesaid view has now been considerably water down by a recent judgment of Hon ble the Supreme Court rendered in the case of Vedika Procon Private Limited v. Balleshwar Greens Put. Ltd. AIR 2015 SC 3103and Valji Khimji and Company v. Official Liquidator of Hindustan Wipro Products (Gujarat) Limited [2008] 9 SSC 299. 42. On behalf of CoC Mr. Ramji Srinivasan learned Senior Counsel has made following submissions:- (i) Mr. Srinivasan has reiterated that CoC RP is empowered to lay down criteria of selection concerning timeline for submission of resolution plan. Both under the pre-amended and post amended provisions of section 25(2) (h) of the Code the difference is recognised between prospective Resolution Applicant and Resolution Applicant which means an applicant who successfully crosses a threshold of eligibility criteria and would become eligible to participate in the next stage of resolution process namely submission of a resolution plan. Therefore, it is permissible to RP CoC to under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Srinivasan also submitted that he adopt all the submission made by Mr. Kathpalia who has appeared on behalf of the RP. 43. Dr. A.M. Singhvi, learned senior counsel appearing for the TSL has prefaced his arguments by giving few snippets. According to Dr. Singhvi on principle any individual who takes liberty with law and does not submit to its mandate should not be rewarded by accepting a challenge on his behalf. A tilt in favour of such a mischief-monger would marginalized the bid system which have developed around Article 14 of the Constitution under the Tender law, Company law and the Insolvency and Bankruptcy Code. The bid system according to authoritative judgments of Hon ble the Supreme Court rendered in the cases like 2G Spectrum namely Subramanian Swamy v. A. Raja, (2012) 11 S.C.R. 873 must be fully applied. The tender principles are the species of the same genus and there is marriage of private and public law because it involves the larger public interest. Reliance has also been placed on the judgment rendered in the case of M/s Synergy Steels Limited v. Petroleum and Natural Gas Regulatory Board, W.P. (C) No. 5195/2015 CM No. 9435/2015 dated 09.10.2015 M/s. Naya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the potential Resolution Applicant were required to submit the relevant documents concerning qualifications on or before 06.10.2017 which was the deadline fixed. The Liberty House-applicant admittedly failed to adhere to the last date and filed his expression of interest on 13.11.2017 whereas TSL submitted its expression of Interest before the closing date. On the examination of the expression of interest submitted the eligibility was to be determined and in terms of the public notice the time line was to be communicated to the qualified potential Resolution Applicant only. After the expression of interest, the Committee of Creditors in its meeting dated 11.11.2017 and 17.11.2017 authorized Resolution Professional to issue process document setting out the deadline, process and criterion for submission of resolution plans. Despite the fact that Resolution Professional kept on asking the Liberty House-applicant to submit confidential undertaking and various other documents like audited financial statements, Memorandum of Association, Articles of Association, Proof of address, incorporation documents, copy of PAN Card/Tax identification number, a Chartered Accountant certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench in an order dated 15.02.2018 passed in the case of Clutch Auto Limited, (IB) No. 15(PB)/2017, Dr. Singhvi has argued that paradigm shift between the earlier regime and the post Insolvency and Bankruptcy Code has been noted to be the time line which is associated necessarily with the value of the assets which deplete very fast. Based on the observations made in the aforesaid order Dr. Singhvi has highlighted that acceptance of commercial decisions of Committee of Creditors ought to be a rule and interference with it should be an exception. Likewise, reliance has been placed on similar observations made in the order dated 19.12.2017 rendered in the case of Bank of India v. Tirupati Infraprojects Private Limited, (IB) No.l04(PB)/2017 to argue that allowing the participation of a person after the deadline would amount to changing the rules of the game after the game has begun. Expanding his argument, it has been submitted by Dr. Singhvi that if a rule provides where a power is given to do a certain thing in a certain way then that thing must be done in that way or not at all. Other methods of performance are necessarily forbidden. In that regard reliance has been placed on the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed by the Resolution Professional in consultation with the Committee of Creditors was required to be adhered to. Dr. Singhvi has then drawn our attention to para 27 of the judgment rendered in the case of Sorath Builders v. Shreejikrupa Buildcon Limited and Another, [2009] 11 SCC 9 and has argued that their Lordships of Hon be the Supreme Court upheld the time schedule attached to the notice inviting tenders and did not permit a late comer to participate in the tendering process. Likewise, reliance has been placed on para 66 of the judgment rendered in the case of B.S.N. Joshi Sons Ltd. v. Nair Coal Services Ltd. and Ors., [2006] 11 SCC 548. 50. Learned Counsel has made a pointed reference to the general principles which have been summarized by Hon ble the Supreme Court namely (a) all essential conditions must be followed, unless there is a power of general relaxation no relaxation is to be given and (b) the bidder cannot form a cartel; (c) and that they may be give an offer to match with the rates quoted by the lowest tenderer in public interest. Attacking the antecedents and conduct of the Liberty House-applicant, learned Senior Counsel has placed reliance on an order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CoC as per the procedure postulated in S. 24 of the Code. Section 25 (1) of the Code has listed various duties of the Resolution Professional. The RP is under a sacred obligation of preserving and protecting the assets of the Corporate Debtor including its business operation. S. 25 (2) has enumerated numerous other duties cast on the RP. 52. Before 23.11.2017 S. 25 (2) (h) of the Code stood differently. In term it meant that for the purposes of preserving and protecting assets of the Corporate Debtor the RP was to undertake the following actions, namely ..................(h) invite prospective lenders, investors, and any other persons to put forward resolution plans . This is in fact what was made known in the print media by the RP. The invitation seeking Resolution Plans for BPSL5 as published in the press on 21.09.2017 reads as under;- INVITATION SEEKING RESOLUTION PLANS FOR BHUSHAN POWER STEEL LIMITED The undersigned has been appointed as the resolution professional ( RP ) by the committee of creditors of Bhushan Power and Steel Limited ( Corporate Debtor ) pursuant to the e-voting conducted under Regulation 26 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution plans shall be separately communicated to the Potential Applicant who meet the qualification requirements as mentioned above. For clarifications, if any, please contact: [email protected] Please note that RP reserves the right to amend or modify the Invitation without assigning any reason and without incurring any liability of whatsoever nature. Any amendment or modification shall be posted on the website of the corporate debtor www.bhushanpowersteel.com. Potential Resolution Applicants are requested to regularly visit the aforesaid website for regular updates. Sd/- Mahender Kumar Khandelwal Resolution Professional - Bhushan Power Steel Limited 53. After this public notice to the whole world no other public notice has been issued specifying a different date for submission of a Resolution Plan. It is admitted case at all hands that the process has been kept internal on the ground that those who meet the qualification requirements were alone entitled to further informations. 54. In the aforesaid backdrop we proceed to examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds that will be used to pay the - (a) insolvency resolution process costs and provide that the insolvency resolution process costs will be paid in priority to any other creditor; (b) liquidation value due to operational creditors and provide for such payment in priority to any financial creditor which shall in any event be made before the expiry of thirty days after the approval of a resolution plan by the Adjudicating Authority; and (c) liquidation value due to dissenting financial creditors and provide that such payment is made before any recoveries are made by the financial creditors who voted in favour of the resolution plan. (2) A resolution plan shall provide: (a) the term of the plan and its implementation schedule; (b) the management and control of the business of the corporate debtor during its term; and (c) adequate means for supervising its implementation. Regulation 39 (1) Approval of resolution plan. 39. (1)A resolution applicant shall endeavour to submit a resolution plan prepared in accordance with the Code and these Regulations to the resolution professional, thirty days before expiry of the maximum period permitted under section 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following actions, namely:- (a) .................. (b) .................. (c) .................. (d) .................. (e) .................. (f) .................. (h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans. 56. It is significant to notice that after issuance of public notice in print media on 21.09.2017 (supra) the Resolution Professional has not issued any other public notice notifying the criteria which might have been laid down by the Committee of Creditors. If no new public notice notifying the criteria finalized by CoC in terms of amendment is issued, then the original public notice would prevail with regard to the period for receipt of Resolution Plan application. 57. In the aforesaid context it would be necessary to make a brief survey of the minutes of meeting of Committee of Creditors. The first meeting of the Committee of Creditors was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated to be a condition for receiving the information memorandum and other relevant information concerning the Corporate Debtor. It also makes clear that the RP was to place before the Committee of Creditors for its approval such resolution plans which conform to the conditions set out under Section 30 (2) of the Code read with Section 38 of the CIRP Regulations. It also clarifies that consideration, evaluation and approval of resolution plan was to be submitted by RP to the Committee of Creditors and that it was within the power of the Committee of Creditors under the Code and CIRP Regulations. It provides further that the CoC was to specify an evaluation criteria separately for evaluation of the resolution plans. It is significant to note that the public notice clearly specifies that (the detailed process and timeline for submission of resolution plans shall be separately communicated to the Potential Resolution Applicant who meet the qualification requirements as mentioned above. 60. The Liberty House submitted its formal expression of interest on 13.11.2017 (Annexure A/4). In the third meeting of the CoC held on 31.10.2017 under item No. 9 the Resolution Professional poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e refusal of CoC to open the Resolution Plan and its rejection on the ground of delay was based on the process which was internal affairs. 64. The resolution plan in the present case was submitted on 20.02.2018. The period of 180 days was extended to 270 days on an application filed by the Resolution Professional under Section 12 (2) vide order dated 22.12.2017. The period of 270 days admittedly would be expiring on 22.04,2018. If we apply the aforesaid yardstick then the decision of the CoC in its meeting dated 21.02.2018 would not be sustainable. Under item No. 9 discussion took place on the resolution plan submitted by Liberty House and reference was made to an email sent by it to the RP on 13.02.2018. The Resolution Professional also informs the CoC in its meeting dated 21.02.2018 that he received a resolution plan on 20.02.2018 although it was after the expiry of the time line prescribed in the process document, i.e., 1400 hours 1ST on 08.02.2018 (internal process). The Resolution Professional also disclosed to the CoC that the packet is stated to contain a Resolution Plan, the Liberty House has submitted another envelope which is stated to contain two drafts of ₹ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted now. CoC would maintain the transparency and fairness of the process being followed to select the successful resolution applicant in accordance with the Process Document and would proceed with evaluation of only those complaint resolution plans which have been submitted on the Proposal Due Date in accordance with the requirements of the Process Document. Therefore, CoC, in the aforesaid meeting held on February 21, 2018, has decided against opening the Submitted Document and have instructed the Resolution Professional to return the Submitted Documents unopened. In light of the aforesaid, I am hereby returning all the Submitted Documents unopened. Kindly take receipt of the same by personally visiting the office of Bhushan Power Steel Limited at F-Block, 1st Floor, International Trade Tower, Nehru Place, New Delhi-110019 today i.e. 22nd of February 2018, otherwise the same shall be sent to you by registered post to your abovementioned address. 65. The aforesaid decision of the CoC would stare in the face of the stand taken by the RP while discussing item No. 9 in the third meeting of the Committee of Creditors dated 31.10.2017. There the Resolution Professio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleadings and during the course of argument was that the TSL was to walk away from the CIR process if the Tribunal was to entertain the application of Liberty House. Such a stance by a RP is wholly untenable and there is nothing in the minutes of meeting of the Committee of Creditors to support such a stance. An RP is expected to act as an impartial umpire and is not supposed to have taken a stance which is not true. Even the Committee of Creditors spoke in the same tone which again is not borne out from the minutes of the meeting of the CoC. The majesty of Courts cannot be put to ransom by veiled threat of this nature nor the administration of justice could be thwarted by any such insinuation. 67. There cannot be any quarrel with the propositions put forward by learned senior counsel Mr. Arun Kathpalia, Mr. Ramji Srinivasan and Dr. A.M. Singhvi for RP, CoC and TSL respectively that there should be level playing field for each of the participants. In the present case the level playing field was provided by inviting resolution plan within the period specified in the public notice dated 21.09.2017 and the Liberty House has filed its resolution plan 30 days before the expiry of max ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file the resolution plans. If the speed is the essence of the whole process then it must be remembered that one consolidated process is better suited to CIR Process than splitting the process in various parts. In the present case the process which has started on 21.09.2017 could not be concluded by 21.02.2018 on account of unnecessary complications created in conducting the process by inviting expression of interests. It is worthwhile to notice that the fashionable phenomena expression of interest is resorted to in cases where thousands of applicants are expected to participate. In a case where the number is not likely to exceed more than ten then such process seems to be un-necessary. In most of the cases under the IBC the number of resolution applicants are not more than ten. The reasons for such small number are evident. Firstly, most of the time it is a specialized business and the number of such person participating in the CIR process is likely to be limited as the experience has shown so far. Secondly when the magnitude of assets involved is enormous then the number is likely to be limited as is evident from the facts of the present case. We find support to the aforesaid v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ek S. Bhatt v. Union of India and Ors., 2008 (4) ALLMR 663 . In the present case only seven applicants have come forward. As a matter of fact, no expression of interest was warranted and the vital time spend in this process could have been saved. 72. We are further of the view that the object of the Insolvency and Bankruptcy Code is to reorganize and evolve insolvency resolution of, inter alia, Corporate persons in a time bound manner for maximization of the value of assets of such person. The aforesaid statement of object is evident from para 2 of the long title of the Code which reads as under:- The objective of the Insolvency and Bankruptcy Code, 2015 is to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the priority of payment of government dues and to establish an Insolvency and Bankruptcy Fund, and matters connected therewith or incidental thereto. An effective legal framework f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is consumed in the litigation would not prima facie be part of the period prescribed for CIRP under the IBC. 75. It has come on record that the period of 270 days for CIR process is to expire on 22.04.2018. The present application by Liberty House was filed on 22.02.2018 and it is being decided on today (23rd April, 2018). The period from 22.02.2018 till date would thus stand excluded from the period of 270 days and the process may now be concluded by 23.06.2018. For the aforesaid view we draw support from the judgment of the Hon Hole National Company Law Appellate Tribunal rendered in the case of Quantum Limited v. Indus Finance Corporation Limited, Company Appeal (AT) (Insolvency) No. 35/2015 dated 20.02.2018. In that case the Mumbai Bench of NCLT had dismissed an application filed by RP under Section 12 of the Code for extension of time beyond 180 days. Learned National Company Law Appellate Tribunal set aside the order of Adjudicating Authority/NCLT and also proceeded to exclude the period of litigation by observing as under:- For the aforesaid reasons, we set aside the impugned order dated 18th December, 2017 and extend the period of resolution process for anot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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