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TMI Blog2018 (5) TMI 1557X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal may have expired. This is a case in which so many issues came up for consideration before us during the period of CIRP. The CoC has changed the IRP thereby there is change of IRP. During the consideration of the only one plan of the resolution applicant an amended Ordinance was notified laying down certain disqualification to promoter directors of a company like the promoter in the case in hand Extension of time limit - Held that: - In Surendra Trading Company Vs. Juggilal Kamlapat Jute Mills Co. Ltd. [2017 (9) TMI 1566 - SUPREME COURT OF INDIA], the Hon’ble Supreme Court in answering a question as to whether the time limit prescribed in Insolvency and Bankruptcy Code for admitting and rejecting a petition for initiating insolvency resolution process is mandatory. It has been held that Extension of time may be allowed if it is needed to be given for circumstances which are exceptional occasioned by reasons beyond the control of the defendant and grave injustice would be occasioned if the time was not extended - The period of CIRP as prescribed under section 12 of the Code cannot be extended in the facts of the case. Whether reconsideration of vote in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of the CIR process was expired on 25.09.2017. As per an application moved by the Resolution Professional (C.A. No.388 of 2017) the CIRP duration has been extended by 90 days on the strength of a unanimous decision of the CoC, thereby the extended period of CIR process was expired on 25-12-2017. 2. In the meanwhile, on 04-01-2018 Ld. Resolution Professional filed a report stating that upon conclusion of CoC meeting on 21-12-2017 the resolution plan was put to vote and that the plan has been approved with a vote share of 68.50% by way of e-voting. In the meanwhile two of the financial creditors of CoC moved appeals against an interim order passed by this Adjudicating Authority and got a stay and therefore this Adjudicating Authority was prevented from approving resolution plan. While so Resolution applicant filed CA (IB) 50/KB/2018 before this Adjudicating Authority for direction to issue notice to dissenting creditors so as to reconsider their decision in regards the approval of the plan and on receipt of notice of the application two of the dissenting creditors changed their voting status and given assent to the resolution plan of Mr. Lakhotia. Upon casting their vote in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the Resolution Plan is within time. The Resolution Professional also contends that the reconsideration of votes of assenting and dissenting creditors was considered by the financial creditors as per an order of the adjudicating authority in CA(IB) No.50 of 2018 and CA (IB) No.50 of 2018 has been filed by the Resolution Applicant seeking directions against the dissenting and absenting creditors to reconsider their decision regarding the approval of the plan. Upon the said contentions resolution professional prays for approving the plan. 5. Considering the objections of two financial creditors as against approval of the resolution plan submitted by the resolution professional on 06-04-2018, two questions arise for consideration. Firstly whether this Adjudicating Authority has empowered to extend the time limit prescribed under section 12 of the Code? If not whether this Adjudicating Authority has power to exclude the duration of continuation of stay order of Hon ble Appellate Tribunal and the period rendered for the disposal of interim applications by this Bench during the CIRP?. Secondly whether reconsideration of vote in respect of approval of the resolution plan already fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfrastructure Limited seems to have set up in 1995 is engaged in infrastructure projects (mainly roads and buildings) which are under development / construction across the state. From a perusal of the records it is understood that due to various factors including recurrent downturn, mismanagement of cash flows, excess of short term funds being used for long term purposes, termination of few projects, the dues from the clients getting into litigation, non-renewal of working capital limits from the Consortium of Banks and resultant loss of important personnel from various sites and offices led to delay in completion of most of the projects and got the company into the current situation of financial distress. 9. Due to failure on the side of the corporate debtor to clear its dues due to the creditors one among the financial creditors namely RBL Bank Limited approached this adjudicating authority by filing application under Section 7 of the Code. That application was allowed on 30-03-2017 by appointing one Mr. Atanu Mukherjee as Interim Resolution Professional (IRP). However, the Committee of Creditors (CoC) upon its own reason changed the Interim Resolution Professional and propose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than a promoter director of the corporate debtor who has given personal guarantee to the corporate debtor. According to them he is in eligible under amended section. Section 29A(c) and (h). The CoC therefore took a decision on the basis of the objections of certain financial creditors on 11-12-2017 to seek clarification regarding the resolution applicant s eligibility from the Adjudicating Authority. 12. While so the Resolution Applicant Mr. A.K. Lakhotia himself filed CA (IB) No.543/KB/2017 before this Bench on 12-12-2017 for clarification regarding his eligibility under section 29A (c) (h) of the Code. That application was disposed of by this Adjudicating Authority vide order dated 18-12-2017. It is good to read two paragraphs in page No.14 of the order dated 18-12-2017 in CA (IB) NO.543/KB/2017. It is self explanatory as to the objections raised against the resolution applicant. It is pertinent to mention that in the case in hand the extended period for submission of Resolution Plan is going to expire on 23rd Dec 2017. The Resolution Applicant has submitted the revised Resolution Plan after elaborate discussion in consecutive meetings of CoC, and the same was under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed the professional to put the Resolution Plan of Mr. Lakhotia to votes instead of ballot voting directed the Resolution Professional to conduct e-voting. It is significant to note here that when the voting requisition of the plan has been finally considered by the CoC, the CIR process duration is to be expired within four days of the meeting held on 21-12-2017. The e-voting have been completed on 22-12-2017 by the Resolution Professional. As per the said voting the plan was approved with 68.50% voting share. Out of 20 members of the Committee of Creditors /financial creditors, the majority financial creditors voted in favour of the Resolution Plan. Three financial creditors supported the plan. Six financial creditors voted against the plan and one financial creditor abstained from voting. But their voting share does not exceed 68.50%. In the meantime, the financial creditors namely IDBI, Punjab National Bank as well as RBL Bank (all descending creditors) expressed their intentions to challenge the order of this Bench dated 18-12-2017 in CA (IB) No.543/KB/2017 and their decisions to challenge the said order seen recorded in the minutes of the 12th meeting of the CoC convened on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired required voting share as per section 30(4) of the Code in the 12th meeting of the CoC held on 21-12-2017. 18. On the basis of the directions, the Resolution Professional has issued notice by serving copy of the CA. No.50 of 2018 to the dissenting creditors namely Allahabad Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, IDBI Bank, and the Oriental Bank of Commerce and to Indian Overseas Bank (IOB) who abstained from voting. Upon receipt of the notice, out of the 7 creditors, the above referred Indian Overseas Bank and Bank of Maharashtra gave its assents. The relevant extract of the said two creditor s reply is shown as below. (i) The Indian Overseas Bank issued an email on January 31, 2018 under which Indian Overseas Bank has stated; we hereby advise that our top management approved mandate in favour of the resolution plan submitted by the applicant . (ii) The Bank of Maharashtra on February 02, 2018 issued an email enclosing its letter dated January 31, 2018 conveying its stand. The Bank of Maharashtra accorded approval in favour of the final Resolution Plan submitted by Mr. A.K. Lakhotia subject to inter alia, the condition; Our Bank unutilized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing for the IDBI. IDBI also filed CA(IB) 238/KB/2018 challenging extension of the CIRP beyond 270 days as it is prohibited under section 12 of the Code and also challenged the reconsideration of voting after the expiry of 270 days. The objection raised by the IDBI in the application is therefore is the objection against the approval of the resolution plan. Therefore the said CA was heard along with the CP. 23. Similarly Bank of Baroda also filed CA. (IB) No. 270/KB/2018 challenging the approval of the Resolution Plan contending the very same contention of the IDBI. It contended that any modification of the resolution plan after completion of 270 days as provided under section 12 of the Code is bad in Law and that any reconsideration by dissenting creditors on resolution plan after the time limit for completion of insolvency process in terms of section 12 of the code cannot be allowed. 24. The Ld. Counsel appearing for the IDBI as well as Bank of Baroda unanimously argued that under Section 12 of the Code this Adjudicating Authority cannot extend the period of CIR process beyond 270 days and that section 12 of the Code mandate a statutory bar upon the Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping the object of the legislature in mind, would be outside the judicial ken. The task of a Judge, when he looks at the literal language of the statute as well as the object and purpose of the statute, is not to interpret the provision as he likes but is to interpret the provision keeping in mind Parliament s language and the object that Parliament had in mind. With this caveat, it is clear that judges are not knight-errants free to roam around in the interpretative world doing as each judge likes. They are bound by the text of the statute, together with the context in which the statute is enacted; and both text and context are Parliaments , and not what the Judge thinks the statute has been enacted for. Also, it is clear that for the reasons stated by us above, a fair construction of Section 9(3) , in consonance with the object sought to be achieved by the Code, would lead to the conclusion that it cannot be construed as a threshold bear or a condition precedent as has been contended by Dr. Singhvi. 27. This proposition no doubt applicable in the case in hand. The very object of the code is resolution of falling corporate debtor companies and not liquidation of corporate deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on professional to file an application for extension of period in such case, in the interest of justice and to ensure that the resolution process is completed following all the procedures time should be allowed by the Adjudicating Authority who is empowered to extend such period up to 90 days beyond 180th day. 29. While allowing the appeal preferred by Quantum Limited, the Hon ble Appellate Tribunal set aside the interim order and extended the period of resolution process for another 90 days counted from the date of order of the appellate tribunal. The Hon ble Appellate Tribunal has held that The period between 181 days and passing of this order shall not be counted for any purpose and is to be excluded for all purposes and is to be excluded for all purpose . According to Ld Counsel for the IDBI the proposition in the above cited order of NCALT is not applicable in the case in hand because the Hon ble NCALT ordered extension under sub-section (3) of section 12 of the Code beyond 180 days and not beyond 270 days. Truly the Hon ble NCALT allowed the appeal holding that even after expiry of 180 days further extension can be allowed and ordered extension of 90 days beyond 180 day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Tribunal may have expired. This is a case in which so many issues came up for consideration before us during the period of CIRP. The CoC has changed the IRP thereby there is change of IRP. During the consideration of the only one plan of the resolution applicant an amended Ordinance was notified laying down certain disqualification to promoter directors of a company like the promoter in the case in hand. A clarification was sought for by the resolution applicant before the Bench. Against the order of clarification two of the financial creditors filed appeal before the Hon ble NCALT. There was an order of stay restricting this Bench from proceeding further in regards approval of the plan. 34. Bare in mind the object of the Code, the legislative intention behind the enactment of the Code, in the larger interest of the public, the workmen and other employees of the corporate debtor why not the delay occurred for no fault of the resolution applicant in getting his plan approved in time is excluded. In the interest of justice and in order to achieve the object of the Code our endeavour is to see that the corporate debtor would continue as a going concern. Here in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is occurred this Adjudicating Authority can extend the time limit provided under section 12 of the Code. However we are not asked to extend the time limit as provided under section 12 of the code but to exclude the period due to litigation and upon the above said finding we already held that exclusion of period due to litigation is liable to be allowed in a case of this nature. So we are not holding that we can extend the period of CIRP as prescribed under section 12 of the Code. 37. The next question is whether reconsideration by dissenting creditors and abstain creditor on resolution plan after the time limit of completion of insolvency process can be allowed?. Both Ld. Counsel for IDBI and Bank of Baroda raised the above question. In answering the first question posed by the above said financial creditors we already come to a conclusion that the time period due to continuation of stay order and period due to litigation before this Bench shall be excluded. So that the period of disposal of CA (IB) No.543/KB/2017 by this Bench and period of continuation of stay order of NCALT in CA (AT) (Insolvency) No. 330/2017 shall be excluded. That being so period from 11-12-2017 to 18-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standpoint of a prudent man thinking also, if one person wish to change its mind who is not debarred from changing its mind, why not change stands considering the subsequent change in the circumstances or events. In the said background, we do not find any justifiable reason to hold that reconsideration of resolution plan is bad in law as contended by IDBI and Bank of Baroda. 41. Ld. Counsel for the IDBI at this juncture, stressed an argument that request for reconsideration was not from the side of the financial creditors but from the side of Resolution Applicant by way of filing CA(IB) No.50/KB/2018 and, therefore, on that ground also reconsideration of votes in respect of approval of Resolution Plan cannot be considered by the Adjudicating Authority. Truly, CoC meeting has not been convened subsequent to 22-12-2017 for the reason that CIR process, according to the Resolution Professional, commenced on 30-3-2017 ends on 25-12-2017. The Resolution Professional continued the management of the corporate debtor as per the direction of this Adjudicating Authority. Since the CoC could not be convene meeting after a period of 270 days from the date of commencement of CIRP and there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he right of all stakeholders and particularly the entire creditors. 44. From the aforesaid discussion we may conclude that the basic premises on which l B code is built is that on failure of the Company in discharging its dues, its debt is to be restructured, for continuing the Company as a going concern, by giving the Company to any person who is found financially and technically capable to take over the Company. No challenge from any corner raised before us regarding the technical and economical viability of the resolution applicant in taking over the company by him. This is a unique case in which CIRP could not completed with in 270 days. The exceptional circumstances occasioned beyond the control of the resolution applicant in the case in hand upon the reasons already led in prompt us to exclude the period of litigation and thereby we also found the plan came up for approval with in time. Under section 31(1) we have to look into whether the plan meets the requirements as referred to in sub-section (2) of section 30, this Adjudicating Authority shall by order approve the resolution plan. The resolution applicant also complied Regulation 39(4)(a) of IBBI (Insolvency Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X
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