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TMI Blog2021 (2) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... ir ignorance about the provisions regarding Asset Reconstruction Companies they are withdrawing the Resolution Plan, as the Resolution Applicant should have examined all the provisions/ rules before submitting a Resolution Plan and depositing the E.M.D. As per Regulation 36B (4A) of IBBI (Insolvency Resolution Process for Corporate persons) Regulations, 2016, the Request For Resolution Plans (RFRP) shall require the Resolution Applicant (if the resolution plan is approved under Sub-Section (4) of Section 30), to provide a performance security within the time specified therein and such performance security shall stand forfeited if the Resolution Applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule. Thus, it is clear that when a Resolution Plan is admitted, in case the party withdraws its Resolution Plan by not remitting the requisite amount, surely the EMD amount paid will be forfeited as per the aforesaid provisions in the IBBI Regulations. Hence, this Tribunal cannot direct the Resolution Professional to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the NCLT, Kochi Bench, the said case was transferred to this Bench and renumbered as TIBA/9/KOB/2019. This Bench admitted the same by an order dated 20.09.2019 and appointed Mr. R. Velu, as the Interim Resolution Professional. CIRP commenced thereafter and IRP was later appointed as the Resolution Professional by the Committee of Creditors (COC) in its 1st meeting held on 18.10.2019. The Resolution Professional published an Invitation of Expression of Interest (EoI). M/s. Invent Asset Securitisation Construction Private Limited [Resolution Applicant] submitted an EoI on 24.12.2019. The Resolution Applicant who is the sole eligible PRA submitted the Resolution Application on 31.01.2020. The CoC approved the Resolution Plan on 19.08.2020 and this Tribunal vide order dated 10.09.2020 approved the Resolution Plan submitted by the Resolution Applicant M/s. Invent Asset Securitisation Construction Private Limited which was approved by the CoC with a voting share of 100% on 19.08.2020. 4. As per the Order of this Tribunal a Monitoring Committee was constituted with the Applicant/Resolution Professional as the Chairman. The stakeholders submitted the name of the representatives on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Financial Creditor also pointed out that the RA has never indicated that they were not inclined to implement the plan since the same was approved. Even in the first meeting of the Monitoring Committee held on 26.09.2020 they requested for 30-45 days time for payment. The Resolution Applicant requested not to forfeit the RFRP performance guarantee as withdrawal of Resolution Plan was required only to comply with RBI regulatory rules. It was decided by FC to forfeit the Performance Guarantee because enough time and opportunity had been provided to RA to implement the plan as per the approved Resolution Plan. b) FC requested for initiation of Liquidation of the Corporate Debtor or such other steps may be decided by Hon'ble NCLT. C) Mr. Velu, Chairman of the Monitoring Committee has sent invoice for ₹ 1,00,000/ to Resolution Applicant which has to be paid by the RA as per the approved Resolution plan For this Resolution Applicant, requested the Chairman to include the Fee payable for acting as Chairman of Monitoring Committee as a prayer in the application to be filed with the Hon'ble NCLT as the management of RA was not willing to make payment. 8. Hence the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to convert an EoI deposit into a Performance Guarantee under clause 1.20.1 of the Request for the Resolution plan, which is as under: - 1.20.1 Performance Guarantee The Resolution Plan shall be accompanied by a Performance Guarantee of INR 10% (Ten percent) of the upfront cash recovery amount or INR 1,00,00,000 Crores (Rupees one Crores) whichever is higher in favor of Axis Bank Ltd, The Performance Guarantee shall get activated once the COC approved Resolution Plan is approved by NCLT. The Performance Guarantee should be payable at Chennai and should be executed from Scheduled Bank located in India. The form of the Performance Guarantee shall be in the form provided in Appendix-4, In case Resolution Applicant is unable to give Performance Guarantee, they can transfer the same amount in favour of Axis Bank Ltd. The Performance Guarantee shall be valid for an initial period of 12 months from the date of approval by the CoC and shall be extended / renewed by the Successful Resolution Applicant(s) for such period until 100% (one hundred percent) of the Successful Resolution Applicant(s) Contribution is made by the Successful Resolution Applicant(s) in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not aware of the proceedings pending before the RBI against UVARC at the time of approval of the Resolution Plan by the COC. 14. On coming to know of the above case, the Resolution Applicant immediately communicated to the Resolution Professional on 26.08.2020 by a message on WhatsApp. However, the Resolution Professional seems to have ignored the same and proceeded with the application seeking approval of the Resolution Plan before this Tribunal filing M.A./113/KOB/2020. Since the Resolution Plan was approved by this Tribunal, the information regarding the RBI decision could not be confirmed at that time, and the Applicant was constrained to go ahead with the Resolution Plan. 15. It is further stated that the Applicant was the sole participant in the entire Resolution Process. No other person had expressed any interest to submit a Resolution Plan. The Corporate Debtor would have gone into liquidation if the Resolution Plan of Applicant was not available. Therefore, no damage or legal injury has been caused to the stakeholders of the Corporate Debtor due to the participation in the Resolution Process by the Applicant and withdrawal of the Resolution Plan. The basic principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Resolution Plan or one who abets such contravention. FINDINGS 20. Heard the learned counsel for the parties and considered their verbal and written submissions in the backdrop of facts and circumstances of the case. 21. With regard to the plea of withdrawal of Resolution Plan made in MA/186/KOB/2020 IA/IBC/16/2021 IN MA/113/KOB/2021, it may be seen that the Insolvency Resolution Process in respect of the Corporate Debtor commenced on the date of the admission of Application on 20.09.2019 under Section 7 of the Code and the statutory period of limitation for completion of proceedings under the I B Code viz. 180 days ended on 18.03.2020 and further 90 days period was extended as per Section 12 of the Code, which came to an end of 18.06.2020. As a matter of fact, the statutory permitted period of 270 days for completion of Corporate Insolvency Resolution Process had been expired and more than 07 months had passed since then. 22. Before approval of a Resolution Plan by the Committee of Creditors the Corporate Insolvency Resolution Process passes through various stages. After admission of the Application under Section 7, 9 or 10 of the I B Code, IRP is appo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution plan, if such person, or any other person acting jointly or in concert with such person-- (a) is an undischarged insolvent; (b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949; (c) 2[at the time of submission of the resolution plan has an account,] or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 1949) 3[or the guidelines of a financial sector regulator issued under any other law for the time being in force,] and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor: Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan; 4[Provided further that nothi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this clause shall not apply if a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a resolution plan approved under this Code or pursuant to a scheme or plan approved by a financial sector regulator or a court, and such resolution applicant has not otherwise contributed to the preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction;] (h) has executed 8[a guarantee] in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code 3[and such guarantee has been invoked by the creditor and remains unpaid in full or part]; (i) 9[is] subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or (j) has a connected person not eligible under clauses (a) to (i) 10[Explanation. I] -- For the purposes of this clause, the expression connected person means-- (i) any person who is the promoter or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India; (f) such categories of persons as may be notified by the Central Government.].] 25. Here the only question to be answered is whether a Resolution Plan approved by the Adjudicating Authority can be recalled and an order of Liquidation be passed? 26. In the matter Committee of Creditors of Educomp Solutions Ltd. vs. Ebix Singapore Pte. Ltd. Anr. [Company Appeal (AT) (Insolvency) No. 203 of 2020] Dated 29th July, 2020 [NCLAT] it was held as under: 3. .. after approval of the Resolution Plan by the Committee of Creditors the Adjudicating Authority has no jurisdiction to entertain or permit the withdrawal application filed by the Resolution Applicant and that Adjudicating Authority cannot enter into the arena of the majority decision of the Committee of Creditors. It is further submitted that there is no provision in the Code which allows withdrawal of an approved Resolution Plan and provisions in the Regulations for submission of Performance Bank Guarantee by a Resolution Applicant while submitting its Resolution Plan is a provision to discourage the Resolution Applicant from withdrawing its Resolution Plan. The business decision of the CoC, based on their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule. 29. From the above it is clear that when a Resolution Plan is admitted, in case the party withdraws its Resolution Plan by not remitting the requisite amount, surely the EMD amount paid will be forfeited as per the aforesaid provisions in the IBBI Regulations. Hence, this Tribunal cannot direct the Resolution Professional to refund the EMD of the Resolution Applicant. 30. Since the Resolution Applicant has withdrawn the Resolution Plan for the reasons stated in their request for withdrawal of Resolution Plan and that the EMD amount is still available with the Resolution Professional, it is a matter for the parties to approach the appropriate forum seeking directions as per the IBBI Regulations. As stated earlier this Tribunal cannot either order liquidation or to direct the refund of the EMD, as this Tribunal has become functus officio after approval of a Resolution Plan with the consent of both the parties. 31. In the circumstances and reasons stated above, both applications, MA/186/KOB/2020 IA(IBC)/16 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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