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TMI Blog2021 (10) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority on 08.01.2021 in IA No.1079/2020 in CP (IB) No.184/HDB/7/2019 (filed by the 2nd Respondent/Resolution Professional) had granted another 60 days extension from 08.01.2021 expiring on 08.03.2021 and that the 330 days period was also to lapse on the same day - It transpires that the Resolution Professional had re-issued the Form G on 25.01.2021 because of the perceived increase in value of the Corporate Debtor as per Regulation 36-A read with Regulation 36(B)(7) of IBBI (Insolvency Resolution for Corporate Persons) Regulations 2016. The last date for submission of Resolution Plan was on 24.02.2021 and further, that the said date was extended to 01.03.2021, till 06.03.2021 and then, finally till 08.03.2021. This Tribunal is of the considered opinion that application filed by the Resolution Professional on 03.03.2021 (six days before the expiry of 330 days on 09.03.2021) ought to have been determined by the Adjudicating Authority , prior to the passing of the impugned order dated 24.06.2021 (uploaded on 09.07.2021), with a view not to give room for complications and to avoid wider ramifications and implications. Unfortunately, such a course was not resorted to, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course bearing in mind of the fact that the relevant provisions of the Code are well thought of in public interest and to ensure good Corporate Governance. The repercussions in not following the timeline prescribed in IBC are that (i) maximisation of the value assets of the Corporate Debtor will weaken the realisation potential prospect of the Creditors; (ii) The promoters of the Company will remain undischarged from their obligation/liability. The individual who is to proceed against the Company, is suspended from exercising his right for moratorium remains in force till the CIRP period is continuing. It is to be pointed out that the Tribunal/ Appellate Tribunal are showered with restricted jurisdiction mentioned in the I B Code, 2016 and they cannot function as Courts of Equities or exercise plenary powers. In short, they are scrupulously bound by the discipline of statutory provisions and they cannot traverse beyond the parameters of law. Resolution Professional s Duty - HELD THAT:- A Resolution Professional is not to be made liable because his perception is incorrect unless it is unreasonable. He is required to take prudent/ reasonable care in arriving at a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place only the Resolution Plan of First Respondent/ Consortium of Prudent ARC Limited Vizag Minerals and Logistics Pvt. Ltd. ( Prospective Resolution Applicant ) and the Resolution Plan of Sindhu Trade Links Ltd. ( STLL ), which were submitted before the due date, before the Committee of Creditors for its consideration and to complete the CIRP keeping in mind on 07.11.2019, the C.P.(IB) No.184/7/HDB/2019 was admitted by the Adjudicating Authority commencing CIRP against the Corporate Debtor , a timely resolution of stressed assets is a prime factor in the successful working of the Code, the interest of the Stakeholders including the Creditor(s) , effectively balancing within the four corners of Law , and as per I B Code, 2016 and Regulations without any further loss of time. Appeal disposed off. - COMPANY APPEAL(AT) (CH)(INSOLVENCY) NO. 166 OF 2021, COMPANY APPEAL(AT) (CH)(INSOLVENCY) NO. 174 OF 2021 - - - Dated:- 25-10-2021 - MR. JUSTICE M. VENUGOPAL MEMBER (J) AND MR. KANTHI NARAHARI MEMBER (T) For the Appellant : Mr. Sumant Batra, Advocate Mr. Aditi, Deshpande, Advocate Mr. Jash Shah,, Advocate For the Respondent : Mr. Joy Saha, Sr. Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtending timelines beyond 330 days in the guise of maximization of value. 14 To arrive at a definite and conclusive answer, we refer to IBC, 2016 and CIRP Regulations. Section 30(1) laid down that a resolution applicant may submit a resolution plan to the resolution professional prepared on the basis of the information memorandum. Whereas Regulation 36A(5) speaks of the methodology of submission of EoI by the Prospective Resolution Applicants. The Prospective Resolution Applicants who meet the requirements of the invitation for expression of interest, shall submit expression of interest within the time specified in the invitation under clause (b) of sub-regulation (3). Regulation 36A(6) also very clearly mentions that the EoIs received after the time specified in the invitation under Clause (b) of sub-regulation (3) shall be rejected. 15. Regulation 36B deals with Request for Resolution Plan and Regulation 36B(2) details each step in the process and the manner and purposes of interaction between the resolution professional and the prospective resolution applicant, along with corresponding timelines and Regulations 36B(6) deals with extension of timelines for submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtend RFRP beyond 330 days without specific approval of the Adjudicating Authority. We strongly express our reservations on the decision of CoC as well as RP in this regard and accordingly direct the Resolution Professional/ CoC to consider the two plans received prior to last extension of RFRP timeline i.e. received before 330 days period to complete the CIRP. and ultimately allowed the Interlocutory Application with the aforesaid direction. Appellant /Second Respondent s Submissions (In Both Appeals) 4. The Learned Counsel for the Appellant/Second Respondent submits that the Adjudicating Authority (National Company Law Tribunal, Bench-II, Hyderabad Bench) by virtue of the impugned order dated 24.06.2021 had directed the Appellant/ Committee of Creditors and the 2nd Respondent/ Resolution Professional to only consider the Resolution Plan received before the expiry of 330 days of CIRP period forego Resolution Plans received subsequently, although, they are far superior commercially and financially , by ascribing unjustifiable reason that such Plan was received belatedly post expiry of 330 days, despite, extending the period of CIRP by 45 days. In sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The grievance of the Appellant/ Second Respondent is that the Adjudicating Authority (National Company Law Tribunal, Bench-II, Hyderabad) had proceeded to hear and determine the Application projected by the First Respondent (Prospective Resolution Applicant on 02.06.2021) almost three months after filing of the Extension Application and very nearly 45 days after the communication of the Committee of Creditors decision of 21st April, 2021 and passed the impugned order without firstly deciding an Extension Application and without considering the law laid down by the Hon ble Supreme Court and the Appellate Tribunal in number of judgments including Arcelor Mittal s case which holds that the First Respondent / Prospective Resolution Applicant does not have any Locus to file such Application and the decision of Hon ble Supreme Court in Kalpraj Dharamshi Anr. Vs. Kotak Investment Advisors Limited and Anr., reported in (2021) SCC OnLine SC 204 whereby it is held that in view of the paramount importance given to the decision of the Committee of Creditors , which is to be taken on the basis of commercial wisdom. 10. The contention of the Learned Counsel for the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to seek only the revisions and not fresh submissions of the Resolution Plans in such extended process, despite it being in the larger interests of the Stake holders of the Corporate Debtor . Furthermore, for maximising the interest of one Prospective Resolution Applicant , the interest of various stake holders, at whose instance the CIRP is carried on may not be prejudiced. 15. The Learned Counsel for the Appellant/ Second Respondent forcefully comes out with a plea that the impugned order passed by the Adjudicating Authority erroneously notes that the Committee of Creditors and the Resolution Professional had usurped the Adjudicating Authority s role as it had extended the process and considered Resolution Plans post expiry of 330 days without specific direction from the Adjudicating Authority . 16. On behalf of the Appellant/ Second Respondent it is brought to the notice of this Tribunal that the Committee of Creditors had acted mainly, in the interest of the stake holders by striving to revive the Corporate Debtor and maximise its value. With this aim, the Resolution Professional with the Committee of Creditors Approval had filed an Exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor must be completed within the outer limit of 330 days from the insolvency commencement date, the period of CIRP can be further extended if (i) only a short period is left for completion of CIRP (ii) it would be in the interest of all the stake holders that the Corporate Debtor be put back on its feet instead of being sent into liquidation (iii) the fault for the time taken in the legal proceedings or a large part thereof cannot be ascribed to the parties. Further, that in such cases the Adjudicating Authority would have the discretion to make an allowance and grant a further extension beyond 330 days as done in the present case, as per order dated 15.07.2021. 21. The Learned Counsel for the Appellant/ Second Respondent submits that since the Resolution Plans received namely viz. of the First Respondent/ Prospective Resolution Applicant and Sindhu Trade Links Ltd. (STLL) prior to this request was made, were found unsatisfactory, the Committee of Creditors had approved the decision with 95.71% vote to re-issue the request for submission of Resolution Plans to all the Prospective Resolution Applicants . In fact, the decision to reinvite plans from all Prospective Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent points out that the First Respondent/ Prospective Resolution Applicant had submitted the Revised Proposal at least three times beyond the dead line. In fact, owing to such revisions, the First Respondent/ Prospective Resolution Applicant had improved its initial financial proposal by more than 60%, which also explains why the First Respondent/ Prospective Resolution Applicant sought to interfere with the Committee of Creditors exercise of commercial wisdom and prevent any further value maximisation . 26. The Learned Counsel for the Appellant/ Second Respondent adverts to the fact that the First Respondent/ Prospective Resolution Applicant had sought and obtained extensions for submission of revisions/ modifications in its Resolution Plan both earlier and post expiry of 330 days period. In fact, on 22.02.2021, an extension for two weeks i.e. till 08.03.2021 was sought for, while being aware that the 330 period was to end on 09.03.2021. Again, an extension was sought on 18.03.2021, 02.04.2021, 28.04.2021, 10.05.2021, 02.06.2021, 08.06.2021, 18.06.2021 and 25.06.2021, viz; even after filing of an application on 02.06.2021. 27. Based on the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been submitted clause by clause. The CoC in its wisdom did not find it appropriate to give more time to the Appellant and discussed the Resolution Plan and rejected the same for reasons recorded. These are commercial decisions and we cannot hear the Appellant claiming that he was offering bigger amount and so the CoC should be directed to consider his plan. In Judgment in the matter of Arcelormittal India Pvt. Ltd. vs. Satish Kumar Gupta Ors. [Civil Appeal No. 9402-9405 etc. of 2018] Judgment of the Hon ble Supreme Court dated 4th October, 2018 (MANU/SC/1123/2018), the Hon ble Supreme Court in para 79 of the judgment has observed that there is no vested right or fundamental right in the Resolution Applicant to have its Resolution Plan approved. In the present matter, the CoC considered and in its wisdom did not grant further time and rejected the Resolution Plan. As such, we do not find any reason to interfere in the impugned order only on the basis that the Appellant had filed an I.A before the Adjudicating Authority and the Adjudicating Authority without deciding the I.A passed order of liquidation. 7. In this matter, Section 7 Application was admitted on 8th November ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Venkata Reddy, (1993) 3 SCC 4 : 1993 SCC (Cri) 571]. The object of the criminal law is to punish perpetrators of crime. This is in tune with the well-known legal maxim nullum tempus aut locus occurrit regi, which means that a crime never dies. At the same time, it is also the policy of law to assist the vigilant and not the sleepy. This is expressed in the Latin maxim vigilantibus et non dormientibus, jura subveniunt. Chapter XXXVI CrPC which provides limitation period for certain types of offences for which lesser sentence is provided draws support from this maxim. But, even certain offences such as Section 384 or 465 IPC, which have lesser punishment may have serious social consequences. The provision is, therefore, made for condonation of delay. Treating date of filing of complaint or date of initiation of proceedings as the relevant date for computing limitation under Section 468 of the Code is supported by the legal maxim actus curiae neminem gravabit which means that the act of court shall prejudice no man. It bears repetition to state that the court's inaction in taking cognizance i.e. court's inaction in applying mind to the suspected offence should not be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate Tribunal to extend time beyond 330 days. Likewise, even under the newly added proviso to Section 12, if by reason of all the aforesaid factors the grace period of 90 days from the date of commencement of the Amending Act of 2019 is exceeded, there again a discretion can be exercised by the Adjudicating Authority and/or Appellate Tribunal to further extend time keeping the aforesaid parameters in mind. It is only in such exceptional cases that time can be extended, the general rule being that 330 days is the outer limit within which resolution of the stressed assets of the corporate debtor must take place beyond which the corporate debtor is to be driven into liquidation. 32. In regard to the contention of the Appellant/ Second Respondent that the Prospective Resolution Applicants have no fundamental or vested rights vis- -vis the CIRP, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws that the disapproval of the Committee of Creditors on the ground that the resolution plan violates the provisions of any law, including the ground that a resolution plan is ineligible under Section 29A, is not final. The Adjudicating Authority, acting quasi-judicially, can determine whether the resolution plan is violative of the provisions of any law, including Section 29A of the Code, after hearing arguments from the resolution applicant as well as the Committee of Creditors, after which an appeal can be preferred from the decision of the Adjudicating Authority to the Appellate Authority under Section 61. 81. If, on the other hand, a resolution plan has been approved by the Committee of Creditors, and has passed muster before the Adjudicating Authority, this determination can be challenged before the Appellate Authority under Section 61, and may further be challenged before the Supreme Court under Section 62, if there is a question of law arising out of such order, within the time specified in Section 62. Section 64 also makes it clear that the timelines that are to be adhered to by the NCLT and NCLAT are of great importance, and that reasons must be recorded by either the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring completion of the stated processes within the timelines prescribed by the I B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subjectmatter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable. 34. The Learned Counsel for the Appellant/ Second Respondent points out the decision of the Hon ble Supreme Court in Kalpraj Dharamshi Anr. Vs. Kotak Investment Advisors Limited and Anr., reported in (2021) SCC OnLine SC 204 wherein at paragraph 155 to 157 it is observed as under: 155. This Court observed, that the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Insolvency of Corporate Debtor, we did not pass order of Liquidation. 7. To maintain parity of process, we direct the RP and CoC to allow the Applicant to submit the Plan on the basis of amendment of Form G on which the Group Companies of M/s. Jindal Power Ltd were allowed to submit the plan. 8. The Applicant to submit the Resolution Plan within two weeks from today without fail. We further direct the RP and CoC to consider both Resolution Plans within two weeks thereafter. 9. We further direct the RP to complete the CIRP process within 30 days without fail because CIRP period is already over (excluding the lockdown period and period under which CIRP was stayed). First Respondent s Submissions (in Both Appeals) 36. The Learned Counsel for the First Respondent contends that the impugned order of the Adjudicating Authority had considered the relevant facts, timelines and the breach of such timelines committed by the Resolution Professional and the Committee of Creditors . At this juncture, the Learned Counsel for the First Respondent points out that the impugned order apart from taking into account all the citations referred to by the parties and espec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case but in other cases also. The Appeal is devoid of any merit. 39. According to the Learned Counsel for the First Respondent the 330 days period may be extended in exceptional circumstances and only when a short period is left for the completion of the Insolvency Resolution Process . Moreover, the principle of Maximisation of Asset Value is to be read in conjunction with the directive of time bound process , as made mention of in the I B Code and also reiterated in various Hon ble Supreme Court decisions. 40. The Learned Counsel for the First Respondent contends that the Committee of Creditors which is the creation of a statute is required to act within the parameters of the I B Code, 2016 and it cannot be breached under the garb of commercial wisdom . 41. The Learned Counsel for the First Respondent adverts to the fact that the Court has allowed extension of time beyond 330 days period to dispose of the pending Resolution Plans, where there is a real possibility of Resolution over liquidation. In this regard, the Learned Counsel for the First Respondent relies on the judgment of this Tribunal in Comp App (AT) (Ins) No.05 of 2020 dated 10.02.2020 Ashish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the First Respondent / Resolution Applicant , the Resolution Professional and the Committee of Creditors continue to deliberately misconstrue the distinction between a Resolution Plan and a Revised Offer and the time lines qua the same. 45. The Learned Counsel for the First Respondent points out that the term Resolution Plan is defined u/s 5(26) of the I B Code to mean a Plan proposed by the Resolution Applicant for Insolvency Resolution of the Corporate Debtor as a going concern in accordance with part II. However, there is no definition for a Revised offer and / or Revised financial proposal and in this regard, the Learned Counsel for the First Respondent cites the judgement of this Tribunal in Binani Industries Ltd. V. Bank of Baroda and Anr. reported in 2018 SCC online NCLAT 565 wherein it is observed and held as under: - 34. Section 25(2)(h) provides invitation of prospective lenders, investors and any other persons to put forward a Resolution Plan . Submission of revised offer is in continuation of the Resolution Plan already submitted and accepted by the Resolution Professional. It is not in dispute that after invitation was called for, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmittee of Creditors , based on which negotiations took place and a revised and modified Resolution Plan was submitted on 26.06.2021. Therefore, it is projected on the side of the First Respondent that there is no possibility to re-examine the Resolution Plan of the First Respondent, for placing it before the Committee of Creditors . 47. The Learned Counsel for the First Respondent points out that consequent to the negotiations and discussions held with the Committee of Creditors , the Committee of Creditors from time to time had asked for clarifications and modifications to the Plan had also asked for the Upward Revision of the Plan size and these were complied with by the First Respondent, which does not fell within the purview of a fresh Resolution Plan . As such, it is the plea of the First Respondent that the secrecy of the First Respondent bid was completely compromised and that the Resolution Professional and the Committee of Creditors had unduly favoured Vedanta which was granted with an opportunity to file a Resolution Plan , after coming to know of the contents of the bids of the First Respondent and STLL . 48. The Learned Counsel for the First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred judgement held that u/s 30(2) of I B Code, decision of Committee of Creditor is purely commercial and cannot be adjudicated by the Authority. Thus, we are of the view that the Adjudicating Authority is well within its jurisdiction while rejecting the application of A-1. 17. With the aforesaid, we are of the considered view that the Adjudicating Authority has erroneously entertain the application and Resolution Plan of the Respondent No. 1 and directed the RP to put up the same before CoC for consideration. 49. The Learned Counsel for the First Respondent submits that the Resolution Professional as well as the Committee of Creditors till date, have not complied with the impugned order and the deliberate delay, on their part, had led to the value destruction in contra distinction to maximisation , because of the fact that the only real asset of the Corporate Debtor i.e. the power purchase agreement with PTC for supply of power to Bangladesh appears to be in default, considering the fact that PTC through letter dated 04.08.2021 had served the Resolution Professional with a notice of Intent to terminate the said PPA . First Respondent s Citations 50. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. 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. 157. No doubt, it is sought to be urged, that since there has been a material irregularity in exercise of the powers by RP, NCLAT was justified in view of the provisions of clause (ii) of sub-section (3) of Section 61 of the I B Code to interfere with the exercise of power by RP. However, it could be seen, that all actions of RP have the seal of approval of CoC. No doubt, it was possible for RP to have issued another Form G , in the event he found, that the proposals received by it prior to the date specified in last Form G could not be accepted. However, it has been the consistent stand of RP as well as CoC, that all actions of RP, including acceptance of resolution plans of Kalpraj after the due date, albeit before the expiry of timeline specified by the I B Code for completion of the process, have been consciously approved by CoC. It is to be noted, that the decision of CoC is taken by a thumping majority of 84.36%. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout any exception thereto - may well be an excessive interference with a litigant's fundamental right to nonarbitrary treatment under Article 14 and an excessive, arbitrary and therefore unreasonable restriction on a litigant's fundamental right to carry on business under Article 19(1)(g) of the Constitution of India. This being the case, we would ordinarily have struck down the provision in its entirety. However, that would then throw the baby out with the bath water, inasmuch as the time taken in legal proceedings is certainly an important factor which causes delay, and which has made previous statutory experiments fail as we have seen from Madras Petrochem [Madras Petrochem Ltd. v. BIFR, (2016) 4 SCC 1 : (2016) 2 SCC (Civ) 478] . Thus, while leaving the provision otherwise intact, we strike down the word mandatorily as being manifestly arbitrary under Article 14 of the Constitution of India and as being an excessive and unreasonable restriction on the litigant's right to carry on business under Article 19(1)(g) of the Constitution. The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution Professional may only invite fresh resolution plans if no other resolution plan has passed muster. . 79. Take the next stage under Section 30. A Resolution Professional has presented a resolution plan to the Committee of Creditors for its approval, but the Committee of Creditors does not approve such plan after considering its feasibility and viability, as the requisite vote of not less than 66% of the voting share of the financial creditors is not obtained. As has been mentioned hereinabove, the first proviso to Section 30(4) furnishes the answer, which is that all that can happen at this stage is to require the Resolution Professional to invite a fresh resolution plan within the time limits specified where no other resolution plan is available with him. It is clear that at this stage again no application before the Adjudicating Authority could be entertained as there is no vested right or fundamental right in the resolution applicant to have its resolution plan approved, and as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve several rounds of negotiations and revisions between the Resolution Applicant and the CoC, before it is approved by the latter and submitted to the Adjudicating Authority ((3) The committee shall evaluate the resolution plans received under subregulation (1) strictly as per the evaluation matrix to identify the best resolution plan and may approve it with such modifications as it deems fit: Provided that the committee shall record its deliberations on the feasibility and viability of the resolution plans). However, this statutorily-enabled room for commercial negotiation is not enough to over-power the other elements of regulation that detract from the view that CoC-approved Resolution Plans are contracts. CoC-approved Resolution Plans, before the approval of the Adjudicating Authority under Section 31, are a function and product of the IBC s mechanisms. Their validity, nature, legal force and content is regulated by the procedure laid down under the IBC, and not the Contract Act. The voting by the CoC also occurs only after the RP has verified the contents of the Resolution Plan and confirmed that it meets the conditions of the IBC and the regulations therein. The amended Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor during the CIRP (1 Pages 55-56, Report of the Insolvency Law Committee (February 2020), Ministry of Corporate Affairs, available at https://www.mca.gov.in/ inistry/pdf/ICLReport_05032020.pdf accessed on 20 August 2021). These reports are periodically commissioned by the parliament to review the functioning of the Code and suggest amendments. However, if the intention was to view a CoC approved Resolution Plan as a contract, the principles of unjust enrichment would have been sufficient to address the issue and an amendment may not be considered necessary. A Resolution Applicant, as a third party partaking in the insolvency regime, seeks to acquire the business of the Corporate Debtor without the entirety of its debts, statutory liabilities and avoiding certain transactions with third parties. These benefits are a function of the coercive mechanisms of the IBC which enable a third party to acquire the assets of a Corporate Debtor without its liabilities, for a negotiated amount of the debt that is owed by the Corporate Debtor. Typically, resolution amounts envisage payment of a fraction of debt that is owed to the creditors and the business is acquired as a going co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajeure clause in its Resolution Plan to seek a direction compelling the CoC to negotiate a modification to its Resolution Plan. The Court held that there was no scope for negotiations between the parties once the Resolution Plan has been approved by the CoC. Thus, contractual principles and common law remedies, which do not find a tether in the wording or the intent of the IBC, cannot be imported in the intervening period between the acceptance of the CoC and the approval by the Adjudicating Authority. Principles of contractual construction and interpretation may serve as interpretive aids, in the event of ambiguity over the terms of a Resolution Plan. However, remedies that are specific to the Contract Act cannot be applied, de hors the overriding principles of the IBC. 143 The statutory framework governing the CIRP seeks to create a mechanism for resolving insolvency in an efficient, comprehensive and timely manner. The IBC provides a detailed linear process for undertaking CIRP of the Corporate Debtor to minimize any delays, uncertainty in procedure and disputes. The roles and responsibilities of the important actors in the CIRP are clearly defined under the IBC and its regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat may lead to unpredictability, delay and complexity not contemplated by the legislature. With this birds -eye view of the framework of insolvency through the CIRP, we proceed to answer the question of law raised in this judgement - whether a Resolution Applicant is entitled to withdraw or modify its Resolution Plan, once it has been submitted by the Resolution Professional to the Adjudicating Authority and before it is approved by the latter under Section 31(1) of the IBC. 146 Judicial restraint must not only be exercised while adjudicating upon the constitutionality of the statute relating to economic policy but also in matters of interpretation of economic statutes, where the interpretative manoeuvres of the Court have an effect of transgressing into the law-making power of the legislature and disturbing the delicate balance of separation of powers between the legislature and the judiciary. Judicial restraint must be exercised in such cases as a matter of prudence, since the court neither has the necessary expertise nor the power to hold consultations with stakeholders or experts to decide the direction of economic policy. A court may be inept in laying down a detailed proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been, but has not been provided for in a statute cannot be supplied by courts, as to do so will be legislation and not construction. But there is no presumption that a casus omissus exists and language permitting the court should avoid creating a casus omissus where there is none. (emphasis supplied) The treatise further discusses that a departure from this rule is only allowed in cases where words have been accidently omitted or the omission has an effect of making any part of the statute meaningless. Further, only such words can be supplied to the statute which would have certainly been inserted by the Parliament, had the omission come to its notice. The relevant paragraph is extracted below: As already noticed it is not allowable to read words in a statute which are not there, but where the alternative lies between either supplying by implication words which appear to have been accidentally omitted, or adopting a construction which deprives certain existing words of all meaning, it is permissible to supply the words . A departure from the rule of literal construction may be legitimate so as to avoid any part of the statute becoming meaningless. Words may also be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils which the IBC sought to obviate through the back-door. 156 Regulation 40A envisages a modeltime line for the CIRP. Any deviation from this timeline needs to be specifically explained by the RP in Clause 10 of Form H. Regulation 40B imposes a time-limit on the RP for filing the requisite forms at different stages of the CIRP, including forms seeking extensions on account of delays at any stage. The failure to fill these forms within the stipulated deadline results in disciplinary action against the RP by the IBBI. Further, as discussed in Section I of the judgement, various mandatory timelines have been imposed for undertaking specific actions under the CIRP. If the legislature intended to allow withdrawals or subsequent negotiations by successful Resolution Applicants, it would have prescribed specific timelines for the exercise of such an option. The recognition of a power of withdrawal or modification after submission of a CoCapproved Resolution Plan, by judicial interpretation, will have the effect of disturbing the statutory timelines and delaying the CIRP, leading to a depletion in the value of the assets of a Corporate Debtor in the event of a potential liquidation. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared the position in law to not enable a withdrawal or modification to a successful Resolution Applicant after its submission to the Adjudicating Authority, long delays in approving the Resolution Plan by the Adjudicating Authority affect the subsequent implementation of the plan. These delays, if systemic and frequent, will have an undeniable impact on the commercial assessment that the parties undertake during the course of the negotiation. xxx xxx xxx ....The NCLT and the NCLAT should endeavor, on a best effort basis, to strictly adhere to the timelines stipulated under the IBC and clear pending resolution plans forthwith. Judicial delay was one of the major reasons for the failure of the insolvency regime that was in effect prior to the IBC. We cannot let the present insolvency regime meet the same fate. 55. The Learned Counsel for the First Respondent refers to the judgement of this Tribunal dated 28.06.2021 in Comp App (AT)(INS) No.233 and 333 of 2021 reported in MANU/NL/0240/2021 Between Dwarkadhish Sakhar Karkhana Ltd and Ors Vs Pankaj Joshi and Ors wherein (for Issue No. iv) whether to allow DSKL after due date to file the EOI is a commercial decision? at para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Kalpraj (supra) which reads as under:- 156. No doubt, it is sought to be urgent, that since there has been a material irregularity in exercise of the powers by RP, NCLAT was justified in view of the provisions of clause (ii) of sub-section (3) of Section 61 of the I B Code to interfere with the exercise of power by RP. However, it could be seen, that all actions of RP have the seal of approval of CoC. No doubt, it was possible for RP to have issued another Form G , in the event he found, that the proposals received by it prior to the date specified in last Form G could not be accepted. However, it has been the consistent stand of RP as well as CoC, that all actions of RP, including acceptance of resolution plans of Kalpraj after the due date, albeit before the expiry of timeline specified by the I B Code for completion of the process, have been consciously approved by CoC. It is to be noted, that the decision of CoC is taken by a thumping majority of 8436%. The only creditor voted in favour of KIAL is Kotak Bank, which is a holding company of KIAL, having voting rights of 0.97%. We are of the considered view, that in view of the paramount importance given to the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 13.06.2020 and when the CoC reviewed its earlier Resolution these same challenges were there too, there is no change in circumstances which compel them to review/revisit their earlier decision. They have not assigned any good reason for revisiting their earlier decision. The CoC in the shelter of maximisation of value of asset, cannot be permitted to take any decision at any point of time in the name of commercial wisdom. In the present case the Resolution Plan of DSKL is yet to be examined with the comparison of other PRAs. Therefore, at this stage, how one can say that the decision taken in the favour of DSKL was for maximization of value of asset. 37. Now, we have considered whether the decision taken by the CoC in 09th CoC meeting was an independent decision or was it procured by Pankaj Joshi by suppressing material facts. 38. At the time of 9th CoC meeting, Pankaj Joshi has suppressed the fact that he was served with the Application of DSKL and that they are going to file application before the Adjudicating Authority against the decision of 7th CoC . If such fact was disclosed by Pankaj Joshi at the time of convening 9th CoC then they might be precluded from revisitn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority mentioned the time of receipt of e-mail dated 18th August, 2018 (Annexure A-9) from the Appellant at 11:50:58 hours, the document filed by the Appellant himself shows that it was received/sent after 12 o clock. In terms of Clause -6 of Regulation 36-A, even if such e-mail was to be categorized as an expression of interest, it would require to be rejected. Apart from this, if Sub-Clause -7 of Regulation 36-A is seen, it requires that the expression of interest shall be unconditional and should be accompanied by undertakings, records, information as specified in Sub-Clause a to g . One of the requirements for the prospective Resolution Applicant is giving undertaking that it meets the criteria specified by the Committee under Clause h Sub-Section (2) of Section 25. We have already reproduced the e-mail dated 18th August, 2018. It can hardly be said to be complying with any of the requirements as provided under IBC. No doubt the RP sent the Appellant e-mail (Annexure A-10) that the CoC had discussed and found the e-mail not to be in conformity with the requirements asked for and also the provisions of IBC. We have gone through the expression of interest (Annexure A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g forth which or the other Notification etc. applies. Under Sections of MSME Act, even if getting Memorandum Certificated for a given enterprise may be optional, if advantage is to be taken of MSME Act, the Applicant must take pains to get the Memorandum Certificate to seek benefits under IBC. 19. The Learned Counsel for the Appellant relied on the Judgement in the case of Saravana Global Holdings Ltd Anr Vs.Bafna Pharmaceuticals Ltd Ors. of this Tribunal in Company Appeal (AT) (Ins) No.203 of 2019 dated 4th July, 2019 to submit that in that matter benefit was given to the Corporate Debtor when it was claimed that it was MSME. If para 8 and para -19 of that Judgement are seen, the Resolution Professional in that matter had confirmed that the Resolution Applicant therein was an MSME and was eligible under Section 29-A of IBC. That being not the case in present matter and there being disputes of facts being raised, the Appellant cannot take benefit of the said Judgement. 20.When this Appeal was filed, and the appellant claimed that the Corporate Debtor was MSME by Interim Order dated 3rd September, 2019. This Tribunal had directed that during the pendency of the Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oC. Finally, he has also submitted that the present appeal is misconceived in law and facts and the Application needs to be dismissed. 24.We have gone through the ubmission of the Appellant, SBI and Respondent it is observed that the Appellant has strictly not complied with the terms and conditions of Expression of Interest (EOI) dated 14.08.2018 and non-submission of EMD along with submission of Resolution Plan dated 4.10.2018 as required by the Bid Process Memorandum. They have also deviated on other parameters. And hence CoC after deliberation has rejected the plan and accordingly the Resolution Professional has communicated to the Resolution Applicant. Since, liquidation proceedings as a going concern is already on from July 2019 and there is always scope for Resolution Applicants to opt for Arrangements under Section 230-232 of the Companies Act, 2013, if they are eligible in accordance with provisions of Insolvency and Bankruptcy Code, 2016 along with relevant Rules. Hence there is no merit in the case to consider the relief of setting aside the impugned order of NCLT, Hyderabad Bench. We hphold the order of NCLT Hyderabad Bench and with the passing of this order, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same was premature and therefore, not maintainable. In this connection, the Learned Counsel for the Second Respondent submits that the I B Code, 2016 does not prohibit the Committee of Creditors from excepting a Resolution Plan from a Prospective Resolution Applicant who had submitted the Expression of Interest within the time prescribed by the Committee of Creditors . 62. According to the Learned Counsel for the Second Respondent, the Adjudicating Authority had not appreciated the Fact on Record that Vedanta Ltd. was taking part as a Prospective Resolution Applicant in the Corporate Insolvency Resolution Process of the Corporate Debtor from the year 2020. That apart, Vedanta Ltd. had submitted its Expression of Interest on 27.02.2020 and was also included in the final list of Prospective Resolution Applicant issued by the Respondent on 08.03.2020 and later on 03.02.2021 as per Regulation 36A(12) r/w Regulation 36B(7) of the CIRP Regulations . In fact, Vedanta Ltd. had an access to the Data Room together with the other shortlisted Prospective Resolution Applicants forming part of the final list of the Prospective Resolution Applicants . As such, Vedanta Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insolvency Resolution Process of the Corporate Debtor in the best interest of the Corporate Debtor , its employees and other stake holders, bearing in mind the object and spirit of the Code. 68. The Learned Counsel for the Second Respondent contends that the impugned order of the Adjudicating Authority begs the question that in the event of lapse of 330 days period and in the absence of an order from the Adjudicating Authority , pertaining to an extension, whether the Corporate Insolvency Resolution Process can be stopped until such an order is passed. 69. The Learned Counsel for the Second Respondent (Resolution Professional)/ Appellant submits that the Adjudicating Authority in the impugned order dated 24.06.2021 in I.A. 244 of 2021 in CP(IB) No.184/HDB/07/2019 at paragraph 16 had wrongly observed that: we are of the view that CoC and Resolution Professional have taken the process into their own hands even though they cannot extend timelines beyond 330 days unilaterally without the approval of the Adjudicating Authority. This action of Resolution Professional is contrary to the letter and spirit of the Code and its Regulations. and finally came to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Professional before the Adjudicating Authority praying for extension of 60 days that was granted as per order dated 08.01.2021. In view of the fact, that CIRP must be completed within 330 days as noted in the order of the Adjudicating Authority dated 08.01.2021, failing which the liquidation proceeding would be initiated the Second Respondent / Resolution Professional filed an Appeal before National Company Law Appellate Tribunal , Chennai Bench in Comp App (AT) (CH) (INS) No. 15 of 2021 and that the Appellate Tribunal through an order dated 25.03.2021 directed the Adjudicating Authority to take up the I.A. No.120 of 2021 and dispose of the same by passing a reasoned order and dismissed the Appeal as withdrawn . 74. It is brought to the notice of this Tribunal that upon the extension of CIRP period, as per order dated 08.01.2021 the Second Respondent/ Resolution Professional had re-issued the Form G on 25.01.2021, pursuant to the original Form G, which was earlier published on 21.01.2020. 75. In terms of the Invitation for Expression of Interest , a final list of Prospective Resolution Applicants was drawn on 08.02.2021 and they were to furnish their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essional had addressed an email to the First Respondent/Applicant informing them that the deadline to furnish the Resolution Plan by the Prospective Resolution Applicants was extended unilaterally, as per the decision of the Committee of Creditors and further informed that the Committee of Creditors had received an additional Plan after the deadline for submission of the Resolution Plan and hence decided to extend the deadline for all Prospective Resolution Applicants included in the final list of the Prospective Resolutions Applicants dated 21.02.2021 (one time opportunity to submit Improvised Plan ). In fact, the Resolution Professional through its email dated 21.04.2021 had informed that the consideration of the Additional Resolution Plan would be subject to the decision of the Adjudicating Authority . 80. It is averred by the First Respondent/Applicant in IA 244/2021 in CP (IB)No.184/HDB/2019 that being dissatisfied with the email of the Resolution Professional dated 21.04.2021, it, on 30.04.2021 had addressed a Letter/email to the Resolution Professional strongly objecting to the consideration of the Additional Resolution Plan , for which no reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e only the plans submitted before the due date before the Committee of Creditors for its consideration; 85. Before the Adjudicating Authority in the Reply filed on behalf of Members belonging to the Committee of Creditors of the Corporate Debtor through State Bank of India at paragraph 4 (a) and 4(c) it is averred as under:- a) The Applicant Consortium lacks the locus standi to file the instant Application. The Applicant Consortium being a prospective resolution applicant has no vested or fundamental right vis- vis the CIRP until their resolution plan is approved for the Corporate Debtor as held by the Hon ble Supreme Court decision in the case of Arcelor Mittal India Pvt Limited Vs. Satish Kumar Gupta and Ors, (Judgement dated October 4, 2018 in Civil Appeal Nos 9402-9405 of 2018). c) The instant Application is not maintainable and premature at this stage in as much as (a) no resolution plan has yet been approved by the CoC so far: (b) Applicant Consortium has no vested or fundamental right to raise challenge vis- vis the CIRP at this stage: and (c) the Extension Application seeking time for completion of CIRP is pending adjudication before the Hon ble Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.244/2021 and the Maintainability of the Application , (although the said pleas were taken by the Committee of Creditors of Meenakshi Energy Ltd as well as by the Resolution Professional) to the effect that as on date, no adjudication has been made in regard to the Resolution Plan . However, keeping in mind the jurisdiction of the Adjudicating Authority , (National Company Law Tribunal) as per ingredients of Section 60(5)(c) of the I B Code, 2016, this Tribunal holds that the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench-II) is entitled to determine the question of priorities, question of law or facts arising out of or in relation to Insolvency Resolution (relating to the Corporate Debtor ) in I.A. No.244 of 2021 in CP (IB) No.184/HDB/7/2019 and to dispose of the same on merits, of course, by passing a reasoned/speaking order. 91. At this stage, it is not out of place for this Tribunal to make a relevant mention that the Adjudicating Authority on 07.11.2019 had admitted the Section 7 Application filed by the State Bank of India (Financial Creditor) under I B Code, 2016 initiating the CIRP against the Corporate Debtor /Meenakshi Ene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law Tribunal, Hyderabad Bench, Hyderabad) to take up the IA No.120 of 2021 (filed by the Appellant/Applicant seeking extension of 60 days for completion of CIRP ) pending on its file, on the next date of hearing i.e. 23.04.2021 and to dispose of the same on merits by passing a reasoned order , of course, in a fair, Just and dispassionate manner in accordance with Law and in the manner known to Law, at an early date. 98. The Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench) in I.A. No.120 of 2021 filed by the Resolution Professional (seeking for an extension of CIRP process , which was pending before it), on 15.07.2021 passed an order granting 45 days for completion of the CIRP process, much after the order passed by it in IA No.244/2021 in CP (IB) No.184/HDB/7/2019 (filed by the First Respondent/ Consortium of Prudent ARC and Vizag Minerals/Applicant). 99. It must be borne in mind that in IA No.244/2021 in CP (IB) No.184/HDB/7/2019 (filed by the First Respondent/ Consortium of Prudent ARC and Vizag Minerals/Applicant) an order was passed on 24.06.2021, but the said impugned order was published on the Adjudicating Authority (Tribunal s website) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in I.A. No.244 of 2021 in CP (IB) No.184/HDB/7/2019 dated 24.06.2021 (uploaded on 09.07.2021), with a view not to give room for complications and to avoid wider ramifications and implications. Unfortunately, such a course was not resorted to, which in the considered opinion of this Tribunal is not a desirable/ palatable one. Need of Speed 102. It cannot be gainsaid that speed is the gist for an effective functioning of the I B Code. As per Section 12(2) of the Code, an application for an extension of Insolvency Resolution Process must be made by Resolution Professional, if directed/ instructed in that regard, by means of a Resolution passed by the 75% majority of the Creditors . The timeline i.e. prescribed is for the reason that liquidation proceedings otherwise should not be for an interminable period, thereby jeopardizing the interest of all Stakeholders in the Corporate Insolvency Resolution Process . Observance of Time Frame 103. Indeed, all the concerned Authorities are necessarily required to adhere to the timeline enunciated in Regulation 40A of the IBBI (Corporate Insolvency Resolution Process for Corporate Persons) Regulations, 2016. No wonde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be necessary for Insolvency Resolution of Corporate Debtor for maximisation of his assets including but not limited to the matters mentioned in this Regulation. 107. As per Regulation 40 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Committee may instruct the Resolution Professional to make an application to the Adjudicating Authority under this Section (12) to extend the Insolvency Resolution Process period. Upon receiving an instruction from the Committee under this Regulation , the Resolution Professional shall make an application to the Adjudicating Authority for such an extension. 108. It is to be pointed out that the Tribunal/ Appellate Tribunal are showered with restricted jurisdiction mentioned in the I B Code, 2016 and they cannot function as Courts of Equities or exercise plenary powers. In short, they are scrupulously bound by the discipline of statutory provisions and they cannot traverse beyond the parameters of law. Resolution Professional s Duty 109. A Resolution Professional is not to be made liable because his perception is incorrect unless it is unrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspects enumerated in the relevant Sections of the Code, depending on the points/ issues involved. 113. As far as the present case is concerned, the Resolution Plan of the First Respondent/ Consortium of Prudent ARC Limited Vizag Minerals and Logistics Pvt. Ltd. was filed along with plan, payment of Earnest Money Deposit of ₹ 1/- crore on 06.03.2021. As a matter of fact, on 05.03.2021 Sindhu Trade Links Ltd. (STLL another Prospective Resolution Applicant ) submitted its Resolution Plan. The Vedanta submitted its Resolution Plan on 16.04.2021 i.e. after the due date of 08.03.2021 (the expiry of 330 days period). The Committee of Creditors on 20.04.2021 had decided to consider the Vedanta Resolution Plan in the absence of any orders being obtained from the Adjudicating Authority in the teeth of the ingredients of the I B Code, 2016. 114. Although, on behalf of the Second Respondent/Resolution Professional it is brought to the notice of this Tribunal that since the decision of the Committee of Creditors to extend the time beyond 08.03.2021 was at all times been subject to 330-390 days Extension Application and the same was also adequately recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent/ Resolution Professional to place only the Resolution Plan of First Respondent/ Consortium of Prudent ARC Limited Vizag Minerals and Logistics Pvt. Ltd. ( Prospective Resolution Applicant ) and the Resolution Plan of Sindhu Trade Links Ltd. ( STLL ), which were submitted before the due date, before the Committee of Creditors for its consideration and to complete the CIRP keeping in mind on 07.11.2019, the C.P.(IB) No.184/7/HDB/2019 was admitted by the Adjudicating Authority commencing CIRP against the Corporate Debtor , a timely resolution of stressed assets is a prime factor in the successful working of the Code, the interest of the Stakeholders including the Creditor(s) , effectively balancing within the four corners of Law , and as per I B Code, 2016 and Regulations without any further loss of time. 116. With the aforesaid observations and directions the Company Appeal (AT) (CH) (INS.) Nos.166 174 of 2021 stand disposed of. No costs. All connected pending IAs are closed. 117. Before parting with the case, in view fact that the Second Respondent/ Resolution Professional/ Appellant in Comp App (AT) (CH) (INS) 174 of 2021 has come out wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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