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TMI Blog2022 (9) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government any State Government or any Local Authority etc. In the present case, the Adjudicating Authority vide impugned order directed the 1st Respondent to place the resolution plan before the CoC for its consideration by excluding and extending the CIRP period, when an application is pending for approval of resolution plan, which is completely illegal and against the law laid down by the Hon ble Supreme Court in Ebix Singapore [ 2021 (9) TMI 672 - SUPREME COURT ] - This Tribunal in the facts of the present case, is of the opinion that there are no reasons for extending and excluding the CIRP period by the Adjudicating Authority. It is not the case that no PRAs received in the CIRP process and to afford an opportunity to call for PRAs with an aim to avoid liquidation of the Corporate Debtor. In the present case, the plan is pending for approval before the same Adjudicating Authority and the Adjudicating Authority for reasons best known to it allowed the application filed by the Respondents No. 5 to 7 is arbitrary and against all canons of law. Whether the Adjudicating Authority can overlook the decision of CoC which was taken in their commercial wisdom? - HELD TH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 227/2020 and 225/2020 in C.P. (IB) No.51/BB/2018, whereby the Adjudicating Authority directed the Resolution Professional (R-1) to place the Resolution Plan submitted by Swamitva Landmark Ors. before the CoC along with the Resolution Plan filed by METL (Appellant) and after considering both the plans by the CoC, the plan approved by the CoC shall be submitted to the Adjudicating Authority for its consideration and approval. Brief Facts: Appellant s Submissions: 2. The Learned Counsel for the Appellant submitted that the Appellant is aggrieved by the impugned order whereby it has directed the RP and the Members of CoC to consider evaluation and approval of Resolution Plans after elapse of nearly 14 months and after the resolution plan submitted by the Appellant was approved unanimously by 100% voting share of the CoC pursuant to the 19th Meeting held on 11.02.2020. 3. It is submitted that the Appellant submitted a Resolution Plan on 07.12.2019 and the plan of the Appellant was discussed and negotiated with the members of the CoC and pursuant to the discussions the Appellant submitted an amended and restated resolution plan dated 11.02.2020 and all the resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted thereafter. The Adjudicating Authority has directed that period from 05.03.2020 till the receipt of the impugned order dated 28.05.2021 stands excluded and the CIRP period extended by a period of 12 weeks (approximately 3 months) to carry out the directions set out in the impugned order. 7. The Learned Counsel further submitted that the Adjudicating Authority has disposed of the Application No. 161 of 2020 seeking approval of the resolution plan without consideration on merits and without approving or rejecting Appellant s resolution plan in accordance with Section 31 of the I B Code, 2016. 8. The Learned Counsel in the grounds of appeal submitted that the resolution process under the IBC is a time bound process where Prospective Resolution Applicants (in short PRAs) are required to submit resolution plans for the consideration of the CoC within the time lines prescribed under the IBC. The Adjudicating Authority does not have the power to direct the CoC to consider a resolution plan submitted beyond the expiry of the CIRP period. The said extension of time beyond the period of 330 days is in the teeth of the judgment of the Hon ble Supreme Court in Committee of Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating Authority has rightly allowed the other applications owing to the merits in them. The I.A. No. 161 of 2020 filed by the RP seeking approval of the plan is concerned the same is a result of an irregular process followed in by the RP. 13. It is submitted that the submission of plan by these Respondents is within the CIRP period on the ground that post 14.03.2020 any day in the CIRP period would not be considered as a day passed by, by virtue of the order passed by the Hon ble Supreme Court. The Regulation 40C of the CIRP Regulations specifically excluded the time for any activity from the CIRP period by virtue of the lockdown imposed by the Central Government in the wake of outbreak of Covid-19. The Adjudicating Authority considered all submissions and rightly concluded that the time could be extended for completion of CIRP by virtue of this Tribunals ruling in Quinn logistics India Pvt. Ltd. Vs. Macks of Softtech Pvt. Ltd., which permitted such extension of time under justified circumstances. 14. The Learned Senior Counsel relied upon the judgment of the Hon ble Supreme Court in the case of Creditors of Essar Steel India Limited through Authorised Signatory Vs. Satish Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt citations. After analysing the pleadings, the issue fell for consideration is whether the Appellant has made out any case warranting interference by this Tribunal in the order passed by the Adjudicating Authority (impugned order). 19. The Appellant is the Successful Resolution Applicant of the Corporate Debtor whose plan has been approved by the Committee of Creditors on 06.03.2020 unanimously by 100% voting share. 20. It is an admitted fact that the Corporate Debtor was admitted and CIRP was initiated against it vide order dated 26.10.2018. The 1st Respondent being the RP published invitation for EoI for submission of resolution plan and the last date for submission of EoI was extended from time to time. The Appellant submitted its EoI on 04.10.2019 for submission of resolution plan. The Appellant submitted its resolution plan on 07.12.2019 and the members of CoC deliberated the said plan in various meetings of the CoC. The Appellant submitted an amended and re-stated resolution plan on 11.02.2020 and the resolution plan of the Appellant along with other resolution plans received by the 1st Respondent was put for e-voting. The e-voting took place from 13.02.2020 till 06.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithdrawal from the resolution process by the Respondents No. 5 to 7, the 1st Respondent continued to keep them informed about the time lines in the resolution process including the extension and last date for submission of the resolution plan was on 30.11.2019 to 07.12.2019. 23. As per Clause 2.1.5 of Request for Resolution Plan (RFRP) dated 09.10.2019, it is made clear that any resolution plan submitted beyond date would be at the sole discretion of the resolution professional and it would be considered that the plan to be considered as non-responsive , at the sole discretion of the resolution professional. The Adjudicating Authority was of the view that the 1st Respondent had not complied with the provisions of law contained in Regulation 36(2)(b), (c), (d) and (f) of CIRP Regulation, 2016 by not providing the requisite details such as audited accounts and details of creditors as required under the above Regulation. 24. The Adjudicating Authority miserably failed to note that the Respondents No.5 to 7 have withdrew from the resolution process on 06.11.2019 and they have not submitted any resolution plan nor there is any request for asking the details of the Corporate Debto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 8 SCC 531 at para 127. Whilst with regard outer limit of 330 days. The Hon ble Supreme Court held 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 . Thus, the CIRP is to be completed in 330 days and only extension can be granted in exceptional circumstances. 28. Further, this Tribunal in Pioneer Rubchem Vs. Vivek Raheja Ors. Company Appeal (AT) (Ins) No. 706 of 2020 at para 4 observed that although it is directory that CIRP can be completed up to a period of 330 days or so which is largely to consider the time frame of judicial process. Hence, practically all attempts to be made to complete the CIRP within 270 days . 29. The point for consideration is whether the resolution plan submitted for approval of the Adjudicating Authority under Section 31 of I B Code, 2016 is binding on the CoC and Successful Resolution Applicant. From the judicial precedents it is a settled position of the law that once the CoC has approved a resolution plan which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IBC, as held by a three judge Bench of this Court in Essar Steel (supra). Therefore, after accounting for all statutorily envisaged delays which the RP has to explain in its Form H and otherwise through Regulation 40B, the procedure envisages a fifteen-day window between submission of Resolution Plan and its approval or rejection by the Adjudicating Authority. This clearly indicates that the statute envisages a certain level of finality before the Resolution Plan is submitted for approval to the Adjudicating Authority. Even the CoC is not permitted to approve multiple Resolution Plans or solicit EOIs after submission of a Resolution Plan to the Adjudicating Authority, which would possibly be in contemplation if the Resolution Applicant was permitted to withdraw from, or modify, the Plan after acceptance by the CoC. Regulation 36B(4A) requires the furnishing of a performance security which will be forfeited if a Resolution Applicant fails to implement the Plan. This is collected before the Adjudicating Authority approves the Plan. Notably, the regulations also direct forfeiture of the performance security in case the Resolution Applicant contributes to the failure of implementati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33. This Tribunal in the facts of the present case, is of the opinion that there are no reasons for extending and excluding the CIRP period by the Adjudicating Authority. It is not the case that no PRAs received in the CIRP process and to afford an opportunity to call for PRAs with an aim to avoid liquidation of the Corporate Debtor. In the present case, the plan is pending for approval before the same Adjudicating Authority and the Adjudicating Authority for reasons best known to it allowed the application filed by the Respondents No. 5 to 7 in our view arbitrary and against all canons of law. 34. The other point needs to be addressed/considered is whether the Adjudicating Authority can overlook the decision of CoC which was taken in their commercial wisdom. The Hon ble Supreme Court in K. Shashidhar Vs. Indian Overseas Bank Ors. reported in (2019) 12 SCC 150 para 52 held as under: 52. As aforesaid, upon receipt of a rejected resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I B Code. The legislature has not endowed the adjudicating authority (NCLT) with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It has been held, that the opinion expressed by CoC after due deliberations in the meetings through voting, as per voting shares, is a collective business decision. It has been held, that the legislature has consciously not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the Adjudicating Authority and that the decision of CoCs commercial wisdom is made non justiciable. 36. From the decisions of the Hon ble Supreme Court, it is unequivocal that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated process within the time lines prescribed by the I B Code. Further the Hon ble Supreme Court in Kalpraj Dharamshi (supra) at para 145 held as under: 145. This Court held, that what is left to the majority decision of CoC is the feasibility and viability of a resolution plan, which is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIRP Regulations. In the case of Kundan Care, since both, the Resolution Applicant and the CoC, have requested for modification of the Resolution Plan because of the uncertainty over the PPA, cleared by the ruling of this Court in Gujarat Urja (supra), a one-time relief under Article 142 of the Constitution is provided with the conditions prescribed in Section K.2. 38. The Adjudicating Authority is not authorised to pass any orders which would circumvent and attempt to frustrate the resolution plan pending before it for consideration under Section 31 of the Code. The bitter truth remains that the Respondents No. 5 to 7 are completely standing outside of the CIRP and once evinced their EoI and backed out from participating in resolution process and now after completion of the CIR period their application cannot be considered. In this regard, this Tribunal in Kalinga Allied Industries Pvt. Ltd. Vs. Hindustan Coils Ltd. (2021) SCC Online NCLAT 51 para 15 held as under: 15. In pursuant to the expression of interest issued by RP on 24.08.2018 the Appellant submitted a Resolution Plan. After several rounds of deliberation by the COC revised Resolution Plan was submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on but it all depends on the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority and that is made non-justiciable . Thus, the Appeal No 1490/2019 deserves to be allowed. 40. We avowed the precedents/decisions of this Tribunal in re-Kalinga Allied Industries (supra) and in re-Shrawan Kumar Agarwal (supra) and affirm that there is no such provision in the Code or Regulation which provides that while exercising the power under Section 31 of the I B Code, the Adjudicating Authority can direct the CoC to consider the resolution plan of such person who has not been part of CIRP. Otherwise, also if such procedure is adopted then the CIRP will be frustrated. Admittedly, in the present case the Respondents No. 5 to 7 were not part of CIRP. 41. The reason given by the Adjudicating Authority that the 1st Respondent has not provided the documents to the Respondents No. 5 to 7 is concerned from the records, it is seen that the audited balance sheet up to a period of financial year 2014-15 was available from the data room which was accessible by all the PRAs including the Respondents No. 5 to 7. Further the financial st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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