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TMI Blog2022 (11) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Company Law Tribunal', Hyderabad Bench-II), whereby, the 'Adjudicating Authority', dismissed the Petition filed under the Insolvency & Bankruptcy Code, 2016 (in short 'I & B Code', 2016). Brief Facts: 2. M/s Earthin Projects Ltd. is the 'Appellant' in present 'Appeal', before this 'Appellate Tribunal' is the 'Successful Resolution Applicant'. Mr. Anup Kumar Singh is a 'Resolution Professional' of 'Indu Projects Ltd.', is the 1st Respondent herein. 'Indu Projects Ltd.', is the 'Corporate Debtor' under 'Corporate Insolvency Resolution Process', is the 2nd Respondent herein. 3. On an application filed by the Bank of India as Financial Creditor of the Corporate Debtor (Indu Projects Ltd.), the 'Adjudicating Authority' admitted 'Corporate Insolvency Resolution Process' on 25.02.2019 and Mr. Gopi Krishna Byadigera was appointed as 'Interim Resolution Professional' on 05.03.2019. However, on the recommendation of the 'Committee of Creditors', Mr. Anup Kumar Singh was appointed as 'Resolution Professional' by the 'Adjudicating Authority', on 04.06.2019. 4. The 1st Respondent invited 'Expression of Interest' in Form-G on 16.07.2019 inviting prospective 'Resolution Applicants' to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in case the RA fails to pay the balance instalments as mentioned in the Resolution Plan, and there is subsisting default beyond 7 days from schedule date, such default amount shall be liable for simple interest @ 8% per annum". 7. In terms of the approved 'Resolution Plan' a monitoring committee was formed on 28.10.2021 consisting of three representative one each from 'Resolution Professional', 'Financial Creditor' and 'Successful Resolution Applicant' (the 'Appellant' herein). 8. The 'Appellant' has brought out that he was under honest belief that effective date being 25.10.2021 i.e. date when approved 'Resolution Plan' was uploaded (in contrast to the provisions made in the 'Resolution Plan' which defines effective date as date of order of approved by the 'Adjudicating Authority' which was 01.10.2021). Be that as it may, the 'Appellant' failed to make payment of Rs. 501 crores within 90 days of the effective date. The 'Appellant' has brought out that this was due to post COVID-19 uncertainly, delayed disbursement of fund by global investors etc. The 'Appellant' approached the 'Adjudicating Authority' by way of I.A. 733 of 2021 in I.A. 861 of 2020 under Rule 11 r/w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs under Section 74 (3) of the I&B Code, 2016 have to be initiated as per Law shall not hold good. In so far as the observations made by the 'Adjudicating Authority', ("National Company Law Tribunal", Hyderabad Bench) in the impugned order in IA No.77 of 2022 in IA No.861 of 2020 in CP(IB)-372/7/HDB/2018 are to the fact that "we are very upset with the manner in which the 'Monitoring Committee' has given a very very long rope to the Applicant in making the payment. We get a doubt on the fairness of the 'Monitoring Committee' with regard to implementation of the Resolution Plan" to that extent is expunged by this Tribunal in furtherance of 'substantial cause of justice'. Accordingly, the instant Company Appeal (AT)(CH)(Ins) No.86/2022 stands disposed of. No costs. The pending connected I.A. Nos.183 & 184/2022 are closed." [emphasis supplied] 11. This 'Appellate Tribunal' note that in the meantime one 'Operational Creditor' M/s Vishal Nirmiti Pvt. Ltd. approached Hon'ble Supreme Court of India vide Civil Appeal No. 3660 of 2022 under Section 62 of I & B Code, 2016 against this 'Appellate Tribunal' Judgment and order dated 13.04.2022. Following relevant portion of the Judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that no further extension would be given. The relevant portion of the judgment of the 'Adjudicating Authority' dated 05.09.2022 is also been quoted as under :- "This IA is filed by the Resolution Professional seeking extension of 60 days time to conduct the CIRP afresh in the light of the failure of the successful bidder in honouring the commitments made in the Resolution Plan. The IA is allowed and the Resolution Professional is directed to complete the Corporate Insolvency Resolution Process afresh, within 60 days from today and no further extensions, whatsoever, will be granted in the matter. Accordingly, prayer in Item No. C in IA(IBC)/283/2022 is allowed. Prayers in Item Nos. A, B are not pursued by the Resolution Professional. In view of passing of the order in this IA and taking into consideration the earlier orders of this Bench on 01.03.2022 rejecting granting of extension of time to the Successful Resolution Applicant f(SRA) and also the NCLAT orders dt.13.04.2022 passed in an appeal preferred against the order of rejection of extension of time by this tribunal, by virtue of which a time of three more months to make payment, was given, IA(IBC)/654/2022 has becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disbursement of fund by global investors the 'Appellant' could not meet the time line for settling claims as given in the 'Resolution Plan' and accordingly the 'Appellant' approached the 'Adjudicating Authority' by way of I.A. No. 77 of 2022 (Extension Application) for seeking extension of timelines, however the 'Adjudicating Authority' dismissed the extension application ignoring the prevailing circumstances and genuine ground for seeking extension. 16. The Learned Counsel for the Appellant pointed out that despite his best intension to resolve the matter and bring back the 'Corporate Debtor' from liquidation stage, the 1st Respondent approached the 'Adjudicating Authority' vide I.A 283 of 2022 with several prayer, inter-alia, invoking EMD bank guarantee of the 'Appellant' and initiating fresh 'Corporate Insolvency Resolution Process'. 17. The Learned Counsel for the Appellant mentioned that aggrieved by this he approached this 'Appellate Tribunal' in CA (AT)(CH) (Ins.) No. 86 of 2022. The Learned Counsel for the Appellant highlighted that this 'Appellate Tribunal' appreciating the genuine grievances of the 'Appellant' and valid circumstances allowed extension of time as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt payment of around Rs. 60 crores under the 'Resolution Plan' and if the 'impugned order' is not set aside, the investment made by the 'Appellant' will go down the drain. The Learned Counsel for the Appellant also stated that the very purpose of the I & B Code, 2016 is to bring back the 'Corporate Debtor' from the brink of the Insolvency and put it back as a going concern. The Learned Counsel for the Appellant also mentioned that since then they have tied up the funds with foreign entities and are ready to settle the 'Resolution Plans'. The Learned Counsel for the Appellant further stated that the 'Resolution Plan' itself had foreseen the circumstances of delay and provided for delayed payment @ 8% which they are willing to pay. 22. The Learned Counsel for the Appellant stated that the 'Adjudicating Authority' failed to exercise inherent powers granted to it under Section 60(5) of the I & B Code, 2016 to meet ends of justice. 23. The Learned Counsel for the Appellant concluding his pleadings requested this 'Appellate Tribunal' to set aside the 'impugned order' dated 05.09.2022 passed by the 'Adjudicating Authority' in I.A 283 of 2022 and I.A 655 of 2022 along with restraining 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding request of forensic audit did not have any substance on merit and was initiated only to delay the whole proceedings and making the payments as per 'Resolution Plans'. The Learned Counsel for the Respondent also assailed the contention of the 'Appellant' that he was not given an opportunity of being heard and his rights of natural justice were breached were simply misconstrued as the 'Adjudicating Authority' considered all the relevant factors into consideration before disposing I.A. No. 654 & 655 of 2022. The Learned Counsel for the Respondent also mentioned that the 'Resolution Plan ' was supposed to be prepared with due diligence and the 'Appellant' cannot be allowed to raise boggy issues to circumvent the settlement payments. 28. The Learned Counsel for the Respondent also denied averments made by the 'Appellant' that he was not given hearing in I.A. No. 655 of 2022 ('Impleadment Applications'). The Learned Counsel for the Respondent further stated that in I.A. No. 655 of 2022 became infructuous since 'Resolution Applicant' failed to fulfil his commitments within the time period granted by the 'Adjudicating Authority' as well as extended time period granted by this 'Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and Others (2020) 11 SCC 467 gave very clear verdict that commercial wisdom of CoC is supreme and neither the 'Adjudicating Authority' not the 'Appellate Authority' can trespass the commercial wisdom of the 'Committee of Creditors'. 32. The Learned Counsel for the Respondent mentioned that the pursuant to the 'Adjudicating Authority' order dated 05.09.2022, the 1st Respondent has already issued fresh 'Form G' inviting 'Expression of Interest' from perspective Resolution Applicants on 19.09.2022 in order to revive the 'Corporate Debtor' and any intervention at this stage will only frustrate the whole process and reduce the economic value of the 'Corporate Debtor'. 33. The Learned Counsel for the Respondent concluded his arguments with the strong plea to dismiss the Appeal. Findings 34. Heard the Learned Counsel for the Appellant and the Respondents and also perused record made available to us. Several issues have been raised in the Appeal which are required to be deliberated upon before coming to final conclusion. (I) Whether the 'Adjudicating Authority' has got the sufficient power to extend the time lines for making payments as per approved 'Resolution Plan' and if so, whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime being in force; (f) conforms to such other requirements as may be specified by the Board. [Explanation.-For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law]; (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). [(4) The committee of creditors may approve a resolution plan by a vote of not less than 5 [sixty-six] per cent. of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under section 29A and may require the resolution professional to invit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1),- (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. [(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.]" * The objective of I & B Code, 2016 is for maximisation of value of assets of the Corporate Debtor and not maximisation of value of any one stake ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... num". * Taking 01.10.2021 as effective dated 90 days period and additional 60 days with interest of 8 % per annum would be over quite sometime back. * Admittedly, the 'Appellant' till date, even after substantial period is over has paid around Rs. 60 crores as against required to be Rs. 501 crores as per 'Resolution Plan' in addition to Rs. 40 crores as working capital (total Rs. 541 crores). Thus, broadly 90% of Resolution Plan settlement amount is yet to be brought in by the 'Appellant'. * It is noted that this 'Appellate Tribunal' has granted additional three months period vide its earlier order dated 13.04.2022 which has also been noted by the Hon'ble Supreme Court of India while disposing the appeal against this 'Appellate Tribunal's order as discussed earlier in preceding paragraphs. * The 'Adjudicating Authority' while disposing I.A. No. 283 of 2022 filed by 1st Respondent as taken note of this 'Appellate Tribunal' and recorded that despite this extended time line, the 'Appellant' could not make the payment. * This 'Appellate Tribunal' consciously notes that powers of the 'Adjudicating Authority' has been clearly defined in Section 31 of the I & B Code, 2016 (discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding paragraphs averments made by the 'Respondent' on above contentions of the 'Appellant'. * It has been observed from the order of the 'Adjudicating Authority' while disposing I. A 283 of 2022 vide order dated 05.092022 that the 'Adjudicating Authority' has factored into I.A. No. 654 of 2022 and has recorded that this has become infructuous due to non - payment by the 'Appellant' and failure to comply with the orders dated 13.04.2022 passed by this 'Appellate Tribunal'. The 'Adjudicating Authority' has also taken a view that once the extended time lines of stipulated by this 'Appellate Tribunal' is over the 'Adjudicating Authority' do not have any further power to extend the time lines. * As regard, I.A No. 655 of 2022 the 'Adjudicating Authority'' has mentioned that no such I.A's was filed by the Resolution Professionals for initiation of liquidation proceedings of the Corporate Debtor as such 'Adjudicating Authority' did not find any reason to keep order pending and dismissed I.A. No. 655 of 2022 and pronounced the judgment in I.A No. 283 of 2022 on 05.09.2022. * In I.A. No. 283 of 2022 the 1st Respondent had asked for dismissing I.A. No. 77 of 2022 of the 'Appellant' as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Plan', the 'Appellant' is yet to settle around 90% of its liabilities towards the 'Resolution Plan'. * It is a fact that the timely resolution is very important in case the value of the 'Corporate Debtor' is required to be preserved and in order to ensure maximisation of value of assets of the 'Corporate Debtor'. This 'Appellate Tribunal' has also noted that pursuant to the 'Adjudicating Authority' order for fresh 'Corporate Insolvency Resolution Process', the 1st Respondent has already issued fresh 'Form-G' on 19.09.2022 inviting fresh "Expression of Interest" from prospective Resolution Applicants and any interference at this stage will hamper the entire process and perhaps may lead to liquidation which is practically death knell of the 'Corporate Debtor'. In view of all above, this 'Appellate Tribunal' do not find any error in the 'impugned order' on this account. Issue No. (IV) Whether, the 'Appellant' exhausted legal remedies in view of failure to comply extended time lines permitted vide order dated 13.04.2022 as well as after dismissal of appeal filed by one 'Operational Creditor' before the Hon'ble Supreme Court of India challenging this Appellate Tribunal's order ? ..... X X X X Extracts X X X X X X X X Extracts X X X X
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