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TMI Blog2022 (12) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... S. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED ORS. [ 2021 (9) TMI 672 - SUPREME COURT] is with respect to withdrawal/modification of a Resolution Plan by an SRA, the Hon ble Supreme Court has clearly laid down that the NCLT is Residuary Jurisdiction [under Section 60(5)(c)] though vide, is nonetheless defined by the text of the Code. Specifically, the NCLT cannot do what the IBC consciously did not provide it the power to do . Further, the Court observed that this Court must adopt an interpretation of the NCLT is Residuary Jurisdiction which concurs with the broader goals of the Code . Ebix Singapore Pvt. Ltd. has observed that strict timelines have to be adhered to and that the Adjudicating Authority lacks the authority to allow the withdrawal/modification of the Resolution Plan by an SRA, as this would defeat the very objective of the statute. In the instant case, though it is not the SRA which is seeking withdrawal, the effect of the CoC seeking withdrawal of an already approved Resolution Plan would have identical repercussions with respect to timelines as the same would have the effect of restarting the CIRP P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicating Authority has observed as follows: The counsel, appearing for the successful resolution applicant, submits that there is no scope for the CoC to reconsider the same once the plan is approved and improving of the value is not the question. In view of the fact that there is lot of passage of time and the approval of the plan has been delayed for various reasons and hence they should be given an opportunity to proceed and take over the unit. After hearing the submissions made by both the counsels, the legal point that arises here is that whether the financial creditors who are the constituents of the CoC, have the power or it is within their scope to withdraw a consent for the plan and try for other offers so that there is a maximization of value of the assets by inviting fresh offers. In view of the same, we are also of the considered view that the CoC is well within its powers to reject a plan, improve a plan and also withdraw a plan in their commercial wisdom and hence the decision on the part of the financial creditors to reconstitute the CoC and to construe better plans, is well within their powers and the same cannot be denied by this Bench. In view of the same t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIRP since the inception. 3. Submissions of the Learned Counsel appearing on behalf of the first Respondent: Learned Counsel for the first Respondent submitted that the CoC can withdraw and recall its consent given to a Resolution Plan prior to the approval by the Adjudicating Authority and placed reliance on the Judgements of this Tribunal in Siva Rama Krishna Prasad Vs. S. Rajendran, Official Liquidator of M/s. Krishna Industrial Corporation Ltd. Ors. Comp. App. (AT) (Ins.) No. 751/2020 , and in Gulabchand Jain Vs. Ramchandra D. Choudhary, Resolution Professional of Vijay Timber Industries Pvt. Ltd. Comp. App. (AT) (Ins.) No. 142/2021 in support of his submissions. Learned Counsel also relied on the Judgements of the Hon ble Apex Court in K. Sashidhar Vs. Indian Overseas Bank Ors. (2019) 12 SCC 150 , Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta Ors. (2020) 8 SCC 531 , and in Kalpraj Dharmashi Anr. Vs. Kotak Investment Advisors Ltd. Anr. 2021 SCC OnLine SC 204 , in support of his argument that the Commercial Wisdom of the CoC is non-justiciable and hence it is in the domain of the CoC to decide even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary 2019. Vide Order dated 27.02.2020, the Adjudicating Authority had directed the RP to consider the new Resolution Plan of HCL. The SRA preferred an Appeal challenging this Order dated 27.02.2020, which was allowed by this Tribunal in Kalinga Allied Industries India Pvt. Ltd. (Supra). It was directed that no new Application ought to be entertained if a person has not participated in the CIRP. The matter was heard on remand by the Adjudicating Authority when the CoC filed an Application I.A. 999/2021 to withdraw their approval after more than two years of its approval. It is significant to mention that the Order dated 11.01.2021 passed by this Tribunal was never challenged by the CoC and has hence since attained finality. 7. Learned Counsel for the first Respondent/CoC placed reliance on the Judgements of the Hon ble Apex Court in K. Sashidhar (Supra), Committee of Creditors of Essar Steel India Ltd. (Supra), and Kalpraj Dharmashi Anr. (Supra), in support of his submission that Commercial Wisdom of CoC is non-justiciable. The Hon ble Supreme Court in a catena of Judgements has held that the jurisdiction of the Tribunal is limited as far as the Commercial Wisdom of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a withdrawal, would have a deleterious impact on the Corporate Debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time. A failed negotiation for modification after submission, or a withdrawal after approval by the CoC and submission to the Adjudicating Authority, irrespective of the content of the terms envisaged by the Resolution Plan, when unregulated by statutory timelines could occur after a lapse of time, as is the case in the present three appeals before us. Permitting such a course of action would either result in a down-graded resolution amount of the Corporate Debtor and/or a delayed liquidation with depreciated assets which frustrates the core aim of the IBC. 245. If the legislature in its wisdom, were to recognize the concept of withdrawals or modifications to a Resolution Plan after it has been submitted to the Adjudicating Authority, it must specifically provide for a tether under the IBC and/or the Regulations. This tether must be coupled with directions on narrowly defined grounds on which such actions are permissible and procedural directions, which may include the timelines in which they can be proposed, vot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the NCLT cannot do what the IBC consciously did not provide it the power to do . Further, the Court observed that this Court must adopt an interpretation of the NCLT is Residuary Jurisdiction which concurs with the broader goals of the Code . Ebix Singapore Pvt. Ltd. (Supra) has observed that strict timelines have to be adhered to and that the Adjudicating Authority lacks the authority to allow the withdrawal/modification of the Resolution Plan by an SRA, as this would defeat the very objective of the statute. In the instant case, though it is not the SRA which is seeking withdrawal, the effect of the CoC seeking withdrawal of an already approved Resolution Plan would have identical repercussions with respect to timelines as the same would have the effect of restarting the CIRP Process from the valuation stage when all the statutory timelines have long since been exhausted. The principle with respect to timelines is applicable to the facts of this case. At the cost of repetition, it is crystal clear that any modification or a withdrawal (by SRA or otherwise) after approval by the CoC and submission to the Adjudicating Authority, irrespective of the content of the terms e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observing as follows: With the aforesaid, we are of the view that when the Application for approval of Resolution Plan is pending before the Adjudicating Authority at that time the Adjudicating Authority cannot entertain an Application of a person who has not participated in CIRP even when such person is ready to pay more amount in comparison to the successful Resolution Applicant. If a Resolution Plan is considered beyond the time-limit then it will make a Company Appeal (AT) (Ins.) No. 518 of 2020 never-ending process. Thus, impugned order is not sustainable in law as well as in fact. The impugned Order is hereby set aside. 9. This Order has attained finality and no fresh consideration of any Resolution Plan at this stage can be entertained. It is reiterated that the Maximisation of Value of Assets ought to be within the specified timelines and if it is not a timebound process , the entire scope and objective of the Code would fail merely because there is another higher offer made by a third party, the CoC cannot consider another Plan of a third party who did not participate in the CIRP Proceedings. For all the ongoing reasons, this Tribunal is of the earnest view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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