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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 ..... 2016, (hereinafter referred to as 'The Code'). By the Impugned Order, the Adjudicating Authority has allowed the Application preferred by the Committee of Creditors ('CoC') seeking a direction to the Resolution Professional ('RP') to call for a Meeting at the CoC and consider the Resolution Plan of M/s. Hindustan Coils Limited, ('HCL') M/s. Kalinga Enterprises Private Limited ('KEPL') and M/s. New Lakshmi Steel & Power Private Limited or any other entity and sought for additional 30 days to consider and approve the most suitable Plan. While allowing the Application, the Adjudicating 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order was never challenged and therefore no new Application can be entertained if a person has not participated in the CIRP. * It is also argued that the Resolution Plan approved by the CoC is a 'Contract' and becomes binding between the CoC and the SRA; that the CoC cannot withdraw approval of the Resolution Plan as more than three years has lapsed and moreover it cannot bypass the Order of this Tribunal dated 11.01.2021. It is contended that the Adjudicating Authority has erroneously directed the new party to participate in the CIRP when it was never a part of the 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.' C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain issue which arises in this Appeal is whether the CoC after having approved the Resolution Plan on 11.11.2019 can seek direction to consider the new Resolution Plan of a third party who was not a part of the CIRP Proceedings, and seek to withdraw their approval after more than two years of the approval of the first Resolution Plan. 6. It is a fact that the CoC had approved the Resolution Plan on 11.11.2019 and the Application for approval of the Plan under Section 31 of the Code was filed before the Adjudicating Authority in January 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 Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdrawals or modifications of the Resolution Plan at the behest of the successful Resolution Applicant, once it has been submitted to the Adjudicating Authority after due compliance with the procedural requirements and timelines, would create another tier of negotiations which will be wholly unregulated by the statute. Since the 330 days outer limit of the CIRP under Section 12(3) of the IBC, including judicial proceedings, can be extended only in exceptional circumstances, this open-ended process for further negotiations or 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." (Emphasis Supplied) 8. Though the main issue raised in 'Ebix Singapore Pvt. Ltd.' (Supra) 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.' (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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td.' (Supra). It is the case of the Intervenors that I.A. (IB) No. 815/2021 in C.P. IB No.-60(PB)/2018 is still pending Adjudication before the Adjudicating Authority and that the Appellant has no vested right for consideration of its Resolution Plan as they only continue to remain a prospective Resolution Applicant. At this juncture, it is significant to mention that the Order passed by this Tribunal in 'Kalinga Allied Industries India Pvt. Ltd.' (Supra), has set aside the Order of the Adjudicating Authority 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 fre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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