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2021 (8) TMI 1400 - AT - Insolvency and BankruptcyUnsuccessful resolution applicant - Chellanged the approval of resolution plan of others - Failure to implement the Resolution Plan - grievance raised by the Appellant with regard to ineligibility of Respondent No. 3 were also considered by the CoC with regard to the Allied Strips Limited which was pointed out and CoC still took a conscious decision to accept the Resolution Plan of Respondent No. 3 - HELD THAT - It is pertinent to mention that delay in implementation of Resolution Plan cannot be considered the same as failure in implementing the Plan. The ineligibility as specified under Regulation 38 (1B) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 establishes the ineligibility in clear terms by stating that the Resolution Applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any other Resolution Plan approved by the Adjudicating Authority at any time in the past. - Therefore delay in implementation of the Resolution Plan cannot be considered as a ground for ineligibility of the Resolution Applicant. It is clear that the COC deliberated Respondent No. 3 s eligibility and thereafter considering the statement of Respondent No. 3 took a conscious commercial decision in accepting its Resolution Plan. Moreover judicial notice may be taken of the prevailing situation the entire world is facing on account of the Covid 19 pandemic. Therefore if there is some delay in implementing the Plan it cannot be considered a failure in implementing the Resolution Plan thereby making the Resolution Applicant ineligible for submission of the Resolution Plan under Regulation 38 (1B) of the CIRP Regulations. In the instant case the COC has approved the Resolution Plan pending adjudication before the Adjudicating Authority u/s 31 of the Insolvency and Bankruptcy Code 2016. After approval of the Resolution Plan by the COC Affidavit is filed on behalf of the COC wherein it is stated that since the Corporate Insolvency Resolution Process was scheduled to be completed on 19th February 2020 the COC did not have sufficient opportunity to consider the specific details of the revised Resolution Plan submitted by the Appellant - it is clear that in case of ineligibility of Resolution Applicant under proviso to Clause (c) of Section 29 A the Insolvency and Bankruptcy Code the COC is entitled to grant 30 days to make payment of overdue amounts. Still these 30 days shall not be construed as an extension of the period for the proviso to Sub-section 3 of Section 12 for completion of CIRP. Since the statutory time limit for completion of the Corporate Insolvency Resolution Process has already expired the COC cannot seek additional time to complete the Corporate Insolvency Resolution Process and review its decision after approval of the Resolution Plan. The position of law is clear that once the Resolution Plan has been approved by COC and it is pending adjudication u/s Section 31 before the Adjudicating Authority the COC does not contain any power to review its earlier decision to approve the Resolution Plan. It is made clear that that the Appellant s Plan was conditional and is rejected by COC. Therefore the Appellant has no right to insist that its Plan should be accepted. Under its commercial wisdom COC has accepted the Resolution Plan of Respondent No. 3 with open eyes regarding developments in the matter of Allied Strips. The decision of COC in approving the Resolution Plan was its commercial decision which needs no interference. Therefore the Appellant has no locus to question the commercial decision. The Appeal is not maintainable. Once COC accepts the Resolution Plan the Adjudicating Authority may consider if it is to be accepted or rejected. The Appellant has no right to stall the proceeding for the approval of the Resolution Plan by challenging commercial decisions of the COC - Appeal dismissed.
Issues Involved:
1. Eligibility of Respondent No. 3 as a Resolution Applicant. 2. Consideration of the Appellant's revised Resolution Plan. 3. Adjudicating Authority's decision on the premature application. 4. Commercial wisdom of the Committee of Creditors (CoC). 5. Compliance with the Insolvency and Bankruptcy Code (IBC) and related regulations. Issue-wise Detailed Analysis: 1. Eligibility of Respondent No. 3 as a Resolution Applicant: The Appellant claimed that Respondent No. 3 was ineligible due to its failure to implement resolution plans in other cases, specifically in the matters of Allied Strips Limited and Tirupati Infrastructure Private Limited. The Appellant argued that Respondent No. 3 had suppressed material facts and provided false undertakings. However, the Adjudicating Authority and the CoC considered these claims and determined that delays in implementation did not equate to failure under Regulation 38 (1B) of the CIRP Regulations. The CoC, after deliberation, accepted Respondent No. 3's explanation and did not find it disqualified under Section 29A of the IBC. 2. Consideration of the Appellant's Revised Resolution Plan: The Appellant submitted multiple revised resolution plans, which the CoC found to be conditional and non-compliant with the CIRP regulations. Despite being given several opportunities, the Appellant's plans were consistently found wanting. The final revised plan submitted by the Appellant was also conditional and offered a lower amount than Respondent No. 3's plan. The CoC's commercial wisdom led them to approve Respondent No. 3's plan, which was deemed more feasible and viable. 3. Adjudicating Authority's Decision on the Premature Application: The Adjudicating Authority dismissed the Appellant's application as premature, noting that it was filed before the voting on the resolution plan was completed. The Authority emphasized that the application was based on misconceived facts and circumstances that did not exist at the time of filing. The Authority also highlighted that the CoC was still negotiating with Respondent No. 3 when the application was filed. 4. Commercial Wisdom of the Committee of Creditors (CoC): The CoC's decision to approve Respondent No. 3's resolution plan was based on their commercial wisdom, which is protected under the IBC. The Supreme Court has consistently held that the Adjudicating Authority and the Appellate Authority should not interfere with the CoC's commercial decisions as long as they comply with the provisions of the IBC and related regulations. The CoC considered the feasibility and viability of the plans and the maximization of the value of the corporate debtor's assets. 5. Compliance with the Insolvency and Bankruptcy Code (IBC) and Related Regulations: The judgment emphasized that the resolution process must adhere to the timelines and procedural requirements set out in the IBC. The CoC's approval of Respondent No. 3's plan was within the statutory framework, and the Appellant's conditional plans were rightly rejected. The Adjudicating Authority's role is limited to ensuring compliance with the IBC and not to reassess the commercial decisions of the CoC. Conclusion: The appeal was dismissed, with no order as to costs. The Adjudicating Authority was requested to urgently decide the application pending under Section 31 of the IBC. The judgment reaffirmed the principle that the commercial wisdom of the CoC is paramount and should not be interfered with by judicial bodies as long as it complies with the IBC and related regulations.
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