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2025 (5) TMI 409 - AT - IBCSubmission of a Resolution Plan after the recall of the earlier approved Resolution Plan due to forged Bank Guarantee by the Successful Resolution Applicant (SRA) - Grant of 30 days time for submission of Resolution Plan as per provisions of Regulation 36B(5) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 - HELD THAT - The present is a case where process of issuance of Form-G had commenced on 04.10.2022 under which all Prospective Resolution Applicants were allowed time as per Regulation 36B. The process which commenced after the order dated 19.12.2024 was not direction for start of a fresh process by issuance of fresh Form-G rather Adjudicating Authority has remitted the matter to CoC and it was left to the commercial wisdom of the CoC to take steps. The Adjudicating Authority further held that if steps are not completed within 60 days the CD would be deemed to be liquidated. The CoC in its 7th Meeting held on 13.01.2025 resolved to invite PRAs who had submitted the Resolution Plans in the previous round. The CD was also not eligible to submit the Resolution Plan in view of the order dated 19.12.2024 and CoC decided to seek Resolution Plan from three Resolution Applicants who had submitted the Resolution Plans in the previous round. The present is a case where the Appellant has not submitted the Resolution Plan within the time allowed by the CoC. In view of the order dated 19.12.2024 the process which was carried on by the CoC was not the process for issuance of fresh Form-G and inviting Expression of Interest and Resolution Plans and the decision was taken to invite Resolution Plans from existing PRAs only. The provisions of Regulation 36B sub-regulation (3) are not attracted nor the CoC was obliged to grant 30 days time to Resolution Applicants to submit the Resolution Plan - The timeline was to be fixed by the CoC and the CoC having extended the time for submitting the Plan to 03.02.2025 which was extended both for Appellant as well as other PRAs there are no error in the order of Adjudicating Authority rejecting the Application filed by the Appellant praying for extension of timeline for submission of the Plan by the Appellant. Conclusion - i) The Appellant was eligible to submit a Resolution Plan after rectification of the order dated 19.12.2024. ii) The Appellant was not entitled to a fresh 30-day period under Regulation 36B(3) for submission of the Resolution Plan. iii) The CoC s timeline of 03.02.2025 for submission of the Resolution Plan was valid and binding. iv) The Adjudicating Authority did not err in rejecting the Application for extension of time filed by the Appellant. Appeal dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this appeal are: - Whether the Suspended Director of the Corporate Debtor ("Appellant") was wrongly held ineligible to submit a Resolution Plan after the recall of the earlier approved Resolution Plan due to forged Bank Guarantee by the Successful Resolution Applicant ("SRA"). - Whether the Appellant was entitled to a fresh 30-day period for submission of the Resolution Plan under Regulation 36B(3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") following the rectification of the order dated 19.12.2024. - Whether the Committee of Creditors ("CoC") and the Resolution Professional ("RP") were justified in setting a deadline of 03.02.2025 for submission of the Resolution Plan by the Appellant and other Prospective Resolution Applicants ("PRAs"). - Whether the Adjudicating Authority erred in rejecting the Application (IA No.856 of 2025) filed by the Appellant seeking extension of time for submission of the Resolution Plan. - The legal effect of the order dated 19.12.2024 recalling the earlier approval of the Resolution Plan and remitting the matter to the CoC with a direction to complete the resolution process within 60 days. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Eligibility of the Appellant to submit a Resolution Plan after recall of earlier Resolution Plan Legal framework and precedents: The Insolvency and Bankruptcy Code, 2016 (IBC) and CIRP Regulations govern eligibility criteria for submission of Resolution Plans. The Adjudicating Authority's order dated 19.12.2024 held that the Appellant (JSSI Hydraulics Pvt. Ltd.) was ineligible to submit a Resolution Plan due to the forged Bank Guarantee submitted by the SRA. Court's interpretation and reasoning: The Tribunal noted that the order dated 19.12.2024 was rectified by the Adjudicating Authority on 27.01.2025, clarifying that the ineligibility was intended only for the SRA (JM Hydraulics Solutions Pvt. Ltd.) and not the Corporate Debtor itself. Consequently, the Appellant became eligible to submit a Resolution Plan. Application of law to facts: After rectification, the CoC invited the Appellant to submit a Resolution Plan by 03.02.2025 along with an Earnest Money Deposit (EMD) of Rs. 2 crores. Conclusion: The Tribunal concluded that the Appellant was eligible to submit a Resolution Plan post-rectification and was duly invited by the CoC to do so. Issue 2: Entitlement of the Appellant to a fresh 30-day period for submission of Resolution Plan under Regulation 36B(3) of CIRP Regulations Legal framework and precedents: Regulation 36B(3) mandates that the request for Resolution Plans shall allow a minimum of thirty days for submission. Regulation 36B(5) states that any modification in the request for Resolution Plan is deemed a fresh issue, triggering the 30-day timeline afresh. Court's interpretation and reasoning: The Tribunal analyzed whether the process after the recall of the earlier Resolution Plan constituted a fresh start under Regulation 36B. It held that the process post 19.12.2024 order was not a fresh start involving issuance of a new Form-G or fresh Expression of Interest, but rather a continuation/remand to the CoC to take commercial decisions within a 60-day timeframe. The Tribunal emphasized that the CoC's decision to invite only existing PRAs to submit plans within the 60-day period fixed by the Adjudicating Authority was a commercial decision and not bound by the 30-day minimum period under Regulation 36B(3). Application of law to facts: The Appellant received the invitation to submit the Plan on 29.01.2025 and was required to submit by 03.02.2025, a period of only five days. The Appellant contended entitlement to 30 days, but the Tribunal rejected this, holding that the 30-day timeline was not applicable as the process was not a fresh start under the Regulations. Treatment of competing arguments: The Appellant argued that the rectification order on 27.01.2025 effectively restarted the process, entitling it to 30 days. The RP and SRA contended that the 60-day timeline fixed by the Adjudicating Authority was paramount and the CoC's timeline was commercially justified. The Tribunal sided with the latter, emphasizing adherence to the 60-day limit and CoC's commercial wisdom. Conclusion: The Tribunal held that the Appellant was not entitled to a fresh 30-day period under Regulation 36B(3) and the CoC's timeline of 03.02.2025 was valid. Issue 3: Whether the Adjudicating Authority erred in rejecting the Application seeking extension of time for submission of Resolution Plan Legal framework and precedents: The Insolvency and Bankruptcy Code prescribes strict timelines for completion of CIRP, and extensions are generally not granted beyond statutory limits unless exceptional circumstances exist. Court's interpretation and reasoning: The Adjudicating Authority observed that the prayer for extension of time for submission of the Resolution Plan would effectively extend the CIRP beyond the statutory period, which was not permissible. The Tribunal agreed, noting that the entire process was to be completed within 60 days from 19.12.2024 as per the Adjudicating Authority's order. Application of law to facts: The Appellant failed to submit the Resolution Plan or the requisite EMD by the deadline fixed by the CoC (03.02.2025). The request for extension was therefore inconsistent with the statutory timeline and the commercial wisdom exercised by the CoC. Treatment of competing arguments: The Appellant argued for extension based on the short notice and rectification of eligibility. The RP and SRA argued that the Appellant was not a serious Resolution Applicant, having failed to submit EMD or Plan, and that the timeline was strictly governed by the 60-day limit. The Tribunal accepted the latter. Conclusion: The Tribunal found no error in the Adjudicating Authority's rejection of the Application for extension of time. Issue 4: Effect of the order dated 19.12.2024 recalling the earlier approved Resolution Plan and remitting the matter to the CoC Legal framework and precedents: The IBC provides that the Adjudicating Authority can recall approval of a Resolution Plan in case of fraud or misrepresentation, and remit the matter to the CoC for fresh steps. Court's interpretation and reasoning: The Tribunal extracted the relevant portion of the order dated 19.12.2024, which remitted the matter to the CoC to take fresh steps within 60 days and clarified that the CD would be deemed dissolved if the process was not completed within that period. The order also disqualified the SRA from submitting a Resolution Plan. Application of law to facts: The CoC, exercising its commercial wisdom, decided not to publish a fresh Form-G but to invite existing PRAs to submit plans within the 60-day period, excluding the disqualified parties. Conclusion: The Tribunal accepted that the process post 19.12.2024 was a continuation/remand and not a fresh CIRP requiring issuance of Form-G or triggering Regulation 36B timelines afresh. 3. SIGNIFICANT HOLDINGS "Taking the holistic view and to substance the object of IBC, 2016, we remit the matter back to CoC to take fresh steps, in the direction of resolution at Insolvency of the corporate debtor. It is left to the commercial wisdom of CoC that what steps it would be taking in the direction. It is made clear that a fresh process is not completed within 60 days from today the corporate debtor would be deemed as dissolved." "The process, which was carried on by the CoC, was not the process for issuance of fresh Form-G and inviting Expression of Interest and Resolution Plans, and the decision was taken to invite Resolution Plans from existing PRAs only. We, thus, are of the view that provisions of Regulation 36B, sub-regulation (3) are not attracted, nor the CoC was obliged to grant 30 days time to Resolution Applicants to submit the Resolution Plan." "Had the Appellant desirous of submitting the Plan by submitting the requisite EMD of Rs.2 crores it could have been done by the Appellant within the time allowed, when the Adjudicating Authority on 19.12.2024 has left the matter to the commercial wisdom of the CoC to take steps in the process." "The CoC having already extended the time till 03.02.2025 for the Appellant to submit the Resolution Plan, the prayer of the Appellant to extend further time for submission of the Plan, could not have been accepted." Core principles established include: - The Adjudicating Authority's recall of approval of a Resolution Plan and remand to the CoC with a fixed timeline constitutes a continuation of the CIRP process, not a fresh start triggering Regulation 36B timelines afresh. - The commercial wisdom of the CoC in fixing timelines for submission of Resolution Plans within the statutory period is binding unless arbitrary or unreasonable. - A Prospective Resolution Applicant who fails to submit the requisite EMD and Resolution Plan within the fixed timeline cannot claim entitlement to extension of time. - The strict timelines under the IBC and CIRP Regulations are to be adhered to, and extensions are not granted lightly, especially when the statutory period is expiring. Final determinations: - The Appellant was eligible to submit a Resolution Plan after rectification of the order dated 19.12.2024. - The Appellant was not entitled to a fresh 30-day period under Regulation 36B(3) for submission of the Resolution Plan. - The CoC's timeline of 03.02.2025 for submission of the Resolution Plan was valid and binding. - The Adjudicating Authority did not err in rejecting the Application for extension of time filed by the Appellant. - The Appeal is dismissed with no order as to costs.
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