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2025 (7) TMI 709 - AT - IBCRejection of application seeking extension of 45 days beyond 465 days - exceptional circumstances exists on which the Adjudicating Authority could allow the application for 45 days extension as 465 days has already elapsed or not - HELD THAT - There can be no dispute that 465 days was already elapsed which was noted by the Adjudicating Authority while granting extension on 17.03.2025. No one can raise the issue with regard to period extended upto 27.04.2025 only issue which requires consideration is that before expiry of the period whether any substantial steps were taken for resolution of the Corporate Debtor. It is clear from the materials on record that before the impugned order could be passed e-voting on the plan has been completed and plan has been approved. It is case of all the parties that no order was pronounced in the Court and the parties could not know what order Court has passed hence subsequent events upto 03.06.2025 could not be placed before the Adjudicating Authority. In view of all the facts and materials which have been brought on the record by the Appellants and Resolution Professional majority Financial Creditor and Successful Resolution Profession all being aggrieved of the order the extension as prayed in special facts of the present case require consideration. The Adjudicating Authority without adverting to the pleadings in the application has rejected the application observing that there appears to be no chance of resolving the matter within this timeframe whereas the matter has already been resolved before 03.06.2025 when the order was passed. The application granting extension of 45 days allowed - appeal disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Appellate Tribunal were:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Justification for Rejection of 45-Day Extension Application Legal Framework and Precedents: Under the Insolvency and Bankruptcy Code, the CIRP must be completed within 330 days from the insolvency commencement date, including any extensions granted by the Adjudicating Authority in exceptional circumstances. Extensions beyond 330 days are permissible only when justified by exceptional circumstances. Court's Interpretation and Reasoning: The Tribunal noted that the Adjudicating Authority had granted four extensions previously, the last being a 90-day extension up to 27.04.2025. The Resolution Professional filed an application (IA No.2297 of 2025) on 21.04.2025 seeking a further 45-day extension to complete the voting process on the resolution plan. The Adjudicating Authority rejected this application on 03.06.2025, observing that "there appears to be no chance of resolving the matter within this timeframe." Key Evidence and Findings: The minutes of the Committee of Creditors (CoC) meeting dated 15.04.2025 showed that the CoC had authorized the Resolution Professional to seek the 45-day extension, and the voting on the resolution plan commenced on 13.05.2025 and concluded on 22.05.2025, prior to the order of rejection. The resolution plan was approved by 92.87% vote share. Application of Law to Facts: The Tribunal emphasized that the extension application was filed before the expiry of the last granted extension and that substantial progress-specifically, the voting on the resolution plan-had been completed within the requested extension period. The Adjudicating Authority's rejection was made without due consideration of these facts and without pronouncement of the order in Court, which deprived the parties of knowledge of the order until its upload on 24.06.2025. Treatment of Competing Arguments: The Financial Creditor and Resolution Professional argued that exceptional circumstances existed because the voting process was ongoing and required the extension to be completed. The intervener opposed, contending that no exceptional circumstances existed and that the CoC had not acted with urgency after the remand of the resolution plan. Conclusion: The Tribunal found merit in the appellants' submissions and held that the Adjudicating Authority erred in rejecting the extension application without considering the substantial steps taken and the ongoing voting process. Issue 2: Existence of Exceptional Circumstances Warranting Extension Legal Framework and Precedents: The IBC mandates strict timelines but allows extensions in exceptional circumstances. The Tribunal considered whether the delay caused by the remand of the resolution plan and the subsequent procedural steps constituted such exceptional circumstances. Court's Interpretation and Reasoning: The Tribunal observed that the resolution plan was remanded back to the CoC by the Adjudicating Authority on 17.01.2025 for reconsideration. The CoC held multiple meetings thereafter, including on 15.04.2025, where the Resolution Applicant submitted clarifications addressing the remand objections. The voting process was then scheduled and completed within the extended timeline. Key Evidence and Findings: The minutes of the 15.04.2025 CoC meeting detailed the clarification letter from the Resolution Applicant, which addressed concerns raised by the Adjudicating Authority. The CoC also deliberated on the terms of the resolution plan, including the sanction letters for borrowing and concerns raised by minority creditors about the credibility of certain sanction letters. Application of Law to Facts: The Tribunal found that the procedural delay was attributable to the Adjudicating Authority's remand and the need for the Resolution Applicant to provide clarifications. The CoC acted diligently by considering the clarifications and proceeding with voting within the extended period. Treatment of Competing Arguments: The intervener argued that the delay was due to the CoC's lack of urgency. However, the Tribunal found that the CoC had taken all necessary steps, including convening meetings, considering clarifications, and conducting voting within the extended timeframe. Conclusion: The Tribunal concluded that the circumstances justified the extension as exceptional, given the remand and the steps taken to complete the resolution process. Issue 3: Adequacy and Validity of Voting Process on the Resolution Plan Legal Framework and Precedents: The IBC requires that the resolution plan be approved by the CoC through voting, with at least 66% vote share in favor. The process must be transparent and conducted in accordance with prescribed procedures. Court's Interpretation and Reasoning: The Tribunal examined the detailed minutes of the CoC meetings, which described the voting methodology, including e-voting procedures, timelines, and confidentiality measures. The voting was conducted from 13.05.2025 to 22.05.2025 and resulted in approval by 92.87% vote share. Key Evidence and Findings: The minutes reflected that the CoC considered clarifications from the Resolution Applicant, addressed objections raised by minority creditors, and followed a structured e-voting process with clear instructions, OTP authentication, and confirmation mechanisms. Application of Law to Facts: The Tribunal found that the voting process was compliant with the Code and that the CoC's decision was valid and binding. Treatment of Competing Arguments: The intervener questioned the genuineness of sanction letters and the motivations of certain CoC members but the Tribunal noted that these concerns were debated within the CoC and resolved through collective decision-making. Conclusion: The Tribunal upheld the validity of the voting process and the approval of the resolution plan. Issue 4: Effect of Non-Pronouncement and Delay in Communication of the Order Legal Framework and Precedents: Transparency and timely communication of judicial orders are essential for fair process and to protect parties' rights. Court's Interpretation and Reasoning: The Tribunal noted that no order was pronounced in Court on 03.06.2025 when the application was considered, and the order was uploaded only on 24.06.2025, with parties becoming aware on 25.06.2025. Key Evidence and Findings: The delay in communication meant that parties were unaware of the rejection of the extension application until after the voting had concluded and the resolution plan was approved. Application of Law to Facts: The Tribunal observed that the delay in pronouncement did not prejudice the appellants since the voting had already been completed in their favor, but it highlighted procedural irregularity. Treatment of Competing Arguments: No direct competing arguments were raised on this procedural point. Conclusion: The Tribunal implicitly criticized the delay but found it did not affect the substantive outcome. 3. SIGNIFICANT HOLDINGS "The Adjudicating Authority without adverting to the pleadings in the application has rejected the application observing that there appears to be no chance of resolving the matter within this timeframe, whereas the matter has already been resolved before 03.06.2025, when the order was passed." "In view of all the facts and materials which have been brought on the record by the Appellants and Resolution Professional, majority Financial Creditor and Successful Resolution Applicant all being aggrieved of the order, we are of the view that extension as prayed, in special facts of the present case, require consideration." "The Adjudicating Authority shall proceed to consider the plan approval application at an early date in accordance with law." Core principles established include:
Final determinations:
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