TMI Blog2020 (11) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... o not be arbitrary or unreasonable. The above proposition has also been statutorily recognized by way of amendment of Regulation 39(3) of CIRP Regulations. It is also noteworthy provision of simultaneous voting on Resolution Plan has been brought in this regulation which also goes to show the legislative intent as regard to transparent process be followed by RP/CoC. There appears to be a certainty in the mind of RP/CoC that irrespective of delays to any extent such application is not required as Resolution Applicant cannot withdraw itself from such process. The Resolution Applicant is granted permission to withdraw its Resolution Plan - Application disposed off. - IA 439 of 2020 in IA 476 of 2018 CP (IB) 14/7/NCLT/AHM/2018 - - - Dated:- 8-9-2020 - M.B. Gosavi, Member (J) and Virendra Kumar Gupta, Member (T) For the Appellant : Mihir Thakore, Learned Senior Counsel, Sandeep Singhi, Learned Counsel, Navin Pahwa, Learned Senior Counsel For the Respondent : Manish Bhatt, Learned Senior Counsel and Rusabh Shah, Learned Counsel ORDER 1. Through this Application, the Resolution Applicants are seeking permission from this Authority to withdraw Resolution Plan p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard during the pendency of the same. This case also went up to the Hon'ble Supreme Court wherein the Hon'ble Supreme Court vide its order dated 20.06.2019 directed that the matter be heard by a Bench comprising of one Judicial Member and One Technical Member. It was also pointed out that said Operational Creditor also challenged the validity of Insolvency Bankruptcy (Amendment) Act, 2019 before Hon'ble Supreme Court wherein the Petitioner was directed to raise all contentions before NCLT. Learned senior counsel also submitted copy of decision of Hon'ble Gujarat High Court in Civil Application No. 9118 of 2020 to again emphasize on the fact that even the issue hearing of this application was challenged before Hon'ble Gujarat High Court as late as in July 2020 which goes to show that the litigation in future cannot be ruled out at all, hence, even if the plan is approved, the same may not attain finality even in next one or two years. It was also contended that Adjudicating Authority vide its order date 03.12.2019 directed the CoC to revisit the Resolution Plan of applicants in the light of judgment of the Hon'ble Supreme Court in the Case of Committee of Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depletion in the value of assets of the Corporate Debtor due to pandemic situation and various contracts/agreements being cancelled or in the process of cancellation, hence, applicants cannot revive the Corporate Debtor as envisaged and also cannot recover its investment in the manner as considered by the applicants while submitting Plan. For this proposition, he drew our attention to various documents showing loss of contracts in the area of O M segment of the Corporate Debtor. A chart was also submitted for this purpose. It was also contended that there was also deterioration in the value of Independent Power Producers (IPP) business of Corporate Debtor. In addition to this, the learned senior counsel contended that complete closure of Daman Unit was to be done as per the terms of Resolution Plan which was not done and huge liability towards workers dues had mounted which further made the proposal of Resolution Applicants unviable and non-feasible and, therefore, its implementation was not possible. He further pointed out that additional liability towards workers' dues could be in the range of 40 Crores or more which was a huge sum and if applicants were compelled to conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the order of Hon'ble NCLAT in the case of Committee of Creditors of Metalyst Forging Ltd. vs. Deccan Value Investors LP Ors. and referred to Para 29, 31, 32 and 39 of the said order in support of his case. It was specifically pointed out that this decision was of the Bench comprising three Members. Having stated so, he pointed out that there was a subsequent decision of the Hon'ble NCLAT in the case of COC of Committee of Creditors of Educomp Solutions Ltd. vs. Ebix Singapore Pte Ltd. wherein Bench comprising of two Members held that plan approved by CoC could not be withdrawn. It was further pleaded that the earlier decision of Hon'ble NCLAT in the case of Committee of Creditors of Metalyst Forging Ltd. vs. Deccan Value Investors LP Ors. had been taken note of only as a contention of the applicants in Para 17 of the said order but no further consideration of earlier decision had been made, hence, this decision was not binding and earlier decision of Larger Bench of the Hon'ble NCLAT in the case of Committee of Creditors of Metalyst Forging Ltd. vs. Deccan Value Investors LP Ors. was still valid, being a decision of lager Bench, hence, to be followed. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, being a promise under Section 54 and 55 of the Contract Act, 1872 and, therefore, it could withdraw there from. It was again emphasized that there was a considerable element of doubt as regard to the future of the Resolution Plan in view of number of objections/applications filed for opposing the approval of the Resolution Plan on various grounds and provisions of appeal against the order of Adjudicating Authority before the NCLAT and Supreme Court. He then referred to the provisions of Section 60(5)(c) to contend that this Authority had both jurisdiction as well as power there-under to decide the issue of withdrawal of Resolution Plan of the Resolution Applicant. 9. Learned senior counsel for the Resolution Professional appeared and after narrating sequence of events made following submissions: [A] Date and Events [B] Submissions The Resolution Applicant in the captioned Application has sought withdrawal of the Resolution Plan citing reasons of efflux of time in approval of the Resolution Plan as the reason for making it unviable and unfeasible. The effect of efflux of time on the Corporate Debtor is alleged to be mainly deterioration in business, loss of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s competent to issue any direction in relation to the exercise of commercial wisdom of financial creditor- be it for approving, rejecting or abstaining, as the case may be.......... iii The scope of inquiry by this Hon'ble Adjudicating Authority is thus limited to the scope of defined in Section 31 of IB Code. The opening word of Section 31(1) also substantiates this, when it says .....if the Adjudicating Authority is satisfied that the Resolution Plan as approved by Committee of Creditors..... . The Resolution Plan therefore may be approved or rejected only on the basis of the considerations stipulated in Section 30(2) r/w. the proviso to Section 31 of IB Code. iv The Hon'ble NCLAT in Educomp Solutions Limited (Company Appeal (AT) No. 203 of 2020) is also placed to observe:- 94.........This court holds that the Adjudicating Authority after approval of the Resolution Plan by the Committee of Creditors had no jurisdiction to entertain or to permit the withdrawal application filed by the First Respondent/Resolution Applicant. v The Hon'ble NCLT, New Delhi, Special Bench has also in I.A. No. 1679/2019 in IB-940 (ND)/2018 has rejected appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons with RA. Para 15 @ Pg. 301/304 notes update on business operations which show improvement in operational performance. Also Refer Pg. 311 @ Sr. No. 68-70 which note the presence of RA officials. Resolution Plan is approved by majority of 93.63 (@ Pg. 318). b) The Resolution Professional has demonstrated from the records that the going concern status of the Corporate Debtor has been maintained and overall performance has improved in the business rather than deterioration. Allegations on withdrawal of O M contracts are based on incorrect facts (Para 14.2 of Reply (Pg. 10/14) + Para 8 of Affidavit-in-Sur Rejoinder (Pg. 4) + Merged Table (now being produced + provisional financial statements as at 31.3.2020 produced). Considering these contents, it is clear that the allegation of deterioration in business is misconceived. c) In the year ended March 2020, the revenue, EBIDTA, cash flows, profit after tax- all have shown improvements (Para 20 of the Reply + Page 4 of the unaudited provisional financial statement). d) Machine Availability (M.A.) which is the availability of wind turbines to generate electricity power has increased consistently during the CIRP period - In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut having the correct information as regard to commercial activities of the Corporate Debtor being carried on by Resolution Professional, hence, misconceived. It was also submitted that the applicant neither had any grievance against the Resolution Professional nor there were any allegations of misconduct. It was also claimed that Resolution Plan envisaged haircut to the extent of 80% of debts owed by the Corporate Debtor, hence, it was not a case that a high offer had been made. 11. Learned senior counsel on behalf of the Resolution Professional further submitted that provisions of Section 31 and 31 were self contained provisions as regard to Resolution Plan and legislature in its wisdom did not provide for withdrawal of plan by Resolution Applicant after approval of the plan by CoC, hence, power of withdrawal could not be borrowed from Section 60(5)(c) of IBC, 2016. For these propositions, he relied on the observations of the Hon'ble Supreme Court in the Case of Essar Steel India Ltd. and referred to Para 49 and 50. For this proposition, he strongly relied on the decision of Hon'ble NCLAT in the Case of Educomp Solutions Ltd. It was also pleaded that the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel further pleaded that though provisions of Section 56 of Indian Contract Act, 1872 were claimed to have not been relied on by the Resolution Applicant but these were extensively argued indirectly and, therefore, in fitness of things, a reply thereto was required. Having stated so, the learned senior counsel pleaded that provisions of Section 56 of Indian Contract Act, 1872 would not be applicable in a situation where contract had become commercially onerous or unviable for a party to perform due to occurrence of any event subsequent to entering into contract. For this proposition, the learned senior counsel relied on the decision of Hon'ble Supreme Court in the case of Travancore Board vs. Thanath International (2004) 13 SCC 44. Thereafter, it was also contended that in the present case, Resolution Applicant was a promisor and CoC was a promise and after approval of CoC, Resolution Plan contract had become valid and binding on both the parties, hence, there was no question of any reciprocal promises and if the Resolution Applicants' arguments were to be accepted then each and every contract would be construed as a case of reciprocal promises under the provisions of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that Resolution Applicant had renewed the Bank Guarantee on 19.05.2020 for the period of three months hoping that plan would be approved and Resolution Applicant did not take any exception to the plan. and therefore, present application was nothing but an afterthought without any reasonable basis. He further contended that the application filed by Resolution Applicant was not maintainable u/s 60(5) of IBC, 2016 and for this proposition, he placed reliance on the decision of Hon'ble Supreme Court in the case of Embassy Property Developments Private Limited vs. State of Karnataka. The learned senior counsel finally argued that if the withdrawal of Resolution Plan was allowed CoC would be saddled with substantial losses and this will open the floodgates for such applications and, hence, considering this position, this application was liable to be dismissed. 14. In rejoinder, the learned senior counsel contended that more than 600 days had passed and even 9 more months have passed after the amendment prescribed maximum period of 330 days including the time taken in judicial proceedings and even no solution was in sight, hence, the contentions of the RP/CoC that there was no ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Authority had necessary jurisdiction to permit the withdrawal. As regard to reliance placed by CoC on the decision of Hon'ble Supreme Court in the case of Maharashtra Seamless Limited vs. Padmanabhan Venkatesh Ors., it was contended that in that case it was held that withdrawal of Resolution Plan by Resolution Applicant was not permissible u/s. 12A IBC, 2016 which applied only to creditors who filed the insolvency petition, hence, such decision was not at all applicable to the present situation. As regard to conditions of process document relied on by RP/CoC, it was contended that no party would ever offer any Resolution Plan if there was no time prescribed or underlying therein as inordinate delay in the implementation of Resolution Plan in business world would lead to innumerable uncertainties which no Resolution Applicant could afford to undertake. According to learned senior counsel, the process document was required to be read with underlying condition that Resolution Plan, if offered, would be approved within a reasonable time or at least within the maximum period of 330 days. It was further contended that the clauses relied on by the RP/CoC could not bind a Resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance therewith. If such Resolution Plan is found to be in conformity with the provisions of IBC, 2016 then it is submitted by Resolution Professional before CoC for its approval. Resolution Professional is bound to apprise CoC that such plan confirms to the provisions of IBC, 2016 and Regulations made there-under. iii. CoC may approve or reject such plan. If approved, then such plan is submitted by Resolution Professional to the Adjudicating Authority for its approval who has to evaluate the plan in terms of provisions of Section 31(1) of IBC, 2016. If such plan is found to be in conformity and complying with the requirements of Section 30(2) of IBC, 2016 then such plan needs to be approved by Adjudicating Authority subject to satisfaction of Adjudicating Authority that such plan can be effectively implemented. An important aspect is that the timeline provided for such approval of Resolution Plan is 165 days from the date of commencement of Insolvency Resolution Process. Thereafter, 15 days are given to Adjudicating Authority for consideration and approval of Resolution Plan. Thus, the total process is to be completed within 180 days from the date of commencement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be specified.] 18. It is important to note that Section 29A provides situations where Resolution Applicant will not be eligible to submit Resolution Plan, if such person falls into those situations. The Resolution Applicant has to file an affidavit as regard to its eligibility under Section 29A along with Resolution Plan which has been prepared on the basis of Information Memorandum. This is so provided in Section 30(1) of IBC, 2016. Thereafter, the ball shifts to the court of Resolution Professional and CoC. Resolution Professional as per Section 30(2) is required to examine the Resolution Plan to confirm that such Resolution Plan is in conformity with the provisions of Section 30(2) of IBC, 2016. If such Plan confirms to the conditions prescribed in Section 30(2) then it is presented for approval of CoC. The CoC may approve a Resolution Plan by a Vote of not less than 66% of voting share of Financial Creditors after considering its feasibility and viability and the manner of distribution taking into consideration the provisions of Section 53(1) of IBC, 2016. There is a specific provision in Section 30(4) that Resolution Plan will not be approved where the Resolution Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had contested the decision of the resolution professional against its non-inclusion in the said provisional list. 20. It is important to note that the process document shall detail each steps in the process, and the manner and purpose of interaction between resolution professional and prospective resolution applicant. The process document shall not require any non-refundable deposit for submission of or along with Resolution Plan. As per the Regulation 36B (4A) a Resolution Applicant shall be required to provide a performance security which, in case, its plan is approved by CoC under Section 30(4) of IBC, 2016 could be forfeited in the event of failure of Resolution Applicant to implement or to contributes to the failures of implementation of a Resolution Plan approved by Adjudicating Authority. Any modification in the approval matrix or in RFRP shall be deemed to be a fresh issue and timelines will have to be modified accordingly. Regulation 37 provides that Resolution Plan should contain measures for insolvency resolution of the Corporate Debtor for maximization of value of its assets and such measures are necessary but not exhaustive. There is Regulation 38 which provides reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not obtained. As has been mentioned hereinabove, the first proviso to Section 30(4) furnishes the answer, which is that all that can happen at this stage is to require the Resolution Professional to invite a fresh Resolution Plan within the time limits specified where no other Resolution Plan is available with him. It is clear that at this stage again no application before the Adjudicating Authority could be entertained as there is no vested right or fundamental right in the resolution applicant to have its Resolution Plan approved, and as no adjudication has yet taken place. 83. It is the Committee of Creditors which will approve or disapprove a Resolution Plan, given the statutory parameters of Section 30. Under Regulation 39 of the CIRP Regulations, Sub-clause (3) thereof provides: 39.(3) The committee shall evaluate the Resolution Plans received Under Sub-Regulation (1) strictly as per the evaluation matrix to identify the best Resolution Plan and may approve it with such modifications as it deems fit: Provided that the committee shall record the reasons for approving or rejecting a Resolution Plan. This Regulation shows that the disapproval of the Committee of Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which rejects the Resolution Plan for the purposes of Section 33. The same would apply to an ultimate order of rejection by the Supreme Court under Section 62. This is on the principle that, as stated in Lachmeshwar Prasad Shukul and Ors. v. Keshwar Lal Chaudhuri and Ors. and followed in a number of our judgments, an appeal is a continuation of the original proceedings. 86. Given the fact that both the NCLT and NCLAT are to decide matters arising under the Code as soon as possible, we cannot shut our eves to the fact that a large volume of litigation has now to be handled by both the aforesaid Tribunals. What happens in a case where the NCLT or the NCLAT decide a matter arising out of Section 31 of the Code beyond the time limit of 180 days or the extended time limit of 270 days? Actus curiae neminem gravabit the act of the Court shall harm no man-is a maxim firmly rooted in our jurisprudence (see Jang Singh v. Brijlal, SCR at P. 149 A.R. Antulay v. R.S. Nayak, SCR at p. 71). It is also true that the time taken by a Tribunal should not set at naught the time limits within which the corporate insolvency resolution process must take place. However, we cannot forget that the conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirements of Section 30(2) of IBC, 2016 then only RP/CoC would be responsible for such non-compliance and Resolution Applicant cannot be made accountable for that in any manner. As far as Resolution Plan is concerned, the role of CoC ends after approval of such plan. Thereafter, role of Resolution Professional starts to get it approved from Adjudicating Authority. This is to be done within the timelines as specified in the Code. As per model timelines, Adjudicating Authority is required to be given 15 days time to approve the Resolution Plan. However, if such process is completed in such specified time schedule and there would be a legitimate expectation on part of the Resolution Applicant as well as other stakeholders that it would certainly be approved in a reasonable time. However, if the approval doesn't come within a reasonable time which is essentially a matter of fact, then, can a Resolution Applicant claim that it is not bound by such Resolution Plan and, if it is so claimed, whether Adjudicating Authority has got the requisite jurisdiction and power to dispose of such application for this purpose? For this purpose, we have to consider the provisions of Section 60 of IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Part, the period during which such moratorium is in place shall be excluded. 23. Section 60(1) provides for territorial jurisdiction which is not in question in the case before us. Section 60(2) and 60(3) provide for disposal of the matters of guarantors of Corporate Debtor whose insolvency proceedings or Liquidation proceedings are pending before the NCLT. Section 60(4) provides that NCLT would have the power of DRT. Section 60(5) is relevant for our purposes. The RP and CoC have relied upon mainly on the provision of Section 30 and 31 of IBC, 2016 and judicial decisions rendered by Hon'ble NCLAT/Hon'ble Supreme Court to contend that these sections only are to be looked into in regard to matters relating to Resolution Plan and provisions of Section 60(5) could not be borrowed. In this regard, we are of the view that as far as jurisdiction of NCLT as Adjudicating Authority u/s 31 of IBC, 2016 is concerned there cannot be any dispute that when a plan is approved by CoC and such plan is submitted by Resolution Professional before the Adjudicating Authority u/s 30(6) for its approval, the Adjudicating Authority is obliged either to approve or reject this plan, if such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 60(5)(a) of application or proceeding initiated u/s 7, 9 and 10 of IBC, 2016 to assume valid jurisdiction u/s 60(5)(c). As far as Clause 60(5)(b) is concerned, it is not of much relevance for our purposes in the present case, hence, we consider that it is not necessary to deal with the same in an elaborate manner. Now, comes clause 60(5)(c) under which following three situations can be entertained or disposed of by NCLT as Adjudicating Authority: i. any question of priorities or; ii. any question of law which arises out of or in relation to the insolvency resolution or liquidation proceedings or; iii. any question of fact which arises out of or in relation to the insolvency resolution or liquidation proceedings The words 'insolvency resolution or liquidation proceedings indicate that the stage of quasi judicial determination of an application filed u/s 7, 9 and 10 has already been over by admission of such applications for insolvency resolution or liquidation of the corporate debtor or corporate person as per the relevant provisions of IBC, 2016. In our considered view, in the present case, both question of law and question of fact are involved. Questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory alternative remedy, is concerned, Anisminic cannot be relied upon. The distinction between the lack of jurisdiction and the wrongful exercise of the available jurisdiction, should certainly be taken into account by High Courts, when Article 226 is sought to be invoked bypassing a statutory alternative remedy provided by a special statute. 25. On the basis of this principle, let us now see whether the case of the State of Karnataka fell under the category of (1) lack of jurisdiction on the part of the NCLT to issue a direction in relation to a matter covered by MMDR Act, 1957 and the Statutory Rules issued there under or (2) mere wrongful exercise of a recognized jurisdiction, say for instance, asking wrong question or applying a wrong test or granting a wrong relief. 28. Therefore as rightly contended by the learned Attorney General, the decision of the Government of Karnataka to refuse the benefit of deemed extension of lease, is in the public law domain and hence the correctness of the said decision can be called into question only in a superior court which is vested with the power of judicial review over administrative action. The NCLT, being a creature of a special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be subject to one limitation i.e., this cannot be used to direct other statutory Government Authorities who discharge functions under Public Law. This proposition of law was explained by Hon'ble Supreme Court in the case of Embassy Property Developments Pvt. Ltd. v. State of Karnataka reported in. In that case NCLT directed Karnataka Government to review the terms of lease of property given to Corporate Debtor. In this background, the Hon'ble Supreme Court explained the scope of powers of NCLT u/s 60(5) as under: 37. From a combined reading of Sub-section (4) and Sub-section (2) of Section 60 with Section 179, it is clear that none of them hold the key to the question as to whether NCLT would have jurisdiction over a decision taken by the government under the provisions of MMDR Act, 1957 and the Rules issued there-under. The only provision which can probably throw light on this question would be Subsection (5) of Section 60, as it speaks about the jurisdiction of the NCLT. Clause (c) of Sub-section (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to insolvency resolution. But a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udice. 27. In the present case, we are not exercising jurisdiction u/s 60(5)(c) of IBC, 2016 in that manner or on an issue of that nature, hence, in our most humble view, these findings of the Hon'ble Supreme Court do not come in our way and, hence, these do not help the cause of the RP/CoC. Further, the Hon'ble Supreme Court held that government dues fell into the category of operational debts, hence, already ascertained claims would be subject to consideration of NCLT under IBC, 2016 as per the scheme of Code. We are of the view that when there is a dispute or appeal pending under relevant statute, the same would be decided as per the provisions of that statute and not under IBC, 2016. However, RP/Liquidator can make best estimate thereof for it being considered in Resolution Plan so that Resolution Applicants is made aware of such claims. 28. There is one more aspect of scope of provision of Section 60(5)(c) of IBC, 2016. It is an established legislative practice that one omnibus provision is generally provided in every statute as all situations and eventualities which may arise in future cannot be forecast or visualised at the time of making of statute. Such omnib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard, it is to be noted that there may arise issues for which no specific provision has been made under IBC and NCLT as Adjudicating Authority would have to apply its mind in accordance/to provisions of various laws/regulations which may be dealing with the subject matters subject to limitation of Section 238 of IBC and ratio of decision of Hon'ble Supreme Court in the case of Embassy Property Development Private Limited (supra). iv. Under Section 42 an appeal may be filed to Adjudicating Authority against the order of liquidator in respect of its decision in accepting or rejecting the claims again Adjudicating Authority has to decide the same in the manner as aforementioned in preceding clause. v. Under Section 44 the Adjudicating Authority may pass in the manner as prescribed therein in respect of preferential transaction, hence, no discretion is vested. vi. Similar is the case in respect of undervalued transactions as specified in Section 45 to 47 where order is to be passed by Adjudicating Authority u/s 48. vii. Under Section 51 the prescription of order has been made. Adjudicating Authority is supposed to act accordingly. viii. Under Section 60(5)(a) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot available then, we are of the view that for this purpose, the Adjudicating Authority is to be guided by the preamble of IBC because preamble is considered as a part of statute and key source to judicial mind as it expresses the scope and object of a particular statute in a comprehensive manner. In this regard, we can also take assistance of settled principle of interpretation of statute i.e. construction of different provisions of statute be made in a manner to give effect to the object and intent of that statute. This principle is known as purposive construction or harmonious interpretation which is put into service in such kinds of situations. We are further of the view that Rule 11 of NCLT Rules, 2016 may also give substantial assistance and guidance to Adjudicating Authority as to how that matter before it can be disposed of. For this purpose, firstly we look at Rule 11 of NCLT Rules, 2016 which reads as under: Nothing in these rules shall be deemed to limit or otherwise affect the Inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. It is also noted that as per Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of Section 30 and 31 of IBC, 2016. This claim was rejected by the Hon'ble Supreme Court in view of specific provisions concerning the approval or rejection of a Resolution Plan post CoC's approval as contained in Section 30 and Section 31 of IBC, 2016. We have already stated that for approval or rejection of CoC approved Resolution Plan, Section 30 and Section 31 of IBC, 2016 are applicable and Adjudicating Authority is bound to exercise its jurisdiction in terms of those provisions whereas in the present case, we have to adjudicate upon the request of the Resolution Applicants for withdrawal of Resolution Plan approved by CoC. We further state that we are not indulging into any judicial review of justness or legitimacy of commercial wisdom exercised by CoC. Accordingly, in our humble view, the ratio of this decision of the Hon'ble Supreme Court is not applicable in the facts of present case. 36. We have already dealt briefly with the findings of the Hon'ble Supreme Court in Para 86 of the order in the case of Arcelormittal India Private Limited vs. Satish Kumar Gupta wherein the issue was that at what stage NCLT as Adjudicating Authority could exercise its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, in our opinion they cannot withdraw from the proceeding in the manner they have approached this Court. The exit route prescribed in Section 12-A is not applicable to a Resolution Applicant. The procedure envisaged in the said provision only applies to applicants invoking Sections 7, 9 and 10 of the code. In this case, having appealed against the NCLAT order with the object of implementing the Resolution Plan, MSL cannot be permitted to take a contrary stand in an application filed in connection with the very same appeal. Moreover, MSL has raised the funds upon mortgaging the assets of the corporate debtor only. In such circumstances, we are not engaging in the judicial exercise of determining the question as to whether after having been successful in a CIRP, an applicant altogether forfeits their right to withdraw from such process or not. 38. From the perusal of the observations underlined by us, it is apparent that the Hon'ble Supreme Court in this decision has merely stated that provision of Section 12A could not be invoked for withdrawal of Resolution Plan approved by CoC. Rather closing observations of Hon'ble Supreme Court in the above Para indicate that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated 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.] (2) A Resolution Plan shall provide: (a) the term of the plan and its implementation schedule; (b) the management and control of the business of the corporate debtor during its term: and (c) adequate means for supervising its implementation [(3) A Resolution Plan shall demonstrate that - (a) it addresses the cause of default; (b) it is feasible and viable; (c) it has provisions for its effective implementation; (d) it has provisions for approvals required and the timeline for the same; and (e) the resolution applicant has the capability to implement the Resolution Plan.] 41. As per Regulation 38 (2)(a), the Resolution Plan shall provide the term of the plan and its implementation schedule. Clause 38(2)(b) also refers to term of Resolution Plan. In our view, the word term used in the Regulation 38(2) refers to period only as it is not capable of any other interpretation in this context. Having stated so, we still consider it necessary to ponder a little on the meaning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om a bank for Rs. X for Y years or in relation to one or more variables such as the term of the Resolution Plan, amount payable to creditors under the Resolution Plan, etc.] 43. It is evident from the perusal of this explanation that tenure of Bank Guarantee is to be given in number of years or it may also be on the basis of the term of the Resolution Plan. Thus, this explanation makes it amply clear that the term of Resolution Plan should be for a specific period. This mandatory condition is of paramount significance in the context of controversy before us. When we pose a question to ourselves that why such a condition i.e., term of the plan has been incorporated? In our view, it is very vital because Resolution Applicant is coming to the rescue of Corporate Debtor. One of objects of insolvency resolution is to balance the interests of all stakeholders, which, not only includes financial creditor, corporate debtor and Resolution Applicant but also includes employees, operational creditors, Government and other stakeholders. No doubt, Resolution Applicant is also not coming with an object of charity. Resolution Applicant, in business sense, comes only when Resolution Applicant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Plan once made/submitted shall be valid for not less than 6(six) months from the Resolution Plan Submission Date including any revision to such Resolution Plan Submission Date ( Plan Validity Period ). In case of extension of Resolution Plan Submission Date by the CoC, the validity period of the Resolution Plan shall also be deemed to be extended for a period of 6(six) months from such revised Resolution Plan Submission Date. It is clarified for abundant caution that the Resolution Plan approved by the CoC shall not be subject to any expiry and shall remain valid and binding on the Successful Resolution Applicant. (Pg. 15 of 62 of process document). 45. From the perusal of the above clauses, it is apparent that this clause makes Resolution Plan submitted by a Resolution Applicant valid for perpetuity meaning thereby if the Resolution Plan is not approved even after ten years still the Resolution Applicant will remain tagged or bind therewith. Can this be the intention of the legislature? In our view, having regard to objects and scheme of IBC, 2016, this cannot be so by stretching our imagination to any extent. However, in the present case as can be seen from the perusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , instead of that, in our considered view, the option to dispose of the present application by permitting withdrawal of such Resolution Plan if exercised in favour of the Resolution Applicant would be better one so that we may not be required to pass order of liquidation necessarily because withdrawal situation as such does not fall either in Section 33(1)(a) or 33(1)(b) of IBC, 2016 for the reason that a Resolution Plan has been received u/s 30(6) of IBC, 2016 and the same is being permitted to be withdrawn and not rejected. We are further of the view that CoC may find suitable entrepreneurs considering the fact that Corporate Debtor is still a going concern and has substantial amount of business/assets, hence, for this reason also allowing the Resolution Applicant to withdraw may serve this purpose. 47. Thus, this withdrawal application can be disposed of at this stage only by passing an order permitting such withdrawal. However, considering the fact that there exists no specific provision in IBC, 2016 or Regulations made there-under as regard to this aspect, hence, question of applicability of the provisions of Indian Contract Act, 1872 in such situation is of paramount impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een held that time is the essence of insolvency resolution and IBC, 2016 also contemplates a strict enforcement of timeline prescribed therein. According to Resolution Applicant, if this is not achieved for any reason without any fault on the part of the Resolution Applicant, then the Resolution Applicant shall stand absolved from its obligation of performing his promise in the Resolution Plan. For this purpose, Resolution Applicant has placed strong reliance under the provisions of Section 46, 54 and 55 of Indian Contract Act, 1872 which are reproduced as under: 46. Time for performance of promise, when no application is to be made and no time is specified.--where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time. Explanation.--the question what is a reasonable time is, in each particular case, a question of fact. 54. Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises.-- When a contract consists of reciprocal promises, such that one of them cannot be performed, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mutual promises and having regard to the time, being essence of the contract, delay of more than 600 days in approval of Resolution Plan by Adjudicating Authority from the date of submission/approval of plan has made such contract voidable at the option of the Resolution Applicant, being a promise, in accordance with the provisions of Section 54 and Section 55 of Indian Contract Act, 1872 as referred to above. It has been emphasized that even if time was not to be treated as essence of contract then also it was required to be performed within a reasonable time in the light of provisions of Section 46 of Indian Contract Act, 1872. 50. Before proceeding further, we deem it fit to deal with the contentions made on behalf of CoC in this regard. The questions raised regarding the nature of contract require us to look into the sequence of actions involved in the transaction. The Resolution Professional first published invitation for Expression of Interest. The Resolution Applicant expressed its interest. List of proposed Resolution Applicants have been finalised by the Resolution Professional. Resolution Professional has prepared RFRP as approved by CoC. The Resolution Applicant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssified as unilateral because only one party is ever under an obligation. Thus, the unilateral contract is a contract in which only one party makes a promise or undertakes to perform. For example, in the present case, without any invitation to offer being made by Resolution Professional, if the Resolution Applicant would have made a promise to pay the consideration to acquire Corporate Debtor then it could be said that it was a unilateral contract but admittedly it is not so here as both the parties have made promises and undertaken respective performance obligations. Bilateral Contract: A contract in which each party promises a performance, so that each party is on obligor on that party's own promise and an oblige on the other's promise; a contract in which the parties obligate themselves reciprocally, so that the obligation of one party is correlative to the obligation of the other- Also termed mutual contract; reciprocal contract; (in civil law) synallagmatic contract. See COUNTER PROMISE. In a bilateral contract a promise, or set of promises on one side, is exchanged for a promise or a set of promises on the other side. In a unilateral contract, on the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Resolution Plan by Resolution Professional for its approval within the overall period of 180 days, hence, it is not correct to say that no time is prescribed for approval of Resolution Plan by Adjudicating Authority. In view of above discussion, we reject all contentions made on behalf of CoC in this regard. 52. We further find that the Resolution Applicant has participated in CoC meeting held on 23.12.2019 which was convened in pursuance of order of this Authority to make the CoC approved plan to make the conditions of Resolution Plan in accordance with the findings of the Hon'ble Supreme Court in the case of Essar Steel India Limited(supra) but the same, in our view, cannot be considered as acceptance of the Resolution Applicant to wait for approval of the Resolution Plan indefinitely thereby making him disentitled to withdraw from such plan in future even if the circumstances change and it also appears to Resolution Applicant that there may not be a finality to Resolution Plan in near future. This is particularly so in view of pandemic situation caused by Covid-19 and pendency of several Interlocutory Applications filed by different parties whereby various challenges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... domain of courts, has in incremental stages come to be transferred to the decision- making authority of tribunals. There is hence a jurisdictional transfer of dispute resolution to tribunals. Accompanied by legislative enactment, this postulates the exclusivity of entrustment to tribunals. Then again, new tribunals have been constituted to deal with subject areas of a genre quite distinct from, and therefore, unlike the traditional pattern of litigation with which conventional courts were familiar. Tribunals have thus not only taken away subjects which have been carved out of the jurisdiction of courts as a matter of legislative policy, but have also fostered a new culture of adjudication over areas in which a traditional court mechanism had little experience and expertise. In that sense, tribunalisation represents an amalgam of the old and the new: a combination of the role which was traditionally performed by the court together with new functional responsibilities, quite unlike the dispute resolution Junction which was traditionally performed by courts. Domain specialisation 3 The movement towards setting up tribunals has been hastened in many parts by the need for special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal will follow procedures which are less cumbersome and tied to forms established in conventional courts. By allowing for a measure of procedural flexibility coupled with domain knowledge, tribunals are expected to remedy some of the causes which burden the judicial system. 6 Similarly, another object of the growing need for tribunalisation is to unburden the court system. That purpose may be subserved when a chunk of existing cases pending before the conventional court system are transferred for adjudication to the newly created body. Reducing the burden on courts is a partial realisation of the purpose underlying the creation of the tribunal. Equally significant is that the tribunal must possess the ability not to allow, over a period of time, accretions of undisposed cases which had created judicial arrears in the first place. Statistical reduction of pending arrears in the judicial system occasioned by the creation of a tribunal has to be matched by the capacity of the new body to dispose of cases transferred to it from the court as well as new institutions before it. If this is not achieved, the net result is to defeat the very purpose of establishing the tribunal. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucting Insolvency and Bankruptcy Code, 2016 proceedings have not been framed as yet and NCLT is conducting judicial proceedings as per NCLT Rules, 2016 which are not in harmony with the concept of adherence to time lines prescribed under substantive provisions of Insolvency and Bankruptcy Code, 2016. The Hon'ble Supreme Court, in the case of Swiss Ribbons Pvt. Ltd. and Ors. Vs. Union of India (UOI) and Ors. in Para 33, observed as under: 33. Rule 4(3) of the aforesaid Rules states as follows: 4. Application by financial creditor.-- xxx xxxxxx (3) The applicant shall dispatch forthwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor. xxxxxxxxx Section 420 of the Companies Act, 2013 states as follows: 420. Orders of Tribunal.--(1) The Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Tribunal may, at any time within two years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service to the petitioner or applicant, to the Registry before the date of hearing and such reply and copies of documents shall form part of the record. A conjoint reading of all these Rules makes it clear that at the stage of the Adjudicating Authority's satisfaction under Section 7(5) of the Code, the corporate debtor is served with a copy of the application filed with the Adjudicating Authority and has the opportunity to file a reply before the said authority and be heard by the said authority before an order is made admitting the said application. What is also of relevance is that in order to protect the corporate debtor from being dragged into the corporate insolvency resolution process mala fide, the Code prescribes penalties. Thus, Section 65 of the Code reads as follows: 65. Fraudulent or malicious initiation of proceedings.--(1) If, any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of Resolution Plan by Adjudicating Authority which is the foundation of the contract in a sense that without this Resolution Plan cannot be implemented in a reasonable time henceforth and even approval of Resolution Plan by us cannot attain finality in near future in view of statutory remedies available to various litigants, the Resolution Applicant stands discharged from its obligation of performance even though theoretically such performance may still be possible. 54. Although, the Resolution Applicant has specifically stated that it is not taking any shelter of the provisions of Section 56 of Indian Contract Act, 1872, still we consider it necessary to ponder a little on this aspect in view of submissions made on behalf of CoC in regard to this. It is a Settled proposition that contract is a pious obligation undertaken by parties thereto, hence, the same should be given effect to in its true sense. Thus, doctrine of absolute contract remains valid for all times. However, certain exceptions have emerged to this over last two hundred years. Initially, the party to a contract was discharged from its obligation or performance on account of physical incapacity or destruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement governed by a legislation like IBC, 2016, inordinate delay in disposal of proceedings by a judicial forum for significant period but due to complexities involved in the process of disposal beyond the control of parties to the contract would also be construed as an event giving occasion to frustration of contract. 55. Based upon these legal principles, the position which emerges is that the law recognizes that without default of either party, if a contractual obligation has become incapable of being performed because the circumstances in which the performance is called for have rendered the performance impossible then a party may be released from its performance obligation. This is the proposition in general law and if it is so in general law then such doctrine has to be necessarily applied to a case which is governed by a law which is itself based upon adherence to timelines. Having said so, we do not consider it necessary to go into the exercise of judicial approach as regard to focus on adherence to timelines given under IBC, 2016 in much detail as this issue has already been settled by Hon'ble Supreme Court in various decisions after taking note of Reports of BLRC., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited circumstances, if 75 % of the creditors committee decides that the complexity of a case requires more time for a Resolution Plan to be finalised, a onetime extension of the 180 day period for up to 90 days is possible with the prior approval of the adjudicator. This is starkly different from certain present arrangements which permit the debtor/promoter to seek extensions beyond any limit. This approach has much strength: Asset stripping by promoters is controlled after and before default. The promoters can make a proposal that involves buying back the company for a certain price, alongside a certain debt restructuring. Others in the economy can make proposals to buy the company at a certain price, alongside a certain debt restructuring. All parties know that if no deal is struck within the stipulated period, the company will go into liquidation. This will help avoid delaying tactics. The inability of promoters to steal from the company, owing to the supervision of the IP, also helps reduce the incentive to have a slow lingering death. The role of the adjudicator will be on process issues: To ensure that all financial creditors were indeed on the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx xxx xxx Conclusion The failure of some business plans is integral to the process of the market economy. When business failure takes place, the best outcome for society is to have a rapid renegotiation between the financiers, to finance the going concern using a new arrangement of liabilities and with a new management team. If this cannot be done, the best outcome for society is a rapid liquidation. When such arrangements can be put into place, the market process of creative destruction will work smoothly, with greater competitive vigor and greater competition. 100. The speech of the Hon'ble Minister on the floor of the House of the Rajya Sabha also reflected the fact that with the passage of time the original intent of quick resolution of stressed assets is getting diluted. It is therefore essential to have time-bound decisions to reinstate this legislative intent. It was also pointed out on the floor of the House that the experience in the working of the Code has not been encouraging. The Minister in her speech to the Rajya Sabha gives the following facts and figures: Now, regarding the Corporate Insolvency Resolution Process (CIRP), under the Code, I wan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of ascertaining the mischief sought to be emedied by the legislation and the object and purpose for which the legislation is enacted. This is in accord with the recent trend in juristic thought not only in western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. In fact there are at least three decisions of this Court, one in Loka Shikshana Trust v. CIT [ (1976) 1 SCC 254 : 1976 SCC (Tax) 14 : 101 ITR 234 : 1976 LR 1], the other in Indian Chamber of Commerce v. Commissioner of Income Tax [ (1976) 1 SCC 324 : 1976 SCC (Tax) 41 : 101 ITR 796 : 1976 Tax LR 210] and the third in Additional Commissioner of Income Tax v. Surat Art Silk Cloth Manufacturers' Association [ (1980) 2 SCC 31 : 1980 SCC (Tax) 170 : 121 TTR 1] where the speech made by the Finance Minister while introducing the exclusionary clause in Section 2, clause (15) of the Act was relied upon by the Court for the purpose of ascertaining what was the reason for introducing that clause. 103. In Paripoornan (supra), the Court held as follows: 77. In support of the construction pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e only indicates the object for which the amendment was made and as it contains certain data which it is useful to advert to, we take aid from the speech not in order to construe the amended Section 12, but only in order to explain why the Amending Act of 2019 was brought about. 105. Given the fact that timely resolution of stressed assets is a key factor in the successful working of the Code, the only real argument against the amendment is that the time taken in legal proceedings cannot ever be put against the parties before the NCLT and NCLAT based upon a Latin maxim which sub-serves the cause of justice namely, actus curiae neminem gravabit. 106. In Atma Ram Mittal v. Ishwar Singh Punia (1988) 4 SCC 284, this Court applied the maxim to time taken in legal proceedings under the Haryana Urban (Control of Rent and Eviction) Act, 1973, holding: 8. It is well-settled that no man should suffer because of the fault of the court or delay in the procedure. Broom has stated the maxim actus curiae neminem gravabit -- an act of court shall prejudice no man. Therefore, having regard to the time normally consumed for adjudication, the ten years' exemption or holiday from the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudice no man. It bears repetition to state that the court's inaction in taking cognizance i.e. court's inaction in applying mind to the suspected offence should not be allowed to cause prejudice to a diligent complainant. Chapter XXXVI thus presents the interplay of these three legal maxims. The provisions of this Chapter, however, are not interpreted solely on the basis of these maxims. They only serve as guiding principles. 108. Both these judgments have been followed in Neeraj Kumar Sainy v. State of Uttar Pradesh (2017) 14 SCC 136 at paragraphs 29 and 32. Given the fact that the time taken in legal proceedings cannot possibly harm a litigant if the Tribunal itself cannot take up the litigant's case within the requisite period for no fault of the litigant, a provision which mandatorily requires the CIRP to end by a certain date - without any exception thereto - may well be an excessive interference with a litigant's fundamental right to non-arbitrary treatment under Article 14 and an excessive, arbitrary and therefore unreasonable restriction on a litigant's fundamental right to carry on business under Article 19(1)(g) of the Constitution of India. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e driven into liquidation. 56. Thus, we axe of the view that although word mandatorily was held unconstitutional by Hon'ble Supreme Court in Essar's case but the spirit of amendment in Section 12 has been retained by Hon'ble Supreme Court by putting so many riders for extension of period, hence, delay beyond the maximum period specified in Section 12 would be a reasonable cause for excuse from performance. 57. Now, we shall deal with other contentions made by the parties. 58. The Resolution Applicant has pointed out that there were serious adverse impacts due to delay and for which he has relied on various facts such as cancelling of O M Contracts and uncertainty regarding renewal of O M contract, substantial portion of other income in the cash flow meaning thereby that business was not generating cash from basic operations and erosion in the value of assets. The Resolution Applicant has also claimed that claims towards workmen were to be settled as per clause 6 of part II of Resolution Plan as in relation to the workers had Daman Unit which was to be closed completely but still the same had not been closed and due to this additional liability of ₹ 40 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard, we consider it pertinent to dwell upon the issue of role and powers of CoC as per statutory provisions and shift in the approach of legislature/judiciary forums as regard to the same. CoC is constituted by RP in terms of provision of Section 21 of IBC, 2016 which is comprised of all Financial Creditor or Corporate Debtor. The Voting power of each member of the CoC is determined on the basis of financial debt owed to him. CoC in its first meeting is bound to appoint Resolution Professional by the requisite percentage of votes. It is also within its competence to replace IRP/RP in terms of provisions of Section 22 and 27 of IBC, 2016 respectively. Section 28 of IBC, 2016 provides that certain actions cannot be taken by Resolution Professional during the CIRP without the prior approval of CoC. And the important obligation of CoC is contained in Section 25(2)(h) of IBC, 2016 which provides for approval of criteria for submission of Resolution Plan and such criteria is to be fixed having regard to the complexity and scale of operations of the business of the Corporate Debtor. As far as role of CoC as regard to Information Memorandum is concerned, there is no requirement in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2019 there was a mandatory requirement of recording the reasons for approving or rejecting the Resolution Plan. It is noteworthy that in the main sub regulation 3 the word 'may' was always there which means that a plan could be approved or rejected. The COC was always having power to modify. In the amended proviso w.e.f. 25.07.2019, the requirement of recording reasons has been substituted with the requirement to record its deliberations on the feasibility and viability of the Resolution Plan which is in sync with the provisions of Section 30(4) of IBC, 2016. Further, it is much wider in scope for responsibilities of CoC as compared to the earlier provisions consisting to requirement or recording the reasons. 61. Now, we reproduce the provisions of Section 30(1) to 30(4) of IBC, 2016 as under: 30. Submission of Resolution Plan (1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under section 29A to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each Resolution Plan received by him to confirm that each Resolution Plan- (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w for the time being in force for the implementation of actions under the Resolution Plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law.] 3) The resolution professional shall present to the committee of creditors for its approval such Resolution Plans which confirm the conditions referred to in sub-section (2). (4) The committee of creditors may approve a Resolution Plan by a vote of not less than [sixty-six] per cent, of voting share of the financial creditors, after considering its feasibility and viability, [the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor] and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a Resolution Plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the Resolution Applicant is ineligible under section 29A and may require the resolution professional to invite a fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or the need for additional financial resources by the Corporate Debtor or Resolution Applicant. Accordingly, the requirement of considering feasibility and viability of a Resolution Plan by CoC in itself is a step forward to take care of interest of all stakeholders in addition to interests of CoC comprising of Financial Creditors. In a sense, it also leads to prima facie conclusion that legislature gradually thought it fit to burden CoC to give due weightage and consideration to the objects enshrined in the preamble to the IBC, 2016. This is further strengthened by incorporating words feasibility and viability in Regulation 39(3) of CIRP regulations as well. 62. Now, we would take note of provisions of Section 31(1) and 31(2) are also reproduced as under: 31. Approval of Resolution Plan 30(1) If the Adjudicating Authority is satisfied that the Resolution Plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the Resolution Plan which shall be binding on the corporate debtor and its employees. members, creditors, [including the Central Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Resolution Plan as CoC, in reality, is generally concerned and remain interested till debts owed to Financial Creditors are settled or repaid whereas legislature is concerned that there should not be situation of second insolvency and plan should get implemented in the best interest of all stakeholders. In this sense, there is again a curtailment of powers of CoC in a progressive manner. 67. In the case of K Sashidharan, Hon'ble Supreme Court upheld the supremacy of commercial wisdom of the CoC based upon the provision then existing. The fact that there were changes to CIRP regulations thereafter was also noted by the Hon'ble Supreme Court in that case and those changes were held to be prospective. Hon'ble Supreme Court in the case of Essar Steel Vs. Satish Kumar Gupta in Para 54 held as under: 54. This is the reason why Regulation 38(1A) speaks of a Resolution Plan including a statement as to how it has dealt with the interests of all stakeholders, including operational creditors of the corporate debtor. Regulation 38(1) also states that the amount due to operational creditors under a Resolution Plan shall be given priority in payment over financial creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Committee of Creditors has paid attention to these key features, it must then pass the Resolution Plan, other things being equal. 68. The above findings have given power of limited judicial review to Adjudicating Authority on the various aspects which essentially emanates from preamble to the IBC, 2016. The significance of these findings is that the Hon'ble Supreme Court has settled the proposition that preamble to an Act may not only be a guide but it also prescribes certain conditions which are not mentioned in any specific provisions of that statute but would run through the Code as spirit of the Code and would have to be complied with. This decision has also imposed an obligation on CoC to ensure that corporate debtor remains a going concern and insolvency resolution is done after taking into consideration larger interests of all stakeholders. 69. It is very interesting to note that the factors which Adjudicating Authority is now capable to consider for limited judicial view are not mentioned in Section 30(2). This is a significant departure in judicial approach whereas earlier it was generally held that the role of NCLT was limited to see that Resolution Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility, financial situations and needs of any particular Person (defined hereinafter). Nothing in these materials is intended to be construed as legal, financial, accounting or tax advice. (b) .... Past performance is not a guide for future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from the forward-looking statements due to various factors. No statement, fact, information (whether current or historical) or opinion contained herein should be construed as a representation or warranty, express or implied of Resolution Professional, Resolution Process Advisors, Corporate Debtor (as defined below) or the members of CoC; and none of the Resolution Professionals, Resolution Process Advisors, Corporate Debtor, the member of CoC, or any other Persons/entities shall be held liable for the authenticity, correctness or completeness of any such statements, facts or opinions. This document has not been approved and will or may not be reviewed or approved by any statutory or regulatory authority in India or by any stock exchange in India. This document may not be all inclusive and may not contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Applicant(s) or Resolution Plans without assigning any reasons whatsoever. (Page 3 of 62 of process document). Miscellaneous Section 3.2 The Committee of Creditors, in their sole discretion and without incurring any obligation or liability, reserve the right, any time, to: i. Suspend and/or cancel the Resolution Plan Process and/or amend and/or supplement the Resolution Plan Process modify the dates or other terms and conditions set out in this Process Document; ii. Consult with any Resolution Applicant(s) in order to receive clarifications or further information; iii. Retain any information and/or evidence submitted to the Resolution Professional by, on behalf of, and/or in relation to any Resolution Applicant(s); iv. Cancel or disqualify the Resolution Plan submitted by the Resolution Applicant(s) at any stage of the Resolution Plan Process; or v. Independently verify, disqualify, reject and/or accept any and all submissions or other information and/or evidence submitted by, or on behalf of any Resolution Applicant(s). vi. Request the Successful Resolution Applicant(s) to provide any additional documents or information in relation to the Proposed Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CoC shall not be subject to any expiry and shall remain valid and binding on the Successful Resolution Applicant.(Pg. 15 of 62 of process document) 1.7.5. A Resolution Plan submitted by a Resolution Applicant(s) shall be irrevocable and binding on the Resolution Applicant(s). No modification, alteration, amendment or change may be made to a Resolution Plan submitted by a Resolution Applicant(s) except as specifically provided in this Process Document. (Pg. 16 of 62 of process document). 1.17.17. The Resolution Applicant(s) cannot unilaterally change/withdraw the Resolution Plan once submitted to the Resolution Professional (Pg. 26 of 62 of process document). 73. Apart from these clauses, there are other provisions in process document which make it a document tilted strongly in favour of CoC and also lead to an inference that terms and conditions of process document may not be in compliance of provisions of IBC, 2016. However, we are not reproducing the same as, in our view, above discussion is sufficient to indicate about the arbitrary and unreasonable approach of CoC while formulating the process document but we cannot resist ourselves from observing that as per Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Resolution Applicant could not take any exception to the conditions specified in the process document to remain eligible applicant. Thus, this approach creates a situation of take it or leave it for the Resolution Applicant. However, in our considered view, in spite of such circumstances, it cannot be said that by submitting a Resolution Plan, the Resolution Applicant has committed a crime which is punishable by a term for life imprisonment. Now, the consequences of such conditions are apparent. In this regard, we may submit that initial 180 days were practically consumed in finalization of process document which was ultimately approved and finalized just few days before expiry of initial period of 180 days. Further, incorporation of such clauses create a situation where RP and CoC feel confident that once Resolution Applicant is declared successful and his plan is approved, such Resolution Applicant can never get out. Thus, as against the claim of CoC that permission to withdraw the Resolution Plan would result into serious difficulties for all stakeholders in future, we are of the view that, in fact, it would result into improving the quality and timeliness of Resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
