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TMI Blog2021 (10) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate, For Mr. Edward James, Advocate Mr. Bishwajit Dubey, Advocate JUDGMENT (Virtual Mode) M. Venugopal (J) Company Appeal (AT) (CH) (INS.) No. 166 of 2021 Preface: 1. The Appellant/ Committee of Creditors of Meenakshi Energy Limited, Hyderabad through State Bank of India has preferred the instant Company Appeal (AT) (CH) (INS.) No. 166 of 2021 being dissatisfied with the impugned order dated 24.06.2021 in I.A. 244 of 2021 in CP(IB)No.184/HDB/7/2019 passed by the 'Adjudicating Authority' (National Company Law Tribunal, Bench-II, Hyderabad). Company Appeal (AT) (CH) (INS.) No. 174 of 2021 2. The Appellant / Resolution Professional of Meenakshi Energy Limited, Hyderabad has filed the present Company Appeal (AT) (CH) (INS.) No. 174 of 2021 as an 'aggrieved person' in respect of the certain observations and findings made against the Appellant/ Resolution Professional and the Second Respondent / Committee of Creditors of Meenakshi Energy Limited that they had acted in a manner inconsistent with the Code and 'CIRP' Regulations etc., in the impugned order dated 24.06.2021 in I.A. 244 of 2021 in CP(IB)No.184/HDB/7/2019 (filed under Section 60(5) of the Code read with Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he committee, if the resolution plans received in response to an earlier request are not satisfactory, subject to the condition that the request is made to all prospective resolution applicants in the final list. 16. Regulation 36A and Regulation 36B(2) clearly speaks that timelines specified are mandatory. In the instant case, the 330 days period completed on 08.03.2021. The Applicant claimed that two resolution plans were placed before the CoC for consideration as per the timelines specified in RFRP and before the timelines expired, the Resolution Professional has further extended the time at the request of another Resolution Applicant viz Vedanta Limited, who is qualified as prospective Resolution Applicant in final list of EoI. The Two Resolution Plans pending before the committee were deliberated at length and the contents known to all the CoC members. The CoC in its commercial wisdom has requested the Resolution Professional to extend the RFR timelines beyond 330 days with a view to given an opportunity to Vedanta Limited to submit their Resolution Plan in the name of value maximization of Corporate Debtor, albeit opportunity was given to the other two resolution applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Second Respondent contends that the 'impugned order' of the 'Adjudicating Authority' had addressed the First Respondent/ 'Prospective Resolution Applicants' Application on merits directly, without even addressing the preliminary issue of 'Maintainability' and 'Locus-standi' of the First Respondent/ 'Prospective Resolution Applicant to raise any objection in the 'Corporate Insolvency Resolution Process'. 6. The Learned Counsel for the Appellant/ Second Respondent points out that the 'prospective Resolution Applicant' as per the judgment of the Hon'ble Supreme Court in Arcelor Mittal's case (vide judgment dated 04.10.2018 in Civil Appeal No.9402-9405 of 2018) reported in MANU/SC/1123/2018 has no vested right to raise the objections to the 'CIRP' seeking to (1) have its 'Resolution Plan' approved; and/ or (2) to have its 'Resolution Plan' being considered in exclusivity or in priority over the 'Resolution Plan' of other 'Resolution Applicants'. 7. The Learned Counsel for the Appellant/ Second Respondent takes a stand that the 'impugned order' passed by the 'Adjudicating Authority' had failed to appreciate that the First Respondent/ 'Prospective Resolution Applicant's' Application wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request for 'Resolution Plans' in the 20th 'Committee of Creditors' meeting and (2) during the pendency and subject to the 'Extension Application', which was finally allowed on 15.07.2021. 11. Also that, it is projected on the side of the Appellant/ Second Respondent that in view of the fact that time was granted by the 'Adjudicating Authority' (National Company Law Tribunal, Bench-II, Hyderabad) in any event, the said 'Authority' had no reason to interfere with the decision of the 'Committee of Creditors' and the 'Resolution Professional' based on the binding decision of the Hon'ble Supreme Court of India in Kalpraj Dharamshi & Anr. Vs. Kotak Investment Advisors Limited and Anr. 12. It is represented on behalf of the Appellant/ Second Respondent that the decision of the 'Committee of Creditors' (arrived at by a thumping majority) was meant to provide an equal opportunity to all the 'Prospective Resolution Applicants' in the final list to submit fresh/ revised plans in accordance with the Regulation 36B(7) of the 'CIRP Regulations', because of the fact that the Plans received earlier that too were not found satisfactory. As a matter of fact, it was the decision of the 'Committee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that because of the delay in deciding the 'Extension Application' and considering that it was essential to keep the 'Corporate Debtor' as a 'going concern' for 'Successful Resolution', the 'Committee of Creditors' together with the 'Resolution Professional' had continued the 'CIRP' after the lapse of 330 days, subject to the Adjudicating Authority's order on the 'Extension Application'. In fact, the 'Committee of Creditors' and the 'Resolution Professional' had disclosed to all the stake holders (including the First Respondent/ 'Prospective Resolution Applicants') that such process post expiry of 330 days was subject to the order of the 'Adjudicating Authority' and indeed unless the 'Extension Application' is approved, all the stakes would not create any rights and obligations. 18. The Learned Counsel for the Appellant/ Second Respondent, for an illustration, adverts to the Form G (Re-Issue) dated 19.05.2021 which mentioned the following: "The timelines provided above are subject to receipt of approval from NCLT for extension of timeline for completion of CIRP beyond 330 days and are tentative in nature which may undergo change on account of various reasons including any exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant'). 22. It is the version of the Appellant/ Second Respondent that by seeking resubmission of all the 'Prospective Resolution Applicants', the 'Committee of Creditors' and the Resolution Professional had fulfilled the requirement of Regulations 36B(7) and ensured that no preference was given to anyone of the 'Prospective Resolution Applicants' over the other. Besides this, a level playing field was created for all the 'Prospective Resolution Applicants' by adhering to the due process as per the I&B Code and the 'CIRP Regulations'. 23. The Learned Counsel for the Appellant/ Second Respondent contends that the based on the invitation for 'Expression of Interest' dated 21.01.2020 and 'Expression of Interest' dated 25.01.2021 the Vedanta had submitted its 'Expression of Interest and was included in the final list of 'Prospective Resolution Applicants' published each time that it on 23.03.2020 and on 08.02.2021. Therefore, 'Vedanta' cannot be termed as just an 'outsider' which is endeavouring to submit its plan, at a later stage thereby delaying the completion of 'Corporate Insolvency Resolution Process'. 24. The Learned Counsel for the Appellant/ Second Respondent submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent/ 'Prospective Resolution Applicant' had reaped the benefit of extension of timeline for submitting the 'Resolution Plan' itself, it is the contention of the Appellant that the First Respondent/ 'Prospective Resolution Applicant' is stopped from objecting to the 'Committee of Creditors' decisions to provide similar opportunities to the other 'Prospective Resolution Applicants'. 28. The Learned Counsel for the Appellant/ Second Respondent refers to the judgment of this Tribunal dated 12.08.2021 in the matter of Unicon Buildtech vs. Aishwarya Mohan Gahrana RP, Durha Virak Private Limited (vide Comp App (AT) (Ins.) No.517 of 2021) and submits that the 'Appeal' preferred by the 'Prospective Resolution Applicant' objecting to the non-grant of time and rejection of its plan by the 'Committee of Creditors' was rejected. 29. The Learned Counsel for the Appellant/ Second Respondent submits that the impugned order in the instant Appeal was passed in an unreasonable and arbitrary manner and also is indicative of an inconsistent approach by the very same 'Adjudicating Authority' who had passed an order in Riddhi Siddhi case on 23.09.2021 in I.A. 325 of 2021 in CP(IB)492/07/HDB/2019 where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Supreme Court in The Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta and Ors. (vide judgment dated 15.11.2019 in Civil Appeal No.8766-8767 of 2019) wherein at paragraph 79 it is observed as under: 79 "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 129 ten years' exemption or holiday from the application of the Rent Act would become illusory, if the suit has to be filed within that time and be disposed of finally. It is common knowledge that unless a suit is instituted soon after the date of letting it would never be disposed of within ten years and even then within that time it may not be disposed of. That will make the ten years holiday from the Rent Act illusory and provide no incentive to the landlords to build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es." 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 being the case, we would ordinarily have struck down the provision in its entirety. However, that would then throw the baby out with the bath water, inasmuch as the time taken in legal proceedings is certainly an important factor which causes delay, and which has made previous statutory experiments fail as we have seen from Madras Petrochem (supra). Thus, while leaving the provision otherwise intact, we strike down the word "mandatorily" as being ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23/2018 wherein at paragraphs at 76, 79 to 81 76. "Given the timeline referred to above, and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudicating Authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution Professional may only invite fresh resolution plans if no other resolution plan has passed muster. .... 79. Take the next stage under Section 30. A Resolution Professional has presented a resolution plan to the Committee of Creditors for its approval, but the Committee of Creditors does not approve such plan after considering its feasibility and viability, as the requisite vote of not less than 66% of the voting share of the financial creditors is 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , does not invest the NCLT with the jurisdiction to interfere at an applicant's behest at a stage before the quasi-judicial determination made by the Adjudicating Authority. The nonobstante clause in Section 60(5) is designed for a different purpose: to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings." 33. The Learned Counsel for the Appellant/ Second Respondent in regard to the submission that 'Commercial wisdom' is paramount and not to be interfered with relies on the judgment dated 05.02.2019 of the Hon'ble Supreme Court in K. Shashidhar vs. Indian Overseas Bank reported in (2019) 12 SCC at page 150 wherein at paragraph 52 it is observed as under: 52. "As aforesaid, upon receipt of a "rejected" resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to anal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 156. It would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code. 157. No doubt, it is sought to be urged, that since there has been a material irregularity in exercise of the powers by RP, NCLAT was justified in view of the provisions of clause (ii) of sub-section (3) of Section 61 of the I&B Code to interfere with the exercise of power by RP. However, it could be seen, that all actions of RP have the seal of approval of CoC. No doubt, it was possible for RP to have issued another Form 'G', in the event he found, that the proposals received by it prior to the date specified in last Form 'G' could not be accepted. However, it has been the consistent stand of RP as well as CoC, that all actions of RP, including acceptance of resolution plans of Kalpraj after the due date, albeit before the expiry of timeline specified by the I&B Code for completion of the process, have been consciously approved by CoC. It is to be noted, that the decision of CoC is taken by a thumping majority o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot for considering the new Resolution Plans submitted after the expiry of prescribed time as well as after the lapse of 330 days. 37. The Learned Counsel for the First Respondent points out that the impugned order was passed based on due consideration of Regulations 36A and 36B of the Corporate Persons Regulation, 2016. Furthermore, it is represented on behalf of the First Respondent that the last Form G (third one) published by the 'Resolution Professional' was dated 12.05.2021 and this would exhibit that the 'Resolution Professional' had acted arbitrarily, dehors the provisions of the Code and under the false assumption that 'Form G' could be issued even beyond the 330 days' period and without securing the approval in this regard, from the 'Adjudicating Authority'. 38. The Learned Counsel for the First Respondent points out that the 'Adjudicating Authority' had rightly allowed the I.A. 244/2021 and passed the 'impugned order' by not permitting the 'Resolution Professional and the 'Committee of Creditors' to extend the time frame beyond 330 days. In this connection, the Learned Counsel for the First Respondent places reliance on the judgement of this Tribunal in 'Pioneer Rubchem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than once. It is to be borne in mind by the concerned authorities to adhere to the model 16 timeframe envisaged in Regulation 40(A) of IBBI (CIRP for corporate person) Regulations 2016 as far as possible. In an extraordinary circumstance(s), the 'Adjudicating Authority' can extend the 'Corporate Insolvency Resolution Process' beyond the time limit adumbrated in Section 12(3) of the Code. The extension of time can be only on an application made by the Insolvency Resolution Professional on the basis of 'Committee of Creditors' as mentioned in sub-Section 2 and 3 of Section 12 of the IBC, 2016." 42. The Learned Counsel for the First Respondent submits that the First Respondent's challenge was not founded on its rights to be approved but against an illegal procedure adopted by the 'Resolution Professional' and the 'Committee of Creditors' in violation of the provisions of the Code, whereby the CIRP was derailed completely, i.e. by extending the last date of submission of 'Resolution Plans' and keeping the 'CIRP' process open ended instead of closing the same and by illegally allowing Vedanta's 'Resolution Plan' in the 'zone of consideration' well after the completion of 330 days o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra Tech Cement Ltd. within time on 12th February, 2018 it was open to the Committee of Creditors to notice the revised offer given by Ultra Tech Ltd. on 08th March, 2018. The Committee of Creditors has taken note of revised offer given by the 'Rajputana Properties Private Limited' on 07th March, 2018 but refused to notice the revised offer submitted by Ultra Tech Cement Limited on 08th March, 2018 i.e. much prior to the decision of the Committee of Creditors (14th March, 2018). 39. On a careful reading of the aforesaid clauses, it is clear that all the Resolution Plan' which meet the requirements of Section 30(2) of the 'I&B Code' are required to be placed before the 'Committee of Creditors' and the Resolution Professional' can review the Resolution Plan' and the 'Committee of Creditors' is entitled to negotiate and modify with consent of the Resolution Applicant. To apply this clause there is no time limit prescribed except that the Resolution Process should be completed within the stipulated period of 180 days or maximum 270 days." 46. We appreciate the aforesaid submissions made by Mr. Gopal Subramanian, Ld. Senior Counsel that the Committee of Creditors, Resolution Profess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 31 of the IBC, the Adjudicating authority can direct the CoC to consider the resolution plan of such person who has not been part of CIRP. Otherwise also if such procedure adopted, then the CIRP will be frustrated. Once the resolution plan has been opened and fundamentals and financials of the plan and offer made therein were disclosed to all the participants including RP. Then anyone can enhance its offer before the Adjudicating Authority in the guise of maximisation of realization. Therefore, no further fresh bid or offer would have accepted or considered... 16. This Appellate Tribunal in the case of Chhatisgarh Distilleries Ltd. Vs. Dushyant Dave and Ors. Company Appeal (AT)(Ins.) No. 461 of 2019 in the light of the pronouncement of Hon'ble Supreme Court in the case of Committee of Creditors Essar Steel India Ltd. Vs. Satish Gupta & Ors. 2019 SCC online SC1478 held that: "In the light of the above pronouncement of Hon'ble Supreme Court we have examined the issues raised in these appeals. Admittedly, the A-1 filed its Resolution Plan before the Adjudicating Authority on 13.02.2019 whereas, the last date for submission of Resolution Plan before RP was 15.10.2018. Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is not open to the Adjudicating Authority or Appellate Authority to reckon any other factor other than specified in Sections 30(2) or 61(3) of the I&B Code. It has further been held, that the commercial wisdom of CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. This Court thus, in unequivocal terms, held, that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. It has been held, that the opinion expressed by CoC after due deliberations in the meetings through voting, as per voting shares, is a collective business decision. It has been held, that the legislature has consciously not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the Adjudicating Authority and that the decision of CoC's 'commercial wisdom' is made non-justiciable. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rfering with the commercial decision taken by CoC by a thumping majority of 84.36%." 51. The Learned Counsel for the First Respondent relies on the judgment of this Tribunal (Dated 04.02.2019) in Tata Steel Ltd. vs. Liberty House Group Pte. Ltd. & Ors., Comp App (AT) (Ins.) 198 of 2018 wherein at paragraph 32 and 39 it is observed as under: 32. "It is true that the 'Committee of Creditors' will have to ensure a time bound process, to better preserve the economic value of the asset. Simultaneously, it is duty of the 'Committee of Creditors' to ensure that the 'Resolution Plan' is viable, feasible and should maximize the assets of the 'Corporate Debtor'. 39. Similar provisions were noticed by this Appellate Tribunal in "Binani Industries Limited" (Supra), and held that the 'Committee of Creditors' in its sole discretion can ask the 'Resolution Professional' to negotiate better terms with the 'Compliant Resolution Applicant(s)'. However, such negotiation to be made and completed within the timeframe i.e. within 180 days' subject to extension if granted by the Adjudicating Authority which should not be extended beyond 270 days." 52. The Learned Counsel for the First Respondent ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompletion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate Tribunal to extend time beyond 330 days. Likewise, even under the newly added proviso to Section 12, if by reason of all the aforesaid factors the grace period of 90 days from the date of commencement of the Amending Act of 2019 is exceeded, there again a discretion can be exercised by the Adjudicating Authority and/or Appellate Tribunal to further extend time keeping the aforesaid parameters in mind. It is only in such exceptional cases that time can be extended, the general rule being that 330 days is the outer limit within which resolution of the stressed assets of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court under Section 62, if there is a question of law arising out of such order, within the time specified in Section 62. Section 64 also makes it clear that the timelines that are to be adhered to by the NCLT and NCLAT are of great importance, and that reasons must be recorded by either the NCLT or NCLAT if the matter is not disposed of within the time limit specified. Section 60(5), when it speaks of the NCLT having jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person, does not invest the NCLT with the jurisdiction to interfere at an applicant's behest at a stage before the quasi-judicial determination made by the Adjudicating Authority. The non-obstante clause in Section 60(5) is designed for a different purpose: to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings." 54. The Learned Counsel for the First Respondent refers to the judgment of the Hon'ble Supreme Court dated 13.09.2021 in Ebix Singpore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to vote, it shall be considered approved if it receives requisite votes. (3B) Where two or more resolution plans are put to vote simultaneously, the resolution plan, which receives the highest votes, but not less than requisite votes, shall be considered as approved: Provided that where two or more resolution plans receive equal votes, but not less than requisite votes, the committee shall approve any one of them, as per the tie-breaker formula announced before voting: Provided further that where none of the resolution plans receives requisite votes, the committee shall again vote on the resolution plan that received the highest votes, subject to the timelines under the Code..........") further regulates the conduct of the CoC on voting on Resolution Plans and has introduced the requirement of simultaneous voting. The IBBI's Discussion Paper issued on 27 August 2021 has invited comments on regulating the process on revisions that can be made to resolution plans submitted to the CoC (available at https://www.ibbi.gov.in/uploads/w hatsnew/ fbe59358a8c440d001f3b950be4a1c67.pdfaccessed on 5 September 2021). These developments bolster the conclusion that the mechanism prior to submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime. The elements of contractual interpretation can be relied upon to construe the language of the terms of the Resolution Plan, in the event of a dispute, but not to re-fashion and distort the mechanism of the IBC altogether. This Court in Laxmi Pat Surana v. Union Bank of India ((2020) SCC On Line SC 1187) has held that the IBC is a self-contained Code. Thus, importing principles of any other law or a statute like the Contract Act into the IBC regime would introduce unnecessary complexity into the working of the IBC and may lead to protracted litigation on considerations that are alien to the IBC. To give an example, the CoC can forfeit the PBG furnished by the successful Resolution Applicant under certain circumstances in terms of the RFRP and Resolution Plan including, inter alia, on the ground that the Resolution Applicant has failed to implement the resolution or has contributed to its failure. Regulation 36B (4A) of CIRP regulations provides for the furnishing of such performance security once the plan is approved by creditors. The Regulations do not provide that the performance security has to be a reasonable estimate of loss as is expected of penalty clauses under contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a ((2021) SCC OnLine 194, para 71) (supra) a three judge Bench of this Court observed that a "delay in completion of the insolvency proceedings would diminish the value of the debtor's assets and hamper the prospects of a successful reorganization or liquidation. For the success of an insolvency regime, it is necessary that insolvency proceedings are dealt with in a timely, effective and efficient manner". The stipulation of timelines and a detailed procedure under the IBC ensures a timely completion of CIRP and introduces transparency, certainty and predictability in the insolvency resolution process. The UNCITRAL Guide also states that the insolvency law of a jurisdiction should be transparent and predictable. It notes the value of such predictability in the following terms (Page 13, UNCITRAL Guide, supra 56): "11. An insolvency law should be transparent and predictable. This will enable potential lenders and creditors to understand how insolvency proceedings operate and to assess the risk associated with their position as a creditor in the event of insolvency. This will promote stability in commercial relations and foster lending and investment at lower risk premiums. Transpar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as the IBC. In this case, if Resolution Applicants are permitted to seek modifications after subsequent negotiations or a withdrawal after a submission of a Resolution Plan to the Adjudicating Authority as a matter of law, it would dictate the commercial wisdom and bargaining strategies of all prospective Resolution Applicants who are seeking to participate in the process and the successful Resolution Applicants who may wish to negotiate a better deal, owing to myriad factors that are peculiar to their own case. The broader legitimacy of this course of action can be decided by the legislature alone, since any other course of action would result in a flurry of litigation which would cause the delay that the IBC seeks to disavow. 147 The IBC is silent on whether a successful Resolution Applicant can withdraw its Resolution Plan. However, the statutory framework laid down under the IBC and the CIRP Regulations provide a step-by-step procedure which is to be followed from the initiation of CIRP to the approval by the Adjudicating Authority. Regulation 40A describes a model-timeline for the CIRP that accounts for every eventuality that may arise between the commencement of the CIRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epair an omission in the Act, it should be possible to state with certainty that these or similar words would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law." In the wake of the COVID-19 pandemic, several Resolution Plans remained pending before Adjudicating Authorities due to the lockdown and significant barriers to securing a hearing. An Ordinance was swiftly promulgated on 5 June 2020 which imposed a temporary suspension of initiation of CIRP under Sections 7, 9 and 10 of the IBC for defaults arising for six months from 25 March 2020 (extendable by one year). This was followed by an amendment through the IBC (Second Amendment) Act 2020 on 23 September 2020 which provided for a carve-out for the purpose of defaults arising during the suspended period. The delays on account of the lockdown were also mitigated by the IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations 2020, which inserted Regulation 40C on 20 April 2020, with effect from 29 March 2020, and excluded such delays for the purposes of adherence to the otherwise strict timeline. Recently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds subject in which it can be allowed and the statutory procedure to be adopted for its exercise. 159 After the amendment to Section 12 in 2019 which mandate a 330 days outerlimit for conclusion of the CIRP (which can be breached only under exceptional circumstances as held in Essar Steel (supra)), it would be antithetical to the purpose of the IBC to allow the Adjudicating Authority to use its plenary powers under Section 60(5)(c) to potentially extend these timelines to enable the CoC to either issue a fresh RFRP if the Resolution Plan is withdrawn by a successful Resolution Applicant or direct further negotiations with the Resolution Applicant who is seeking a modification of the plan, whose failure could result in withdrawal as well. The likely consequence of a withdrawal by a successful Resolution Applicant after going through the stages of the CIRP for nearly 180 days (provided all statutory timelines have been strictly followed) would inevitably be a delayed liquidation after the value of the assets has further depreciated. In the event of intervening delays on account of litigation or otherwise, the delay would be even more severe. If a CoC, could be compelled by the Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0th CoC meeting to allow DSKL after due date to file EOI is not a commercial decision. 29. Now we have considered whether the CoC can review its own decision at any point of time in contravention of Regulation 36-A )6) of the Regulations 2016. 30. Ld. Se. Counsel for DSKL submitted that Regulation 36-A cannot override the mandate of Code i.e. maximization of value and commercial wisdom of CoC and for this contention, cited the Judgement of Hon'ble Supreme Court in the Case of Brilliant alloys Vs S. Rajagopal in which Hon'ble Supreme Court while dealing with Regulation 30-A has explicitly held that seemingly mandatory language of Regulation has to be read along with provision of the Code. Thus, Hon'ble Supreme Court held that Regulation 30A would be directory. Additionally, Regulation 36 is not mandatory in nature. The word 'shall' has to be read as 'may' since no consequence of non-compliance are provided. 31. We have considered the argument in the case of Brilliant Alloys, Corporate Debtor as well as Financial Creditor and Operational Creditor were agreed to withdrawal of the Application. However, in view of Regulation 30A, withdrawal was not permitted. In that context, Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal allowed the Appeal on the ground of material irregularity where we are examining this appeal u/s 61(1) of IBC. The scope of Appeal u/s 61(3) is limited to the grounds as specified in subsection 3. However, there is no such limit for the Appeal u/s 61(1) of IBC. In the case of Kalpraj, Hon'ble Supreme Court held that all the actions of RP, including acceptance of Resolution Plan of Kalpraj after due date, albeit before the expiry of time line specified by the IBC for completion of the process, have been consciously approved by the COC. In the present case, as we have already discussed, in the 7th CoC meeting with the consultation of Mr. Pankaj Joshi, the request for submitting EOI after due date was rejected. After two months, when Mr. Pankaj Joshi appointed RP, he in contravention of Regulation 36A in his own accord overturned the decision of 07th COC and permitted DSKL to submit EOI. However, DSKL has not requested the COC to re-visit their earlier decision. Mr. Pankaj Joshi by suppressing material facts and misguiding the CoC procured the desired decision and inducted DSKL in the list of prospective Resolution applicant. In the case of Kalpraj, RP's actions are bonafide, imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmit its EOI. Pankaj Joshi also misguided the CoC that he is not required to take express permission from the CoC to issue a equest for Resolution Plan to an eligible Prospective Resolution applicant. This is not the position in this case the request for submission of EOI after due date was rejected by the CoC then there is no question to issue a request for resolution plan to DSKL. 40. Pankaj Joshi in 09th CoC meeting canvassed the case of DSKL and when one of CoC Members proposed to publish fresh Form 'G' then he suggested that this is impracticable and delayed the CIRP. 41. With the above discussion, we are of the view that the decision taken in 09th Meeting of the CoC was not transparent, fair and was under the influence of Pankaj Joshi.'' 56. The Learned Counsel for the First Respondent cites the judgement of this Tribunal dated 20.12.2019 in Amit Gupta V. Yogesh Gupta(Resolution Professional) in Comp App (AT)(Ins) No.903/2019 wherein at paragraph 16 to 20 it is observed as under:- "16.Under Section 25(2)(h), the Resolution Professional is required to invite prospective Resolution Applicants who fulfil such criteria as may be laid down by him with the approval of Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved Section 10 Application so as to invoke provisions of IBC for the Corporate Debtor and neither at that time nor at any time including when e-mail dated 18th August, 2018 was sent at any point of time, the claim was made that the Corporate Debtor is an MSME. It appears from record that such claim was made directly before the Adjudicating Authority by filing CA 259/2018. This too after more than 1 ½ month after the last correspondence from Respondent which was Annexure A12 dated 31st August, 2018. 18. Under Sub-Clause 'c' of Clause - 7 of Regulation 36-A, there is provision that the prospective Resolution Applicant should give undertaking that it does not suffer from any ineligibility under Secton 29-A to the extent applicable. It is apparent from record that the Appellant gave no such undertaking and clearly the provisions of IBC were not complied and moving the Adjudicating authority after a delay would not help. When the Resolution Professional receives the expression of interest, (if there is no dispute that the Corporate Debtor is MSME, it would be different, but otherwise), he is not expected to sit down and decide applying facts to provisions of Section - 7 of MSME ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t finds that the Appellant has failed to show that it is MSME, for reasons recorded above although it is stated that the Appellant has submitted a proposed Resolution Plan, copy of which has been filed which is stated to have been sent only on 14.11.2019 (as endorsed on the copy), we do not propose to go into such plan which again has been put up only after 2 months of the September Order. The Counsel for Respondent has further submitted that the statutory period has also expired and COC has already moved the Adjudicating Authority for passing orders of liquidation in view of pendency of this Appeal." 57. The Learned Counsel for the First Respondent points out the Judgement of this Tribunal dated 29.05.2020 in First Global Finance Pvt Ltd V. IVRCL Ltd and others (vide Comp App (AT)(INS) No.918-919 of 2019 dated 29.05.2020) wherein at paragraph 23 and 24 it is observed and held as under:- "23. State Bank of India has submitted on behalf of the Committee of Creditors through its affidavit dated 04.12.2019 that the Resolution Plan submitted by the Reconstituted Consortium was not commercially acceptable to the CoC and in spite of repeated request by the CoC to the "Reconstituted Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors of Meenakshi Energy Ltd. Through State Bank of India and the Second Respondent/ Resolution Professional had only considered the "Vedanta Resolution Plan" in accordance with the Code, with a view to achieve value maximization under the Code and further that no 'determination' vis-à-vis its approval was taken in regard to the same. 59. The Learned Counsel for the Second Respondent contends that the right to challenge 'is available to a Resolution Applicant' only on the approval of a 'Resolution Plan' by the 'Adjudicating Authority' and not at any stage earlier. Also it is projected on the side of the Second Respondent that there is no vested right to a 'Resolution Applicant' to have its 'Resolution Plan' be considered by the Committee of Creditors. Therefore, no challenge can be made before the 'Adjudicating Authority' by a 'Resolution Applicants' till a 'Resolution Plan' is approved by the said Authority. 60. Expatiating his submission, the Learned Counsel for the Second Respondent proceeds to point out that the decision of the Appellant and the Second Respondent to extend the timeframe beyond 08.03.2021 was at all times be subject to the outcome of 33-390 days 'Extensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be extended and in reality, the same falls within the purview of the 'commercial wisdom of the Appellant'. 64. The Learned Counsel for the Second Respondent submits that the First Respondent had strongly objected to the consideration of the Vedanta 'Resolution Plan' through email dated 28.04.2021 and letter dated 30.04.2021, based on the reason that it was beyond the last date for submission and that the first Respondent sought further time till 05.05.2021 to submit its 'Resolution Plan'. Again, the 'First Respondent' had prayed for more time through email dated 10.05.2021, sought further time till 24.05.2021 to submits its 'Resolution Plan'. 65. Because of the fact that the Learned Counsel for the Second Respondent points out that on the instructions of the Appellant, since the Second Respondent had extended the last date for submission of 'Resolution Plan' till 12.05.2021, the first Respondent submitted the 'Resolution Plan' of May 12.2021. Subsequently, on 02.06.2021, the First Respondent again sought time to submit a revised 'Resolution Plan' simultaneously with the filing of the 'Impugned Application', and even after filing of the 'Impugned Application', the First Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he I&B Code) was filed by the Financial Creditor/ State Bank of India, and the said petition was admitted on 07.11.2019 by the 'Adjudicating Authority' in CP (IB) No.184/HDB/7/2017 and that the Second Respondent/ Ravi Shankar Devarakonda was appointed as an 'Interim Resolution Professional' of the 'Corporate Debtor'. Later, the Resolution Professional's appointment was affirmed in the first meeting of the 'Committee of Creditors' and later, Mr. Ravi Shankar Devarakonda was appointed as 'Resolution Professional' on 05.12.2019. 71. According to the First Respondent/ Applicant the Second Respondent/ Resolution Professional initially, published Form G, on 21.01.2020, based on which, the First Respondent/ Applicant submitted its 'Expression of Interest' on 21.02.2020. Later, the 'Resolution Professional' prepared a final list of 'Prospective Resolution Applicants' on 23.03.2020, but because of the 'Covid19 Pandemic' and on account of the imposition of the nationwide lockdown on 23.03.2020, the Second Respondent/Resolution Professional lost significant time and was unable to consider the proposal made by the 'Prospective Resolution Applicants'. 72. In fact, it comes to be known that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ending of the 'CIRP' period of i.e. 08.03.2021. Indeed, the Applicant/ First Respondent made an 'Earnest Money Deposit of Rs. 1 crores as per clause 14A.1.(d) of the Request for 'Resolution Plan' dated 29.10.2020 and after the submission of the 'Resolution Plan' before the Resolution Professional, the same was presented before the 'Committee of Creditors' in a sealed envelope in the 18th Meeting of the 'Committee of Creditors' that took place on 10.03.2021. Furthermore, in the CoC meeting that took place on 10.03.2021, the 'Resolution Plan' furnished by the First Respondent/ Applicant was presented and lengthly discussed. 77. Apart from the above, the Second Respondent/ Resolution Professional had requested the First Respondent/ Applicant to furnish an excel model version on financial projections pertaining to the 'Resolution Plan' through email dated 12.03.2021 and on through email dated 17.03.2021, the Second Respondent/ Resolution Professional had insisted that 'CIRP' is a 'time bound' process and requested the First Respondent/ Applicant to furnish the clarifications by 19.03.2021 and the clarifications were submitted through email 25.03.2021. 78. It is the version of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal' filed before the NCLT, Chennai, are to the limited extent of an extension of the CIRP period after 330 days. In fact, as on date, no extension was granted by the Adjudicating Authority, because of the fact, IA No.120/2021 was not heard. 82. The plea of the First Respondent/Applicant in IA No.244/2021 in CP(IB)No.184/HDB/2019 is that the said I.A. was filed because of the fact that 'Resolution Plan' of the First Respondent/Applicant was disclosed to the 'Committee of Creditors' and the contents of the same were made known to all the creditors and since the confidential details of the First Respondent/Applicant plan were disclosed, the 'Resolution Professional' cannot consider the 'Resolution Plan' filed by any proposed 'Resolution Applicant' subsequently at a later stage. 83. The pivotal stand of the First Respondent/Applicant is that the action of the 'Resolution Professional' in considering the 'Additional Plan' which was submitted after deadline, and after the 'Resolution Plan' made by the First Respondent/Applicant was disclosed and neither the 'Resolution Professional' nor the 'Committee of Creditors' do have the powers to unilaterally conduct 'CIRP' against the spirit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its Resolution Plan considered by the Committee of Creditors' and further, it was held that no challenge can be made before the 'Adjudicating Authority' by a 'Resolution Applicant' until a 'Resolution Plan' is approved by the 'Adjudicating Authority'. 87. The stand of the Resolution Professional/2nd Respondent of Meenakshi Energy Ltd is that the 'Applicant' can only assail a 'Resolution Plan' which is approved by the 'Adjudicating Authority' and as on date, 'no adjudication' is made and as such the IA No.244/2021 in CP (IB) No.184/HDB/7/2019 on the file of the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench) is a 'premature' and 'not maintainable' one. 88. At this juncture, this Tribunal points out that in the impugned order dated 24.06.2021 in IA No.244/2021 in CP(IB)No.184/HDB/7/2019 passed by the 'Adjudicating Authority' paragraph 1 reads as under:- "1. This Application is filed under Section 60(5) of Insolvency & Bankruptcy Code, 2016 (herein after referred to as Code) by prospective Resolution Applicant seeking directions not to allow the Resolution Professional to accept any plan after the closure of due date of CIRP i.e. 08.03.20221." 89. A curso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Insolvency Resolution Process' and thus the period of 180 days of CIRP comes to an end on 11.08.2020 and also granted extension of CIRP period in the matter of M/s Meenakshi Energy Ltd beyond 180 days by a further period of 90 days with effect from 12.08.2020. 93. In the instant case, the Adjudicating Authority on 08.01.2021 in IA No.1079/2020 in CP (IB) No.184/HDB/7/2019 (filed by the 2nd Respondent/Resolution Professional) had granted another 60 days extension from 08.01.2021 expiring on 08.03.2021 and that the 330 days period was also to lapse on the same day. 94. It transpires that the Resolution Professional had re-issued the Form G on 25.01.2021 because of the perceived increase in value of the Corporate Debtor as per Regulation 36-A read with Regulation 36(B)(7) of IBBI (Insolvency Resolution for Corporate Persons) Regulations 2016. The last date for submission of 'Resolution Plan' was on 24.02.2021 and further, that the said date was extended to 01.03.2021, till 06.03.2021 and then, finally till 08.03.2021. 95. Be it noted, that on 05.03.2021 another prospective Resolution Applicant/Sindhu Trade Links Ltd (''STLL'') had submitted his 'Resolution Plan'. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riting and shall be signed and dated by the President or Member or Members constituting the Bench which heard the case and pronounced the order. (3) A certified copy of every order passed by the Tribunal shall be given to the parties. (4) The Tribunal, may transmit order made by it to any court for enforcement, on application made by either of the parties to the order or suo motu. (5) Every order or judgment or notice shall bear the seal of the Tribunal." 100. At this stage, this Tribunal aptly points out that in Comp App (AT) (CH) (Ins) No.15/2021 on the file of National Company Law Appellate Tribunal, Chennai Bench a direction was issued to the 'Adjudicating Authority' to take up I.A. No. 120 of 2021 on the next date of hearing i.e. 23.04.2021 and to dispose of the same on merits etc. at an early date. 101. I.A. No.120 of 2021 in CP (IB) No.184/HDB/7/2019 (seeking Extension of CIRP period) was filed by the Resolution Professional on 03.03.2021, six days before the expiry of 330 days on 09.03.2021 and prior to the receipt of any 'Resolution Plans'. In fact, the I.A. No.120 of 2021 in CP (IB) No.184/HDB/7/2019 was decided on 15.07.2021, more than four months from the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Section 12(3) of the Code further enjoins that any extension of CIRP under this Section shall not be granted more than once and Section 12(3) of the Code is to be read with the third proviso to Section 30(4) which mentions that the maximum period of 30 days specified in the second proviso is permissible, as the only exception to the extension of the period not being granted more than once as per decision of the Hon'ble Supreme Court in 'Arcelor Mittal India Pvt. Ltd.' Vs. 'Satish Kumar Gupta', 2018 SCC online SC 1733. Undoubtedly, an extension of time limit for CIRP is a grey/ critical arena. In a case, where CIRP is pending and not completed within 330 days within which the Resolution of stressed asset is to take place, only in an exceptional / extraordinary case, the outer time limit of 330 days can be extended with a view to secure the ends of justice. Effect of Non-Observance of Time Line 105. A Tribunal/ Appellate Tribunal is to follow the requirement and discipline of 'I&B' Code, 2016, enacted by the Parliament, to streamline the Resolution of Corporate Insolvencies, of course bearing in mind of the fact that the relevant provisions of the Code are well thought of in 'pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a duty to invite 'Prospective Resolution Applicants', who satisfy such criteria as may be laid down by him with the approval of 'Committee of Creditors', considering the complexity and scale of operations of the 'Business' of the 'Corporate Debtor' and such other conditions as may be prescribed by 'IBBI' to project 'Resolution Plans', present such Plan(s) to the 'Committee of Creditors' etc. As per Section 30(2) of the I&B Code, the 'Resolution Professional' is to examine each 'Resolution Plan' received by him and confirm that it meets the requirements mentioned in sub-section (2). Confidentiality of Plan 111. In fact, the 'Resolution Plan' furnished by one or the other 'Resolution Applicant' is a 'confidential' one and it cannot be disclosed to any 'Competing' 'Resolution Applicant' nor any view can be taken or objection can be asked for from other 'Resolution Applicants' in regard to one or the other 'Resolution Plan'. It cannot be lost sight of that the conduct of 'Resolution Professional' is important in deciding whether he is guilty of 'Misfeasance' or 'Fraud' or any other 'Serious Irregularity' in the preparation of 'Resolution Plan'. As a matter of fact, the 'Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the 'Adjudicating Authority') yet this Tribunal, keeping in mind of the averment made by the First Respondent/ Applicant at paragraph 21 inter alia to the fact that I.A. No.120 of 2021 in CP (IB) No.184/HDB/7/2019 was filed 'essentially on the ground that since the 'Resolution Plan' of the Applicant (First Respondent) has been disclosed to the 'Committee of Creditors' and the contents of the same have been made known to all the Creditors pursuant to disclosing all the confidential details of the Appellant's Plan and not maintaining the secrecy of 'fidelity' / 'confidentiality' comes to a resultant conclusion that the 'Resolution Plan' of Vedanta which was submitted after the due date 08.03.2021 (expiry of 330 days period-general rule of outer limit, of ) and as such, the same is not to be considered either by the 'Committee of Creditors' or the Second Respondent/'Resolution Professional' (Appellant in Comp App (AT) (CH (INS) 174 of 2021), because of the breach of the 'confidentiality' of the 'Resolution Plan'. Result 115. In the light of foregoing upshot, 'this Tribunal' considering the entire conspectus of the attended facts and circumstances of the case in an holistic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Adjudicating Authority' (National Company Law Tribunal, Bench-II, Hyderabad) at para 16 of the impugned order in I.A. No.244 of 2021 in CP (IB) No.184/HDB/7/2019 dated 24.06.2021 to the effect that ..... "CoC in its commercial wisdom has requested the Resolution Professional to extend the RFRP timelines beyond 330 days with a view to given an opportunity to Vedanta Limited to submit their Resolution Plan in the name of value maximization of Corporate Debtor, albeit opportunity was given to the other two resolution applicants to revise their proposal. As this being status, we are of the view that CoC and Resolution Professional have taken the process into their own hands even though they cannot extend timelines beyond 330 days unilaterally without the approval of the 'Adjudicating Authority'. This action of Resolution Professional is contrary to the letter and spirit of the Code and its Regulations." and the observations made in paragraph 17 of the impugned order to the effect that .... "In our view, the CoC and the Resolution Professional has categorically violated the timelines in the name of value maximization, thereby kept on extending the process beyond 330 days and CoC in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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