9911796707
TMI Blog2023 (6) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... DB/2019, whereby the 'Adjudicating Authority' has dismissed the 'Application' filed by the 'Appellant', seeking the following reliefs: a) To restrain the Respondents from proceeding with the Challenge Process. b) Direct the Respondents Nos. 1 & 2 to accept the Resolution Plan of the Appellant as submitted on 28/10/2022. c) Restrain the 1st Respondent from considering any of the Resolution Plans submitted after 20/10/2022. 2. It is submitted by the Learned Counsel for the Appellant that the 'CIRP' of the Corporate Debtor was initiated on 07/11/2019; Form G was issued on 21/01/2020 and the 1st Respondent / 'Resolution Professional' (RP) had prepared the final list of prospective Resolution Applicants on 23/03/2020; IA No. 582/2020 was filed by the RP seeking extension of the timelines which was granted by the 'Adjudicating Authority'; IA No. 1079/2020 was also filed seeking the 2nd extension of the CIRP period by another 60 days which was allowed by the 'Adjudicating Authority'; that the RP had circulated the request for Resolution Plan dated 29/10/2020 and reissued the Form G on 25/01/2021. It is submitted that the final list of prospective Resolution Applicants was drawn up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 15/07/2022 for a period of 60 days till 12/09/2022 and fresh Form G was issued. On 29/08/2022, the Appellant had submitted the Resolution Plan and there were three prospective Resolution Applicants namely, Jindal Power Limited, Vedanta Limited and the Appellant herein. On 12/09/2022, the RP filed another Application IA No. 920/2022, seeking extension of the Period of 90 days to complete the CIRP Process which was partly allowed by the 'Adjudicating Authority' granting 72 days time. While so, on 27/12/2022, Vedanta Limited revised that plan by way of addendum contrary to Regulation 39(1A) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations). 5. The Learned Counsel drew our attention to Regulation 39(1A) which reads as follows: "Regulation 39(1A) specifies "the resolution professional may, if envisaged in the request for resolution plan - (a) allow modification of the resolution plan received under sub-regulation (1), but not more than once; or (b) use a challenge mechanism to enable resolution applicants to improve their plans."" 6. The Learned Senior Counsel for the Appellant submitted that for improvements in Resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and regulations made therein, have to be submitted to the RP and any Resolution Plan submitted in contravention of Regulation 39(1A) would be noncompliant. As regarding the commercial wisdom of CoC, the Learned Senior Counsel placed reliance on the Judgment of Hon'ble Supreme Court of India in 'M.K. Rajagopalan Vs. Dr. Periasamy Palani Gounder', reported in [(2023) SCC Online SC 574], it was held that 'the principles underlying the decisions of this Court respecting the commercial wisdom of CoC cannot be over-expanded to brush aside a significant shortcoming in the decision making of CoC when it had not duly taken note of the operation of any provision of law for the time being in force'. 7. It is also the case of the Appellant that the 'Adjudicating Authority' has not focused on the matters of procedure, though the 'Bankruptcy Law Reforms Committee' at pages 30 and 31 of their Report, issued in November, 2015, clearly recommended that the Adjudicator will focus on ensuring that all parties adhere to the process of the Code. The Adjudicator ought to be very directly involved in the Resolution Process once it is determined that the date is not viable and that the entity or indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the CoC has illegally considered the unsolicited revised offer of Vedanta when it is contrary to Clause 9 of the RFRP which prohibits submission of addendum under any circumstances and that the 'Adjudicating Authority' has erred observing that this Clause 9 of RFRP can be looked at only as a norm incorporated to discipline the process of receiving the Resolution Plan. The contents of RFRP are mandatory in nature and do not consider any Resolution Plan received after timelines. The RP and CoC being statutory Institutions are bound to exercise the power within IBC and cannot exercise powers which are not contemplated under the Code. The Learned Senior Counsel concluded that the addendum was unsolicited as it was viable to Regulation 39(1A) (b) of the CIRP Regulations and that the CIRP was erroneously conducted when the CoC had already decided to vote upon the Resolution Plans submitted on 28/10/2022. 10. The Learned Senior Counsel placed reliance on the following Judgments in support of his submission. i. Jindal Stainless Ltd. Vs. Shailendra Ajmera, [(2023) SCCOnLine NCLAT 44] ii. Vistra ITCL (India) Ltd Vs. Torrent Investments Pvt. Ltd.& Ors. Company Appeal (AT) (In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to 04/01/2023. The Appellant had opportunity to participate in the Challenge Process without prejudice but for reasons best known to it, opted to set out of the Challenge Process. As per Clause 2 of the Challenge Process and the email dated 01/012023, the CoC would consider the last submitted Resolution Plan of the participant who did not take part in the Challenge Process. As the Appellant did not participate in the Challenge Process, the CoC considered the last Resolution Plan submitted on 28/10/2022 and did not approve the same. 13. It is submitted by the Learned Senior Counsel that running the Challenge process, the value of the Corporate Debtor had increased as the value of the bid have also exponentially increased. As R3 had bid a revised amount of Rs. 1440 crores and Jindal bid a revised amount of Rs. 1344 Crores. 14. It is submitted that there is no violation of Regulation 39(1A) of the CIRP Regulations as the restriction incorporated in Regulation 39(1A) does not fetter the modifications being made more than once. The Learned Counsel placed reliance on the Judgment of this 'Tribunal' in the matter of 'Vistra ITCL (India) Limited Vs. Torrent Investments Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the 'Jindal Stainless Ltd. Vs. Shailendra Ajmera' case reported in [(2023) SCC OnLine NCLAT 44], as in that matter one of the Resolution Applicants was admitted to revise the Resolution Plan, but the CoC in their Commercial wisdom decided not to consider any plan after the Resolution Process. In the present case, RFRP provides vast powers to the CoC. Clause 1.17 of the RFRP empowers the CoC to initiate the terms of the Resolution Plans that the Resolution Applicants including but not limited to determining the mechanism of such negotiation and also request the Resolution Applicants to resubmit their revised proposals on basis of their discussions and negotiation. RFRP was not issued post facto to empower the CoC to run the Challenge Process. RFRP was well in place and CoC had acted in accordance with the same. The RFRP was issued on 10/08/2022 and the decision to undertake the Challenge Process was taken up by the CoC on 29/12/2022. The Challenge Process was decided only for value maximisation, keeping in view, the best interest of all the Stakeholders. 17. It is submitted by the Learned Senior Counsel that the Appellant had deliberately concealed the email dated 03/01/2023, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as approved by the CoC by a majority of 99.18% during the 43rd Meeting held on 29/12/2012; that the Appellant has maliciously sought to mislead this Hon'ble Appellate Tribunal by arguing that the minutes of the 43rd Meeting of the CoC were not shared with the Appellant despite the communication issued by the Appellant to the Resolution Professional in April 2023; that the Appellant's request is belated and was raised much after the Impugned Order was passed on 23/01/223; that the Appellant's request is belated and was raised much after the Impugned Order was passed on 23/01/2023. 20. It is submitted that the decision of CoC to conduct the Challenge Process is supported by Clause 1.17, 1.18 and 7.2 of the Request for Resolution Plan ("RFRP"); Clause 1.17 of RFRP empowers the CoC to "negotiate" (if required) terms of the Resolution Plan(s) with the Qualified Applicant(s) and other Applicants. Pursuant to this, the Committee of Creditors shall be required to vote on the Resolution Plan(s) presented to it; Further the said clause specifically empowers the CoC to 'undertake simultaneous negotiations with various Qualified Applicants and/or adopt any other process of negotiation as they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on applicants to improve their plans." 24. It is the case of the Appellant that this Regulation is mandatory in nature and that the RP ought not to have permitted the modification in the Resolution Plan more than once either by way of revision or by way of challenge mechanism and was duty bound to reject any process which is not complaint with the express provisions of the CIRP Regulations. If the word 'or' contained in Regulation 39 (1A) is read as 'and', it would allow the Resolution Applicants to revise their plans several times which is not the scope and intent of the Code. 25. At this juncture, it is apt to place reliance on Paragraph 20, 21, 30 & 31 of the discussion paper of Insolvency and 'Bankruptcy Board of India', dated 27/08/2021 which deals with the number of revisions that could be allowed to our Resolution Applications while submitting the Resolution Plan. "20. Regulation 36B of the CIRP Regulations contain provision regarding request for resolution plans. It provides for a minimum of 30 days for prospective resolution applicants to submit the plans and allows for revision/ modification of the request for resolution plan (RFRP) subject to the 30- day timeline but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market condition." (Emphasis Supplied) 26. The insertion of Regulation 39(1A) was especially that a objection to maximise the value of the assets and to reduce any delay in timelines by several resubmissions or addendums which the Resolution Applicants seek to submit. 27. The NCLAT, Principal Bench, New Delhi, in Company Appeal (AT) (Ins) No. 132, 133 & 134 of 2023 in the matter of 'Vistra ITCL (India) Ltd. Vs. Torrent Private Ltd. and Ors.' (Supra) addressed to the question whether Regulation 39(1A) contains an implied prohibition on the jurisdiction of the CoC to enter into any further negotiation with the Resolution Applicant or to further ask the Resolution Applicant to increase its Resolution plan value. This Tribunal in Para Nos. 36 and 37 of the aforenoted observed as follows: "36. We have noted in the foregoing paragraphs, the relevant clauses of RFRP on the strength of which, the learned Counsel for the Appellant submits that the right of CoC to negotiate with Resolution Applicants, even if Challenge Mechanism is intact and Regulation 39(1A) does not contain any fetter on the right of the CoC to proceed further after Challenge Mechanism. Clause 3.17.17 for ready ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. It is relevant to reproduce the said paragraph as hereunder: "20. There can be no fetter on the power of the CoC to cancel or modify any negotiation with the Resolution Applicant including a Challenge Process but it is the wisdom of the CoC to take a decision in that regard. CoC, in the facts of the present case, did not take any decision to disregard the Challenge Process completed in 13th CoC meeting held on 15.07.2022 and it decided to vote on the plan which voting process has begun." 29. It is significant to mention that the decision to co-run the challenge process was taken by the CoC to maximise the value of the Corporate Debtor and the record shows that the Respondent No. 3 submitted revised bid of Rs. 1440 Crores, an increase from the initial bid of Rs. 650 Cores submitted on 28/10/2022 and similarly Jindal Power submitted a revised bid of Rs. 1344 Crores which is an increased from initial bid of Rs. 1269 Crores submitted on 28/10/2022. It is evident that there is a significant increase in the amounts submitted by the Resolution Applicants. We find force in the submission of the Learned Counsel for the CoC that it was only after the running of the Challenge Process th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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