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TMI Blog2024 (1) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the Impugned Order dated 22.08.2023 ("First Impugned Order") passed by the National Company Law Tribunal, Mumbai Bench - IV ("Adjudicating Authority") in clarification application being I.A. No. 3699 of 2023, which has held that the Appellant is ineligible to submit a Resolution Plan for the Corporate Debtor. 2. Further, the Appellant has also challenged the Order dated 27.07.2023 ("Second Impugned Order") passed in I.A. No. 3223 of 2023 to the limited extent that the Adjudicating Authority, while rightly granting the Appellant opportunity to submit its Resolution Plan in order to maximise the value of the assets of the Corporate Debtor has held that this opportunity is subject to compliance of the provisions contained in Regulations 39(1-B) read with 36B(7) of the IBBI (CIRP) Regulations, 2016. 3. This matter was heard on various dates on 06.09.2023, 21.09.2023, 05.10.2023 and on 20.10.2023 after hearing at length, the orders were reserved. To seek some clarifications, the matter was again posted for seeking clarification on 04.01.2024 and the orders were reserved. Apart from hearing the all the counsels we perused all the documents including written statements submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presented before the CoC, but were not accepted by the CoC. Thereafter, RP filed an IA No. 836 of 2022 on 20.08.2021 seeking liquidation of the Corporate Debtor. 5.5 During the pendency of the Liquidation Application, another I.A. No. 3593 of 2022 was filed by M/s SEAHAWK (SHAL Group), which was not in the final list of PRAs seeking submission of a resolution plan for the Corporate Debtor. 5.6 By an order dated 29.11.2022 the Adjudicating Authority allowed this I.A. noting that "This is an application filed by the Resolution Applicant for seeking relief of the Committee of Creditor (COC) to consider the Resolution Plan. The RP is directed to submit the Resolution Plan, submitted by the Proposed Resolution Applicant before the CoC and further, COC is directed to consider the Resolution Plan which is submitted by the Applicant as per Law. Accordingly, IA No. 3593 of 2022 is allowed and disposed of." [emphasis supplied] 5.7 Accordingly, M/s SEAHAWK was given an opportunity to submit a resolution plan for the Corporate Debtor. Even though, M/s SEAHAWK was given an opportunity to submit a resolution plan, it did not submit any resolution plan for the Corporate Debtor. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CoC. However, considering the restrictions in Regulation 39(1-B) of the CIRP Regulations, the RP suggested the Appellant to take appropriate directions from the Adjudicating Authority. Pursuant to this, on 21.07.2023, the Appellant filed I.A No. 3223 of 2023 with the Adjudicating Authority inter alia seeking permission to submit a Resolution Plan. By the 27.07.2023 order the Adjudicating Authority allowed and disposed of this I.A. passed the following order: "In view of these facts, this Bench feels that the Applicant in IA- 3223/2023 be allowed an opportunity to submit the Resolution Plan, considering that the Court intends to maximise the value of Corporate Debtor's assets...However, this opportunity shall be subject to compliance with the provisions contained in Regulation 39(1)(b) r/w 36B(7) of CIRP Regulations, which stipulates that such Applicant should be one of Resolution Applicants in the final list of prospective Resolution Applicants and the RP will extend the time line for submission of Resolution Plan after approval of CoC". (Emphasis Supplied) 5.11 Appellant has also challenged the above Order dated 27.07.2023 passed in I.A. No. 3223 of 2023. 5.12 Even though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial wisdom of the CoC with rider subject to compliance of provisions contained in Regulation 39(1B) r/w 36B(7) of the CIRP Regulations. Therefore, there is a statutory bar on submission of resolution plan apart from the final list of PRAs, which cannot be circumvent at this juncture." ( Emphasis Supplied ) 5.17 Thus, by the clarification order the Adjudicating Authority has disallowed the Appellant to submit a resolution plan for the Corporate Debtor on account of the bar under Regulation 39(1-B) read with Regulation 36-B(7) of the CIRP Regulations. Grounds of Appellant -Jindal Power Limited (JPL) 6. The Appellant has challenged both orders of the Adjudicating Authority of 27th July 2023 in I.A. No. 3223 of 2023 and also of 22.08.2023 in I.A. No.3699 of 2023. 7. The main ground of JPL is that by accepting the resolution plan it will maximise the value of the assets of the Corporate Debtor, which is in line with the primary objective of the Insolvency and Bankruptcy Code, 2023 ("Code"). The order dated 22.08.2023 of the Adjudicating Authority is contrary to the preamble and to the objective of the Code, which is to maximise the value of the assets of the corporate de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating Authority can take a facilitative step towards greater participation to secure maximisation of the value rather than shut the doors to prospective applicants offering better value to the CoC and other stakeholders. Case of Committee of Creditors (CoC) 9. COC decided to support the appeal for allowing JPL to submit the Resolution Plan for maximisation of the value of the Corporate Debtor as per the preamble of the Code. 10. It further submits that the overarching legislative intent of the Code is resolution of the corporate debtor and simultaneous value maximisation. The aforesaid legal position has been eloquently elucidated in several judgments of the Hon'ble Supreme Court; and in this regard, it would be apposite to refer to a judgment rendered by a learned 3 Judge bench of the Honourable Supreme Court in the matter of Phoenix ARC (P) Ltd. v. Spade Financial Services Ltd., reported in (2021) 3 SCC 475. 11. It further submits that at present the only resolution plan, that is pending consideration before the Committee of Creditors is the plan submitted by SEAPOL. It is pertinent to state that consideration of an additional plan would be in the interest of value maxim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Appeal before considering the revised plan submitted by M/S SEAPOL. g) Further, the RP submits that if Appellant is granted an opportunity to submit a resolution plan for the Corporate Debtor, the RP with approval of COC will also provide an opportunity to M/s SEAPOL to revise its resolution plan once again, ensuring fairness in the process." Case of Prospective Resolution Applicant (PRA) - M/s SEAPOL 13. M/s SEAPOL who is the final PRA, in its Interlocutory Application No.4774 of 2023, has submitted that M/s SEAHAWK was not in the final list and was allowed to submit resolution plan vide its order dated 29.11.2022 of Adjudicating Authority. CoC considered the resolution plan, as submitted by M/s SEAHAWK and rejected due to the fact that it was in contravention and in violation of the Regulation 39(1-B) read with Regulation 36B(7) with the CIRP Regulations. 14. M/s SEAPOL Ports Pvt. Ltd., also submits that it is the sole resolution applicant, whose name was included in the final list of prospective resolution applicants, issued by the resolution professional on 31.10.2020 and in view of the Regulation 39(1-B) of CIRP Regulations, the CoC is incumbent not to consider the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognized that there were several reasons for delays in the CIRP, including the repeated requests for expression of interest, continued extension of time for submission of resolution plans, unsolicited revision of submitted plans, repeated negotiations with the resolution applicants, receipt of unsolicited plans etc. It is clear that the intent behind the insertion of Regulation 39(1- B) in CIRP Regulations was to curtail the delay in the CIR process, by restraining the CoC to consider any resolution plan being received, after the time as specified by the CoC, from a person who does not appear in the final list of PRAs. 20. Further M/s SEAPOL submits that the judgment titled Vistra Ltd. ITCL (India) Ltd. vs. Torrent Investments Pvt. Ltd. & Ors. CA(AT) (Insolvency) No.132, 133 & 134 of 2023 passed by the Hon'ble NCLAT, New Delhi, being referred by the Appellants counsel during the argument is not relevant in the present matter as the said judgment deals with Regulation 39(1-A)(b) of CIRP Regulations. 21. M/s SEAPOL also submits that the earlier proposals of M/s SEAHAWK which was allowed to be considered by the Adjudicating Authority was to consider the proposal as per the law. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) received after the time as specified by the committee under regulation 36-B; or (b) received from a person who does not appear in the final list of prospective resolution applicants; or (c) does not comply with the provisions of sub-section (2) of section 30 and sub-regulation (1)...." [ emphasis supplied ] 25. It may be noted that the Adjudicating Authority has consistently allowed opportunity to all the resolution applicants as long as they were as per law. In the first case of M/s SEAHAWK, the order clearly states that the CoC is directed to consider the resolution plan, which is submitted by the Applicant as per law in its order in I.A. No. 3593 of 2022 and subsequently when Jindal Power Limited approached the Adjudicating Authority in I.A No. 3223 of 2023, it again acknowledged that an opportunity be given to submit the resolution plan to maximise the value of Corporate Debtor asset. However, this opportunity will be subject to compliance with the provisions contained in Regulation 39(1-B) read with Regulation 36-B(7) IBBI (CIRP) Regulations, 2016. In the first case, even though opportunity was given to M/s SEAHAWK, it is confirmed by the RP that the resolution p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No.1 is required to reissue the RFRP and provide time for submission of Resolution Plan to: (a) all PRAs in the Final List of the PRAs under Regulation 36B(7) of the CIRP Regulations (b) M/s SEAHAWK that was not in the Final List of PRAs, but who was allowed to submit a resolution plan for the Corporate Debtor by way of the Adjudicating Authority's order dated 29 November 2022." 28. And the clarification was issued by the Adjudicating Authority on 22.08.2023 in which it clarified as follows : "The order dated 27.07.2023 was consciously passed limiting ourselves not indulging into the commercial wisdom of the CoC with rider subject to compliance of provisions contained in Regulation 39(1B) r/w 36B(7) of the CIRP Regulations. Therefore, there is a statutory bar on submission of resolution plan apart from the final list of PRAs, which cannot be circumvent at this juncture." (Emphasis Supplied) 29. Thus, by the clarificatory order the adjudicating Authority has disallowed the Appellant to submit a resolution plan for the Corporate Debtor. 30. The justification of the Appellant, and supported by RP/CoC, that by accepting its resolution plan, it maximises the value of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gulations did not allow the case of JPL to be allowed by AA and we do not find anything wrong in the conclusion of the AA. 33. The judgment titled Vistra Ltd. ITCL (India) Ltd. vs. Torrent Investments Pvt. Ltd. & Ors. CA(AT) (Insolvency) No.132, 133 & 134 of 2023 passed by this Tribunal may not be relevant in the present matter as the referred judgment deals with Regulation 39(1-A)(b) of CIRP Regulations and we are dealing with Regulation 39(1-B) read with Regulation 36B(7) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016. 34. The judgement of this Tribunal in Ramneek Goel Vs. Sunil Bajab & Ors. reported in 2023 SCC OnLine NCLAT 515 is also referred to by the Appellant, with relevant paragraphs as follows: "..13. There can be no dispute to the law laid down by the Hon'ble Supreme Court that 330 days is the maximum period provided by the Code for the completion of CIRP. The present is a case where 300 days were expiring on 15.04.2021 and prior to expiry of the 300 days period, a decision was taken to re-publish Form-G. The CoC has reason to take a decision since they received an email from Respondent No.1 offe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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