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TMI Blog2025 (5) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... & Another, the erstwhile promoters of CD challenging the impugned Judgment and Order in Company Appeal (AT) (Insolvency) No. 1034 of 2019 and the Company Appeal (AT) (Insolvency) No. 957 of 2019. (iii) Civil Appeal No. 3784 of 2020 has been filed by the Government of Odisha & Others challenging the impugned Judgment and Order in Company Appeal (AT) (Insolvency) No. 1461 of 2019. (iv) Civil Appeal No. 2225 of 2020 has been filed by the Jaldhi Overseas Pte. Limited, an Operational Creditor of CD challenging the impugned Judgment and Order in Company Appeal (AT) (Insolvency) No. 1055 of 2019. (v) Civil Appeal No. 3020 of 2020 has been filed by M/s. Medi Carrier Private Limited, an operational creditor of CD challenging the impugned Judgment and Order in Company Appeal (AT) Insolvency No. 1074 of 2020. (vi) Civil Appeal No. 668 of 2021 has been filed by the State of Odisha (was not party before the NCLAT) challenging the impugned Judgment and Order in Company Appeal (AT) (Insolvency) No. 1035 of 2019. (vii) Civil Appeal No. 6390 of 2021 has been filed by CJ Darcl Logistics Limited, an operational creditor challenging the impugned Judgment and Order in Company Appeal (AT) Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds of negotiations and deliberations, all the three Prospective Resolution Applicants had submitted their improved/ revised Resolution Plans within the deadline stipulated by the NCLAT vide order dated 06.08.2018. (ix) In the 18th Meeting held on 14.08.2018 the plans submitted by the Liberty House, the Tata Steel and the JSW were evaluated by the CoC, as per the evaluation matrix formulated by it, and the JSW was found to have scored the highest in terms of the said evaluation matrix. However, the CoC did not declare H-1 and H-2. (x) It appears that pursuant to the further negotiations between the Core Committee comprising of small group of lenders, JSW submitted the Consolidated Resolution Plan on 03.10.2018. The said Consolidated Plan was circulated by the Resolution Professional to the members of CoC on 05.10.2018 and uploaded in the Virtual Data room. (xi) Thereafter, the Resolution Professional having received a requisition from some of the Banks, he called for a meeting of CoC on 10.10.2018 for consideration and approval of Consolidated Resolution Plan. (xii) Pursuant to the discussion held in the meeting on 10.10.2018, JSW submitted a letter dated 10.10.2018 (Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 254(PB)/2019 is allowed and the resolution plan of JSW-H1 Resolution Plan Applicant is accepted. The objections raised by the Ex- Directors cum Promoters of the Corporate Debtor and Operational Creditors are hereby over-ruled. However, the acceptance and approval of the resolution plan shall be subject to the following; a) The amount due to the operational creditors under the resolution plan must be paid in accordance with the amended Section 30 (2) of the Code as the amendment expressly provides that it would be applicable to all applications pending for approval of the resolution plan like the one in hand. b) C.A. No. 327(PB)/2019 with a prayer for placing the settlement proposal dated 20.02.2019 before the CoC is hereby rejected. c) CA No. 286(PB)/2019 filed by the erstwhile directors Mr. Sanjay Singhal and Mrs. Aarti Singhal seeking copies of the resolution plan is dismissed with a cost of Rs. 1 /- lac to be paid personally by Mr. Sanjay Singal and Ms. Aarti Singal in equal share. d) The resolution plan would be binding on the corporate debtor, its creditors, guarantors, members, employees and other stakeholders. The reduction of share capital of the corporate debtor a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 211 of the said judgment . k) The cases in which the Adjudicating Authority or the Appellate Authority could not decide the claim on merit, all such Applicants may raise the issue before an appropriate forum in terms of Section 60(6) of the Code. The other 'Financial Creditors/Operational Creditors' would not be entitled any remedy under Section 60 (6) of the Code." (xx) The Successful Resolution Applicant-JSW, challenged some of the conditions mentioned in said order passed by NCLT approving its Resolution Plan, by filing the Appeal being Company Appeal No. 957 of 2019, under Section 61 of IBC. (xxi) After the approval of the plan by the NCLT as aforesaid, the Directorate of Enforcement of Central Government (ED), passed an order (PAO) on 10.10.2019 provisionally attaching the assets of the CD-BPSL under Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA). (xxii) The said PAO having been challenged by JSW before NCLAT, in the Company Appeal No. 957 of 2019, the NCLAT stayed the PAO as well as the Resolution Plan so far it related to the payment of creditors, vide the Order dated 14.10.2019. (xxiii) The CoC also challenged the PAO in Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opriate applications before the competent authorities which would be considered in accordance with law because it would not be competent for the Adjudicating Authority- NCLT to enter into any such area for granting relaxation, concession or waiver which is wholly within the domain of competent authorities. 1. All penalties, interest, delayed payment charges, any other liabilities for any non-compliance with statutory obligations including taxes, including delays in filing returns or payment of tax dues, against the Company shall stand settled in accordance with the provisions of this plan as approved by NCLT. I The criminal proceedings initiated against the erstwhile Members of the Board of Directors and others shall not affect the JSW-Hl Resolution Plan Applicant or the implementation of the resolution plan by the Monitoring Agency comprising of CoC and RP. We leave it open to the Members of the CoC to file appropriate applications if criminal proceedings result in recovery of money which has been siphoned off or on account of tainted transactions or fabrication as contemplated under the various provisions of the Code or any other law. Those applications shall be considered in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 06.03.2020, recorded the statement of learned Senior Advocate Dr. A.M. Singhvi appearing for the CoC as under: - "UPON hearing the counsel the court made the following ORDER The appeals are admitted. Dr. A.M. Singhvi, learned senior counsel appearing for the Committee of Creditors states that in case he receives money, he will return the said amount within two months, if the appeal succeeds. List all the matters together on 15.04.2020." 5. It appears that JSW, which was Respondent No. 2 in the SLP (C) No. 29327-29328 of 2019 filed by the CoC, filed an Application being I.A. No. 47947/2020 on 20.03.2020 seeking clarification of the order dated 06.03.2020 to the extent that JSW was not obligated to implement the Resolution Plan during pendency of the SLPs filed by the CoC, Kalyani Transco, Sanjay Singal and others against the Judgment dated 17.02.2020 passed by NCLAT. The said I.A. No. 47947/2020 was resisted by the CoC by filing a detailed reply contending inter alia that JSW was attempting to seek a stay on the implementation of the plan under the garb of clarification of the order dated 06.03.2020. The CoC in the said reply made some serious allegations of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 06, 2020, and would, in any manner, be subject to the order of this Hon'ble Court inasmuch as: (i) In the event of any order of the Hon'ble Supreme Court allowing the appeals filed against the Hon'ble Appellate Tribunal judgment dated February 17, 2020 leading to setting aside of the approved Resolution Plan for any reason whatsoever, or denying the benefit under section 32A of the Code to the Corporate Debtor/ Resolution Applicant which would result in ED's claim against Corporate Debtor not being set aside or which would result in the attachment of the assets of the Corporate Debtor by the ED continuing, the Upfront Payment Amount shall be refunded by the CoC to the Resolution Applicant - JSW within the time period provided for in the March 06, 2020 Order, and that in case of such refund, the ownership, control and possession of Corporate Debtor will be handed over back by JSW to the Financial Creditors. The aforesaid is being further specified in an escrow agreement proposed to be signed inter alia between the financial creditor and the Resolution Applicant. (ii) In the event this Hon'ble Court in the matter grants the benefit under section 32A of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that it is in the interest of all stakeholders that the Resolution Plan is implemented in full at the earliest. 10. The Petitioner craves leave of this Hon'ble Court to refer to and rely on the averments, contents and documents annexed to the said SLP and the subsequent filings by the Petitioner thereunder as an integral part and parcel of the present application and the contents are not being repeated herein for the sake of brevity." 7. The Civil Appeal Nos. 14503-14504 of 2024 arising out of SLP (C) Nos. 29327-29328 of 2019 filed by the Committee of Creditors against ED and Civil Appeal No. 3362 of 2020 filed by the ED against the JSW and Others, came to be disposed of in terms of the Order dated 11.12.2024, which is reproduced hereunder: "1. The Civil Appeals arising out of SLP(C) Nos. 29327-29328/2019 have been filed by the Committee of Creditors against the Directorate of Enforcement and Others challenging the impugned order dated 10.10.2019 passed by the Directorate of Enforcement (hereinafter referred to as the E.D.) in exercise of the powers conferred under the Second proviso to sub- section(1) of Section 5 of the Prevention of Money Laundering Act 2002 (hereinaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019, which did not have the retrospective effect, and hence, in view of the peculiar facts and circumstances of the case and without prejudice to the rights and contentions of the E.D. with regard to the investigation of the case registered against the accused-Promoters of the Corporate Debtor-Bhushan Power and Steel Ltd. and Others, the successful Resolution Applicant be permitted to take control of the attached properties treating the same as the restitution under Section 8(8) of the PMLA read with Rule 3A of the said Rules. 5. The learned senior counsel Mr. Abhishek Manu Singhvi appearing for the CoC and learned senior advocate Mr. Neeraj Kishan Kaul appearing for the successful Resolution Applicant have also stated that they have no objection if these Appeals are disposed of as prayed for in the light of the said Affidavit filed on behalf of the E.D. 6. In view of the above submissions made by the learned counsel for the E.D. and the learned counsel for the CoC and for the successful Resolution Applicant JSW, following order is passed without expressing any opinion on the merits of the Appeals and without prejudice to the rights and contentions of the respective parties in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them, in any case the SRA-JSW has already implemented the Resolution Plan successfully by making payments to the Financial Creditors on 26.03.2021 and by making payments to the Operational Creditors in March 2022. They also submitted that the Appellant Kalyani Transco and other Operational Creditors could no longer be said to be the "person aggrieved," once they have now accepted their payments under the said Resolution Plan. As regards the Appeals filed by the Appellant State of Odisha, it was sought to be submitted by them that the State of Odisha did not file its claim with respect to Entry tax dues before the Resolution Professional, did not approach the NCLT and had filed its Appeal against the Plan Approval Order before the NCLAT. Similarly, the State of Odisha had failed to raise its claim with regard to the Electricity dues before the Resolution Professional, did not file any proceeding before NCLT and NCLAT, and for the first time has filed the present Appeal before this Court, which may not be entertained. 9. Apropos the preliminary objections raised by the learned Senior Advocates appearing for the respondents-JSW and CoC, it may be noted that the issue of maintaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal creditors, and the erstwhile Promoters, being important stakeholders, and whose Company Appeals have been dismissed by the NCLAT vide the impugned judgment, would certainly be the persons aggrieved entitled to file Appeals before this Court under Section 62 of the IBC. Moreover, they have also raised number of questions of law in the instant appeals, which although will be considered in the later part of this judgment, nonetheless, they being the persons aggrieved, the Appeals at their instance are certainly maintainable. 11. This is also most appropriate juncture to deal with the submissions made by the learned Advocates appearing for the Appellants in these Appeals with regard to the maintainability of the Company Appeal No.957 of 2019 filed by JSW before the NCLAT challenging some of the conditions imposed by the NCLT in the order dated 05.09.2019 while approving the Resolution Plan of JSW. According to them, the said Company Appeal of JSW was not maintainable, as none of the grounds mentioned in Section 61(3) of IBC existed. Since the Resolution Plan of JSW was approved, JSW could not be said to be the 'person aggrieved' for filing the Appeal under Section 61, and if it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an appeal that too against an order "approving a resolution plan" under Section 31. First, that the approved resolution plan is in contravention of the provisions of any law for the time being in force. Second, there has been material irregularity in exercise of powers "by the resolution professional" during the corporate insolvency resolution period. Third, the debts owed to operational creditors have not been provided for in the resolution plan in the prescribed manner. Fourth, the insolvency resolution plan costs have not been provided for repayment in priority to all other debts. Fifth, the resolution plan does not comply with any other criteria specified by the Board. Significantly, the matters or grounds-be it under Section 30(2) or under Section 61(3) of the I&B Code-are regarding testing the validity of the "approved" resolution plan by CoC; and not for approving the resolution plan which has been disapproved or deemed to have been rejected by CoC in exercise of its business decision." 14. In the instant case, indubitably, the NCLT vide the order dated 05.09.2019 had allowed the Application of the Resolution Professional, seeking approval of the Resolution Plan of JSW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject matter of the Company Appeal filed by the JSW before the NCLAT. The said Para 147 of the judgment of NCLAT reads as under: "147. Whether 'Bhushan Power & Steel Limited'- ('Corporate Debtor') has 25.6% shareholding in 'Nova Iron Steel' is a question of fact. However, if there is any such share of 'Bhushan Power & Steel Limited'- ('Corporate Debtor') in 'Nova Iron Steel', after approval of the plan and on acquisition of 'Bhushan Power & Steel Limited' by 'JSW Steel Limited', we hold: (a) The Company on approval of the 'Resolution Plan' stand declassified as a promoter/ part of promoter group of any company or entity, including any subsidiaries or joint ventures or Associate Companies in which the 'Corporate Debtor' has made an investment including 'Nova Iron Steel' and shall not be required to follow any separate procedure for reclassification of the Company as 'public shareholders' of such companies. (b) If the 'Corporate Debtor' has any right over 'subsidiary companies', 'associate companies', 'joint venture companies' of the 'Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing of these Appeals, we are not stretching the issue of "related party" any further. (IV) MANDATORY REQUIREMENT UNDER SECTION 29A. 19. However, we certainly deem it appropriate to highlight the statutory requirement of proper disclosure to be made by the Resolution Applicant with regard to its eligibility under Section 29A of the IBC. As per Section 29A, a person shall not be eligible to submit a Resolution Plan, if such person or any other person acting jointly or in concert with such person, falls under any of the clauses contained in the said Section 29A. Further, Section 30(1) read with Regulation 39(1) of the Regulations, 2016 requires that a Resolution Applicant has to submit a Resolution Plan along with an affidavit stating that he is eligible under Section 29A to submit the Resolution Plan. As per Regulation 39(4), when the Resolution Plan as approved by the CoC, is submitted by the Resolution Professional, it has to be submitted by him along with a compliance certificate in Form No. H of the Schedule. The prescribed Form 'H', pertaining to the compliance certificate, contained in the Schedule, specifically requires the Resolution Professional to certify that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plementation and supervision of the resolution plan; Clause 4 of Part A read with Schedule 2 of the Approved Resolution Plan Section 30(2) (e) of the Code The Resolution Plan does not contravene any of the provisions of the law for the time being in force; Clause 1.13(vi) of Part B of the Approved Resolution Plan Regulation 38(1A) of the CIR Regulations The Resolution Plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors of the corporate debtor. Clause 1.9 of Part B of the Approved Resolution Plan Regulation 38(2)(a) of the CIR Regulations The Resolution Plan shall provide the term of the plan and its implementation schedule Schedule 2 of the Approved Resolution Plan Regulation 38(3)(a) The Resolution Plan shall demonstrate that it addresses the cause of default Section 3 of Part A of the Approved Resolution Plan under the head "Business Plan/Financial Projections" Regulation 38(3)(b) The Resolution Plan shall be feasible and viable The CoC in its 18th meeting dated 14th August 2018 considered the resolution plan of JSW Steel and recorded that the resolution plan is feasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the root of the matter, it was incumbent on the part of the Resolution Professional to verify and certify that the contents of the mandatory affidavit, filed by the Resolution Applicant-JSW in respect of Section 29A were in order. The same having not been stated in the Application filed by the Resolution Applicant before the NCLT, it has raised serious doubt in the mind of the Court with regard to the very eligibility of the JSW to submit the Resolution Plan. Our said doubt is further fortified by the observations made and justification given by the NCLAT for the non-disclosure and suppression made in the Resolution Plan by JSW, with regard to the Joint Venture Agreement dated 05.03.2008 entered into by and between the JSW, BPSL and Jai Balaji as discussed hereinabove. (V) POWERS OF NCLAT TO REVIEW THE DECISION OF STATUTORY AUTHORITY UNDER THE PMLA: - 24. This takes us to the issue as to whether the NCLAT had any powers of Judicial Review over the decision taken by the Statutory Authority under the PMLA? As per the chronology of events stated earlier, after the NCLT vide the Order dated 05.09.2019 approved the Resolution Plan of JSW, subject to the conditions mentioned in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retation of Section 32A (2) of IBC or on the powers of the ED to attach the property of the Corporate Debtor which was undergoing CIRP, or on any other legal issues involved in the other connected Appeals (i.e. the present Civil Appeals) pending before this Court. 27. In this regard, it is pertinent to note that the NCLT and NCLAT are constituted under Section 408 and 410 of the Companies Act, 2013 and not under the IBC. The jurisdiction and powers of the NCLT and NCLAT are well circumscribed under Section 31 and Section 60 so far as NCLT is concerned, and under Section 61 of IBC so far as the NCLAT is concerned. Neither the NCLT nor the NCLAT is vested with the powers of judicial review over the decision taken by the Government or Statutory Authority in relation to a matter which is in the realm of Public Law. As held by a Three-judge Bench in case of Embassy Property Developments Private Limited vs. State of Karnataka & Ors.((2020) 13 SCC 308), the Section 60(5) speaks about any question of law or fact, arising out of or in relation to insolvency resolution, but a decision taken by the Government or a statutory authority in relation to a matter which is in the realm of Public La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution Applicant, were immuned from attachment by Directorate of Enforcement. Such an Order of NCLAT is clearly in teeth of the law laid down by this Court in Embassy Property Developments (supra). The PMLA being a Public Law, the NCLAT did not have any power or jurisdiction to review the decision of the Statutory Authority under the PMLA. In our opinion, apart from the fact that the said issue was pending before this Court in respect of the same PAO dated 10.10.2019 and therefore the NCLAT should not have decided the said issue, it was beyond the jurisdiction of the NCLAT to decide the said issue in the Company Appeal filed by JSW under Section 61 of IBC. 31. In that view of the matter, it is held that the observations made and the findings recorded by the NCLAT in the impugned judgment with regard to the PAO dated 10.10.2019 passed by the Directorate of Enforcement under the PMLA, being without any authority of law and without jurisdiction, were coram non judice. (VI) SUBMISSIONS ON NON-COMPLIANCE OF OTHER MANDATORY PROVISIONS AND ON EBITDA: - 32. Adverting to the other issues on merits, the learned Senior Advocate Mr. Dhruv Mehta appearing for the Appellants Ex-Promoters/Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Granting of EBITDA to the creditors, would reduce the liability of the appellants who are the personal guarantors. (ix) There was no scope for negotiation between the CoC and the SRA-JSW after the approval of the Resolution Plan, in view of the law laid down by this Court in Ebix Singapore Pvt. Ltd. Vs. Committee of Creditors of Educomp Solutions Limited and Another ((2022) 2 SCC 401). 33. The Learned Senior Advocate Mr. Diwakar Maheshwari, Mr. Manu Beri and Mr. Arjun Asthana appearing for the Appellants Operational Creditors i.e. Kalyani Transco, CJ Darcl Logistics Ltd. And Jaldhi Overseas PTE Ltd. made further following submissions in addition to the submissions made by the learned Senior Counsel Mr. Dhruv Mehta. (i) The re-classification of Appellant-Jaldhi Overseas claimed from "admitted operational creditor" to the "identified contingent creditor" by SRA was not permissible. The power to admit/reject the claim filed by the Creditors vests solely with the Resolution Professional and no such power is available with the SRA under the Code. (ii) The re-classification of Operational Creditors claims have resulted in inter se discrimination towards class of Creditors, not per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vs. Union of India ((2019) 4 SCC 17), the Resolution Professional does not possess any adjudicatory powers under the IBC, and that his role as a facilitator of the CIRP is only administrative in nature. (iii) The Resolution Plan contravened Sections 30(2) and 30(3) of the IBC and therefore was incapable of being enforced or implemented in view of Independent Sugar Corporation Ltd. Vs. Girish Sriram Juneja and Others. (2025 SCC Online SC 181) (iv) The Appellant State had, via multiple letters raised the demands for the pending Entry tax dues prior to the initiation of CIRP and prior to the approval of Resolution Plan by the CoC and therefore the Resolution Professional had adequate notice of such claim. 35. The learned Senior Advocate Mr. Neeraj Kishan Kaul appearing for the Respondent SRA-JSW broadly made the following common submissions in response to the submissions made by the learned Advocates for the Appellants. (i) The comprehensive resolution process of BPSL has resulted in a payment of Rs.19,350 crores to Financial Creditors, along with payment to Operational Creditors of 50% recovery of their admitted claims (capped at Rs.350 crores) by March, 2022. (ii) The mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged since the amendment w.e.f. 27.11.2019, which provided for the amount payable to an operational creditor to be paid in priority to the Financial Creditor. The said amendment having come into force post approval of the Resolution Plan vide the NCLT judgment on 05.09.2019, the same cannot be applied to the present case. (xi) The State of Odisha had failed to file its claim with regard to the Entry tax dues, before the Resolution Professional, did not approach NCLT, and had filed its Appeal against the Plan approval order directly before the NCLAT, beyond the period of limitation. (xii) As held in Ghanashyam Mishra and Sons (P) Ltd. vs. Edelweiss Asset Reconstruction Co. Ltd.((2021) 9 SCC 657), and in case of Ruchi Soya Industries Ltd. vs. Union of India ((2022) 6 SCC 343), once the Resolution Plan is approved by the NCLT, the plan stands frozen and all such claims which are not a part of Resolution Plan as on that date stand extinguished. (xiii) So far as the claim of State of Odisha in respect of the Electricity dues is concerned, the Resolution Professional, after a thorough verification of documents and records submitted by the Appellant- State, had admitted only Rs.13,75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtainty created because of the attachment of assets of BPSL by the ED. The refund obligation was created on the lenders in the event of Appeals before this Court succeed as recorded vide the 06.03.2021 order, and subsequently in the Escrow Agreement entered into with the SRA dated 19.03.2021. (vi) During the meeting held on 26.03.2021 by the Reconstituted Board which was attended by the Steering Committee, the issuance of Compulsory Convertible Debentures to Piombino Steel Limited (group entity of SRA which was to be merged into BPSL as a part of the Resolution Plan) having a value Rs. 8,450 Crores was approved. Such issuance of CCD's cannot be said to be a departure from the requirement under the Resolution Plan of infusion of Rs. 8,550 Crores as Equity. 37. The learned Senior Advocate Mr. Shyam Diwan appearing for the erstwhile Resolution Professional Mr. Khandelwal, in his brief address to the Court submitted that the Resolution Plan having been implemented during the pendency of these Appeals, the Court may not interfere with the impugned judgment and order passed by the NCLAT, more particularly when no question of law had arisen out of the impugned judgment of NCLAT, as con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (vi) of Part A of this Resolution Plan)." "3. RESOLUTION PLAN - STAGE OF IMPLEMENTATION 3.1 The Resolution Applicant proposes to: (a) undertake all efforts to procure the satisfaction of each Conditions Precedent within a period of 30 days from the date of issuance of LOI and in any case prior to approval of the Resolution Plan by NCLT. The Resolution Applicant shall immediately after the NCLT Approval Date, notify the Monitoring Professional and the Steering Committee in writing ("CP Satisfaction Notice") the date(s) on which it proposes to complete the steps set out in Schedule 2 (Steps for Implementation of the Resolution Plan) and if such steps are to be implemented with receipt of the Specified Approval mentioned Paragraph 4(ii)(a) (II) or in the absence of the same (and in the manner specified in such paragraph) ("Effective Date"), which date shall in any event not exceed 30 (thirty) days from the NCLT Approval Date or such extended period which may be permitted by 66% majority of the lenders forming part of the erstwhile CoC; and (b) implement the Resolution Plan through the SPV, which will merge with the Company in the manner as set out in Schedule 2 (Steps for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IBC is to complete the entire CIR Proceedings in a time bound manner, and that is the reason, a time-line is set out in the Code and its Resolutions for every stage of the proceedings. As well settled, time is a crucial factor of the scheme under IBC. To allow the proceedings to lapse into indefinite delay will frustrate the very object of the Code. The first and foremost time-limit set out for completion of Insolvency Resolution Process is in Section 12 which reads as under- "12. Time-limit for completion of insolvency resolution process. (1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process. (2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of sixty-six per cent. of the voting shares. (3) On receipt of an application under sub-section (2), if the Adjudicating Authority is sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent) Act, 2018 (26 of 2018), inter alia, amended the Code, with retrospective effect from 6-6- 2018, insofar as the requirement in certain sections of approval of 75% of the Committee of Creditors for various decisions was reduced to 51% in Section 21(8) (i.e. the minimum percentage of votes required for any decision of the Committee, where not otherwise provided for in the Code), and to 66% in Sections 12(2) (i.e. extension of time for completion of the process by 90 days), 22(2) (i.e. appointment of resolution professional), 27(2) (i.e. replacement of resolution professional), 28(3) (i.e. approval for certain actions by the resolution professional), 30(4) (i.e. approval of resolution plan), and 33(2) (i.e. initiation of liquidation), votes to extend the said period, and only if the adjudicating authority is satisfied that such process cannot be completed within 180 days. The authority may then, by order, extend the duration of such process by a maximum period of 90 days [see Sections 12(2) and 12(3)]. What is also of importance is the proviso to Section 12(3) which states that any extension of the period under Section 12 cannot be granted more than once. This has to be read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Therefore, the date 26.07.2017 was the date of admission of the Application to initiate the CIRP against the Corporate Debtor BPSL. The appointment of Mr. Khandelwal as the Resolution Professional was confirmed by the CoC in its first meeting held on 01.09.2017. Thereafter the CIRP proceedings were conducted by him. The Company Application being No. 254 of 2019 was submitted by him to the NCLT on 14.02.2019 for the approval of the Resolution Plan of JSW as approved by CoC, stating inter alia that the Consolidated Resolution Plan along with the Addendum Letter was approved by the CoC in its 19th Meeting. Thereafter the members of CoC had participated in the Scheduled e-voting Process and the Resolution Plan along with Addendum Letter was approved by the requisite majority of CoC. Thus, the process, which was required to be completed within a maximum period of 270 days from the date 26.07.2017 i.e. the date of the initiation of proceedings, the Resolution Plan of JSW was sought to be placed before the NCLT for the approval under Section 31 after almost one and a half year on 14.02.2019. 48. As per sub-section (2) of Section 12 the Resolution Professional was required to file an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpiry of 270 days of the initiation of CIRP. 51. The Resolution Professional appears to have justified the delay in filing the Application under Section 31 on the ground that the Appeal No. 198 of 2018 filed by Tata Steel, one of the Prospective Resolution Applicant, was pending before the NCLAT, and that NCLAT had reserved the judgment of the said Appeal on 28.12.2018, and pronounced on 04.02.2019. In this regard, it may be noted that the NCLAT in the said Appeal filed by the Tata Steel, had initially passed interim orders on 09.05.2018 and 24.05.2018, however it had modified the said orders by passing the following order on 12.07.2018: - "In the meantime, it will be open to the Committee of Creditors to pass appropriate order in terms of Section 30(4) of IBC and if any plan has approved, the Resolution Professional may place it before the Adjudicating Authority for appropriate order under Section 31 of IBC and the Adjudicating Authority may pass appropriate order. Interim orders passed earlier stand modified to the extent above." 52. Therefore, in view of the said order dated 12.07.2018, the CoC was permitted to pass appropriate orders in terms of Section 30(4), and if the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors Vs. Satish Kumar Gupta (2020(8) SCC 531) had dealt with the two provisos subsequently inserted in Section 12 by the Act 26 of 2019, which came into effect from 16.08.2019, and had observed as under: - "127. ......Thus, while leaving the provision otherwise intact, we strike down the word "mandatorily" as being manifestly arbitrary under Article 14 of the Constitution of India and as being an excessive and unreasonable restriction on the litigant's right to carry on business under Article 19(1)(g) of the Constitution. The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. However, on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion 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 liquidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that is the period from 07.05.2018 to 04.02.2019 to be excluded for the purpose of counting the period of 270 days, then also according to us for the reasons to follow, there has been gross non-compliance of the mandatory provisions of the IBC and its Regulations, vitiating the entire CIR proceedings. 59. It cannot be gainsaid that as per the scheme of the Act, the role of the Resolution Professional while conducting the entire CIRP, is not only of an Administrator or Facilitator, but is also of an Invigilator, to ensure that the CIR proceedings are completed in a time bound manner, for maximisation of value of assets in order to balance the interest of the stakeholders and that there is compliance of all the mandatory provisions of the Code during the course of entire proceedings. As per Section 17, from the date of appointment of Interim Resolution Professional, the Management of the affairs of the Corporate Debtor vests in the Interim Resolution Professional, and he is responsible for complying with all the requirements under any law for the time being in force on behalf of the Corporate Debtor. As per Section 20, the Interim Resolution Professional is required to make every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the CoC under sub-section (4) of Section 30, met with the requirements as referred to in sub-section (2) of Section 30. The said requirements as per Section 30(2), (as it stood prior to its amendment w.e.f. 16.08.2019) were to confirm that the Resolution Plan provided for the payment of Insolvency Resolution Process costs in priority to the payment of other debts of the Corporate Debtor; and also provided for the payment of the debts of Operational Creditors, which should not be less than the amount paid to the Operational Creditors, in the event of a liquidation of the Corporate Debtor under Section 53. 61. At this juncture, it would be also relevant to refer to some of the CIRP Regulations, 2016, made by the Insolvency and Bankruptcy Board of India. The Regulation 37 of the said Regulations 2016 states that a Resolution Plan shall provide for the measures, as may be necessary for Insolvency Resolution of the Corporate Debtor for maximisation of value of its assets. Some of the measures required to be provided in the Resolution Plan have been stated in the Regulation 37 itself. Further Regulation 38 pertaining to the Mandatory contents of the Resolution Plan, as it stood p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Plan. 63. The CIRP Regulations, 2016 have been made by the Insolvency and Bankruptcy Board of India in exercise of the powers conferred under Section 5, 7, 9, 14, 15, 17, 18, 21, 24, 25, 29, 30, 196 and 208 read with Section 240 of the IPC. The said Regulations being subordinate legislation having statutory force, have the same binding effect as the Code itself. Therefore, the mandates given in the said Regulations to carry out the provisions of the Code have to be strictly complied with by all the stakeholders as well as by the Authorities under the Code. However, in the instant case, the Resolution Applicant - JSW had submitted the Resolution Plan in complete contravention of the mandates given in the Code as well as in the Regulations. 64. As set out earlier, the Resolution Professional had utterly failed in discharging his duties under the Code, by not making Application for extension of time under Section 12 and by not certifying as to whether the Resolution Applicant-JSW was an "eligible" person under Section 29A to submit the plan. He also had failed to make any Applications for avoidance of transactions in accordance with Chapter-III of the Code. When the RBI had issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made as to H1 and H2. It further appears from the Minutes of 19th Meeting that thereafter the negotiations had taken place between the Core Committee comprising of Small Group of Lenders and the Resolution Applicant JSW only, pursuant to which the Consolidated Resolution Plan was submitted by JSW on 03.10.2018. The said Consolidated Resolution Plan of JSW was circulated to the members of CoC on 05.10.2018. The said Consolidated Resolution Plan of JSW along with its Letter dated 10.10.2018 (Addendum Letter) was considered by the CoC at its 19th Meeting held on 10.10.2018. As transpiring from the Minutes of 19th Meeting, number of objections were raised by the representatives of the Financial Creditors and of the Operational Creditors as regards the manner in which the proceedings were being conducted, permitting JSW only to submit and amend the plan submitted earlier; as regards non-compliance of amended Regulation 38 for making payment of amount due to the Operational Creditors in priority over the payment to the Financial Creditors; as regards the Resolution Professional having not checked the compliances of the revised Resolution Plan of JSW, though the CoC had pointed out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst their total admitted claims of Rs.47,157.99 Crores, over and above the cost to be paid by the JSW. The JSW had also undertaken to procure the satisfaction of all the conditions precedent, as detailed in Section 4 (ii) of Part A of its Resolution Plan, within a period of 30 days or such other extended period approved by 66% lenders from the date of issuance of the Letter of Intent. It had also undertaken to immediately, after the approval of the Resolution Plan by NCLT, notify the Monitoring and Steering committee for taking steps for the implementation of the Resolution Plan. 70. Despite, all these clauses and terms stated in the Resolution Plan, on which the CoC had approved its plan and the NCLT had also granted approval under Section 31 of IBC, the JSW instead of implementing the said Approved Resolution Plan, challenged the judgment and order of NCLT dated 05.09.2019 by filing an Appeal being Company Appeal No. 957 of 2019 before the NCLAT. As held by us in the earlier part of this judgment, such Appeal itself was not maintainable under Section 61 of IBC. The said terms of the Approved Resolution Plan remained unimplemented pending the Appeal before the NCLAT, and also dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d stage, offered by JSW, without any demurrer. 72. Having adumbrated the entire facts and circumstances, we find much substance in the submissions of the learned Senior Advocate Mr. Dhruv Mehta for the Ex-Promoters that apart from the fact that there was gross non- compliance of the mandatory provisions of the IBC and the Regulations, there was a dishonest and fraudulent attempt made by JSW, misusing the process of the Court by not making the upfront payments as committed by it for about two and a half years and thereby enriching itself unjustly, and thereafter considering the rising prices of steel in the market, JSW sought to comply with the terms of Resolution Plan at a very belated stage, in collusion with the CoC and the Resolution Professional. The changing stance of CoC in the present proceedings also smacks of its bona fides and raises serious doubts about the exercise of its so- called commercial wisdom. 73. The position of law, propounded by this Court is that commercial wisdom of CoC means a considered decision taken by the CoC with reference to the commercial interest, the interest of revival of Corporate Debtor and maximization of value of its assets. This wisdom is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit before this Court that because of the delaying tactics adopted by JSW and deferring the implementation of the Resolution Plan, the CoC was entitled to the compensation and interest on the said amount of Rs.19,350 Crores for causing loss of crores of rupees per day. Though the CoC had written number of letters raising grievances with regard to non-payment of upfront amount of Rs.19,350 Crores to the Financial Creditors within 30 days of the approval of the plan, the CoC had changed its stance all of a sudden accepting the payment of Rs. 19350 crores without any demurer, and though the Effective date for implementation of the plan had already expired. As stated earlier, there is no material placed on record as to how, when and by whom the Effective date as stated in the Resolution Plan was extended. During the course of arguments also Dr. Abhishek Manu Singhvi appearing for the CoC supported the submissions made by the learned Senior Counsel Mr. Neeraj Kishan Kaul for JSW to the effect that the Resolution Plan was implemented in part in March 2021 by making payment of Rs.19,350 Crores to Financial Creditors and making payment to the Operational Creditors in March 2022, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder was passed by the NCLAT, leaving the creditors in lurch and leaving them high and dry. 78. Now, a situation of fait accompli is sought to be presented before this Court by the learned Senior Advocate Mr. Neeraj Kishan Kaul appearing for JSW by submitting that pending the present Appeals, the Resolution Plan has been fully implemented. In our opinion, nobody should be permitted to misuse the Process of law nor should be permitted to take undue advantage of the pendency of any proceedings in any Court or Tribunal. Instituting vexatious and frivolous litigations in the NCLT or NCLAT and delaying the implementation of Resolution Plan under the garb of pendency of proceedings, has clearly proved the mala fide and dishonest intention on the part of JSW, in firstly securing highest score making misrepresentation before CoC and then not implementing the same under the garb of pendency of proceedings, though the Resolution Plan was supposed to be an unconditional one. Such acts of misuse and abuse of process of law cannot be vindicated by this Court, which otherwise would tantamount to ratifying and pardoning the illegal acts committed by JSW and thereby giving them a clean chit. 79. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Resolution Plan without any cogent reason or justification. This is nothing but a misuse of process of law and a fraud committed by JSW with the CoC and other stakeholders. 81. Recently, this Court in State Bank of India and Others Vs. Consortium of Murari Lal Jalan and Florian Fritsch and Another ((2024) SCC OnLine 3187), has made very apt observations, with regard to the delaying tactics adopted by the Successful Resolution Applicant in implementing the Plan, and the NCLT and NCLAT adopting casual approach in exercising discretion in granting extension of the timelines fixed under the Code. The Court while directing the Corporate Debtor to be taken into liquidation, observed thus: - "173. This litigation is an eye-opener also as regards the manner in which the implementation of plans are handled by the successful resolution applicant and the lenders involved in the process. Once a resolution plan is approved under the Insolvency and Bankruptcy Code, 2016 the successful resolution applicant undertakes a profound responsibility to implement the plan in both letter and spirit. This obligation is not merely an empty formality but an enduring commitment to restore the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of the corporate debtor. However, this has unfortunately led to the consequence of giving excessive leeway to the successful resolution applicants to act in flagrant violation of the terms of the resolution plan in a lackadaisical manner. The successful resolution applicants repeatedly approach the Adjudicating Authority or the National Company Law Appellate Tribunal for the grant of reliefs in relation to relaxation of the strict compliance to the terms of the plan, including the timelines imposed therein. The National Company Law Tribunal and National Company Law Appellate Tribunal more often than not, accede to such requests in exercise of their inherent powers under rule 11 or their power to extend time under rule 15 of the National Company Law Tribunal and National Company Law Appellate Tribunal Rules, 2016 respectively. It is reiterated that the National Company Law Tribunal and National Company Law Appellate Tribunal must not entertain such repeated attempts at violating the integrity of a committee of creditors approved resolution plan by accommodating the incessant requests of the successful resolution applicants. The exercise of discretion as regards altering the bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Professional had utterly failed to discharge his statutory duties contemplated under the IBC and the CIRP Regulations during the course of entire CIR proceedings of the Corporate Debtor- BPSL. (ii) The CoC had failed to exercise its commercial wisdom while approving the Resolution Plan of the JSW, which was in absolute contravention of the mandatory provisions of IBC and CIRP Regulations. The CoC also had failed to protect the interest of the Creditors by taking contradictory stands before this Court, and accepting the payments from JSW without any demurer, and supporting JSW to implement its ill-motivated plan against the interest of the creditors. (iii) The SRA-JSW after securing the highest score in the Evaluation matrix in the 18th meeting of CoC, submitted the revised consolidated Resolution Plan with addendum under the garb of complying with the amendments made in the CIRP Regulations, 2016, and got the same approved from the CoC. However, JSW even after the approval of its Plan by the NCLAT, willfully contravened and not complied with the terms of the said approved Resolution Plan for a period of about two years, which had frustrated the very object and purpose of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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