Dinesh Gupta vs Vikram Bajaj

(Under Section 61 of the Insolvency and Bankruptcy Code, 2016) [Arising out of the impugned order dated 01.03.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench in I.A. No. 412/2020 in CP(IB) No. 117/Chd/ChD/2017 filed by Respondent/ Petitioner / CoC/ Applicant Financial Creditor]

In the matter of: Dinesh Gupta ....Appellant Vs. Vikram Bajaj Liquidator M/s Best Foods Ltd. ....Respondent

Present Appellant: Mr. Sumesh Dhawan and Ms. Vatsala Kak, Advocates.

Respondent: Mr. Abhishek Anand and Mr. Viren Sharma, Advocates.

Coram: Mr. Justice M. Venugopal, Acting Chairperson Mr. V.P. Singh, Member (T) Dr. Ashok Kumar Mishra, Member (T)

(Virtual Mode)

M. Venugopal (J)

Introduction:

1. The Appellant (Director of the Suspended Board of Directors of M/s

Best Foods Ltd. - Corporate Debtor) has preferred the instant Appeal, as an

'Aggrieved Person' in respect of the impugned order dated 01.03.2021 passed

by the 'Adjudicating Authority' (National Company Law Tribunal, Chandigarh

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 1 | 72 Bench, Chandigarh) in I.A. 412 of 2020 in CP (IB) No.117/Chd/CHD/2017

(filed by the 'Resolution Professional') praying for an order of liquidation of the

'Corporate Debtor' as per Section 33(1)(a) of the I&B Code, which was allowed

by the 'Adjudicating Authority'.

2. The 'Adjudicating Authority' (National Company Law Tribunal,

Chandigarh Bench, Chandigarh) while passing the impugned order in I.A. 412

of 2020 in CP (IB) No.117/Chd/CHD/2017(filed by the Resolution

Professional) at paragraph Nos.10 to 17 had observed the following:

10. "Prescribed period for filing application - In the

present case.....the application under Section 9 of the

Insolvency and Bankruptcy Code, 2016 was admitted

on 02.02.2018 and the present application is filed by

the Resolution Professional on 25.08.2020. The period

of 180 days would be completed on 30.10.2018. The

period of 180 days would be completed on 30.10.2018.

As per order dated 31.10.2019, RP has been directed

to place the revised resolution plan before CoC and

further directed to complete the process within 90

days. RP has also filed an application seeking

additional time for concluding the CIRP process.

However, during the pendency, the Resolution

Applicant has withdrawn the resolution plan and the

application for extension has been frustrated. Hence,

no resolution has been passed by CoC and the present

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 2 | 72 application has been filed under Section 13(1)(a) on

21.08.2020 and the essential ingredients of the same

stand satisfied.

11. Appointment of Liquidator - Section 34(1) of the

Code provides that where the Adjudicating Authority

passes an order for liquidation of the corporate debtor

under Section 33, the resolution professional appointed

for the corporate insolvency resolution process shall,

subject to submission of written consent, act as the

Liquidator for the purpose of liquidation. Mr. Vikram

Bajaj, Resolution Professional with IBBI Registration

No. IBBI/PA-002/IPN000013/2016/2017/10003 has

filed his consent in form AA dated 18.05.2020

attached as Annexure 9 of the Petition. The Law

Researcher of this Tribunal has checked the

credentials of proposed Liquidator and nothing

adverse has been found on record, therefore, Mr.

Vikram Bajaj is appointed as the Liquidator.

12. Regulation 39B, 39C and 39D in CIRP

Regulations, 2016, have been inserted by notification

No. IBBI/2019/20/GN/REG/0/048 dated

25.07.2019. Relevant aspects in this respect are

examined hereunder: -

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 3 | 72

13. Liquidation Cost (Regulation 39B of CIRP

Regulations, 2016) - The CoC has not made compliance

of Regulation 39B of the CIRP Regulations, 2016

regarding meeting of liquidation costs. The Liquidator

is, therefrom directed to take necessary action under

Regulation 2A of the IBBI (Liquidation process), (2016)

regarding contribution to liquidation costs.

14. Assessment of Sale as a going concern

(Regulation 39C of CIRP Regulations, 2016) - The CoC

has not made any recommendation regarding sale of the

Corporate Debtor as a going concern. Therefore, the

liquidator is directed to refer to Regulation 32A of the

IBBI (Liquidation Process), Regulation 2016 and take

necessary action.

15. Fees of the Liquidator (Regulation 39D of CIRP

Regulations 2016) - The RP proposed to be appointed

as Liquidator shall charge such fee for the conduct of

liquidation proceedings and in such proportion to the

value of liquidation estate assets as may be specified by

the Board. Regulation 4 of Insolvency and Bankruptcy

Board of India (Liquidation Process) Regulations, 2016

provide for Liquidator's fee. Regulation 4(2) thereof

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 4 | 72 states that the Liquidator shall be entitled to such fee

and in such manner as has been provided therein.

16. Pending applications, if any, and its effect -

The learned authorized representative for applicant has

stated that an Application bearing CA No. 1077/2020

dated 20.11.2019 seeking additional time for

completion of CIRP with certain other reliefs is pending

before this Tribunal. In the instant IA, the applicant also

seeks liberty for withdrawal of CA No. 1077/2019 has

Resolution Applicant has withdrawn its resolution Plan.

17. In view of the satisfaction of the conditions

provided under Section 33(1)(A) of the Code, the

corporate debtor Best Foods Limited is directed to be

liquidated in the manner as laid down in Chapter III of

the Code. Some of the directions are noted as under:-

(i) That as per Section 33(5) of the Code and

subject to Section 52 of the Code, no suit or other legal

proceedings shall be instituted against the corporate

debtor.

Provided that a suit or other legal proceedings may be

instituted by the liquidator on behalf of the corporate

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 5 | 72 debtor, with the prior approval of the Adjudicating

Authority.

(ii) That the provisions of sub-section (5) of Section

33 of the Code shall not apply to legal proceedings in

relation to such transactions as may be notified by the

Central Government in consultation with any financial

sector regulator; and

(iii)That this order of liquidation under Section 33 of the

Code shall be deemed to be a notice of discharge to the

officers, employees and workmen of the Corporate Debtor,

except when the business of the Corporate Debtor is

continued during the liquidation process by the liquidator,

and

(iv) That all the powers of the Board of Directors,

key managerial prescribed and the partners of the

Corporate Debtor, as the case may be, shall cease to have

effect and shall be vested in the liquidator; and

(v) That the personnel of the Corporate Debtor shall

extend all assistance and cooperation to the Liquidator as

may be required by him in managing the affairs of the

Corporate Debtor and provisions of Section 19 of the Code

shall apply in relation to liquidation process as they apply

in relation to CIR process with the substitution of references

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 6 | 72 to the Interim Resolution Professional for references to the

Interim Resolution for references to the Liquidator.

(vi) That the Liquidator shall publish public

announcement in accordance with Regulation 12 of the IBBI

(Liquidation Process) Regulations 2016 and in Form B of

Schedule II of these Regulations within five days from

receipt of this order calling upon the stake holders to submit

their claims as on liquidation commencement date and

provide the last date for submission of claim which shall be

30 days from the liquidation commencement date.

(vii) That the announcement shall be published in

accordance with Regulation 12(3) of the IBBI (Liquidation

Process) Regulation, 2016.

(viii) That in accordance with Regulation 13 of the IBBI

(Liquidation Process) Regulations, 2016, the 'Liquidator'

shall file his preliminary report within 75 days and to file

regular progress reports as per Regulation 15 every

fortnightly thereafter."

and accordingly disposed of the said Interlocutory Application.

Resume of Facts

3. According to the Learned Counsel for the 'Appellant' that the 'Appellant'

is the Director of the Suspended Board of Directors of M/s Best Foods Ltd. (the

'Corporate Debtor'/ Company), engaged in the business of manufacturing and

exporting food grains.

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 7 | 72

4. It is represented on behalf of the Appellant that an Application/ Petition

was filed by M/s Hajura Singh Bhim Singh 'Operational Creditor' (under

Section 9 of the 'I&B' Code, 2016 r/w Rule 6 of the Insolvency and Bankruptcy

Application to Adjudicating Authority) Rules, 2016 against the 'Corporate

Debtor' and the said Application was admitted on 02.02.2018 for initiating the

'Corporate Insolvency Resolution Process' (CIRP) of the 'Corporate Debtor' etc.

Also that Mr. Atul Kumar Kansal was appointed as the 'Interim Resolution

Professional' for the 'Corporate Debtor'.

5. It comes to be known that the 'Interim Resolution Professional' of the

'Corporate Debtor' had constituted the 'Committee of Creditors' (CoC) of the

'Corporate Debtor' after collating and verifying all claims received from the

creditors of the 'Corporate Debtor'. Later, an Application was filed by the

'Committee of Creditors' of the 'Corporate Debtor' (under Section 22 of the 'I&B'

Code). The 'Interim Resolution Professional' was replaced by Mr. Vikram Bajaj,

the Respondent as 'Resolution Professional' for the 'Corporate Debtor' as per

order dated 17.04.2018 passed by the 'Adjudicating Authority'.

6. The 'Resolution Professional'/ Respondent published Form G and invited

'Expression of Interest' (EOI) from the prospective Resolution Applicants by

advertising the same in the Newspapers (vide publication dated 05.05.2018).

On 01.08.2018, this Tribunal passed an order of extending the CIRP period by

another 90 days. Later, the Respondent/ 'Resolution Professional' of the

'Corporate Debtor' issued a fresh invitation calling for 'Expression of Interest'

in respect of the 'Corporate Debtor' on 07.08.2019. The 'Resolution

Professional' received the 'Expression of Interest' from a prospective Resolution

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 8 | 72 Applicant - Maritime Trade Corporation (MTC) and later, request for 'Resolution

Plan' (RFRP) was issued to MTC/ Resolution Applicant for submission of

'Resolution Plan' in respect of the 'Corporate Debtor'.

7. The 'Resolution Applicant' (Maritime Trade Corporation) submitted its

'Resolution Plan' in respect of the 'Corporate Debtor' in terms of Section 30 of

the 'I&B' Code, 2016 to the 'Resolution Professional', on 04.10.2018 together

with Earnest Money Deposit of INR 10 crores. As a matter of fact, consequent

to the review of the 'Resolution Plan' (submitted by the 'Maritime Trade

Corporation') by the 'Resolution Professional' and the 'Committee of Creditors'

of the 'Corporate Debtor' a revised 'Resolution Plan' was submitted by the

'Resolution Applicant' on 19.10.2018.

8. It is brought to the fore that in the 7th meeting of the 'Committee of

Creditors' of the 'Corporate Debtor' dated 25.10.2018, the 'Resolution Plan'

submitted by the 'Maritime Trade Corporation'/ 'Resolution Applicant' was

discussed by the 'Committee of Creditors' of the 'Corporate Debtor'. Indeed, the

Respondent ('Resolution Professional') through mail dated 26.10.2018 had

informed the 'Resolution Applicant' / MTC about the decision of the 'Committee

of Creditors' not to consider the 'Resolution Plan' of the 'Resolution Applicant',

since the same was not in consonance with the provisions of the 'I&B' Code.

9. It is the version of the Appellant that the 'Resolution Applicant' furnished

a revised 'Resolution Plan' to the Respondent/ 'Resolution Professional' as per

email dated 26.10.2018, which was forwarded by the Respondent/ 'Resolution

Professional' to the 'Committee of Creditors' as per mail dated 27.10.2018.

Later, the 'Resolution Applicant' (Maritime Trade Corporation) submitted its

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 9 | 72 'Resolution Plan' to the 'Resolution Professional' as per email dated 28.10.2018.

The Respondent/ 'Resolution Professional' after considering the changes

effected in the 'Resolution Plan', shared it with the 'Committee of Creditors' for

its consideration vide email dated 29.10.2019 with the observations that the

Revised 'Resolution Plan' submitted by the 'Resolution Applicant'/ Respondent

prima-facie appears to be in conformity with the 'I&B' Code, 2016 and the

accompanying rules and Regulations thereunder, notwithstanding that there

were certain inconsistencies that need to be sorted out by means of discussion

with the 'Resolution Applicant'/ MTC, for which, the 'Resolution Applicant' was

'agreeable'.

10. Through email dated 29.10.2018, the 'Resolution Professional'/

Respondent had informed the 'Resolution Applicant'/ MTC that the 'Committee

of Creditors' of the 'Corporate Debtor' was not inclined to consider the 'Revised

Resolution Plan' of 'Maritime Trade Corporation', since the same was 'not found

feasible' and further the time period for 'Corporate Insolvency Resolution

Process' of the 'Corporate Debtor' was almost over, there was no time left in the

'Resolution Process' of the 'Corporate Debtor' to entertain any further 'repetition

of a process'.

11. The stand of the Appellant is that the 'Resolution Plan' of the 'Resolution

Applicant' - 'Maritime Trade Corporation' was not put before the 'Committee of

Creditors' of the 'Corporate Debtor' although inconsistencies in the Resolution

in regard to the non-compliance of the provisions of the Code were also removed

and that the 'Revised Resolution Plan' dated 28.10.2018 was found to be in

agreement with particular rule(s) by the 'Resolution Professional'/ Respondent,

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 10 | 72 as stated by him in the email dated 29.10.2018 to the 'Committee of Creditors'

of the 'Corporate Debtor'.

12. Being dissatisfied with the action of the 'Committee of Creditors' in not

considering the 'Resolution Plan' Resolution Applicant/ 'Maritime Trade

Corporation' projected an Application in CA NO.203 of 2018 before the

'Adjudicating Authority' questioning the arbitrary and illegal decisions of the

'Committee of Creditors' on 25.10.2018, whereby a decision was taken not to

pursue the 'Resolution Plan' submitted by the Resolution Applicant/ 'Maritime

Trade Corporation' and the illegal and arbitrary decision of the 'Committee of

Creditors' on 29.10.2018 not to consider the 'Revised Plan' furnished by the

'Resolution Applicant'/ 'Maritime Trade Corporation' despite the 'Resolution

Plan' was found to be 'in order' by the 'Resolution Professional'.

13. The CA No.603/2018 (filed by the Resolution Applicant) was allowed by

the 'Adjudicating Authority' as per order dated 31.10.2019 in directing the

'Resolution Professional' to place the 'Revised Resolution Plan' submitted by the

'Resolution Applicant'/ 'Maritime Trade Corporation', for consideration before

the 'Committee of Creditors' of the 'Corporate Debtor'.

14. Based on the order dated 31.10.2019 passed by the 'Adjudicating

Authority' the 'Resolution Plan' furnished by the Resolution Applicant/

'Maritime Trade Corporation' was evaluated by the 'Committee of Creditors' in

the ninth meeting of the 'Committee of Creditors' dated 15.11.2019. In reality,

the other members of the 'Committee of Creditors' with a voting share of 42.54%

voted in favour of the 'Resolution Plan'. One of the members of the 'Committee

of Creditors' i.e. the State Bank of India, having vote share of 53.87% abstain

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 11 | 72 from voting because of the 'pending approvals' from its 'higher ups' for 'voting'

on the 'Resolution Plan' and the voting of 'State Bank of India' 'Resolution Plan'

was deferred. In fact, the Resolution on the liquidation of the 'Corporate Debtor'

was rejected by the Committee of Members by the requisite majority. Neither

any resolution for approval/ rejection of 'Resolution Plan' nor any resolution for

liquidation of the 'Corporate Debtor' was passed at the meeting of the

'Committee of Creditors' dated 15.11.2019.

15. With a view to complete the 'Corporate Insolvency Resolution Process'

and pending vote of the State Bank of India on the Resolution Plan on

20.11.2019 the 'Resolution Professional'/ Respondent preferred an Application

in CA No.1077 of 2019 before the 'Adjudicating Authority' praying for an

additional time of 75 days for completion of the 'Corporate Insolvency

Resolution Process' of the 'Corporate Debtor' and to permit the 'Committee of

Creditors' of the 'Corporate Debtor' to abstain from voting viz the State Bank of

India to submit their vote on approval of the 'Resolution Plan' on liquidation of

the 'Corporate Debtor' as the case may be.

16. The State Bank of India (one of the 'Financial Creditors' of the 'Corporate

Debtor') with a voting share of 53.87% through email dated 07.02.2020 had

informed the 'Resolution Professional'/ Respondent that the proposal for

approval of the 'Resolution Plan' was approved by the State Bank of India. In

this connection it is pertinently pointed out that on 13.02.2020, during the

hearing of CA 1077 of 2020 in CP (IB) No.117/Chd/CHD/2017 the 'Resolution

Professional'/ Respondent while informing the 'Adjudicating Authority' about

the approval of the State Bank of India to the 'Resolution Plan' of the Resolution

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 12 | 72 Applicant/ 'Maritime Trade Corporation' prayed for issuance of a direction from

the 'Adjudicating Authority' for convening one more meeting of the 'Committee

of Creditors' to consider the 'Resolution Plan' of the Resolution Applicant/

'Maritime Trade Corporation' for passing appropriate Resolution and also for

granting extension for further necessary period for this purpose.

17. When CA No.1077/2019 in CP (IB) No.117/Chd/CHD/2017 was sub-

judice and pending before the 'Adjudicating Authority' the Resolution

Applicant/ 'Maritime Trade Corporation' through email dated 19.03.2020

addressed to the 'Resolution Professional' unlawfully withdrew its 'Resolution

Plan' which was approved by the 'Committee of Creditors' with requisite

majority in effect in view of the approval communicated by the State Bank of

India as per email dated 13.02.2020.

18. There is no provision under the 'I&B Code', for withdrawal of the

'Resolution Plan' by the 'Resolution Applicant' once the 'Resolution Plan' was

approved by the 'Committee of Creditors'. The 'Committee of Creditors' of the

'Corporate Debtor' after examining the 'viability' and 'feasibility' of the

'Resolution Plan' submitted by the 'Resolution Applicant' and after applying its

commercial wisdom had approved the 'Resolution Plan' of the 'Resolution

Applicant' and the same ought not to have been interjected/ interfered by the

'Resolution Professional'/ Respondent, who had permitted the 'Resolution

Applicant' to withdraw the 'Resolution Plan'.

19. The Respondent/ 'Resolution Professional' in breach of the order dated

31.10.2019 passed by the 'Adjudicating Authority' and in violation of the

provisions of the I&B Code without securing the vote of the 'Committee of

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 13 | 72 Creditors' on the revised 'Resolution Plan' and a resolution to the effect and

without securing a resolution on liquidation by the 'Committee of Creditors' of

the 'Corporate Debtor' directly, out of his individual discretion filed an IA 412

of 2020 (under Section 33(1)(a) of the Code) for 'Liquidation' of the 'Corporate

Debtor' before the 'Adjudicating Authority'.

20. On 01.03.2021, the 'Adjudicating Authority' in I.A. 412 of 2020 passed

an order for 'Liquidation' of the 'Corporate Debtor' in directing the Liquidator

to take steps for liquidation of the 'Corporate Debtor' as per Regulation 32(A) of

the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation,

2016 (Liquidation Regulations).

21. It is the plea of the Appellant that the 'Adjudicating Authority' had

committed an error in directing the Liquidator to take steps as per Regulation

32(A) of the Liquidation Resolutions without directing the Liquidator to take

appropriate steps as per Regulation 2B and the judgment of this Tribunal in Y.

Sivaram Prasad vs. S. Dhanapal & Ors. Vide Co. Appl (AT) (Ins) No.224 of

2018 in which the Liquidator is directed to first call for schemes of compromise

and arrangement under Section 230 of the Companies Act, 2013 at the stage

of liquidation proceedings of the 'Corporate Debtor' before the sale of 'Assets'

of the 'Corporate Debtor' 'collectively' or on a standalone basis in order to keep

the 'Corporate Debtor' as a 'going concern' even during the period when the

'Corporate Debtor' is undergoing liquidation proceedings.

Appellant's Submissions

22. The Learned Counsel for the Appellant submits that the impugned

order dated 01.03.2020 passed by the 'Adjudicating Authority' in I.A No.412 Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 14 | 72 of 2020 in CP (IB) No.117/Chd/CHD/2017 is in negation of the principles of

natural justice and the same is legally untenable.

23. The Learned Counsel for the Appellant contends that the 'Adjudicating

Authority' had failed to observe that the withdrawal of the 'Resolution Plan'

subsequent to the approval of the 'Resolution Plan' by the Committee of

Creditors of the 'Corporate Debtor' is impermissible in law and further that

the action of the Respondent/ 'Resolution Professional' is an unlawful one,

besides the same being in breach of the aims and objectives of the I&B Code,

2016.

24. The Learned Counsel for the Appellant projects an argument that the

State Bank of India (having a voting share of 53.87%) through email dated

07.02.2020 had conveyed its 'approval' for the 'Resolution Plan' to the

'Resolution Professional' of the 'Corporate Debtor', and in fact, 'Resolution

Plan' was approved by 96.04% of the voting share of the 'Committee of

Creditors' of the 'Corporate Debtors'.

25. The Learned Counsel for the Appellant points out that the approval of

the 'Resolution Plan' (conveyed by the State Bank of India - having 53.87%

voting share) through email dated 07.02.2020 was to be taken into account

as per the judgment dated 19.03.2019 of this Tribunal in the matter of 'Apollo

Jyoti LIC and Ors. vs. Jyoti Structures Ltd. - Sharad Sanghi vs. Vandana

Garg & Ors. - vide Company Appeal (AT) (Ins.) 461/2018 and etc. wherein

it was held that if once voting on a 'Resolution Plan' by the 'Committee of

Creditors' was over then the members of the 'Committee of Creditors', who

had earlier either voted against the Plan or abstained on the voting on the

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 15 | 72 Plan can subsequently change their opinion in favour of the Plan, provided

that the change of happened within the 270 days of the CIRP process.

26. According to the Learned Counsel for the Appellant the wisdom of the

'Committee of Creditors' reigns 'supreme' and if it was found that the majority

of the 'Committee of Creditors' had voted in favour of the Plan but fell short

of the requisite threshold of 75% and the alternative of the Plan not being

approved is liquidation, the 'Committee of Creditors' can always change his

opinion to being in favour of the Plan after the voting was first over, subject

to the change of opinion taking place within the period of 270 days and the

judgment of this Tribunal was upheld by the Hon'ble Supreme Court of India

(vide Civil Appeal 3434-3436 of 2019 order dated 15.04.2019) wherein it was

observed and held that the 'Committee of Creditors' is empowered to change

its decisions on Rejection/ Abstention of 'Resolution Plan'.

27. The Learned Counsel for the Appellant projects an argument that the

'Adjudicating Authority' while passing the impugned order in disregard to the

facts and circumstances of the instant case had encroached upon the majority

decision of the 'Committee of Creditors', which it does not have the power to,

except for the grounds mentioned as per sub-section (a) to (e) of Section 32 of

the Code.

28. The Learned Counsel for the Appellant submits that the 'Adjudicating

Authority' had failed to observe in the impugned order that the 'Resolution

Professional'/ Respondent had filed the application for liquidation of the

'Corporate Debtor' without securing the vote and resolution of the 'Committee

of Creditors' neither on the revised Plan nor on the Liquidation of the

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 16 | 72 'Corporate Debtor', which is in breach of the necessary ingredients of the I&B

Code and the directions issued by the 'Adjudicating Authority' as per order

dated 31.10.2019 in CA No.603/2018.

29. The Learned Counsel for the Appellant brings it to the notice of this

Tribunal that the 'Adjudicating Authority' had committed an error in not

observing that the action of the 'Resolution Professional'/ Respondent

permitting the withdrawal is in violation of the ingredients and against the

aims and objects of the Code, since the 'Corporate Debtor' runs a huge risk of

going into 'Liquidation' because the time spent in the 'Corporate Insolvency

Resolution Process' is inversely proportional to the value of the assets of the

'Corporate Debtor' and there is a good chance that none of the rival

'Resolution Applicants' who are earlier interested would be willing to come

forward subsequently. In short, if such 'withdrawal' is allowed and no new

'Successful Resolution Applicant' emerges, such 'Corporate Debtor' is sure to

go into liquidation, which is contrary to the object of the I&B Code. It is to be

remembered that the I&B Code aims to resolve 'insolvency' in a time bound

manner and maximize the value of 'Corporate Debtor', which is in the interest

of 'Corporate Debtor' and its stake holders at large.

30. Yet another contention advanced on behalf of the Appellant is that the

IA 412 of 2020 filed by the Respondent/ 'Resolution Professional' for

liquidation of the 'Corporate Debtor' does not satisfy the test/ conditions

prescribed under Section 33 of the Code for initiation of the 'Corporate Debtor'

and that the 'Adjudicating Authority' had failed to note down/ observe the

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 17 | 72 same in the impugned order. In fact, the IA 412 of 2020 filed by the

Respondent/ 'Resolution Professional' is not maintainable.

31. The Learned Counsel for the Appellant points out that considerable

time in respect of the 'Corporate Insolvency Resolution Process' was

consumed on the approved 'Resolution Plan' and eventually when after

multiple round of negotiations, approval of the majority of the 'Committee of

Creditors' members was received, the 'Resolution Professional' permitted the

'Resolution Applicant' to withdraw the aforesaid plan which resulted in

colossal of waste of 'CIRP' time period from 04.10.2018 when the 'Resolution

Plan' was submitted by the 'Resolution Applicant' for the first time upto

19.03.2020, when the 'Resolution Applicant' withdrew the Resolution Plan

subsequent to the approval of the 'Committee of Creditors' and that the

aforesaid time period might have been otherwise utilized in exploring

possibilities of Resolution of the 'Corporate Debtor', whereas on account of

the acts and commission of the Respondent/ 'Resolution Professional', the

'Corporate Debtor' was pushed into Liquidation.

Appellant's Citations

32. The Learned Counsel for the Appellant seeks in aid of the judgment of

this Tribunal - dated 19.03.2019 (1) Mr. Sharad Sanghi vs. Vandana Garg

and others (Com. App (AT) (Ins.) 461 of 2018); (2) Ashutosh Koul and

Others vs. DBS Bank Limited and others (Com. App (AT) 464 of 2018);

and (3) Appollo Jyoti LLC and others vs. Jyoti Structures Ltd. Through

its Resolution Professional, M/s Vandana Garg and Others (Com. App. (AT)

(Ins) No.548 of 2018) reported in 2019 SCC OnLine NCLAT page 148 (at

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 18 | 72 special page 7 and 8), wherein at paragraph 14 to 19, 23 to 26, it is observed

as under:

"14. Whether a member who has already opined, after

final decision, can change its opinion or not? It is the

matter which can be decided by the 'Committee of

Creditors', which may extend the period and allow to

have fresh voting. Regulation 26(2) being directory

cannot override the power of the 'Committee of

Creditors', which is the final decision making authority

in accepting or rejecting a 'Resolution Plan'. The

Insolvency and Bankruptcy Board of India also noticed

that Regulation 26(2) is not workable and will amount

to interference with the power of the 'Committee of

Creditors' as vested under the Insolvency and

Bankruptcy Code, 2016 and therefore, the Insolvency

and Bankruptcy Board of India deleted Regulation

26(2) w.e.f. 4th July, 2018. If it would not have been

10 Company Appeal (AT) (Insol.) Nos. 461, 464 & 548

of 2018 deleted, one could have argued that

Regulation 26(2) is arbitrary as it does not allow the

'Committee of Creditors' to form its final opinion.

15. A 'Resolution Plan' which may be viable, feasible

and of acceptable financial matrix and which is not

against the provision of Section 30(2), if majority of the

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 19 | 72 members having voting shares approve it but falls

short of the 75% (now 66%) limit as has been

prescribed and later on it comes to the notice of one or

other members that because of the failure the

'Corporate Debtor' will be liquidated, it is always open

to the members to change its opinion subsequently

with the approval of the rest of the members of the

'Committee of Creditors' but it should be within 270

days.

16. In view of the aforesaid findings and the facts as

emerges, we hold that the 'Resolution Plan' in question

stands approved by the 'Committee of Creditors' with

81.39% voting shares.

17. In the case of "Quinn Logistics India Pvt. Ltd."

(Supra) which was affirmed by the Hon'ble Supreme

Court, this Appellate Tribunal observed that the period

of non-joining of the 'Interim Resolution Professional'

should be excluded for the purpose of counting the total

period of 180 days or 270 days.

18. In the present case, as the application was

admitted on 4th July, 2017 and after signature it was

uploaded on 12th July, 2017 i.e. eight days and the

'Interim Resolution Professional' joined much

thereafter, we are of the view that the Adjudicating

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 20 | 72 Authority should have excluded at 11 Company

Appeal (AT) (Insol.) Nos. 461, 464 & 548 of 2018 least

eight days of period during which the order was

passed, signed and subsequently uploaded. If the

aforesaid period of eight days is excluded, then we

find that the 'Resolution Plan' was approved within

270 days which the Adjudicating Authority has failed

to notice.

19. We have not counted the actual period, taking into

consideration the date when the 'Interim Resolution

Professional' had joined. The order of admission

having signed and uploaded on 12th July, 2017, after

excluding eight days, we hold that the process was

conducted within the period.

Xxx xxx xxx

23. However, the aforesaid submissions cannot be

accepted as at the 'Resolution Process', 'Financial

Creditor' claims are decided as per provision of the

'I&B Code'. All the 'Financial Creditors' are treated to

be similar, if similarly situated.

24. We have noticed that the Adjudicating Authority

has made certain observations with regard to the

timeline given by the 'Resolution Applicant'. Learned

counsel appearing on behalf of the 'Resolution

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 21 | 72 Applicant' submits that the total period of 15 years will

be reduced to 12 years.

25. In view of the aforesaid findings and as we have

already held that the 'Resolution Process' took place

within 270 days and the 'Committee of Creditors' had

the jurisdiction to change its opinion in favour of the

'Resolution Plan' to make it a success and Regulation

26(2) being directory which also stands deleted, we set

aside the impugned order and hold that the 'Resolution

Plan' being in conformity with Section 30(2) warranted

approval by the Adjudicating Authority.

26. However, we make it clear that to make the

'Resolution Process' successful, though it is open to the

'Committee of Creditors' to change its opinion by

assenting in favour of one or other plan, we further hold

that 13 Company Appeal (AT) (Insol.) Nos. 461, 464 &

548 of 2018 the 'Committee of Creditors' once voted in

favour of the 'Resolution Plan' cannot change its views".

33. The Learned Counsel for the Appellant relies on the decision of the

Hon'ble Supreme Court in 'Kalpraj Dharamshi and Another' vs. 'Kotak

Investment Advisors Ltd. and Another' (vide judgment in Civil Appeal

No.2943-2944 of 2020) reported in 2021 SCC OnLine SC 204, wherein at

paragraph 155 to 160, it is observed as under:

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 22 | 72

155. "This Court observed, that the Court ought to

cede ground to the commercial wisdom of the

creditors rather than assess the resolution plan on

the basis of quantitative analysis. This Court

clearly held, that the appellate authority ought not

to have interfered with the order of the

adjudicating authority by directing the successful

resolution applicant to enhance their fund inflow

upront.

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' could not be

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 23 | 72 accepted. However, it has been the consistent

stand of RP as well as CoC, that 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 of 84.36%. The only

creditor voted in favour of KIAL is Kotak Bank,

which is a holding company of KIAL having voting

rights of 0.97%. We are of the considered view,

that in view of the paramount importance given to

the decision of CoC, which is to be taken on the

basis of 'commercial wisdom', NCLAT was not

correct in law in interfering with the commercial

decision taken by CoC by a thumping majority of

84.36%.

158. It is further to be noted, that after the

resolution plan of Kalpraj was approved by NCLT

on 28.11.2019, Kalpraj had begun implementing

the resolution plan. NCLAT had heard the appeals

on 27.2.2020 and reserved the same for orders. It

is not in dispute, that there was no stay granted

by NCLAT, while reserving the matters for orders.

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 24 | 72 After a gap of five months and eight days, NCLAT

passed the final order on 5.8.2020. It could thus

be seen, that for a long period, there was no

restraint on implementation of the resolution plan

of Kalpraj, which was duly approved by NCLT. It

is the case of Kalpraj, RP, CoC and Deutsche Bank,

that during the said period, various steps have

been taken by Kalpraj by spending a huge amount

for implementation of the plan. No doubt, this is

sought to be disputed by KIAL. However, we do

not find it necessary to go into that aspect of the

matter in light of our conclusion, that NCLAT acted

in excess of jurisdiction in interfering with the

conscious commercial decision of CoC.

159. It is also pointed out, that in pursuance of

the order dated 5.8.2020 passed by NCLAT, CoC

has approved the resolution plan of KIAL on

13.8.2020. However, since we have already held,

that the decision of NCLAT dated 5.8.2020 does

not stand the scrutiny of law, it must follow, that

the subsequent approval of the resolution plan of

KIAL by CoC becomes non-est in law. For, it was

only to abide by the directions of NCLAT. We are

of the view that nothing would turn on it. The

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 25 | 72 decision of CoC dated 13/14.2.2019 is a decision,

which has been taken in exercise of its 'commercial

wisdom'. As such, we hold, that the decision taken

by CoC dated 13/14.2.2019, which is taken in

accordance with its 'commercial wisdom' and

which is duly approved by NCLT, will prevail.

Further, NCLAT was not justified in interfering with

the stated decision taken by CoC.

160. In that view of the matter, we find that Civil

Appeal Nos. 2943-2944 of 2020 filed by Kalpraj;

Civil Appeal Nos. 2949-2950 of 2020 filed by RP

and Civil Appeal Nos. 3138-3139 of 2020 filed by

Deutsche Bank deserve to be allowed. It is ordered

accordingly. The order passed by NCLAT dated

5.8.2020 is quashed and set aside and the orders

passed by NCLT dated 28.11.2019 are restored

and maintained."

34. The Learned Counsel for the Appellant seeks in aid of the decision

of Hon'ble Supreme Court in 'Ebix Singapore Pvt. Ltd. V. 'Committee

of Creditors of Educomp Solutions Limited and Anr.' reported in

2021 SCC online SC 707 wherein at paragraphs Nos. 145, 147, 159, 169,

172, 173, 175, 177, 178, 179 and 184 it is observed as under: -

145. "The absence of any specific provision in the

IBC or the regulations referring to a CoC-approved

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 26 | 72 Resolution Plan as a contract and the lack of clarity

in the BLRC report regarding the nature of such a

Resolution Plan, constrains us from arriving at the

conclusion that CoC-approved Resolution Plans will

be governed by the Contract Act and common law

principles governing contracts, save and except for

the specific prohibitions and deeming fictions under

the IBC. Regulation 39(3) of CIRP regulations, as it

stood before the IBBI (CIRP) (Fourth Amendment)

Regulations 2020 and applicable to the three

appellants before us, enabled a framework where a

draft Resolution Plan would involve several rounds

of negotiations and revisions between the Resolution

Applicant and the CoC, before it is approved by the

latter and submitted to the Adjudicating

Authority88. However, this statutorily-enabled room

for commercial negotiation is not enough to over-

power the other elements of regulation that detract

from the view that 88 "(3) The committee shall

evaluate the resolution plans received under sub-

regulation (1) strictly as per the evaluation matrix to

identify the best resolution plan and may approve it

with such modifications as it deems fit: Provided

that the committee shall record its deliberations on

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 27 | 72 the feasibility and viability of the resolution plans"

PART H 112 CoC-approved Resolution Plans are

contracts. CoC-approved Resolution Plans, before

the approval of the Adjudicating Authority under

Section 31, are a function and product of the IBC's

mechanisms. Their validity, nature, legal force and

content is regulated by the procedure laid down

under the IBC, and not the Contract Act. The voting

by the CoC also occurs only after the RP has verified

the contents of the Resolution Plan and confirmed

that it meets the conditions of the IBC and the

regulations therein. The amended Regulation

39(3)89 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 CoC90. These developments bolster

the conclusion that the mechanism prior to

submission of a CoC-approved resolution plan is

subject to continuous procedural scrutiny by the IBC

and cannot be considered as a simple contractual

negotiation between two parties. Section J below

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 28 | 72 details how a common law remedies of withdrawal

or modification on account of frustration or force

majeure are not applicable to CoCapproved

Resolution Plans owing to the nature of the IBC.

Similarly, the whole host of remedies such as

liquidated and unliquidated damages, restitution,

novation and frustration, unless specifically

provided by the IBC, are not available

89"39....(3)The committee shall- (a) evaluate the

resolution plans received under sub-regulation (2) as

per evaluation matrix; (b) record its deliberations on

the feasibility and viability of each resolution plan;

and (c) vote on all such resolution plans

simultaneously. (3A) Where only one resolution plan

is put 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

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 29 | 72 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.........." 90

available at accessed on 5 September 2021 PART H

113 to a successful Resolution Applicant whose Plan

has been approved by the CoC and is awaiting the

approval of the Adjudicating Authority. The

Insolvency Law Committee Report of February 2020

has recommended the CIRP process to mandate

Resolution Plans to provide for the apportionment of

the profit or loss accrued by the Corporate Debtor

during the CIRP91. These reports are periodically

commissioned by the parliament to review the

functioning of the Code and suggest amendments.

However, if the intention was to view a

CoCapproved Resolution Plan as a contract, the

principles of unjust enrichment would have been

sufficient to address the issue and an amendment

may not be considered necessary. A Resolution

Applicant, as a third party partaking in the

insolvency regime, seeks to acquire the business of

the Corporate Debtor without the entirety of its

debts, statutory liabilities and avoiding certain

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 30 | 72 transactions with third parties. These benefits are a

function of the coercive mechanisms of the IBC

which enable a third party to acquire the assets of a

Corporate Debtor without its liabilities, for a

negotiated amount of the debt that is owed by the

Corporate Debtor. Typically, resolution amounts

envisage payment of a fraction of debt that is owed

to the creditors and the business is acquired as a

going concern with its employees. The Resolution

Plan is drafted in a way that it is implementable in

the future and brings about a quietus to the CIRP.

Enabling Resolution Applicants to seek remedies

that are not specified by the IBC, by seeking

recourse to the Contract Act would be antithetical to

the IBC's insolvency regime. 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 91 Pages 55-56, Report of the Insolvency Law

Committee (February 2020), Ministry of Corporate

Affairs, available at accessed on 20 August 2021

PART H 114 distort the mechanism of the IBC

altogether. This Court in Laxmi Pat Surana v. Union

Bank of India92 has held that the IBC is a self-

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 31 | 72 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 law,

rather the explanation provides that the

performance security should be of "such nature,

value, duration and source, as may be specified in

the request for resolution plans with the approval of

the committee, having regard to the nature of

resolution plan and business of the corporate

debtor". Further, in the event that the CoC enters into

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 32 | 72 a settlement with the Corporate Debtor and

withdraws from the CIRP under Section 12A,

Regulation 30A provides for only payment of

insolvency costs and not compensation or damages

to Resolution Applicant for investing time and money

in the process. The parties may resort to invoking

principles of frustration or force majeure to evade

implementation of the Resolution Plan leading to

unnecessary litigation. This Court in Amtek Auto

(supra), had curbed a similar attempt by a 92 (2020)

SCC OnLine SC 1187 PART I 115 successful

Resolution Applicant who had relied on a force

majeure clause in its Resolution Plan to seek a

direction compelling the CoC to negotiate a

modification to its Resolution Plan. The Court held

that there was no scope for negotiations between the

parties once the Resolution Plan has been approved

by the CoC. Thus, contractual principles and

common law remedies, which do not find a tether in

the wording or the intent of the IBC, cannot be

imported in the intervening period between the

acceptance of the CoC and the approval by the

Adjudicating Authority. Principles of contractual

construction and interpretation may serve as

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 33 | 72 interpretive aids, in the event of ambiguity over the

terms of a Resolution Plan. However, remedies that

are specific to the Contract Act cannot be applied, de

hors the over-riding principles of the IBC. I Statutory

framework governing the CIRP

147. The decision in Essar Steel (supra) while

reiterating the rationale of the IBC for ensuring timely

resolution of stressed assets as a key factor, had to

defer to the principles of actus curiae neminem

gravabit, i.e., no person should suffer because of the

fault of the court or the delay in the procedure. In spite

of this Court's precedents which otherwise strike

down provisions which interfere with a litigant's

fundamental right to non-arbitrary treatment under

Article 14 by mandatory conclusion of proceedings

without providing for any exceptions, this Court

refused to strike down the second proviso to Section

12(3) in its entirety. It noted that the previous

statutory experiments for insolvency had failed

because PART I 118 of delay as a result of extended

legal proceedings and chose to only strike down the

word 'mandatorily', keeping the rest of the provision

intact. Therefore, the law as it stands, mandates the

conclusion of the CIRP - including time taken in legal

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 34 | 72 proceedings, within 330 days with a short extension

to be granted only in exceptional cases. However, the

Court has warned that this discretion must be

exercised sparingly and only in the following

situations: "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 liquidation and that the time taken in

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 35 | 72 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 corporate

debtor must take place beyond which the corporate

debtor is to be driven into liquidation."

159. The CoC has been given wide powers under the

IBC. It can direct the Corporate Debtor into liquidation

any time before the approval by the Adjudicating

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 36 | 72 PART I 126 Authority, under Section 33(2) of the IBC.

Further, under Section 12A of the IBC the

Adjudicating Authority may allow withdrawal of the

application submitted under Sections 7, 9 or 10 of the

IBC for initiation of the CIRP (i.e., initiation of the CIRP

by the financial creditor, operational creditor and the

corporate applicant, respectively) if the withdrawal is

approved by ninety per cent of the voting share of the

CoC. Dealing with the question whether a successful

Resolution Applicant can retreat through the route

provided under Section 12A of the IBC, a threejudge

Bench of this Court in Maharashtra Seamless v.

Padmanabhan Venkatesh94 observed that, "[t]he exit

route prescribed in Section 12A is not applicable to a

Resolution Applicant. The procedure envisaged in the

said provision only applies to applicants invoking

Sections 7, 9 and 10 of the code". However, this Court

left the question whether a successful Resolution

Applicant "altogether forfeits their right to withdraw

from such process [CIRP] or not", open for subsequent

judicial determination95.

169. Judicial restraint must not only be exercised

while adjudicating upon the constitutionality of the

statute relating to economic policy but also in matters

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 37 | 72 of interpretation of economic statutes, where the

interpretative maneuvers of the Court have an effect

of transgressing into the law-making power of the

legislature and disturbing the delicate balance of

separation of powers between the legislature and the

judiciary. Judicial restraint must be exercised in such

cases as a matter of prudence, since the court neither

has the necessary expertise nor the power to hold

consultations with stakeholders or experts to decide

the direction of economic policy. A court may be inept

in laying down a detailed procedure for exercise of the

power of withdrawal or modification by a successful

Resolution Applicant without impacting the other

procedural steps and the timelines under the IBC

which are sacrosanct. Thus, judicial restraint must be

exercised while intervening in a law governing

substantive outcomes through procedure, such 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 PART J 141 Applicants who are seeking to

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 38 | 72 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.

172. 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 PART J 143 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

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 39 | 72 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, the IBC (Amendment) Ordinance 2021 was

promulgated with effect from 04 April 2021 providing

certain directions to preserve businesses of MSMEs

and a fast-track insolvency process. There has been

a clamor on behalf of successful Resolution

Applicants who no longer wish to abide by the terms

of their submitted Resolution Plans that are pending

approval under Section 31, on account of the

economic slowdown that impacted every business in

the country. However, no legislative relief for enabling

withdrawals or renegotiations has been provided, in

the last eighteen months. In the absence of any

provision under the IBC allowing for withdrawal of

the Resolution Plan by a successful Resolution

Applicant, vesting the Resolution Applicant with such

a relief through a process of judicial interpretation

would be impermissible. Such a judicial exercise

would bring in the evils which the IBC sought to

obviate through the back-door.

173. It is pertinent to note that even the UNCITRAL

Guide does not contain any provisions for withdrawal

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 40 | 72 of a submitted Plan. It only discusses the possibilities

of amending a Resolution Plan. The UNCITRAL Guide

indicates that it PART J 144 contemplates that the

Legislature should choose if it wants to allow any

amendments to a submitted Resolution Plan. In the

event, it does, it should lay down the detailed steps

of proposing amendments to a submitted resolution

plan108. In fact, even the scope of negotiations

between the Resolution Applicant and the CoC has to

be specifically envisaged by the statute109. Further,

the UNCITRAL Guide envisages that amendments can

be made to the Resolution Plan after it is approved by

the creditors only in limited circumstances. It

mentions that, "[a]n insolvency law may include

limited provision for a plan to be modified after it has

been approved by creditors (and both before and after

confirmation) if its implementation breaks down or it

is found to be incapable of performance, whether in

whole or in part, and the specific problem can be

remedied"110. If permitted by the statute, the

recommendations strongly urge the establishment of

a mechanism for amendment after approval by

creditors which details requirements of, inter alia,

approval by creditors of the modification and

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 41 | 72 consequences of failure to secure approval to the

amendments111. The BLRC Report has relied on the

UNCITRAL Guide while designing the IBC112 and it

is a critical tool for ascertaining legislative choice and

intent. Parliament has not introduced an explicit

provision under the IBC for allowing any amendment

of the Resolution Plan after approval of creditors, let

alone a power to withdraw the 108 IV.A.52., page

225, and Recommendation 155: "155. The insolvency

law should permit amendment of a plan and specify

the parties that may propose amendments and the

time at which the plan may be amended, including

between submission and approval, approval and

confirmation, after confirmation and during

implementation, where the proceedings remain open."

of the UNCITRAL Guide, supra note 56 109 Ibid. 110

IV. A. 66, page 230 of the UNCITRAL Guide, supra

note 56 111 Recommendation 156: "The insolvency

law should establish the mechanism for approval of

amendments to a plan that has been approved by

creditors. That mechanism should require notice to be

given to the creditors and other parties affected by the

proposed modification; specify the party required to

give notice; require the approval of creditors and other

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 42 | 72 parties affected by the modification; and require the

rules for confirmation (where confirmation is required)

to be satisfied. The insolvency law should also

specify the consequences of failure to secure approval

of proposed amendments.", UNCITRAL Guide, supra

note 56 112 3.3.1, supra note 55 PART J 145

Resolution Plan at that stage. At the same time, the

Corporate Debtor and the CoC have been empowered

to withdraw from the CIRP. If it intended to permit

parties to amend the Resolution Plan after submission

to the Adjudicating Authority, based on its specific

terms of the Resolution Plan, it would have adopted

the critical safeguards highlighted by the UNCITRAL.

175. The approval of the Adjudicating Authority under

Section 31(1) of the IBC has the effect of making the

Resolution Plan binding on all stakeholders. These

PART J 146 stakeholders include the employees of the

corporate debtor whose terms of employment would be

governed by the Resolution Plan, the Central and State

Governments who would receive their tax dues on the

basis of the terms of the Resolution Plan and local

authorities to whom dues are owed. These

stakeholders are not direct participants in the CIRP but

are bound by its consequence by virtue of the approval

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 43 | 72 of the Resolution Plan, under Section 31(1) of the IBC.

Section 31(1) ensures that the Resolution Plan becomes

binding on all stakeholders after it is approved by the

Adjudicating Authority. The language of Section 31(1)

cannot be construed to mean that a Resolution Plan is

indeterminate or open to withdrawal or modification

until it is approved by the Adjudicating Authority or

that it is not binding between the CoC and the

successful Resolution Applicant. Regulation 39(4) of

CIRP Regulations mandates that the RP should

endeavour to submit the Plan at least fifteen days

before the statutory period of the CIRP under Section

12 is due to expire along with a receipt of a PBG and a

compliance certificate as Form H. It is pertinent to note

that sub-Section (3) to Section 12 mandates that the

CIRP process, including legal proceedings, must be

concluded within 330 days. This three-hundred-

andthirty-day period can be extended only in

exceptional circumstances, if the process is at near

conclusion and serves the object of the IBC, as held by

a three judge Bench of this Court in Essar Steel (supra).

Therefore, after accounting for all statutorily envisaged

delays which the RP has to explain in its Form H and

otherwise through Regulation 40B, the procedure

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 44 | 72 envisages a fifteen-day window between submission

of Resolution Plan and its approval or rejection by the

Adjudicating Authority. This clearly indicates that the

statute envisages a certain PART J 147 level of finality

before the Resolution Plan is submitted for approval to

the Adjudicating Authority. Even the CoC is not

permitted to approve multiple Resolution Plans or

solicit EOIs after submission of a Resolution Plan to the

Adjudicating Authority, which would possibly be in

contemplation if the Resolution Applicant was

permitted to withdraw from, or modify, the Plan after

acceptance by the CoC. Regulation 36B(4A) requires

the furnishing of a performance security which will be

forfeited if a Resolution Applicant fails to implement the

Plan. This is collected before the Adjudicating Authority

approves the Plan. Notably, the regulations also direct

forfeiture of the performance security in case the

Resolution Applicant "contributes to the failure of

implementation", which could potentially include any

attempts at withdrawal of the Plan.

177. The binding nature, as between the CoC and the

successful Resolution Applicant, of the Resolution Plan

submitted for approval by the Adjudicating Authority is

further evidenced from the fact that the CoC issues a

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 45 | 72 LOI to a successful Resolution Applicant stating that it

has been selected as the successful Resolution

Applicant and its Plan would be submitted to the

Adjudicating Authority for its approval. The successful

Resolution Applicant is typically required to accept the

LOI unconditionally and submit a PBG. Sequentially,

the issuance of an LOI is followed by its unconditional

acceptance by the successful Resolution Applicant. In

Amtek Auto (supra), this court thwarted a similar

attempt by a successful Resolution Applicant who had

relied on certain open-ended clauses in its Resolution

Plan to seek a direction compelling the CoC to negotiate

a modification to its Resolution Plan. The Resolution

Plan had been approved by the Adjudicating Authority

and the Resolution Applicant's IA was not entertained.

The Resolution Applicant had then sought to challenge

the approval of the Resolution Plan under Section 61(3)

of PART J 149 the IBC by seeking the same relief. This

Court rejected the claim and observed that, "[t]o assert

that there was any scope for negotiations and

discussions after the approval of the resolution plan by

the CoC would be plainly contrary to the terms of the

IBC".

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 46 | 72

178. Regulation 38(3) mandates that a Resolution Plan

be feasible, viable and implementable with specific

timelines. A Resolution Plan whose implementation can

be withdrawn at the behest of the successful Resolution

Applicant, is inherently unviable, since open-ended

clauses on modifications/withdrawal would mean that

the Plan could fail at an undefined stage, be uncertain,

including after approval by the Adjudicating Authority.

It is inconsistent to postulate, on the one hand, that no

withdrawal or modification is permitted after the

approval by the Adjudicating Authority under Section

31, irrespective of the terms of the Resolution Plan; and

on the other hand, to argue that the terms of the

Resolution Plan relating to withdrawal or modification

must be respected, in spite of the CoC's approval, but

prior to the approval by the Adjudicating Authority. The

former position follows from the intent, object and

purpose of the IBC and from Section 31, and the latter

is disavowed by the IBC's structure and objective. The

IBC does not envisage a dichotomy in the binding

character of the Resolution Plan in relation to a

Resolution Applicant between the stage of approval by

the CoC and the approval of the Adjudicating Authority.

The binding nature of a Resolution Plan on a Resolution

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 47 | 72 Applicant, who is the proponent of the Plan which has

been accepted by the CoC cannot remain indeterminate

at the discretion of the Resolution Applicant. The

negotiations between the Resolution Applicant and the

CoC are brought to an end after the CoC's approval. The

only PART J 150 conditionality that remains is the

approval of the Adjudicating Authority, which has a

limited jurisdiction to confirm or deny the legal validity

of the Resolution Plan in terms of Section 30 (2) of the

IBC. If the requirements of Section 30(2) are satisfied,

the Adjudicating Authority shall confirm the Plan

approved by the CoC under Section 31(1) of the IBC.

179. If the appellants' claim were to succeed, a clause

enabling a Resolution Applicant to withdraw/seek

modification for reasons such as a 'Material Adverse

Event' could also be set up by a Resolution Applicant

when it is being prosecuted under Section 74 (3). It was

contended before us that Form H, which is a compliance

certificate that is to be submitted by the RP to the

Adjudicating Authority along with the Resolution Plan,

mentions that the RP can enter details as to whether the

Resolution Plan is subject to any conditionalities under

Clause 12. Thus, the argument goes that this permits

the Resolution Applicant to stipulate in the Resolution

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 48 | 72 Plan certain contingencies under which it can withdraw

the Plan, for instance if there is an occurrence of an

'Material Adverse Event'. A form is subservient to the

statute. The conditionalities contemplated in Form H

could be those which do not strike at the root of the IBC.

They can include commercial conditions and business

arrangements with the CoC. However, conditions for

withdrawal or re-negotiation of the Resolution Plan

cannot pass the test of 'viability' and 'implementability'

as they would make the resolution process

indeterminate and unpredictable. A two judge Bench of

this Court in K Sashidhar (supra), while discussing the

jurisdiction of the Adjudicating Authority under Section

31 to evaluate a Resolution Plan, has observed that the

Resolution Plan should "be an overall credible plan,

capable of achieving timelines specified in the PART J

151 Code generally, assuring successful revival of the

corporate debtor and disavowing endless speculation"

114. Section 30(2)(d) of the IBC and Regulation 38 of the

CIRP Regulations also provide that the Resolution Plan

should be implementable. In the absence of specific

statutory language allowing for withdrawals or even

modifications by the successful Resolution Applicant, it

would be difficult to imply the existence of such an

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 49 | 72 option based on the terms of the Resolution Plan,

irrespective of, and especially when they do not form a

part of Clause 12 in Form H, as is the case in all the

three Resolution Plans that are in dispute in this present

appeal.

184. Based on the plain terms of the statute, the

Adjudicating Authority lacks the authority to allow the

withdrawal or modification of the Resolution Plan by a

successful Resolution Applicant or to give effect to any

such clauses in the Resolution Plan. Unlike Section

18(3)(b) of the erstwhile SICA which vested the Board

for Industrial and Financial Reconstruction with the

power to make modifications to a draft scheme for sick

industrial companies, the Adjudicating Authority under

Section 31(2) of the IBC can only examine the validity of

the plan on the anvil of the grounds stipulated in Section

30(2) and either approve or reject the plan. The

Adjudicating Authority cannot compel a CoC to negotiate

further with a successful Resolution Applicant. A

rejection by the Adjudicating Authority is followed by a

direction of mandatory liquidation under Section 33.

Section 30(2) does not envisage setting aside of the

Resolution Plan because the Resolution Applicant is

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 50 | 72 unwilling to execute it, based on terms of its own

Resolution Plan".

Respondent's Contentions

35. In response, the Learned Counsel for the Respondent submits that

the Appellant is misrepresenting that the 'Committee of Creditors' had

approved a 'Resolution Plan' and in fact, no 'Resolution Plan' was approved

by the 'Committee of Creditors' within the 'Corporate Insolvency

Resolution' period which came to an end on 15.11.2019. Apart from this,

I.A. No. 1077/2019 for an extension of 'CIRP' period was 'Sub-Judice'

when 'Sole Resolution Applicant' withdrew his 'Resolution Plan'. Moreover,

the Learned Counsel for the Respondent brings it to the notice of this

'Tribunal' that the 'Adjudicating Authority' had noted that in view of the

withdrawal of the 'Resolution Plan' by the 'Sole Resolution Applicant' the

grounds on which CA No.1077/2019 claiming extension of time for

completion of 'CIRP' process was filed by the 'Resolution Professional' were

frustrated.

36. The Learned Counsel for the Respondent points out that since the

'CIRP' period had lapsed on 15.11.2019 and no 'Resolution Plan' was

approved by 15.11.2019, thus the grounds for 'Sub-Judice' application for

extension were frustrated and the 'Adjudicating Authority' passed the

impugned order of 'Liquidation' of the 'Corporate Debtor'. From the date

of 'CIRP' commencement and the date of impugned order there was a

period of 37 months in directing the 'Liquidation' of the 'Corporate Debtor'.

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 51 | 72 It is significant to make a mention that the 'Committee of Creditors' had

not approved any 'Resolution Plan' in respect of the 'Corporate Debtor'.

37. The Learned Counsel for the Respondent takes a stand that the

Appellant has no 'Locus Standi' to assail the impugned order dated

01.03.2021 passed by the 'Adjudicating Authority' in reality, the

'Adjudicating Authority' had the power to pass an order for 'Liquidation' of

'Corporate Debtor' in the event no 'Resolution Plan' is received before the

expiry of the 'CIRP' process as per Section 33(1)(a) of the Code.

38. According to the Learned Counsel for the Respondent, the 'State

Bank of India' requested the 'Resolution Applicant' to make further

amendments / changes to the 'Resolution Plan' and directed the

Respondent to inform the same to the 'Resolution Applicants' for necessary

modifications. Because of the changing economic situation i.e. due to

COVID 19 pandemic the 'Resolution Applicant' withdrew from the 'CIRP'

process of the 'Corporate Debtor'.

39. It is represented on behalf of the Respondent that the 'Insolvency &

Bankruptcy Code Amendment Act', 2019 had commenced w.e.f.

16.08.2019 and calculating the 90 days' period as granted by the

'Adjudicating Authority' to consider and vote on the 'Plan' which came to

an end on 15.11.2019. The main 'Financial Creditor' / 'State Bank of

India' had abstained from voting on the 'Resolution Plan' while the same

was approved by other members of the 'Committee of Creditors' having a

vote of more than 44%.

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 52 | 72

40. It is the stand of the Respondent that because of the fact that no

'Resolution Plan' was approved by the 'Committee of Creditors' within the

'CIRP' period with requisite majority in terms of the Code, consequent

withdrawal of the 'Resolution Applicant' from the 'Resolution Process'

through e.mail dated 19.3.2020 and further that the mandated period of

'CIRP' had lapsed on 15.11.2019, the Respondent was left with no option

but to project an Application seeking 'Liquidation' of the 'Corporate Debtor'

as per Section 33(1)(a) of the Code.

41. At this stage, Learned Counsel for the Respondent projects an

argument that Section 12 of the 'I&B' Code, 2016 mandates that 'CIRP' of

the 'Corporate Debtor' must conclude within 330 days from the

'Insolvency' commencement date. Also, it mandates that a 'CIRP' which

was pending and not completed with the aforesaid period of 330 days, as

on the date of commencement of the Amendment Act i.e. 16.8.2019, shall

be completed within a period of 90 days from such date, i.e. by 15.11.2019.

42. The Learned Counsel for the Respondent submits that 'Corporate

Insolvency Resolution Process' (CIRP) period expired on 15.11.2019 and

that the 'Resolution Professional' could not convene a 'Committee of

Creditors' Meeting (CoC) meeting and thereafter the CoC had become

'Functous Officio' (vide Judgement in 'Sanjay Kumar Ruia' V. 'Catholic

Syrian Bank & Anr.' (Comp. App. (AT)(Ins.) 560/2018 Paragraph 17

and the judgement in 'ICICI Bank' V. 'Venkataranarao Nagarajan'

(Vide Comp. App. (AT)(Ins.) 772/2018).

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 53 | 72

43. The Learned Counsel for the Respondent contends that the

discussion on 'Resolution Plan' between the 'State Bank of India' and the

'Resolution Applicant' after expiry of 'CIRP' period was not through the

'Committee of Creditors' as the CoC was 'Functuous Officio', but based on

a 'Bilateral Engagement' between the 'Resolution Applicant' and the 'State

Bank of India' facilitated to build consensus in interests of 'Resolution'

which did not fructify.

44. According to the Learned Counsel for the Respondent 'State Bank of

India' through e.mail dated 07.02.2020 had conveyed the approval of its

Authorities subject to certain changes being carried out by the 'Resolution

Applicant' in the 'Resolution Plan'. Further, the 'Resolution Applicant'

never submitted by 'Revised Plan' as advised by the 'State Bank of India'.

Besides this, even if the 'Resolution Applicant' has submitted the 'Revised

Plan'(incorporating changes indicated by the 'State Bank of India') the

same would have required a voting by the 'Committee of Creditors', as the

modified plan would have been different than the 'Resolution Plan' placed

for voting before the 'Committee of Creditors' in the last CoC meeting dated

15.11.2019.

45. The Learned Counsel for the Respondent brings it to the notice of

this Tribunal that any modification of the 'Resolution Plan' would also

require a re-examination by the 'Resolution Professional' and certification

that the 'Plan' is compliant before being placed before the CoC for voting.

In fact, 'CIRP' period came to an end on 15.11.2019 and an 'Interlocutory

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 54 | 72 Application' No. 1077/2019 for extension of 'CIRP' period was 'Sub-

Judice'.

46. It is the stand of the Respondent that the 'Resolution Professional'

filed an 'Additional Affidavit' dated 11.2.2020 placing e.mail dated

07.02.2020 before the 'Adjudicating Authority' and sought reasonable time

for completion of process:-

"(i) Incorporation of changes in Resolution Plan as

advised by SBI and resubmission of the

Resolution Plan by the Resolution Applicant

Maritime Trade Corporation.

(ii) Review and certification on Compliance of

Resolution Plan by the Applicant.

(iii)Conduct of CoC meeting for voting on the

Resolution Plan

(iv)Issuance of Letter of Intent to Resolution

Applicant

(v)Acceptance of Letter of Intent by Resolution

Applicant and furnishing of Performance

Security by the Resolution Applicant

(vi)Filing of Application under Section 30(6) by the

Applicant."

Therefore, it is the clear cut stand of the Respondent that the 'State Bank

of India' e.mail dated 7.2.2020 cannot be considered as approval of

'Resolution Plan' by the 'Committee of Creditors', because of the aforesaid

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 55 | 72 steps which were required to be fulfilled as per 'I&B' Code and Regulations

made thereunder for taking approval of the 'Committee of Creditors' and

making applications u/s 30(6) of the 'I&B Code', 2016 for approval of the

'Adjudicating Authority'.

47. The Learned Counsel for the Respondent points out that the

'Resolution Applicant' is not mentioned as a proper and necessary party in

the 'Appeal', while the 'Appeal' is founded on the argument on the plea that

the 'Resolution Applicant' could not have withdrawn the 'Resolution Plan'

even after the lapse of 'CIRP' period on 15.11.2019 because of the SBI

e.mail dated 7.2.2020. As such, it is the stand of the Respondent that the

instant 'Appeal' is not maintainable because of 'Non-joinder of Parties' in

so far as pleadings pertain to withdrawal of 'Resolution Plan' by the

'Resolution Applicant' after the expiry of 'CIRP' period as incidental and

resultant directions saddling the 'Resolution Applicant' with 'Resolution

Plan' cannot be issued without hearing the Applicant.

48. The Learned Counsel for the Respondent contends that the

'Resolution Plan' was not binding on the 'Resolution Applicant' after

15.11.2019 in view of the rejection by the 'Committee of Creditors' (CoC)

in the meeting dated 15.11.2019 and the 'CIRP' period came to an end on

15.11.2019. In reality, the 'Resolution Applicant' acknowledged the

decision of CoC by e.mail dated 19.11.2019 and claimed the refund of

'Earnest Money Deposit'.

49. The Learned Counsel for the Respondent submits that in the

absence of any 'Resolution Plan' the premise for seeking extension of 'CIRP'

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 56 | 72 period through I.A. No. 1077/2019 i.e. possibility of 'Resolution' was lost

and as the 'CIRP' period came to an end on 15.11.2019 and based on the

direction issued by the 'Adjudicating Authority' on 30.10.2019 the

'Resolution Professional' had no option but to prefer an application for

'Liquidation' u/s 33(1)(a) of the 'I&B' Code.

50. The Learned Counsel for the Respondent points out that in the

decision of Hon'ble Supreme Court in the matter of 'Ebix Singapore P.

Ltd.' at the time of withdrawal of 'Resolution Plan', the 'Adjudicating

Authority' had reserved its order on the application for approval of

'Resolution Plan' which was duly approved by the CoC. However, in the

case on hand, it is undisputed that the 'Committee of Creditors' had not

approved the 'Plan' till the last day of CIRP period i.e. on 15.11.2019. Also

that, the CIRP period was not extended by the 'Adjudicating Authority' on

the date of withdrawal i.e. on 19.3.2020 and further that the CoC was

'Functuous Officio' on the date of withdrawal.

51. The Learned Counsel for the Respondent contends that in the

decision of Hon'ble Supreme Court in 'Ebix Singapore P. Ltd.' not only

the application under Section 30(6) of the Code was filed, within the CIRP

period, after acceptance of 'Letter of Intent' and deposit of performance

guarantee by the 'Resolution Applicant' and that the 'Adjudicating

Authority' had reserved its orders on the said application before the

'withdrawal', therefore, as there is no CoC approved 'Resolution Plan' in

the instant case on hand and the 'CIRP' period was over, the decision of

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 57 | 72 Hon'ble Supreme Court in the matter of 'Ebix Singapore P. Ltd.' is

inapplicable.

52. The Learned Counsel for the Respondent submits that there is

material irregularity or 'fraud' committed pertaining to the 'Liquidation'

Order and hence prays for dismissal of the 'Appeal' filed by the Appellant.

Respondent's Decisions

53. The Learned Counsel for the Respondent refers to the decision of

Hon'ble Supreme Court in the matter of 'Committee of Creditors of

Essar Steel Ltd. through Authorised Signatory V. Satish Kumar

Gupta & Ors.' reported in 2020 8 SCC 531 wherein it is observed and

held that while leaving the provision otherwise intact, the term

'Mandatorily' is struck down as being manifestly arbitrarily under 'Article

14 of the Constitution of India' and as being unreasonable restriction on

the Litigant's right to carry on business under 'Article 19(1)(g) of the

Constitution' and contends that the effect of this declaration is that

ordinarily the time taken in relation to 'CIRP' must be completed within

the outer limit of 330 days from the Insolvency commencement date

including extensions and the time taken in legal proceedings. If the delay

or large part thereof is attributable to the process of 'Adjudicating

Authority' and/or the NCLAT itself, it may be open in such cases for the

'Adjudicating Authority' and / or NCLAT to extend the time beyond 330

days. It is only in exceptional cases that time can be extended, the general

Rule being that 330 days is the outer limit within which the 'Resolution of

the Stressed Assets of the Corporate Debtor' must take place beyond which

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 58 | 72 it is to be driven into 'Liquidation'. But in the present case, in the absence

of any 'Resolution Plan' for the 'Corporate Debtor', even after 22 months

(as on 15.11.2019-the last date of extended 'CIRP' period there being no

exceptional circumstances, the consequence of expiry of time followed i.e.

'Liquidation of the Corporate Debtor'.

54. The Learned Counsel for the Appellant adverts to the judgement of

this Tribunal dated 16.03.2021 in the matter of 'Kuldeep Verma' V.

'State Bank of India & Ors.' (Comp. App. (AT)(Ins.) 98/2021) where it

is observed that while initiating Liquidation against the 'Corporate Debtor',

inter alia made it clear that the object of the Code i.e. time is of the

'essence' has to be considered.

55. The contention projected on the side of the Respondent is that

pursuant to the passing of the 'Liquidation' order by the 'Adjudicating

Authority' the 'Liquidator' had received a scheme (u/s 230 of the

Companies Act, 2013) from 'Equilibrated Venture C Flow P. Ltd.' and

'Shree Ambey Traders and Aggarwal Trading Co.', which was considered

by the stakeholders of the 'Corporate Debtor' in terms of Regulation 2B of

IBBI (Liquidation Process) Regulations and the same was rejected by the

stakeholders, therefore, it is the plea of the Respondent that the decision

of this Tribunal in 'Y Shivram's case is not being followed is contrary to

facts, besides the same being a misconceived one.

56. The Learned Counsel for the Respondent submits that the

'Resolution Applicant' had submitted further revised 'Resolution Plan'

dated 11.11.2019 on 12.11.2019 and that the Respondent convened a

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 59 | 72 ninth 'Committee of Creditors' (CoC) meeting dated 15.11.2019 for voting

of the 'Resolution Plan'. The 'Resolution Plan' only secured 42.54% votes

in favour and was not approved with requisite majority i.e. 66% as required

under the Code. In fact, the Appellant cannot assail the commercial

wisdom of the 'Committee of Creditors' which paramount and supreme as

held by the Hon'ble Supreme Court in catena of decisions in the case

of 'Adhar' V. 'Indian Overseas Bank & Ors.' (Vide Civil Appeal No.

10673/2018) and further that the aforesaid view was affirmed in the

decision of Hon'ble Supreme Court in the 'Committee of Creditors of

Essar Steel India Ltd.' V. 'Satish Kumar Gupta & Ors.' (Civil Appeal

No. 8766 - 67/19) and in the matter of 'Kalpraj Dharamshi & Anr.' V.

'Kotak Investment Advisors Ltd. & Anr.' (Vide Judgement in Civil

Appeal No. 2943-2944 of 2020 dated 10.03.2021).

Appraisal

57. It transpires that M/s. 'Hajura Singh Bhim Singh' had filed an

application for petition as per Section 9 of the 'I&B' Code to initiate 'CIRP'

against M/s. 'Best Foods Ltd.' (Corporate Debtor), which came to be

admitted on 02.02.2018 and an 'Interim Resolution Professional' 'Mr. Atul

Kumar Kansal' was appointed and later on 17.04.2008 through an order

the said 'Interim Resolution Professional' was changed and one Mr. Vikram

Bajaj came to be appointed as 'Resolution Professional'.

58. In fact, the 'Resolution Professional' of the 'Corporate Debtor' (M/s.

Best Foods Ltd.) projected an 'Interlocutory Application' No. 412/2020(as

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 60 | 72 per Section 33(1)(a) of the 'I&B' Code praying for passing an order of

Liquidation in the matter of M/s Best Foods Ltd. ('Corporate Debtor').

59. It is the plea of the Appellant that the 'Adjudicating Authority' while

passing the impugned order on 01.03.2021 passed by the Adjudicating

Authority initiating liquidation of the 'Corporate Debtor' (M/s Best Foods

Ltd.) based on the I.A. 412/2020 filed by the formal 'Resolution

Professional' (under Section 33(1)(a) of the I&B Code) now appointed as

Liquidator, on the ground that no Resolution Plan was passed by the

Committee of Creditors within the specified period and as such the

requirement u/s 33(1)(a) stand fulfilled.

60. According to the Appellant, the 'Adjudicating Authority' at the time

of passing an impugned order had failed to make an observation that the

'Resolution Plan' of the 'Resolution Applicant' was approved by 96.41% of

voting share of the 'Committee of Creditors' of the 'Corporate Debtor' and

added further, the 'Resolution Plan' once approved could not have

permitted to be withdrawn by the 'Resolution Professional' of the

'Corporate Debtor' since it is in breach of the provisions of the 'I&B' Code,

2016.

61. It is brought to the forefront that resting upon the order dated

31.10.2019 passed by the 'Adjudicating Authority'(National Company Law

Tribunal) Chandigarh Bench, Chandigarh the 'Resolution Plan' furnished

by the 'Resolution Applicant'(Maritime Trade Corporation) was assessed by

the 'Committee of Creditors' in its ninth meeting dated 15.11.2019.

Indeed, the State Bank of India possessing 53.87% voting share - (one of

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 61 | 72 the members of the 'Committee of Creditors') refrained from voting because

of pending approvals from its higher authorities for voting in respect of the

'Resolution Plan' and that the meeting was deferred. However, the fact of

the matter is that other Members of the 'Committee of Creditors' (with a

voting share of 42.54%) had voted in favour of the 'Resolution Plan'.

62. The Learned Counsel for the Appellant vehemently projects an

argument that at the ninth meeting of CoC dated 15.11.2019, the

Resolution on 'Liquidation of the Corporate Debtor' was rejected by the

Committee of Creditors members with a requisite majority and hence, it is

contended on behalf of the Appellant that neither any resolution for

approval / rejection of Resolution Plan nor any Resolution for liquidation

of the Corporate Debtor (Best Foods Ltd.) was passed at the meeting of the

Committee of Creditors that took place on 15.11.2019.

63. The Learned Counsel for the Appellant puts forward a plea that later,

through an e.mail dated 07.02.2020, the State Bank of India (possessing

the voting share of 53.87%) expressed his approval and in fact, the

'Resolution Plan' was approved by 96.41% voting share, the Committee of

Creditors only after applying its commercial wisdom had approved the

Resolution Plan of the Resolution Applicant considering the viability and

feasibility of the Resolution Plan. Therefore, it is a forceful stand of the

Appellant that if a Resolution Plan was approved by the majority of the

Committee of Creditors at a particular point of time, the same is not to be

allowed to be withdrawn by the Resolution Applicant.

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 62 | 72

64. The other prime stand of the Appellant is that the Respondent /

Liquidator filed IA 412/2020 before the 'Adjudicating Authority' praying

for the liquidation of Corporate Debtor without securing the vote and

resolution of the Committee of Creditors.

65. It is the version of the Appellant that the Resolution Professional had

permitted the Resolution Applicant to withdraw the Resolution Plan which

had led to a substantial waste of CIRP time period from 04.10.2019 when

the Resolution Plan was submitted by the Resolution Applicant for the first

time till 19.03.2020 when the 'Resolution Applicant' withdrew the

Resolution Plan subsequent to the approval of the 'Committee of

Creditors'.

66. It is represented on behalf of the Appellant that the 'Adjudicating

Authority' had erred in allowing the Resolution Applicant to withdraw from

the process when the CoC had already approved the Resolution Plan by

7.2.2020. Moreover, it is the stand of the Appellant when CA 1077/2019

filed by the Resolution Professional was pending for extension of time

before the Adjudicating Authority, the aspect of preferring an application

seeking liquidation of the Corporate Debtor does not arise.

67. According to the Respondent, the impugned order dated 01.03.2021

passed by the Adjudicating Authority in IA No. 412/22020 in CP(IB) No.

117/Chd/ChD/2017 filed by Respondent/ Petitioner / CoC/ Applicant

Financial Creditor is free from error.

68. The plea of the Respondent is that in the event of no Resolution Plan

is received before the expiry of the CIRP process, as per Section 33(1)(a) of

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 63 | 72 the Code, the Adjudicating Authority has necessary power(s) to pass a

liquidation order in respect of the Corporate Debtor.

69. On the side of the Respondent it is emphatically submitted that the

'Resolution Applicant' withdrew from the 'Corporate Insolvency Resolution

process' of the 'Corporate Debtor' in view of the changing economic

situation and at the time of withdrawal by the Resolution Applicant on

19.3.2020 the CIRP period had already lapsed on 15.11.2019 and,

therefore, the Resolution Applicant was not bound by the Resolution Plan.

Purpose of I&B Code, 2016

70. It cannot be gainsaid that the aim of Resolution is for 'maximisation

of value of 'Assets' of the 'Corporate Debtor' and thereby for the benefit of

all 'Creditors'. The vital priority of objective is (i) Resolution (ii)

maximisation of value of assets of the Corporate Debtor (iii) promoting

entrepreneurship, availability of credit and balancing the interests.

The Status of Resolution Plan

71. A 'Resolution Plan' is not a recovery / sale / auction / liquidation.

Through a Resolution Plan no individual is purchasing or selling the

'Corporate Debtor' in fact, for selling the 'Corporate Debtor' there is no

requirement of a 'Resolution Plan' in the considered opinion of this

Tribunal. For approving a plan, there is no requirement of application of

mind or voting as the case may be. No wonder, based on a 'Resolution

Plan' few rights in the 'Corporate Debtor' or Assets and Liabilities are

bartered, and that being an ancillary one as opined by this Tribunal.

Submission of Resolution Plan

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72. Be it noted, that the ingredients of Section 30 of the 'I&B' Code

provides for the manner in which the Resolution Plan may be furnished by

a 'Resolution Applicant'. A 'Resolution Applicant' may submit a

'Resolution Plan' to the 'Resolution Professional' who is to scrutinise the

same with a view to find out that it fulfils of Section 30(2) of the Code.

When the plan in issue, endorses the requirements as per Code, then it is

to be projected before the 'Committee of Creditors' for its approval, in terms

of the ingredients of Section 30(3) of the Code. Further, this can be

approved by the 'Committee of Creditors' by a vote of not less than

66%(75% w.e.f 6.6.2018) as per Section 30(4) of the Code.

Application of Judicial Mind

73. It is relevantly pointed out that if a 'Resolution Plan' is approved by

the 'Committee of Creditors', the same is to be filed before the 'Adjudicating

Authority' as per Section 31 of the Code and that the 'Adjudicating

Authority' in such a situation is to take a decision after going through the

Plan that it satisfies or does not satisfies the requirements mentioned in

Section 30 and may either give a nod or reject the same as the case may

be, in the teeth of the decision of Hon'ble Supreme Court in the 'Arcelor

Mittal India Pvt. Ltd.' V. 'Satish Kr. Gupta', reported in 2018) 146 CLA

293 SC.

Approval of Resolution Plan

74. An 'Adjudicating Authority' prior to passing of an order is to see that

the 'Resolution Plan' can be effectively implemented. The said Authority

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 65 | 72 if satisfied that the 'Resolution Plan' approved by the 'Committee of

Creditors' as per Section 30(4) of the Code fulfils the requirement of sub-

section 2 of Section 30 of the 'I&B' Code it shall approve the 'Resolution

Plan' (after considering its feasibility and viability etc.) which will bind the

'Corporate Debtor', its Employees, Members, Creditors, Guarantors and

others concerned with the 'Resolution Plan'. If the plan fails/does not meet

the requirement of sub-section 2 of 30 then the 'Adjudicating Authority' is

bound to reject the 'Resolution Plan'.

Discussions

75. At the outset, this Tribunal necessarily points out that in the instant

case on 02.02.2018, the Insolvency had commenced and that the

Respondent was appointed as 'Resolution Professional' on 17.04.2018. To

put it precisely, the 180 days 'Corporate Insolvency Resolution Period' got

expired on 01.08.2018. In fact, the 'Adjudicating Authority' by virtue of

an order dated 01.08.2018 had granted extension of 90 days in respect of

the CIRP period and that 270 days was over on 30.10.2018.

76. It is worthwhile for this Tribunal to make a significant mention that

the 'Resolution Professional', on 06.11.2018 had submitted his final report

mentioning that no Resolution Plan could be approved as per Section 30(6)

of the I&B Code during the CIRP period, because of the fact that the

'Resolution Plan' of the Maritime Trade Corporation was nonconforming

and sought resultant directions for initiation of liquidation, as per Section

33(1)(a) of the I&B Code.

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 66 | 72

77. It transpires that the Applicant / Resolution Applicant (Maritime

Trade Corporation) had filed CA No. 603/2018 in

CP(IB)117/Chd/CHD/2017(u/s 60(5) of the I&B Code) before the

'Adjudicating Authority' (National Company Law Tribunal) Chandigarh

Bench against the Corporate Debtor (M/s Best Foods) and on 31.10.2019

the 'Adjudicating Authority' had interalia directed the Resolution

Professional to convene a meeting of CoC and to place the revised

Resolution Plan three option one and option two before the CoC which

shall consider the same, vote upon the same and to take appropriate

decision either for approving the Resolution Plan or for reiterating its

earlier decision for liquidation of the Corporate Debtor etc. Also, it was

ordered by the 'Adjudicating Authority' that the entire exercise including

filing of an application u/s 31 or conveying the decision of the CoC to

reiterate initiation of liquidation process of the Corporate Debtor, as the

case may be shall be completed within a period of 90 days from the

commencement of the Insolvency and Bankruptcy Code (Amendment Act,

2019) as provided for in the third proviso to Section 12(3) of the Code.

78. In the present case, it cannot be brushed aside that the 'Committee

of Creditors' had rejected the Resolution Plan in the meeting that took

place on 15.11.2019. Moreover, the 'Corporate Insolvency Resolution

Process' came to an end on 15.11.2019, which date 651 days rolled by

from the commencement date of insolvency on 02.02.2018.

79. As a matter of fact, the Resolution Applicant, on 19.11.2019 had

acknowledged the rejection of its Resolution Plan by the Committee of

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 67 | 72 Creditors and had prayed for the refund of 'Earnest Money Deposit' and

subsequently had requested for a deliberation / discussion with the State

Bank of India for mutual Resolution of the concerns of the Bank. Apart

from that, the Resolution Professional filed CA 1077/2019 on 19.11.2019

and sought for an additional 75 days to complete the CIRP process.

80. It is to be remembered that the expression/discussion by means of

exchange of views in respect of the 'Resolution Plan' between the 'State

Bank of India' and 'Resolution Applicant' after the lapse of expiry of CIRP

period was on account of the bilateral participation between the

'Resolution Applicant' and the 'State Bank of India' had only enabled to

reach an agreement in the interests of Resolution and unfortunately, the

same proved futile.

81. It is brought to the notice of this Tribunal that the State Bank of

India through e.mail dated 7.2.2020 had conveyed its approval of

Authorities with conditions of changes being carried out by the Resolution

Applicant in the Resolution Plan. In this connection, it may not be out of

place for this Tribunal to make a relevant mention that the 'Resolution

Applicant' had not submitted the 'Resolution Plan' as envisaged by the

State Bank of India.

82. Continuing further, any alteration / change to the Resolution Plan

is to be once again examined by the Resolution Professional and due

certification is required that the Plan is in conformity with the provisions

of the Code, prior to placing of the same before the Committee of Creditors

for voting.

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83. In the teeth of e.mail of the State Bank of India dated 07.02.2020

whereby and where under the Bank had conveyed his approval of its

authorities in respect of the Resolution Plan subject to some changes been

carried out by the Resolution Applicant, by no stretch of imagination, in

the considered opinion of this Tribunal, it can be said that the Resolution

Plan was approved by the CoC. Keeping in mind that many requirements

are to be fulfilled as per I&B Code and Regulations for securing the

approval of Committee of Creditors and filing an application as per Section

30(6) of the Code for an approval of the Adjudicating Authority.

84. In the instant Appeal, the Respondent has come out with a stand

that the CoC became 'Functuous Officio' on 15.11.2019 pursuant to the

lapse of CIRP period and in fact, the discussions on the 'Resolution Plan'

after the 'Corporate Insolvency Resolution' period took place between the

State Bank of India and the Resolution Applicant and not through the

Committee of Creditors in and by which no accord/agreement was arrived

at because of the fact the Resolution Applicant had not submitted the

Resolution Plan incorporating the changes advised by the State Bank of

India and had not accepted the terms for performance guarantee.

85. From the Respondent's point of view, a stand is taken that the

'Committee of Creditors' never approved the 'Resolution Plan', and hence

there was no occasion for the issuance of 'Letter of Intent' to the Resolution

Applicant / Deposit of performance security / acceptance of Letter of

Intent by the Resolution Applicant and for preferring an application u/s

30(6) of the Code.

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86. In the present case, it is to be borne in mind that the Resolution

Applicant had acknowledged the decision of the CoC in regard to the

rejection of the Resolution Plan through an email dated 19.11.2019 and

claimed the refund of the 'Earnest Money Deposit'. Further, it cannot be

lost sight of that the Resolution Applicant had not furnished the revised

Resolution Plan including the suggested changes and instead proposed,

more modifications to the commercials and term of the Resolution Plan

and later withdrew its interest in any Resolution Plan. Suffice it for this

Tribunal to point out that on 19.3.2020 the Resolution Applicant withdrew

its interest for pursuing the Resolution Plan, perceiving that the

Committee of Creditors had not approved the Resolution Plan till date of

withdrawal. To put it in a crystalline fashion, in the absence of any

Resolution Plan, seeking an extension of 'Corporate Insolvency Resolution

Process' CIRP period through an Interlocutory Application No. 1077/2019

would not survive.

87. In the present case, indisputably, the CIRP period came to an end

on 15.11.2019 and because of the direction dated 30.10.2019 issued by

the 'Adjudicating Authority' the 'Resolution Professional' had no option but

to file an IA. No. 412/2020 praying for a 'Liquidation Order' be passed as

per Section 33(1)(a) of the Code. Moreover, liberty was prayed for to

withdraw an application seeking extension of CIRP period as grounds were

claiming extension and holding further CoC meeting for consideration of

Resolution Plan had disappeared and the CIRP period got lapsed on

15.11.2019. Ultimately, the 'Liquidation Order' was passed on 01.03.2021

Company Appeal (AT) (Insolvency) No.276 of 2021 P a g e 70 | 72 of course, after 1123 days (making a calculation) from the date of

commencement of insolvency date on 2.2.2018.

88. Be that as it may, in view of the detailed upshot, this Tribunal

considering the facts and circumstances of the entire conspectus of the

instant case in an encircling manner, bearing in mind a primordial fact

that the 'Committee of Creditors' had not approved the 'Resolution Plan'

till 15.11.2019(viz. the final day of CIRP), the CIRP period was not

extended by the Adjudicating Authority on 19.03.2020 when the

Resolution Applicant / Maritime Trade Corporation had withdrew its

interest for pursuing the Resolution Plan, the CoC becoming 'Functuous

Officio' and the Resolution Applicant despite the State Bank of India

conveying the acceptance of Plan by its authorities subject to the inclusion

of changes proposed by its legal team on 07.02.2020 and the 'Resolution

Applicant' / Maritime Trade Corporation had not submitted the modified

'Resolution Plan' etc.; comes to a consequent conclusion that in the

present case, there is no approved plan of the 'Committee of Creditors'.

Looking at from that perspective the impugned order dated 01.03.2021 in

IA No. 412/2021 in CP(IB) No. 117/Chd/ChD/2017 passed by the

'Adjudicating Authority' (National Company Law Tribunal, Chandigarh

Bench in directing the Corporate Debtor/Best Foods Ltd. to be Liquidated

in the manner as laid down in Chapter III of the Code etc. and disposing

of the aforesaid Interlocutory Application is free from any legal errors.

Resultantly, the Appeal sans merits.

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89. Disposition

In fine, the instant Company Appeal (AT) (Insolvency) No.276 of 2021

stands dismissed. No order as to costs. I.A. No. 638/2021 (for stay) and I.A.

No. 639/2021 (claiming exemption from filing typed copies etc.) are closed.

Before parting with the instant case, this Tribunal pertinently suggests that

the 'Liquidator' may explore the possibility of selling the Company/business

as a 'going concern', mainly with a view to see the livelihood of workers

employed in Company/business.

[Justice M. Venugopal] Acting Chairperson

[V.P. Singh] Member (T)

[Dr. Ashok Kumar Mishra) Member (T)

29th September, 2021

Shashi

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