Lorenzo Vitrified Tiles Private ... vs Committee Of Creditors Of Vrundavan ...

IN THE MATTER OF: LORENZO VITRIFIED TILES PRIVATE LIMITED Having its registered office at: 8-A, National Highway, Opp. Omkar Petroluem, Post Box No. 411, Lalpur, Morbi - 363642 ...Appellant

Versus

1. COMMITTEE OF CREDITORS OF VRUNDAVAN CERAMIC PRIVATE LIMITED Through sole financial creditor State Bank of India Stressed Assets Management Branch, 2nd Floor, "Paramsiddhi Complex" Opp. V.S. Hospital, Ellisbridge, Ahmedabad - 380006. ..Respondent No.1 2. VRUNDAVAN CERAMIC PRIVATE LIMITED Having its address at: Survey No. 143/2, 8-A, National Highway, B/h. Gangotri Glazed Tiles, Village: Dhuva, Ta: Vankaner, District : Morbi, Gujarat - 363622 ..Respondent No.2 3. SHRI ARVIND GAUDANA ERSTWHILE RESOLUTION PROFESSIONAL OF VRUNDAVAN CERAMIC PRIVATE LIMITED Having its address at: 307, Ashirwad Paras, Nr. Prahladnagar Garden, Corporate Road, Prahladnagar, Satellite, Ahmedabad - 380015 ..Respondent No.3 4. M/S RRR INSOLVENCY SERVICE EXPERTS LLP LIQUIDATOR OF VRUNDAVAN CERAMIC PRIVATE LIMITED Having its address at: C-10, Lower Ground Floor, Lajpat Nagar-III Delhi - 110024 ..Respondent No.4

Present: For Appellant : Mr. Arjun Sheth, Mr. Shubhanshu Tiwari, Ms. Somya Jain, Advocates. For Respondent : Mr. PBA Srinivasan, Ms. Barnali Paul, Mr. Manish Kumar, Advocates for Respondent No. 5/Intervener. Mr. Harshit Khare, Mr. Prafful Saini, Mr. Ayuj Agrawal, Advocates for SBI. Ms. Eshna Kumar, Ms. Astha Agrawal, Advocates for R-3. Ms. Aditi Sharma, Advocate for R-4.

With Company Appeal (AT) (Ins) No. 1952 of 2024

[Arising out of the Order dated 27.09.2024, passed by the 'Adjudicating Authority' (National Company Law Tribunal, Ahmedabad Bench), in IA(Plan)/33(AHM)2024 in CP(IB) 561 of 2018]

IN THE MATTER OF: 1. SHRI ARVIND GAUDANA ERSTWHILE RESOLUTION PROFESSIONAL OF VRUNDAVAN CERAMIC PRIVATE LIMITED Having its address at: 307, Ashirwad Paras, Nr. Prahladnagar Garden, Corporate Road, Prahladnagar, Satellite, Ahmedabad - 380015 arvindg_cs@yahoo.com ...Appellant

Versus

1. COMMITTEE OF CREDITORS OF VRUNDAVAN CERAMIC PRIVATE LIMITED Through sole financial creditor State Bank of India Stressed Assets Management Branch, 2nd Floor, "Paramsiddhi Complex" Opp. V.S. Hospital, Ellisbridge, Ahmedabad - 380006. ..Respondent No.1

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 2 of 37 team5sanb.ahm@sbi.co.in 2. VRUNDAVAN CERAMIC PRIVATE LIMITED Having its address at: Survey No. 143/2, 8-A, National Highway, B/h. Gangotri Glazed Tiles, Village: Dhuva, Ta: Vankaner, District: Morbi, Gujarat - 363622 vrundavanacct@gmail.com ..Respondent No.2 3. LORENZO VITRIFIED TILES PRIVATE LIMITED Having its address at: 8-A, National Highway, Opp. Omkar Petroleum, Post Box No. 411, Lalpur, Morbi - 363642 dinesh@lorenzovitrified.com ..Respondent No.3 4. M/S RRR INSOLVENCY SERVICE EXPERTS LLP LIQUIDATOR OF VRUNDAVAN CERAMIC PRIVATE LIMITED Having its address at: C-10, Lower Ground Floor, Lajpat Nagar- III Delhi - 110024 Asikdar1990@gmail.com ..Respondent No.4

Present: For Appellant : Ms. Eshna Kumar, Ms. Astha Agrawal, Advocates. For : CS Arvind Gaudana for RP. Respondent Mr. Arjun Sheth, Mr. Shubhanshu Tiwari, Ms. Somya Jain, Advocates for R-3. Mr. PBA Srinivasan, Ms. Barnali Paul, Mr. Manish Kumar, Advocates for Respondent No. 5/Intervener. Mr. Harshit Khare, Mr. Prafful Saini, Mr. Ayuj Agrawal, Advocates for SBI. Ms. Aditi Sharma, Advocate for R-4.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 3 of 37 JUDGMENT

(Hybrid Mode)

[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]

Both the aforesaid appeals have been filed against the same impugned

order passed by the Ld. Adjudicating Authority and for the sake of

convenience are being disposed of by passing this common judgment.

2. CA (AT) (Ins) No. 1950 of 2024 has been filed by the Resolution

Applicant (RA) of the Corporate Debtor (CD) Challenging the impugned order

dated 27.09.2024 passed by the National Company Law Tribunal,

Ahmedabad Bench, (Adjudicating Authority) in IA No. 33 of 2024 moved in

CP IB No. 561 of 2018 for the approval of the Resolution Plan whereby the

Resolution Plan approved by the Committee of Creditors (CoC) has been

rejected by the Ld. Adjudicating Authority and order for liquidation of the

CD has been passed while CA (AT) (Ins) No. 1952 of 2024 has been preferred

by the Resolution Professional of the CD (RP) challenging the same

impugned order wherein the Ld. Adjudicating Authority in the process of

rejecting the Resolution Plan has made some adverse observations against

the conduct of the RP.

3. The facts of the aforesaid appeals are that vide order dated

21.01.2020 passed in CP IB No. 561 of 2018 the Vrundavan Ceramics Pvt.

Ltd. (CD) was admitted into the Corporate Insolvency Resolution Process

(CIRP) on an application moved under Section 7 of the Insolvency and

Bankruptcy Code, 2016 (Code) filed by the State Bank of India.

4. The IRP during the course of CIRP collated the claims of the various

creditors and constituted the CoC comprising of the State Bank of India as

the Sole Financial Creditor and the first meeting of the CoC was held on

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 4 of 37 20.02.2020 wherein Shri Arvind Gaudana was appointed as the Resolution

Professional (RP) of the CD.

5. It is further reflected that an IA No. 604 of 2020 was filed by the RP

for exclusion/extension of the CIRP period which was due to expire on

18.07.2020 and vide order dated 21.09.2020 the period of CIRP was

extended up to 15.10.2020 and thereafter the Form G Seeking Expression of

Interest (EOI) under Regulation 36 A of the CIRP Regulations, 2016 was

published by the RP on 11.06.2020 and the last date of submission of

Resolution Plan was on or before 04.08.2020.

6. It is also evident that due to the Covid-19 Pandemic situation no plan

was received and some of the prospective applicants had requested for

extension of time for submitting their EOI's and in view of the Resolution

passed in the 4th meeting of the CoC held on 05.09.2020 revised Form G

was published on 15.09.2020 and in pursuance of the same three

Resolution Applicants including the appellant- Lorenzo Vitrified were

received and these three Resolution Plans were placed before the CoC in its

meeting held on 12.02.2021. The 7th CoC meeting scheduled to be held on

04.03.2021 was adjourned on account of the fact that one of the Resolution

Applicant namely Shri Vishram Akhai Patel raised objections against

another Resolution Applicant.

7. It is also reflected that the RP filed IA No. 205 of 2021 for the

exclusion of period from 25.03.2020 to 31.05.2020 which was allowed by

the Ld. Adjudicating Authority vide order dated 23.03.2021. In the 8th CoC

meeting held on 13.04.2021 various issues were discussed by the CoC

including the approval of the CIRP expenses and thereafter the 9th CoC

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 5 of 37 meeting was held on 22.04.2021 wherein the CoC resolved to direct the

Resolution Applicants to submit their financial offers on or before

27.04.2021 and thereafter in the 10th CoC meeting held on 03.05.2021 all

the three Resolution Applicants were called through online mode to

ascertain whether they can increase their offers and ultimately it was

resolved that the applicants will submit their revised plans.

8. It is also reflected that in the 11th CoC meeting held on 07.05.2021

after negotiations with all the three Resolution Applicants the CoC informed

them to send their revised financial offers and in pursuance of this

resolution, revised resolution plan was submitted by the appellant Lorenzo

Vitrified Tiles Pvt. Ltd. (appellant), and Mr. Purshottam Lalji Patel. However,

Vishram Akhai Patel along with six consortium members did not provide any

revised Resolution Plan.

9. It is further reflected that the 12th meeting of the CoC was held on

13.07.2021 wherein the CoC required more time for negotiations and to take

a decision to approve or reject the Resolution Plans submitted by the

Prospective Resolution Applicants (PRA's) and as the CIRP period of 330

days stood expired on 11.05.2021 the RP filed IA No. 529 of 2021 before the

Ld. Adjudicating Authority for extension of the CIRP period which was

allowed by Ld. Adjudicating Authority vide order dated 10.08.2021

extending the period of CIRP for further 15 days from 10.08.2021 i.e. the

date of order.

10. It is also evident that in the 13th CoC meeting held on 03.08.2021 the

Resolution was passed for voting on Resolution Plan and in the meeting held

on 03.08.2021 the Resolution Plan submitted by the Lorenzo Vitrified was

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 6 of 37 approved by the CoC and consequently IA No. 638 of 2021 was filed by the

RP before Ld. Adjudicating Authority for approval of this plan, however the

Ld. Adjudicating Authority vide its order dated 08.11.2023 remanded the

matter back to the CoC for reconsideration of the plan keeping in view the

judgment of the Hon'ble Supreme Court passed in Rainbow Paper Ltd.

11. It is further reflected that the 19th meeting of the CoC was called on

04.12.2024 and the CoC requested the SRA to revise its offer within 7 days

and after negotiations the Resolution Applicant vide letter dated 05.01.2024

denied to revise the plan and therefore the 20th meeting of the CoC was held

on 06.01.2024 wherein the State Bank of India sought 7 days' time to

discuss the approval of the Resolution Plan and thereafter the Resolution

Plan was approved by the CoC in its 21st meeting held on 25.01.2024.

12. It is also reflected that RP has filed IA No. 33 of 2024 before Ld.

Adjudicating Authority for approval of the Resolution Plan however the same

was dismissed by Ld. Adjudicating Authority by passing the impugned

judgment, wherein certain adverse remarks were recorded pertaining to the

conduct of RP. Aggrieved by the impugned order CA (AT) (Ins) No. 1950 of

2024 and CA (AT) (Ins) No. 1952 of 2024 have been filed by the SRA Lorenzo

Vitrified and RP of the CD, respectively.

13. Ld. Counsel for the Appellant in CA (AT) (Ins) No. 1950 of 2024 (SRA)

submits that Ld. Adjudicating Authority has not considered the matter in

right perspective and has rejected the Resolution Plan of the Appellant on

the basis that the same has been placed with delay however there is no

fault, whatsoever of the appellant even if any delay has been caused in

submission of the plan before the Ld. Adjudicating Authority.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 7 of 37

14. It is further submitted that the appellant has been vigilant since

beginning and the first application for approval of the Resolution Plan was

filed within the time limit given by the Ld. Adjudicating Authority however

the said application filed by the RP remained pending before the Ld.

Adjudicating Authority for about 2 years and thereafter vide order dated

08.11.2023 passed in IA No. 638 of 2021 the Resolution Plan of the

Appellant was remanded back to the CoC to reconsider it in view of the

Rainbow Paper Judgment passed by the Hon'ble Supreme Court and to

resubmit it to the Ld. Adjudicating Authority till 30.11.2023.

15. It is further submitted that the RP has filed an affidavit on

04.09.2024, explaining therein the time consumed in refiling the application

for approval of the plan and it was evident that the sole CoC i.e. SBI was

served with the copy of the order of the Ld. Adjudicating Authority and it

took time to review the order and the delay has been caused by them in

taking a decision and thereafter the 19th CoC meeting was held on

04.12.2023 wherein the order of the Ld. Adjudicating Authority dated

08.11.2023 was considered and the SBI asked the appellant to give revised

amount and resubmit the plan and the revised plan submitted by the

appellant was considered in the 12th CoC meeting held on 06.01.2024 and

the SBI did not agree to the revised distribution.

16. It is further submitted that the 21st, meeting of the CoC was held on

25.01.2024 wherein the CoC asked the appellant to replace the old original

Resolution Plan once again which was approved initially on 04.08.2021 and

it was the same Resolution Plan which was approved again by the CoC in its

21st meeting held on 25.01.2024 and it was thereafter the plan approval

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 8 of 37 application was filed by the RP on 04.03.2024 which was held up at the

Registry level due to non- clearance of the objections raised by the Registry

for which the fault could not be attributed to the RP or to the appellant and

in this background the third application for approval of Resolution Plan was

filed by the RP on 03.07.2024 being IA No. 33 of 2024 on which the

impugned order has been passed.

17. It is further submitted that the Hon'ble Supreme Court in Committee

of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta & Ors.,

2020 (8) SCC 531 has propounded that the extension of the CIRP may be

given to ensure Resolution of the CD and also in the interest of all

stakeholders and where the delay or a large part of the same could be

attributable to the tardy process of litigation. In this regard reliance is also

placed on K.N Rajkumar vs. V Nagarjan, Civil Appeal No.1792 of 2021,

Swiss Ribbons Pvt. Ltd. vs. Union of India, AIR 2019 SC 739, Invent

Assets Securitisation and Reconstruction Pv.t Ltd. vs. Girnar Fibres

Ltd., (2022) ibclaw.in 26 SC as well as on Asset Reconstruction

Company (India)... vs. Tulip Star Hotels Ltd. Civil Appeal No. 1792 of

2021, Supreme Court.

18. It is further submitted that the CoC (State Bank of India) is now

supporting the impugned judgment whereby the liquidation process has

been initiated however it is precluded from doing so as the State Bank of

India being the sole CoC has approved the Resolution Plan which has been

rejected by Ld. Adjudicating Authority and the same is/was binding on the

appellant as well as the CoC. In this regard reliance has been placed on

State Bank of India & Ors. vs. Consortium of Murari Lal Jalan, (2025)

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 9 of 37 4 SCC 354 and Ebix Singapore Ltd. vs. Committee of Creditors of

Educomp, (2021) SCC Online SC 707.

19. Ld. Counsel for the Appellant/Erstwhile RP of the CD Shri Arvind

Gaudana in CA (AT) (Ins) No. 1952 of 2024 submits that the impugned order

could not be permitted to stand as a grave jurisdictional error has been

committed by the Ld. Adjudicating Authority in passing the impugned order

in complete disregard to the fact that Resolution Plan was approved by

100% of the CoC and the same has been rejected solely on hyper technical

ground of delayed refiling of the approval application.

20. It is further submitted that after taking requisite extensions and

exclusions the resolution plan submitted by M/s Lorenzo Vitrified Tiles Pvt.

Ltd. (SRA) was approved by the CoC with 100% voting share on 03.08.2021

and an application being IA No. 638 of 2021 was filed for approval of the

same and the same remained pending before the Ld. Adjudicating Authority

for more than 2 years and it was on 08.11.2023 the same was remanded

back for reconsideration of the CoC in view of the judgment of the Hon'ble

Supreme Court passed in State Tax Officer vs. Rainbow Paper Ltd. with a

further direction to refile the same by 30th November, 2023.

21. It is further submitted that the Appellant RP immediately send the

copy of this order to the Respondent SBI and after Diwali Holidays the 19th

CoC meeting was convened on 04.12.2023 and the SRA was requested to

revise its offer which was declined by the SRA and it was on 06.01.2024 the

CoC reaffirmed the original Resolution Plan filed by the SRA and on

receiving CoC clearance on 04.03.2024 an IA was filed by the RP however

due to subsequent technical defects raised by the Registry on 29.07.2024

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 10 of 37 this application being Interlocutory Application Plan No. 33 of 2024 was

listed on 29.07.2024 and the same has been rejected by passing the

impugned order, only on technical grounds while having regard to the tone

and texture of the order dated 08.11.2023 the refiling of plan till 30.11.2023

appears to be only directory.

22. It is further submitted that on 06.09.2024, the Ld. Adjudicating

Authority passed an order that the explanation of delay explained by the RP

is not satisfactory and thereafter the order was reserved.

23. It is vehemently submitted that timelines prescribed for the purpose of

Resolution, not contained in the IBC, are not mandatory and in this regard

reliance has been placed by Ld. Counsel for the RP on Surendra Trading

Company vs. Juggilal Kamlapat Jute Mills Co. Ltd. & Ors., (2017) 16

SCC 143.

24. It is further submitted that the invocation of Section 33 (1) (a) of the

Code is manifestly wrong as the original plan which was approved by the

CoC on 03.08.2021 was filed on 19.08.2021, within the CIRP period and by

passing order dated 08.11.2023 the same was not rejected on merits and

will not restart the CIRP period as by passing order dated 08.11.2023

direction was given for reconsideration of distribution in the light of the law

laid down in Rainbow Paper Ltd. Reliance has also been placed on CoC

Essar Steel India Ltd. (supra), Swiss Ribbons Pvt. Ltd. (supra) and on

Piya Puri & Ors. vs. Mr. Debashish Nanda & Ors., CA (AT) (Ins) No. 906

of 2022.

25. It is submitted that so far as the submission with regard to the

absence of authority of the RP for filing of the appeal is concerned the same

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 11 of 37 is not having merits as the appeal has been filed in pursuance of the

Resolution passed by the CoC in its 21st CoC meeting and the IA No. 638 of

2021 was also filed under the directions of the CoC.

26. It is lastly submitted that Ld. Adjudicating Authority has made some

adverse observation/remarks which were totally uncalled for and it is

evident that the RP has conducted CIRP under the directions of the CoC and

therefore these remarks are required to be expunged.

27. Ld. Counsel for the Respondent No. 1 i.e. State Bank of India submits

that the Ld. Adjudicating Authority vide order dated 08.11.2023 has

remanded the matter back to the COC for reconsideration in the light of the

judgment passed in Rainbow Paper Ltd. (supra) with a further direction that

the application for approval of the revised plan shall be filed by 30.11.2023,

however this fact was never communicated by the RP to the CoC and the

meeting of the CoC could only be convened by the RP on 04.12.2023, after

the expiry of the CIRP period and the timeline stipulated by the Ld.

Adjudicating Authority.

28. It is further submitted that so much so the RP thereafter placed the

resolution for original plan approval before the CoC in its 20th meeting dated

06.01.2024 and the same was approved in 21st CoC meeting held on

25.01.2024. However, for reasons best known to the RP alone, the fresh

application for approval of the Resolution Plan was filed by him on

04.03.2024.

29. Ld. Counsel for the SBI has drawn the attention of this Appellate

Tribunal towards many portions of the aforesaid both appeals in order to

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 12 of 37 show that identical language and Phraseology has been used indicating that

both these appeals are collusive.

30. It is also submitted that the RP is having no locus to file the appeal

as he is not an aggrieved person under Section 61 of the Code and no

minutes has been produced by him to show that he was authorised to file

the appeal and keeping in view the law laid down in Regen Powertech Pvt.

Ltd. vs. Giriraj Enterprises, Civil Appeal Nos. 5985-6001 of 2023 the

RP should maintain a neutral stand and could not be treated as aggrieved

party and thus the appeal filed by the RP required to be dismissed on this

ground alone.

31. It is further submitted that the CIRP period had already expired and

in this background the Ld. Adjudicating Authority was justified in invoking

Section 33 of the Code as no Resolution seeking extension of the CIRP

period was placed before the CoC and no application in this regard was filed

before the Ld. Adjudicating Authority after the expiry of the timeline

mentioned in order dated 08.11.2023 i.e. 30.11.2023. Reliance in this

regard has been placed on State Bank of India vs. M/s Manibhadra

Polycot and Ors., Civil Appeal Nos. 4392-4393 of 2019.

32. It is further submitted that delay in filing the plan approval

application was attributable to the Resolution Professional alone and before

a Resolution Plan approved by the CoC is further approved by Ld.

Adjudicating Authority, the CoC is having power in its commercial wisdom

to opt for liquidation. Reliance has been placed on Sanjay Dave vs. Andhra

Bank, CA (AT) (Ins) No. 1128 of 2024 and State Bank of India & Ors.

vs. Consortium of Mr. Murari Lal Jalan & Anr., Civil Appeal Nos. 5023-

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 13 of 37 5024 of 2024 and In Re: Vivek Raheja, CA (AT) (Ins) No. 331 of 2021

decided on 04.05.2021.

33. Ld. Counsel for the intervener i.e. Intec Capital Ltd. submits that the

intervener had filed its claim before RP, which was rejected and an IA No.

340 of 2020 was filed before the Ld. Adjudicating Authority which was also

rejected and in this regard an appeal bearing CA (AT) (Ins) No. 220 of 2021

was filed before this Appellate Tribunal and a direction was issued to the RP

to admit the claim however the RP admitted the claim of the intervener as

unsecured financial creditor and aggrieved by the same the intervener again

approached Ld. Adjudicating Authority and when his application was

rejected an appeal bearing CA (AT) (Ins) No. 771 of 2023 was filed which is

pending before this Appellate Tribunal.

34. It is also submitted that after passing of order dated 08.11.2023 the

20th CoC meeting was held on 06.01.2024 and thereafter the 21st CoC

meeting was held on 25.01.2024 wherein the filing of the application and

appeal by the intervener was discussed and the intervener in this meeting

also dissented the agenda for revised distribution as presented before voting

and the revised distribution schedule in Resolution Plan submitted by the

SRA was rejected by the intervener.

35. It is also submitted that the intervener had voted upon and dissented

the agenda with regard to distribution and not on the original plan as the

voting was with regard to the revised distribution as per Rainbow judgment.

36. We have heard Ld. Counsel for the parties and have perused the

record including written submissions filed by them.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 14 of 37

37. It appears that Section 12 and Section 33 of the Code would be

relevant for our discussion and both these Sections are reproduced as

under:

"Section 12: Time-limit for completion of insolvency resolution process.

(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process. (2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of [sixty-six] per cent of the voting shares.

(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days:

Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once.

[Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor:

Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.]

Section 33: Initiation of Liquidation.

(1) Where the Adjudicating Authority, -

(a) before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under section

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 15 of 37 12 or the fast track corporate insolvency resolution process under section 56, as the case may be, does not receive a resolution plan under sub-section (6) of section 30; or

(b) rejects the resolution plan under section 31 for the non-

compliance of the requirements specified therein, it shall--

(i) pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;

(ii) issue a public announcement stating that the corporate debtor is in liquidation; and

(iii) require such order to be sent to the authority with which the corporate debtor is registered.

(2) Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors [approved by not less than sixty-six per cent of the voting share] to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). [Explanation. -- For the purposes of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, any time after its constitution under sub-section (1) of section 21 and before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum.] (3) Where the resolution plan approved by the Adjudicating Authority [under section 31 or under sub-section (1) of section 54L,] is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected by such contravention, may make an application to the Adjudicating Authority for a liquidation order as referred to in sub-clauses (i), (ii) and

(iii) of clause (b) of sub-section (1).

(4) On receipt of an application under sub-section (3), if the Adjudicating Authority determines that the corporate debtor has contravened the provisions of the resolution plan, it shall pass a liquidation order as referred to in sub- clauses (i), (ii) and (iii) of clause (b) of sub-section (1). (5) Subject to section 52, when a liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the corporate debtor:

Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority.

(6) The provisions of sub-section (5) 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.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 16 of 37 (7) The order for liquidation under this section 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".

38. Perusal of Section 12 would reveal that a period of 180 days has been

provided from the date of initiation of the Insolvency Process to complete the

whole process however it has been further provided in Sub-Section 2 of

Section 12 that the Resolution Professional shall file an application to the

Adjudicating Authority to extend this period beyond 180 days if instructed

to do so by a Resolution passed in the CoC by a vote of 66% and Sub-

Section 3 of the same further provides that if the Adjudicating Authority is

satisfied that the subject matter of the case is such that the Resolution

Process cannot be completed within the time stipulated it may extend the

duration of such process beyond 180 days but not exceeding 90 days with a

further stipulation that any extension of the period of Corporate Insolvency

shall not be granted more than once and the second proviso attached with

Section 12 also provides that the Insolvency Process shall mandatorily be

completed within a period of 330 days from the Insolvency commencement

date including any extension of the period of Corporate Insolvency

Resolution Process granted under this Section and the time taken in legal

proceedings in relation to the Resolution Process.

39. Section 33 of the Code appears in Chapter -III of the Code which

provides various eventualities on the happening of which the Adjudicating

Authority shall pass an order for liquidation of the CD and Sub-Section 1 (a)

of this Section provides one of the eventuality as the non-completion of the

Corporate Insolvency Resolution Process within the maximum period

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 17 of 37 provided under Section 12 of the Code. Sub-Section 2, 3, 4, 5, 6 and 7 deals

with other situations not relevant for our discussion.

40. At this juncture, it is also fruitful to have a glance on the precedents

of this Appellate Tribunal as well as of the Hon'ble Supreme Court which

have been relied on by the parties, to assess the manner in which the delay

occurred in the Insolvency Process or the expiry of the maximum period

under which the Resolution Process must be completed, has been

interpreted.

41. Hon'ble Supreme Court in SBI v. Murari Lal Jalan & Florian

Fritsch (Consortium), (2025) 4 SCC 354 Observed as under:

"166. It is in the above context that the Rules regarding the power of NCLT and NCLAT to extend time, have to be discussed. Rule 15 of the NCLT Rules, 2016 reads as thus:

"15. Power to extend time. --The Tribunal may extend the time appointed by these Rules or fixed by any order, for doing any act or taking any proceeding, upon such terms, if any, as the justice of the case may require, and any enlargement may be ordered, although the application therefore is not made until after the expiration of the time appointed or allowed."

167. Rule 15 of the NCLAT Rules, 2016 reads as thus:

"15. Power to extend time. --The Appellate Tribunal may extend the time appointed by these Rules or fixed by any order, for doing any act or taking any proceeding, upon such terms, if any, as the justice of the case may require, and any enlargement may be ordered, although the application therefore is not made until after the expiration of the time appointed or allowed."

168. Rule 15 of the NCLT and the NCLAT Rules, 2016 grants power to NCLT and NCLAT, respectively, to extend the time-limits for doing any act which have been fixed, either by the rules or by an order, as the justice of the case may require. However, such power must not be exercised mechanically without any application of mind. An extension on the strict timelines fixed under the resolution

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 18 of 37 plan must be done by adequately weighing the period of extension sought with the consequences of such extension on the continued implementation of the resolution plan. After all, such a discretion cannot be exercised to the detriment of the resolution plan and its implementation itself. While one of the reasons supporting the grant of extension would be to ensure the successful revival of the corporate debtor, multiple extensions may seriously hamper the economic feasibility of the resolution plan and also lead to an increase in the debts of the corporate debtor. Not to mention, during the extended period, there are several costs incurred towards maintaining the corporate debtor as well. The feasibility and practicability of the resolution plan adjudged by the "commercial wisdom" of the CoC might no longer remain in cases where incessant extensions are granted by NCLT and NCLAT under their discretionary powers.

169. The discretion in extending the time-limits fixed under the resolution plan must be exercised in a much more circumspect manner, especially in cases such as the present, which pertains to the aviation sector, wherein timely resolution and revival of the corporate debtor is all the more crucial since the sector operates in such a way that a continuous flow of cash is required to maintain the company in a position of status quo.

42. Hon'ble Supreme Court again in Swiss Ribbons (P) Ltd. v. Union of

India, (2019) 4 SCC 17 held as under:

"28. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters/those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor's assets from further dilution, and also

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 19 of 37 protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends".

43. Hon'ble Supreme Court in Essar Steel (India) Ltd. Committee of

Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531 held as under:

"127. Both these judgments in Atma Ram Mittal and Sarah Mathew have been followed in Neeraj Kumar Sainy v. State of U.P. , SCC paras 29 and 32. Given the fact that the time taken in legal proceedings cannot possibly harm a litigant if the Tribunal itself cannot take up the litigant's case within the requisite period for no fault of the litigant, a provision which mandatorily requires the CIRP to end by a certain date -- without any exception thereto -- may well be an excessive interference with a litigant's fundamental right to non-arbitrary treatment under Article 14 and an excessive, arbitrary and therefore unreasonable restriction on a litigant's fundamental right to carry on business under Article 19(1)(g) of the Constitution of India. This being the case, we would ordinarily have struck down the provision in its entirety. However, that would then throw the baby out with the bath water, inasmuch as the time taken in legal proceedings is certainly an important factor which causes delay, and which has made previous statutory experiments fail as we have seen from Madras Petrochem. 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 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

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 20 of 37 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".

44. Hon'ble Supreme Court again in K.N. Rajakumar v. V. Nagarajan &

Ors., (2021) ibclaw.150 SC Opined as under:

"16. It could thus be seen that one of the principal objects of the IBC is providing for revival of the Corporate Debtor and to make it a going concern. Every attempt has to be first made to revive the concern and make it a going concern, liquidation being the last resort".

45. Hon'ble Supreme Court in Asset Reconstruction Company (India)

Ltd. v. Tulip Star Hotels Ltd. & Ors., (2022) ibclaw.94 SC Opined as

under:

"55. The IBC is not just a statute for recovery of debts. It is also not a statute which only prescribes the modalities of liquidation of a corporate body, unable to pay its debts. It is essentially a statute which works towards the revival of a corporate body, unable to pay its debts, by appointment of a Resolution Professional".

46. Hon'ble Supreme Court again in Ebix Singapore (P) Ltd. v. Educomp

Solutions Ltd. (CoC), SCC Online SC 707 Observed as under:

"116. The BLRC Report, which furnished the first draft of IBC and elaborated on the aims behind the overhaul of the insolvency regime, refers to a CoC-approved resolution plan as a "binding contract" in one instance and refers to it as a "binding agreement" in other instances. The report also refers to a CoC-approved resolution plan as a

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 21 of 37 "financial arrangement", "revival plan" or a "solution". The interchangeability of the terms -- "agreement", "contract", "financial arrangement", "revival plan" and "solution"

indicates that there is no clear intention of the BLRC in characterising the nature of the resolution plan as a contract. The binding effect of the resolution plan has the consequence of preventing the CoC or the resolution applicant to renege from its terms after the plan has been approved by the CoC through a voting mechanism. The fleeting mention of a "binding contract" on one occasion in the BLRC Report (which was a pre-legislative text that underwent subsequent modifications by the legislature) to indicate the binding nature of the resolution plan and the finality of negotiations once it is approved by the CoC, does not establish the legal nature of the document, especially when it is not complemented by the text and design of IBC".

47. Hon'ble Supreme Court in Invent Assets Securitisation &

Reconstruction Pvt. Ltd. v. Girnar Fibres Ltd., (2022) ibclaw.in 26 Held

as under:

"Time and again, it has been expressed and explained by this Court that the provisions of the Code are essentially intended to bring the corporate debtor to its feet and are not of money recovery proceedings as such. The intent of the appellant had only been to invoke the provisions of the Code so as to enforce recovery against the corporate debtor. We find no fault in the Tribunal and the Appellate Tribunal having declined the prayer of the appellant".

48. Hon'ble Supreme Court in STATE BANK OF INDIA VS. M/S

MANIBHADRA POLYCOT & ORS., CIVIL APPEAL NOS. 4392-4393 of

2019 held as under:

C.A. Nos. 4656-4657/2019

1. The National Company Law Appellate Tribunal in the impugned order dated 01.05.2019 has excluded a further 21 days from being counted as part of the 270 days' period which is otherwise over in the facts of this case.

These 21 days are divided into 3 groups. A cluster of 7 days from 17.11.2017 to 23.11.2017; another cluster of 11 days between 06.03.2018 and 17.03.2018; and a third cluster of 3 days between 08.08.2018 and 10.08.2018.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 22 of 37

2. We are of the view that the first two sets of days, namely, 7 days and 11 days, cannot be excluded for the simple reason that they are not incurred in any litigation process. Even assuming that the last cluster, namely 3 days between 08.08.2018 and 10.08.2018 are to be excluded, and we add these days to 01.05.2019 when the litigation process has come to an end, we still reach 04.05.2019. The Resolution plan in question is submitted only on 08.05.2019, and is therefore clearly beyond the mandatory period laid down in the Insolvency Code, 2016.

3. The impugned order dated 01.05.2019 is set aside and the appeals are accordingly allowed.

49. This Appellate Tribunal in SANJAY DAVE VS. ANDHRA BANK,

Company Appeal (AT) (INS.) NO. 1128 OF 2024, held as under:

"28. In the given circumstances the Adjudicating Authority has correctly relied on the decision of this Tribunal in Gulab Chand Jain Vs RP of Vijay Timber Industries in CA(AT)(Ins) No. 142 of 2021 wherein it was held that after approval of the resolution plan by the CoC, the CoC can always change its mind and pass a resolution liquidating the Corporate Debtor as long as the resolution plan is not approved by the Adjudicating Authority. The Adjudicating Authority had not committed any error in arriving at the above finding since there was no approved resolution plan available with the RP to be placed before the Adjudicating Authority. The Adjudicating Authority was also of the view that with further delay, the assets of the Corporate Debtor would have suffered from economic depreciation as the liquidation value goes down with the efflux of time. A long time had elapsed since commencement of insolvency on 09.08.2018 and we are inclined to agree with the Adjudicating Authority that Corporate Debtor should go into liquidation forthwith in the interest of all stakeholders. The Adjudicating Authority also was of the view that it had limited powers of judicial review in matters of commercial wisdom of CoC as has been held by the Hon'ble Supreme Court in the matter of K. Sashidhar Vs Indian Overseas Bank (2019) 12 SCC 150.

30. It is pertinent to note that the statutory construct of IBC in terms of Section 33 clearly empowers the CoC to decide to liquidate the Corporate Debtor any time before the confirmation of the resolution plan by the Adjudicating Authority".

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 23 of 37

50. This Appellate Tribunal again in JM Financial Asset Reconstruction

Company Ltd vs. Venkatachalam, Resolution Professional of Raigarh

Champa Rail Infrastructure Pvt. Ltd. 2025 SCC OnLine NCLAT 1052,

held as under:

"6. Consequent to this, an Application was submitted before the Ld. Adjudicating Authority for the purposes of approval of the Resolution Plan. The same was heard and was reserved for final orders on 10.07.2024. However, before Ld. NCLT could pass any orders on the said Application, CoC on 23.10.2024 with the majority voting share of 78.59%, resolved to undertake the challenge mechanism process, in accordance with the CIRP Regulations under I & B Code, 2016. In pursuance to this decision taken on 23.10.2024, the CoC also resolved to withdraw the Plan approval application already submitted, with liberty to file a fresh application depending upon the outcome of the "challenge mechanism process' to be undertaken to which the Successful Resolution Applicant i.e. Medha, had consented upon. On filing of the Application to that effect, as above, the Ld. Adjudicating Authority, on 25.10.2024 dismissed the Application IA No.16/2024 as withdrawn, with a liberty to file a fresh application in respect of the same subject matter.

22. It is to be noted that, the aforesaid two authorities have advocated that a decision of the CoC borne out of its commercial wisdom to re-publish Form G, in order to attract more PRAs and to increase participation in CIRP process, even after completion of the process of submission of Resolution Plans cannot be faulted, as by its very design, such action, by increasing competition, will further enhance value of the Corporate Debtor which is always in the interest of the object of the Act.

26. For the aforesaid reasons, the Impugned Order of 03.04.2025 is hereby quashed and as a consequence, IA (IBC)/608/2025 stands allowed. The relief as sought for, by the Resolution Professional, to be permitted to issue fresh Form G and to invite Expression of Interest (EoI) from new and interested eligible Prospective Resolution Applicants is granted subject to the stipulations that the CIRP process has to be completed in a time bound manner as provided under the Code and Regulations framed thereunder".

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 24 of 37

51. Hon'ble Supreme Court in REGEN POWERTECH PRIVATE LIMITED

VS. GIRIRAJ ENTERPRISES & ANR. CIVIL APPEAL NOS. 5985-

6001/2023, MANU/SCOR/45822/2023 held as under:

"We are of the opinion that in view of the facts and circumstances, the Resolution Professional should not have filed the present appeals. The Resolution Professional should have maintained a neutral stand. It is for the aggrieved parties, including the Committee of Creditors of Regen Powertech Private Limited (RPPL) and Regen Infrastructure and Services Private Limited (RISPL), to take appropriate proceedings or file an appeal before this Court. Recording the aforesaid, the present appeals preferred by the Resolution Professional are dismissed as not entertained.

If required and necessary, the Court can take assistance and ascertain the facts from the Resolution Professional, in case an appeal(s) is preferred by the Committee of Creditors or a third party. Pending application(s), if any, shall stand disposed of".

52. Coming back to the facts of this case the State Bank of India has filed

an application under Section 7 of the Code for initiation of Resolution

Process against the CD and vide order dated 21.01.2020 the same was

accepted and Mr. Arvind Gaudana was appointed as the IRP. The public

announcement was made on 31.01.2020 and claims were invited from the

creditors and IRP after collating the claims constituted the CoC comprising

of SBI as the sole financial creditor.

53. The first meeting of the CoC was convened on 20.02.2020 wherein the

IRP was appointed as the RP. The CIRP period was to expire on 18.07.2020

and in this regard an IA No. 604 of 2020 was filed by the RP for

extension/exclusion of the CIRP period and vide order dated 21.09.2020 the

aforesaid IA was allowed and the period of CIRP was extended for 90 days

till 15.10.2020. In the meanwhile, intervener Intec Capital Ltd. filed an IA

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 25 of 37 No. 340 of 2020 before Ld. Adjudicating Authority for admission of its claim

as secured financial creditor and vide order dated 11.11.2020 a direction

was given by the Adjudicating Authority that the process would proceed only

after disposal of the aforesaid IA, which was ultimately dismissed on

05.02.2021.

54. It appears that Form G seeking expression of interest (EOI) was

published on 11.06.2020, however no plan was received due to Covid -19

Pandemic situation and some Prospective Applicant requested for extension

of time and the CoC in its 4th meeting held on 05.09.2020 resolved to issue

fresh Form G in pursuance of which 3 Resolution Plans were received.

55. It is also reflected that in the meeting of the CoC held on 12.02.2021,

the 3 Resolution Plans were placed before CoC and thereafter the 7th CoC

meeting scheduled to be held on 04.03.2021 was adjourned and an IA No.

205 of 2021 was filed by the RP before Ld. Adjudicating Authority for

exclusion of period from 25.03.2020 to 31.05.2020 and vide order dated

23.03.2021 the same was allowed and the period of 68 days was excluded.

56. It also appears that the 8th CoC meeting was held on 13.04.2021, and

9th CoC meeting was held on 22.04.2021, wherein the CoC directed the PRA

to give presentation and also to revise their proposals. The 10th CoC meeting

was held on 03.05.2021 wherein the PRA's were again directed to revise

their proposals and the revised Resolution Plans was ultimately filed by the

Appellant-Lorenzo Vitrified Tiles and Vishram Akhai Patel on 07.05.2021

and 08.05.2021 respectively.

57. It is also evident that the entire CIRP period of 330 days after

exclusion/extension granted by Ld. Adjudicating Authority expired on

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 26 of 37 11.05.2021 and IA No. 529 of 2021 was filed by the RP for extension of the

CIRP period and vide order dated 10.08.2021 the same was extended till

10.08.2021. In the 13th CoC meeting held on 03.08.2021 CoC approved the

Resolution Plan of the Appellant- Lorenzo Vitrified Tiles Pvt. Ltd. and

approved the same.

58. At this juncture, it is also pertinent to mention that an application

being IA no. 340 of 2020 was filed by the intervener before the Ld.

Adjudicating Authority for treating him to be the financial creditor as a

request to this effect was rejected by the RP. However, his application was

rejected and he filed an appeal CA (AT) (Ins) No. 220 of 2021 which was

allowed by this Appellate Tribunal vide order dated 07.02.2022. The Intec

again filed an application before the Ld. Adjudicating Authority as it was

aggrieved for non-treating it as secured financial creditor which was rejected

by the Ld. Adjudicating Authority and in this regard an CA (AT) (Ins) No. 771

of 2023 was filed before this Appellate Tribunal which according to the

intervener is still pending.

59. The record further shows that on approval of resolution plan by the

CoC on 03.08.2021, in its 13th meeting, the RP filed IA No. 638 of 2021 for

approval of the plan, however vide order dated 08.11.2023 Ld. Adjudicating

Authority remanded the plan back to CoC for its reconsideration in the light

of the judgment passed by the Hon'ble Supreme Court in Rainbow Paper

Ltd. The order dated 08.11.2023 passed in IA No. 638 of 2021 is reproduced

as under:

IA/638(AHM) 2021 This application is remanded back to the RP and dismissed with the liberty to re-file the same again in view

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 27 of 37 of the position of the claims and the distribution amount is crystallized by the Successful Resolution Applicant in the next CoC meeting taking into consideration Rainbow Paper judgment of the Hon'ble Supreme Court. Application for approval, if any, to be filed not later than 30.11.2023. Accordingly, IA/638(AHM) 2021 is dismissed.

60. Perusal of this order would reveal that Ld. Adjudicating Authority has

categorically directed the CoC to consider the plan in the light of the law

propounded by Hon'ble Supreme Court in Rainbow Paper Ltd. with a further

direction that the revised resolution plan shall be submitted before

30.11.2023.

61. Perusal of the impugned judgment passed by the Ld. Adjudicating

Authority in IA No. 33 of 2024 has stated that the plan after the order dated

08.11.2023 could only be submitted on 05.07.2024, with the delay of more

than 8 months and also that the first meeting after the order of remand

could only be convened by the RP on 04.12.2023 after the stipulated date of

30.11.2023 and further noted that RP did not seek any condonation of delay

nor explained the delay and the application was rejected on this score. The

relevant part of the judgment passed by the Ld. Adjudicating Authority is

also reproduced as under:

"VII. Moreover, the non-adherence of the parties in this matter be it the applicant RP or the CoC, is to such extent that notably, the first meeting post the Tribunal's order dated 08.11.2O23 was convened only on 04.12.2023, which itself is beyond the stipulated date as per the order dated 08.11.2023 for the filing of the application.

VIII. The Applicant has further convened several meetings of the CoC without proper authorisation and outside the mandate of the Insolvency and Bankruptcy Code. Moreover, it is noteworthy that the Applicant has neither sought condonation of the delay in filing the present application nor provided any reasonable explanation for the cause of such delay.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 28 of 37 IX. Based on the foregoing observations, it is evident that the RP and the CoC have demonstrated a grossly negligent and lackadaisical approach in the conduct of this matter, thereby failing to uphold the provisions and objectives of the Code. Such conduct not only reflects a disregard for the timelines and procedural mandate stipulated by this Tribunal but also undermines the very essence of the Insolvency Resolution Process.

Χ. The indifference exhibited by the RP and CoC towards their statutory duties is not only condemnable but also warrants serious censure. This Tribunal views their actions as bordering on dereliction of duty, and their failure to act with diligence and expediency as required under the law. The evident lethargy and non-compliance with the legal framework have delayed the resolution process, which is against the spirit of the IBC. Such behavior is not only subject to criticism but may also attract penal consequences under the law, as it has significantly hindered the timely and efficient resolution of the corporate debtor's insolvency.

XI. This Tribunal is fully conscious of the need to keep judicial intervention or innovation from NCLT at its bare minimum and should not disturb the foundational principles of the IBC, as the law laid down in catena of rulings of Hon'ble Supreme Court of India, however at the same time we cannot overlook or brush aside this glaring breach of compliance of a statutory mandatory provision by the parties when noticed".

62. Thus, the Ld. Adjudicating Authority observed that the RP convened

various meetings of the CoC without prior authorisation and outside the

mandate of the IBC and also that the RP as well as the CoC has shown gross

negligent conduct and approach and thereafter censured their conduct.

63. According to the Ld. Adjudicating Authority the CoC/RP failed to

comply the timeline given in order dated 08.11.2023 and the Resolution

plan instead of placing before Ld. Adjudicating Authority on 30.11.2023, as

directed vide order dated 08.11.2023, was in fact submitted on 05.07.2024.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 29 of 37

64. The RP before this Appellate Tribunal has explained that order dated

08.11.2023 was sent to the SBI and the 19th CoC meeting was convened on

04.12.2023 due to Diwali Vacations and SRA was requested to revise the

offer and when the SRA declined to revise the offer the 20th CoC meeting was

held on 06.01.2024, wherein the agenda item no. 20/5 to approve suitable

amendments in resolution plan was discussed and revised distribution was

placed before the CoC, however SBI took 7 days' time for internal procedure

and requested to defer the e-voting on which the Resolution was passed to

authorize the RP to extend the time of e-voting and to file appropriate

application before Ld. Adjudicating Authority. Therefor the 21st CoC meeting

was convened on 25.01.2024 wherein RP informed that SBI and Intec have

rejected the resolution of revised distribution and in this meeting the CoC

affirmed the original plan submitted by the SRA and on 04.03.2024 after

receiving the CoC clearance RP filed fresh application for approval of the

plan.

65. Though, the RP in his written submissions has stated that the

application for approval of plan was filed on 04.03.2024 and has relied on a

fee receipt of Rs. 1000/- deposited on 04.03.2024 and on the copy of the

application moved for approval of the plan, which has been placed on

record, however we are unable to satisfy ourselves as to how only the

deposit of court fee may be construed as the date of filing and likewise the

date bearing on the copy of the application may also not establish that the

application was actually filed on 04.03.2024. It is however again contended

by the RP that the application before the Adjudicating Authority remained in

the defects and it was only on 29.07.2024, the defects could be removed and

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 30 of 37 thereafter the IA No. 33 of 2024 was formally listed before the Adjudicating

Authority. Even if the filing of the application for approval of plan on

04.03.2024, for the sake of argument, is believed (while there is no material

on record to establish the filing of the same on 04.03.2024) even thereafter,

as per the admission of the RP the application remained in defects for a long

time only due to the negligence of the RP as the defect according to the own

admission of the RP could not be removed before 29.07.2024 and ultimately

the application was refiled thereafter. Thus, having regard to the first date

on which this application was presented before the Ld. Adjudicating

Authority, the delay of about 8 months had occurred since 30.11.2023. In

the background of the aforesaid factual matrix we do not find any illegality

in the observation of the Ld. Adjudicating Authority that the application for

approval of Resolution Plan was moved after 8 months' delay.

66. The RP in his additional affidavit dated 08.08.2024 filed before Ld.

Adjudicating Authority has also admitted to have convened the first meeting

of the CoC after passing of the order dated 08.11.2023, on 04.12.2023,

while the last date given in the order dated 08.11.2023 for resubmission of

revised plan was 30.11.2023 and by that time this date had already expired

and no further extension was sought by the RP by moving any application

before Ld. Adjudicating Authority.

67. It is also evident that the next meetings of the CoC were held on

06.01.2024 and 25.01.2024 and it was in the 21st CoC meeting held on

25.01.2024 the resolution plan was approved but, even after approval of the

plan by the CoC on 25.01.2024 the application of approval of the plan was

moved with in ordinate and unexplained delay of many months. Thus at

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 31 of 37 first the RP appears to be responsible for causing delay in not placing the

order of date 08.11.2023 of the Ld. Adjudicating Authority before the CoC in

time by convening any meeting of the CoC and admittedly the first meeting

after the passing of order dated 08.11.2023 could only be convened on

04.12.2023 when the last date for submission of plan, as directed by Ld.

Adjudicating Authority i.e. 30.11.2023, had already expired and thereafter

the CoC consumed much time to take a decision for approval of the

Resolution plan and conspicuously the original plan which was earlier

rejected by the Ld. Adjudicating Authority was again approved without

considering the Rainbow Paper Mill judgment passed by the Hon'ble

Supreme Court and the RP again appears to be at fault for not moving any

application for approval of such plan for many months and surprisingly no

application was moved either to extend the CIRP period which was

admittedly expired on 30.11.2023. Thus in the background of the aforesaid

facts and circumstances we do not find any illegality in the decision of the

Ld. Adjudicating Authority to initiate the liquidation process of the CD.

68. The argument adopted by the appellants that the timeline given by Ld.

Adjudicating Authority vide order dated 08.11.2021 was not mandatory and

was only directory, even if is accepted would also be of no use to the

appellants, as even after the approval of the plan by the CoC on 25.01.2024

the application for approval of the same was not moved by the RP for many

months.

69. We are conscious of the inherent objective of the Insolvency and

Bankruptcy Code that the timely and quick resolution of the stressed assets

is the key to successful working of the Code and also that the delay dilutes

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 32 of 37 the value of the assets and also that one of the key objective of the IBC is to

ensure the survival of the CD as a going concern. But the moot question

which stares at the face of this Appellate Tribunal is whether the

stakeholders of a Resolution Process may be permitted to sleep over the

Resolution Plan for a long time causing deterioration in the value of the

assets of the CD and therefore the survival of the CD as a going concern, in

our considered opinion must not be at the cost of the devaluation of the

value of assets of the CD and in such scenario where the timely action is not

taken by the stakeholders the timely liquidation should be preferred over an

endless resolution process and in this way the interest of the creditors

would also be secured who may be suffering because of no fault of theirs

and in this way maximising of the value of the assets may also be achieved.

70. The timely action and the speed by which the resolution process of the

CD must travel has been enshrined in various provisions of the Code and

Regulations made thereunder as well as in catena of judgments passed by

the Hon'ble Supreme Court and this Appellate Tribunal. The report of the

Bankruptcy Law Reforms Committee, 2015 also highlights and emphasises

the timely working of the Code and has observed that speed of the

Resolution is of the essence for the correct working of the bankruptcy code,

as the calm period can help to keep an organization afloat without the full

clarity of ownership and control, as significant decisions cannot be made

and the longer the delay, the more likely it is that liquidation will be the only

answer. This report also highlights that the liquidation value tends to go

down with time as many assets suffer from a high economic rate of

depreciation.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 33 of 37

71. It may also be recalled that the delay caused in arriving at the

conclusion that the company is to be liquidated is also detrimental to the

company, especially when much time has been consumed for the successful

resolution of the CD and therefore in our considered opinion, the liquidation

of the CD should be as a matter of last resort but one should not turn its

eyes away from the fact that the further delay in arriving at a decision with

regard to the liquidation of the CD would further reduce the value of the

assets.

72. Hon'ble Supreme Court as well as this Appellate Tribunal in various

decisions have highlighted the importance of speedy resolution process

under the IBC and a pre-dominant consideration behind minimising the

delay in resolution of the CD is, as stated earlier, to minimise the

devaluation of the assets and it is in this background the delay which has

been caused in the instant case by the CoC as well as by the RP is to be

visualised. It is also pertinent to mention here that one of the member of the

CoC namely State Bank of India having majority voting share is supporting

the impugned order before this Appellate Tribunal.

73. In State Bank of India vs. Consortium of Murari Lal Jalan (supra)

in paragraph no. 168 Hon'ble Supreme Court has highlighted as to how the

power to extend time may be exercised by the Adjudicating Authority and by

this Appellate Tribunal and it is emphasised that this power must not be

exercised mechanically without application of mind.

74. We also notice that in celebrated case of Committee of Creditors of

Essar Steel India Ltd. vs. Satish Kumar Gupta and Ors. (supra) the

Hon'ble Supreme Court has highlighted the manner in which the delay

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 34 of 37 which has occurred after the outer limit of 330 days must be dealt with and

it is stated that it would be in the interest of all stakeholders that the CD be

put back on its feet instead of being sent into liquidation and the delay

which has occurred due to the pendency of the legal proceedings for which

the fault cannot be attributed to the litigants and could only be due to the

tardy process of adjudication, it may be open in such cases to the

Adjudicating Authority or this Appellate Tribunal to extend time beyond 330

days. However, a note of caution has been given in paragraph no. 127 of the

report that it is only in exceptional cases the time can be extended and the

general rule being that 330 days is the outer limit within which resolution of

the stressed assets of the CD must take place beyond which the CD is to be

driven into liquidation.

75. In State Bank of India vs. M/s Manibhadra Polycot and Ors.

(supra) this Appellate Tribunal has set aside the judgment of the

Adjudicating Authority whereby the application filed by the Resolution

Professional for initiation of the liquidation of the CD was allowed. On an

appeal filed before the Hon'ble Supreme Court in State Bank of India vs.

M/s Manibhadra Polycot and Ors. Civil Appeal Nos. 4392-4393 of 2019,

vide order dated 09.08.2019, Apex Court set aside the order of this

Appellate Tribunal and refused to exclude 21 days from being counted as

part of 270 days' period on the ground that first two sets of days namely 7

days and 11 days cannot be excluded for the reason that they are not

incurred in any litigation process and also noticed that the resolution plan

in question is submitted beyond time stipulated.

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 35 of 37

76. At the cost of repetition, we highlight that the Ld. Adjudicating

Authority has remanded the resolution plan for reconsideration of the CoC

in the background of the law laid down by the Hon'ble Supreme Court in

Rainbow Paper Ltd. (supra) vide order dated 08.11.2023 and has given a

timeline till 30.11.2023 for submission of revised resolution plan. What the

CoC and the RP has done is that the first meeting after this order could only

be convened on 04.12.2023 when the outer limit to file the revised

resolution plan was expired on 30.11.2023 and so much so even after the

approval of the resolution plan (the original resolution plan which was

remanded back by the Ld. Adjudicating Authority without considering the

effect of the Rainbow Paper Ltd.) on 25.01.2024 the same was not submitted

to the Ld. Adjudicating Authority for many months and though a claim has

been made by the RP that application for approval of the resolution plan was

filed on 04.03.2024, but even if this is believed (while there is no material to

establish this fact) the defects were admittedly not removed for months and

it was after 7-8 months of passing of order dated 08.11.2023 the plan

approval application came before the Ld. Adjudicating Authority.

77. In view of the above facts and circumstances and for the reasons

mentioned in the impugned order and also given by us herein before we do

not find any good ground to interfere in the impugned judgment passed by

Ld. Adjudicating Authority and keeping in view the huge delay running into

many months the liquidation was the only option available before Ld.

Adjudicating Authority. So far as the observations made by the Ld.

Adjudicating Authority, with regard to the conduct of the RP, in our

Company Appeal (AT) (Ins) No. 1950, 1952 of 2024 36 of 37 considered opinion same are based on the facts of the case and could not be

said to have been made without any material or basis.

78. In result both the appeals appear without merit and are dismissed as

such.

79. There is no order as to costs.

80. Pending IA's if any are also closed.

[Justice Mohd. Faiz Alam Khan] Member (Judicial)

[Ajai Das Mehrotra] Member (Technical) New Delhi.

20.05.2026.

sr

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