Sikkim Power Investment Corporation ... vs Umesh Garg And Ors

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No.1006, 1007 & 1008 of 2024 (Arising out of Order dated 09.04.2024 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench (Court-II) in IA No.3163/2023, IA No.2146/ND/2018 and IA No.2230/2019 in (IB)-244(ND/2017)

IN THE MATTER OF: Sikkim Power Investment Corporation Ltd. Through Mr. Sonam Rinchen Bhutia, Executive Director, Beside Manan Bhawan, Development Area, Jeevan Theng Marg, Gangtok, Sikkim-737101 ... Appellant

Versus 1. Mr. Umesh Garg, Resolution Professional of Athena Demwe Power Limited, 1413-1416, 14th Floor, Devika Tower, New Delhi - 110019.

2. Committee of Creditors of Athena Demwe Power Ltd. Front Side, Third Floor, Part of Property No.E-561, 561-A, G.R. Plaza, Palam Sector, Dwarka, New Delhi - 110075.

3. Athena Demwe Power Ltd. (Through its RP Mr. Umesh Garg) Front Side, Third Floor, Part of Property No.E-561, 561-A, G.R. Plaza, Palam Sector, Dwarka, New Delhi - 110075.

4. THDC India Ltd. (AR, Mr. L.P. Joshi, CGM), A-141, Portion B, Neeti Bagh, New Delhi - 110049. ... Respondents

Present:

For Appellant : Mr. Busava Prabhu Patil, Mr. Vidhan Vyas, Mr. Mayur Punjabi, Mr. Haider Shah, Advocates.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 1 For Respondent : Mr. NPS Chawla, Mr. Vibhor Kapoor, Mr. Aarshey A Sharda, Advocates for R1 Mr. Brijesh Kumar Tamber, Mr. Vinay Singh Bist, Mr. Prateek Khuswaha, Mr. Sahas Bhasin, Mr. Yashu Rustogi, Advocates for R3.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal has been filed by the Appellant challenging order dated

09.04.2024 passed by National Company Law Tribunal, New Delhi Bench

(Court-II) in IA No.3163 of 2023, IA No.246/ND/2018 and IA No.2230/2022

in CP No.(IB)-244(ND)/2017. The Appellant aggrieved by the order dated

09.04.2024 passed in above IAs, has come up in these Appeal(s).

2. Brief facts necessary to be noticed for deciding these Appeal(s) are:

(i) Athena Energy Ventures Pvt. Ltd. (Holding Company of the

Corporate Debtor) was awarded the development and

implementation of 1750 Mw Hydro Electric Power Project at river

Lohit, Arunachal Pradesh. On 03.08.2007, Athena Demwe Power

Ltd. (Corporate Debtor) was incorporated as a Special Purpose

Vehicle ("SPV") to implement the Project.

(ii) On failure of the Corporate Debtor in repayment of facilities

availed, on an Application filed by the Indian Bank under Section

7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 2 referred to as the "IBC"), the Adjudicating Authority vide order

dated 28.09.2017, initiated the Corporate Insolvency Resolution

Process ("CIRP") against the Corporate Debtor.

(iii) The Resolution Professional ("RP") issued Form-G on 11.01.2018

and 01.06.2018, in pursuance of which two Resolution Plans

were submitted, one by the Appellant and another by Navayuga

Engineering Company Ltd. ("NECL"). The Committee of Creditors

("CoC") declared NECL as disqualified under Section 29A and

approved the Resolution Plan submitted by the Appellant on

25.06.2018 and on the same day an Application was filed by the

RP seeking approval of the Resolution Plan of the Appellant.

(iv) Under the RFRP, the Successful Resolution Applicant ("SRA") was

to provide Performance Bank Guarantee ("PBG"), which is 20% of

the bid amount within two days. The RP after submitting the

Application before the Adjudicating Authority for approval of

Resolution Plan of the Appellant, sent several emails to the

Appellant to submit the PBG of Rs.72.73 crores as per the

obligation of SRA. Several reminders were sent by the RP to the

Appellant for submitting the PBG. The Appellant entered into

correspondence with the RP and promised to submit the PBG.

Several dates were given by the Appellant to deposit the PBG,

which, however, was not submitted.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 3

(v) The Adjudicating Authority vide order dated 26.05.2023

dismissed the IA filed by the NECL, challenging its

disqualification. Company Appeal (AT) (Insolvency) No.783 of

2023 was filed by the NECL, in which initially an order of status

qua was passed, but the Appeal came to be dismissed on

16.02.2024.

(vi) CA No.1683 of 2019 was filed by the Government of Arunachal

Pradesh praying for liberty to submit a Resolution Plan for

resolving the Corporate Debtor. Another IA No.2230 of 2022 was

filed by THDC, a Government Company with 100% paid up share

capital owned by the Government of Arunachal Pradesh and

NTPC. The THDC also prayed that it be permitted to submit a

Resolution Plan to resolve the road map, device to put the CD

back to its feet and rescue the same. An IA No.3163 of 2023 was

filed by the Appellant seeking intervention in the Application filed

by the RP as well as THDC.

(vii) After judgment of this Tribunal on 16.02.2024 dismissing the

Appeal of NECL, THDC filed an IA on 01.03.2024 for hearing of

the matter. The CoC filed a reply in IA No.2230 of 2022, pleading

that the Appellant having not complied the requirement of

submitting PBG of Rs.72.73 crores, the CoC has no objection in

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 4 event the Applications filed by THDC and Government of

Arunachal Pradesh be allowed.

(viii) The Adjudicating Authority heard all the Applications and by the

impugned order dated 09.04.2024, held that SRA having not

deposited the PBG, the Resolution Plan submitted by Appellant

cannot be approved and CA No.246 of 2018 was disposed of

accordingly. In consequence to the order passed in CA No.246 of

2018, IA No.2230 of 2022 filed by THDC and IA No.1683 of 2019

filed by Government of Arunachal Pradesh were allowed. The

Adjudicating Authority directed the CoC to invite the fresh

Expression of Interest ("EoI"), so that all interested party may

submit their Resolution Plan and CIRP was extended for a period

of 120 days. IA No.3163 of 2023, which was filed by the Appellant

for intervention, the Adjudicating Authority has permitted the

Appellant to be also entitled to submit a Resolution Plan.

Operative portion of the order passed by Adjudicating Authority

in paragraph 9, is as follows:

"9. As it may, it is not for this Adjudicating Authority to consider the eligibility or suitability or competence of Resolution Applicant to submit the Resolution Plan, far less to comment upon the viability or acceptability of plan. It is stare decisis that it is for CoC to take a decision in this regard. In the present case, once the Resolution Plan submitted by Sikkim Power Investment Corporation

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 5 Limited is found not in conformity with the relevant regulations the same is rejected. The CA-246/2019 stands disposed of accordingly. It would be advisable that the CoC may invite fresh expression of interest, so that there is healthy competition and all interested parties may submit their Resolution Plan. On invitation of such EoI in prescribed form i.e. Form-G, the Applicant hereinabove us i.e. THDC India Limited would also be entitled to submit its plan. The IA-2230/2022 stands allowed with the following direction:

(1) The period of CIRP stands extended by 120 days.

(2) The RP will ensure that entire process till the stage of approval of Resolution Plan is completed within the extended period.

(3) The form-G would be given wide publicity.

(4) All interested parties would be entitled to submit their Resolution Plan.

CA-1683/2019: In terms of the order passed in IA-

2230/2022, it would be open also to the Applicant in the captioned IA viz. CA-1683/2019 to submit its plan in response to expression of interest, to the RP. It is made clear that the RP will specifically communicate the EoI to the Applicant in CA1683/2019 & IA-2230/2022.

The IA stands disposed of.

IA-3163/2023: In the wake of the order passed in CA- 246/2019 & IA2230/2022 (ibid), the application is disposed of with the direction that in response to press EOI, the Applicant in the present application would also be entitled to submit its Resolution Plan.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 6 We are sanguine that while following the fresh process, the RP/CoC will keep in mind the contentions raised in the present application.

The IA stands disposed of."

(ix) Aggrieved by the order dated 09.04.2023, these Appeal(s) have

been filed by the Appellant.

3. We have heard Shri Busava Prabhu Patil, learned Counsel appearing

for the Appellant; Shri Brijesh Kumar Tamber, learned Counsel appearing for

Respondent No.3; and Shri NPS Chawla, learned Counsel appearing for the

RP.

4. Shri Busava Prabhu Patil, learned Counsel for the Appellant challenging

the impugned order submits that the Appellant was always ready and willing

to submit the PBG and has requested for extension of time and last request

was made for extension of time till 15.06.2024 to deposit the PBG, which

remained pending consideration, hence the view of the Adjudicating Authority

that there is non-compliance of requirement of submission of PBG is not

correct. It is submitted that CoC was empowered to cancel the LoI, which

cancellation having never been taken place, no non-compliance can be read.

It is further submitted that Regulation 36-B, (4-A) of the CIRP Regulations,

2016, was subsequently added in the Regulations, which was not operative

on the date when Resolution Plan of the Appellant was approved. The

consequences provided under Regulation 36-B, (4-A) shall not ensue. It is

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 7 submitted that Regulation 36-B, (4-A) is not attracted in the facts of the

present case and Adjudicating Authority committed error in relying on the

said Regulation. It is submitted that the Adjudicating Authority committed

error in allowing the Application filed by the State of Arunachal Pradesh and

THDC, who had no right to submit a Resolution Plan, they having not

submitted their EoI in response to Form-G issued by RP. The Adjudicating

Authority had no jurisdiction to permit participation of the Applicants, who

were not part of the CIRP. It is submitted that IA No.3163 of 2023, which was

filed by the Appellant for intervention was never heard and order passed by

Adjudicating Authority dated 09.04.2024, is in violation of principles of

natural justice.

5. learned Counsel for the RP refuting the submissions of learned Counsel

for the Appellant submits that the Appellant has not deposited the PBG, which

was required to be deposited as per RFRP. The Appellant was liable to comply

with the provisions of RFRP, which mandates deposit of PBG equivalent to

20% of the bid consideration amount within two days in favour of the

Corporate Debtor. The RP sent several reminders and requested the Appellant

to deposit the PBG, which was not complied by the Appellant. The Appellant

having not complied the requirement of submission of PBG of Rs.72.73 crores,

the Appellant is non-compliant to be a Resolution Applicant and as such, the

Appellant cannot be allowed to implement the Resolution Plan. It is submitted

that several reminders from the year 2018 to 2023 were sent to the Appellant

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 8 for deposit of the PBG and in spite of opportunities having been given to the

Appellant to deposit the PBG, the PBG was never deposited. It is submitted

that CoC in its Meeting dated 04.05.2023 took a decision that the Appellant

is a non-compliant Resolution Applicant, hence, the Application filed by State

of Arunachal Pradesh and THDC be allowed and they will be permitted to

submit a Resolution Plan. It is submitted that Appellant in last five years

could not deposit the PBG, hence, the Appellant is not entitled to implement

the Resolution Plan.

6. The learned Counsel for the CoC refuting the submissions of learned

Counsel for the Appellant submits that the Appellant was required to deposit

the PBG as per clauses of RFRP and immediately after the approval of

Resolution Plan. The Appellant was informed by the RP to submit the PBG.

Large number of reminders were sent by the RP in this regard and in 41st CoC

Meeting held on 04.05.2023, discussion was made on non-submission of PBG

by the Resolution Applicant within the stipulated time and noticed several

reminders sent to the Appellant. Email communication sent by the Appellant

was also noticed. It is submitted that in IA No.2230 of 2022, reply was filed

by the CoC, where the CoC took the stand that Appellant having not given any

heed to submit PBG, it raises serious doubt on the conduct of the

management of the Appellant and the CoC has now lost confidence in the

Appellant. It was further deliberated and opined that in the current situation,

the CoC is not objecting to the Applications filed by the State of Arunachal

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 9 Pradesh and THDC in the best interest of the Corporate Debtor. It is

submitted that Resolution Plan, which was approved five years ago is no more

relevant and in the interest of justice, it is necessary that fresh Resolution

Plans be invited to give opportunity to all intending parties to come forward to

revive the huge power Project. The Appellant, who could not deposit even the

PBG in five years, cannot be allowed to further delay the process.

7. We have considered the submission of learned Counsel for the parties

and have perused the record.

8. We may first notice the clauses of RFRP under which the Resolution

Plan was submitted by the Appellant. Clause 1.9.3 of the RFRP provides for

'submission of Performance Bank Guarantee', which is as follows:-

"1.9.3 Submission of Performance Bank Guarantee

Upon approval of the Resolution Plan by CoC, the Successful Resolution Applicant shall cause to furnish a performance bank guarantee of an amount equivalent to 20% of the Bid Consideration amount, within 2 (two) business days of issuance of Lol by the CoC, in favour of the Corporate Debtor, in the form of a bank guarantee, issued by any scheduled commercial bank in India ("Bank") which shall be in accordance with Format VIII (Performance Bank Guarantee) of this PM ("PBG").

The PBG shall be valid for entire tenure of the Resolution Plan submitted by the Successful Resolution Applicant and shall be subject to re-issuance/renewal or extension by the

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 10 Successful Resolution Applicant as may be required by the CoC (PBG Validity"). It is hereby clarified that non-submission of the PBG by the Resolution Applicant, along with the acceptance of the Lol, shall lead to cancellation of Lol issued by the CoC, unless otherwise determined by the CoC at its sole discretion.

Provided further that payment of the amount of the PBG by an Associate Company shall be accompanied by a letter in the format as set out in Format VIII-A (PBG Amount payment by on Associate Company) of this PM, which shall be acknowledged by the Resolution Applicant in the format as set out therein.

Provided further that where the payment of the amount of the PBG by an Associate Company is made on behalf of the Resolution Applicant, and is due to be refunded in terms of this PM. such refund shall be made to the Associate Company."

9. Learned Counsel for the parties has referred to provisions for Regulation

36B of the Insolvency and Bankruptcy of India (Insolvency Resolution Process

for Corporate Persons) Regulations, 2016 in which Regulation clause (4-A) was

also added w.e.f. 24.01.2019. Clause 36-B is as follows:-

"36B. Request for resolution plans. (1) [The resolution professional shall, within five days of the date of issue of the final list under sub-regulation (12) of regulation 36A, issue the information memorandum, evaluation matrix and a request for resolution plans to every resolution applicant in the final list:

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 11 Provided that where such documents are available, the same may also be provided to every prospective resolution applicant in the provisional list.]

(2) The request for resolution plans shall detail each step in the process, and the manner and purposes of interaction between the resolution professional and the prospective resolution applicant, along with corresponding timelines.

(3) The request for resolution plans shall allow prospective resolution applicants a minimum of thirty days to submit the resolution plan(s).

(4) The request for resolution plans shall not require any non-

refundable deposit for submission of or along with resolution plan.

[(4A) The request for resolution plans shall require the resolution applicant, in case its resolution plan is approved under sub- section (4) of section 30, to provide a performance security within the time specified therein and such performance security shall stand forfeited if the resolution applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule.

Explanation I.- For the purposes of this sub-regulation, "performance security" shall mean security of such nature, value, duration and source, as may be specified in the request for resolution plans with the approval of the committee, having

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 12 regard to the nature of resolution plan and business of the corporate debtor.

Explanation II. - A performance security may be specified in absolute terms such as guarantee from a bank for Rs. X for Y years or in relation to one or more variables such as the term of the resolution plan, amount payable to creditors under the resolution plan, etc.]"

10. From the above, it is clear that although Regulation (4-A) was added on

24.01.2019 i.e. subsequent to issuance of RFRP in the present case. RFRP

itself contains stipulation of submission of Performance Bank Guarantee to

the extent of 20% of the bid consideration amount within two business days

which was termed as Performance Bank Guarantee. Plan having been

approved on 25.06.2018, the Appellant was required to submit Performance

Bank Guarantee within two days. Numerous reminders were sent by the

Resolution Professional to the Appellant for depositing the Performance Bank

Guarantee of Rs.72,72,00,000/-. We may refer to the e-mail dated 18.10.2018

sent by the Resolution Professional which have been brought on the record by

the Appellant along with Additional-Affidavit which e-mail provided as

follows:-

"Dear Sir

Ref. trailing mail and telephonic conversations, being a successful Resolution Applicant you were advised to submit performance Guarantee which you have not provided till date.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 13 In terms of conditions of Resolution Plan, as already advised you are reminded once again to provide the G'lee from Govt. of Sikkim equivalent to Rs. 72,72,15,464/- (Rupees Seventy Two Crore Seventy Two Lac Fifteen Thousand Four Hundred Sixty Four only) is. 20% of the Bid Consideration amount).

An immediate action in the matter will be highly appreciated."

11. Further reminder was issued on 30.01.2019 to the Appellant. On

28.09.2020, e-mail was received from Appellant praying for two more weeks'

time beyond 28.09.2020 for submission of the Performance Bank Guarantee.

Liquidator on 29.09.2020 wrote back to the Appellant to submit the

Performance Bank Guarantee latest by 13.10.2020. The Adjudicating

Authority in the impugned order has noticed the several reminders given by

the Resolution Professional requiring the Appellant to submit Performance

Bank Guarantee. The e-mail dated 17.06.2024 was sent by the Resolution

Professional to the Appellant where Appellant was requested to deposit the

amount latest by 30.06.2022. It is useful to extract the e-mail dated

17.06.2022, which is as follows:-

"Dated: 17th June, 2022 To

1. Sikkim Power Investment Corporation Ltd. NH-31. Near UD&HD Office, Gangtok, Sikkim-737101

2. Sh. Nirmal Aggarwal (Chief General Manager) Sikkim Power Investment Corporation Ltd. NH-31, Near UD&HD Office, Gangtok, Sikkim-737101

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 14

3. Sh. Ganesh Chettri MD SPICL and PCE Cum Secretary Power Department, Government of Sikkim Power Secretariat, Kazi Road, Gangtok, Sikkim-737101

4. Sh. VB Pathak Chairman, SPICL Tashling Secretariat, Kazi Road, Gangtok, Sikkim-737101

5. Sh. SC Gupta, IAS Chief Secretary, Govt of Sikkim Tashiling Secretariat Gangtok, Sikkim-737101

6. Sh. Sunil Sarangi Executive Chairman Teesta Urja Limited Aapian Building, Plot No. 38 Ground Floor, Unit A, Sector-44, GURGAON-122003

Ref : Resolution Plan submitted be SPICL in the matter of Athena Demwe Power Limited

Sub : Performance Guarantee (PG) from Govt. of Sikkim amounting to Rs. 72,72,15,464/- overdue by 4 years to be provided by SPICL

Dear Sir(s), This is in continuation to numerous letters & reminders sent to you by RP on his own and also on behalf of Committee Creditors (CoC) of M/s. Athena Demwe Power Ltd. to remind you that in terms of Resolution Plan submitted by you on dated 4th June, 2018 (which includes all subsequent amendments thereto as submitted from time to time during the CIRP process, the last one submitted on 25th June, 2018) which was approved by CoC in presence of SPICL GM Mr. Nirmal Kumar in COC meeting dated 25th June, 2018 and the same was subsequently submitted to Hon'ble NCLT for its approval in same day i.e. 25th June 2018 itself.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 15 In terms of clause 1.9.3 of Process Memorandum and clause 1.13 of Format V (Financial Proposal) of the Resolution Plan, the Resolution Applicant/you were/ are required to provide a Performance Guarantee (PG) from Government of Sikkim amounting to Rs. 72,72,15,464/- (Rupees Seventy-Two Crore Seventy-Two Lac Fifteen Thousand Four Hundred Sixty-Four only] by 27th June, 2018, which is still awaited.

Despite several repeated reminders, you/the Resolution Applicant have failed to fulfil your obligations in term of clause 1.9.3 of Process Memorandum and clause 1.13 of Format (Financial Proposal) of the Resolution Plan and consequently the Performance Guarantee is yet to be submitted by you. Pursuant to this, in the past the undersigned met various officials of SPICL apart from Chief Secretary of Government of Sikkim, but nothing has moved forward to far. On the date of this letter, you have not provided the PG even after a delay of 4 years of it's getting due.

It is pertinent to point out that this is a breach of terms and conditions of Resolution Plans and Process Memorandum which renders the Resolution Plan Non-Responsive and gives power to CoC to declare SPICL in breach of terms of Resolution Plan/ Process Memorandum and consequently reject the resolution Plan of SPICL on these grounds and also withdraw your Resolution Plan which was earlier submitted for approval of Hon'ble NCLT.

Last chance Due to non-fulfilment of your obligation to provide the Performance Guarantee amounting to Rs. 72,72,15,464/-. CoC has decided to provide you one last opportunity to furnish the PG from Government of Sikkim/Demand Draft in favour of Corporate Debtor. CoC has viewed the matter seriously and CoC is duty bound to protect the value of Assets of the Corporate Debtor which is premise of the Code. Hence, CoC hereby provides you one last opportunity to submit the performance guarantee within 13 days of receipt of this communication.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 16 Consequences of non-submission of Performance Guarantee within stipulated time-

1. Due to your failure to fulfil your prime obligations of providing the PG in terms of provisions of the Resolution Plan and the Process Memorandum even after 4 years of due date, SPICL will be treated as a Resolution Applicant in default.

2. EMD amounting to Rs.5,00,00,000/- deposited by you will stand forfeited.

3. CoC will withdraw your Resolution Plan from NCLT.

4 CoC will initiate necessary action to invite fresh Resolution Plans for Resolution of the Corporate Debtor. CAUTION

No further reminders will be sent after this communication

We are hopeful that you will take this notice seriously and submit the PG/deposit the amount latest by 30th June 2022.

Best Regards

Umesh Garg /+91 9818990001 Resolution Professional M/s. Athena Demwe Power Limited Office: 1413-1416, 14th Floor, Devika Tower, New Delhi 110019"

12. In the year 2023 also emails were sent by the Resolution Professional to

the Appellant for submitting the Performance Bank Guarantee. A letter dated

04.03.2024 was sent by the Appellant where it was informed that the budget

for the year 2023-24 does not include provision in regard to Performance Bank

Guarantee and further time was prayed till 15.06.2024. The said letter has

been brought on record by the Appellant as Annexure 30 to the Additional

Affidavit.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 17

13. The CoC in its meeting held on 04.05.2023 has discussed the non-

submission of the Performance Bank Guarantee by Appellant which notices

the various reminders sent to the Appellant to submit the Performance Bank

Guarantee. The Agenda Item No.6 of the minutes of the meeting dated

04.05.2023 has been extracted in paragraph 2 of the impugned order of the

Adjudicating Authority which is extracted herein:-

"ITEM NO. 6

TO DISCUSS NON-SUBMISSION OF PERFORMANCE GUARANTEE BY SPCL

Chairman informed the members that in addition to numerous communications/reminders already sent to SPICL in this regard, a communication on behalf of CoC was sent to SPICL on dated 17th June, 2022 wherein the communication clearly warned SPICL about the consequences of non-submission which are being repeated hereunder in italics:

"Consequences of non-submission of Performance Guarantee within stipulated time-

1. Due to your failure to fulfil your prime obligations of providing the PG in terms of provisions of the Resolution Plan and the Process Memorandum even after 4 years of due date, SPICL will be treated as a Resolution Applicant in default.

2. EMD amounting to Rs 5,00,00,000/- deposited by you will stand forfeited.

3. CoC will withdraw your Resolution Plan from NCLT.

4. CoC will initiate necessary action to invite fresh Resolution Plans for Resolution of the Corporate Debtor.

CAUTION

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 18 No further reminders will be sent after this communication.

We are hopeful that you will take this notice seriously and submit the PG/deposit the amount latest by 30th June 2022."

Chairman further informed that since last CoC meeting held on dated 27th February, 2023 RP has sent further reminders to SPICL to submit the PG on dated 27th February, 2023, 13th March, 2023, 20th March, 2023, 27th March, 2023, 03rd April, 2023, 10th April, 2023, 17th April, 2023, 24th April, 2023, 01 May, 2023 and 03rd May, 2023 but is disappointed to inform that SPICL did not submit the Performance Guarantee till the date of this meeting.

Copy of CoC letter dated 17th June, 2022 and latest reminder dated 3rd May, 2023 is attached herewith as Annexure-A & B respectively.

Chairman further informed that just before commencement of this CoC meeting, Mr. Sunil Saraogi, CMD of SPICL has sent an email communication dated 04th May, 2023 to RP wherein Mr. Sunil is seeking 30 days' time from order of 29A matter which is reserved, to submit the PG. Relevant extract of said email communication is reproduced hereunder:

"We request you to kindly appreciate that we are Government Company, and have our own limitations and accountability. However, we are serious on the project, and therefore, request you to kindly accord us 30 days' time (as per discussions with our proposed strategic partner) from the date of the pronouncement of this qualifications - disqualification judgment."

Chairman also placed the said email communication before the CoC members for their perusal. Copy of email communication received from SPICL on 04th May, 2023 is attached herewith as Annexure-C. Chairman invited CoC members to deliberate the matter and take a decision in this regard.

COC DELIBERATION & DECISION:

CoC deliberated the matter and decided that in view of the fact that even if we deliberate this matter now and take a final call on Resolution Plan of SPICL because of pending PG it will be of little use because we can't initiate further actions

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 19 till 29A application of NEC is pending. As such, CoC decided that it will be appropriate to discuss this agenda after judgement on 29A application of NEC is pronounced. CoC requested RP to call a meeting thereafter on short notice.

CoC further decided that communication from SPICL dated 4th May 2023 will also be taken up for consideration in the next meeting itself."

14. The Adjudicating Authority also in the impugned order has extracted

Clause 1.9.3 of the RFRP which contains requirement of submission of

Performance Bank Guarantee of an amount equivalent to 20% of the bid

consideration amount within two business days.

15. From the facts as noticed above, it is clear that the Performance Bank

Guarantee was not submitted by the Appellant despite dozens of reminders

sent by the Resolution Professional to the Appellant. There was clear non-

compliance of provisions of the RFRP Clause 1.9.3 which oblige the Resolution

Applicant after approval of the Resolution Plan by the CoC to furnish the

Performance Bank Guarantee of an amount equivalent to 20% of the bid

consideration amount within two business days. We have also noticed that

the two applications one by the State of Arunachal Pradesh and another by

THDC were filed before the Adjudicating Authority praying for liberty to submit

the Resolution Plan for resolution of the corporate debtor. In IA No. 2330 of

2022, CoC has filed its reply. The reply submitted by CoC has been noticed by

the Adjudicating Authority in paragraph 1(d). Paragraph 1 (d) of the order of

the Adjudicating Authority is as follows:-

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 20 "(d) In the meeting of CoC held on 04.05.2023, the issue of filing of applications by Government of Arunachal Pradesh and THDC India Limited were discussed. On deliberation the CoC viewed that the SRA (SPICL) is in default and breach of its own Resolution Plan. Nevertheless, for maximization of value of the plan and repayment of the debt of creditors, a decision was taken not to oppose/object the application filed by the Government of Arunachal Pradesh. The relevant excerpt viz. paras 14 to 19 of the reply filed by CoC to IA-

2230/2022 reads thus:

"14. That in the recent meeting of CoC dated 04.05.2023 the issue pertaining to the non-submission of performance guarantee even after 5 years by SPICL was discussed. The Resolution Professional apprised that on behalf of the CoC an email dated 17.06.2022 was sent wherein the SPICL was warned about the consequences of non-submission of Performance Security/Guarantee. The Excerpts of the email are reproduced below:

"Consequences of non-submission of Performance Guarantee within stipulated time

1. Due to your failure to fulfil your prime obligations of providing the PG in terms of provisions of the Resolution Plan and the Process Memorandum even after 4 years of due date, SPICL will be treated as a Resolution Applicant in default.

2. EMD amounting to Rs 5,00,00,000/- deposited by you will stand forfeited.

3. CoC will withdraw your Resolution Plan from NCLT.

4. CoC will initiate necessary action to invite fresh Resolution Plans for Resolution of the Corporate Debtor.

CAUTION No further reminders will be sent after this communication. We are hopeful that you will take this notice seriously and submit the PG/deposit the amount latest by 30th June 2022.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 21

15. That the Resolution professional further informed that the reminder email were also sent vide an email dated 27.02.2023, 13.03.2023, 20.03.2023, 27.03.2023, 10.04.2023, 17.04.2023, 24.04.2023, 01.05.2023 and on 03.05.2023. The Resolution professional further shown disappointment that the SPICL did not submit Performance Guarantee. Copies of emails sent to the SPICL are annexed herewith and marked as ANNEXURE R-4(COLLY).

16. That since the SPICL did not give any heed to submit performance security/ guarantee. It further raises serious doubt on the conduct of the management of the SPICL, the management of SPICL have delayed providing performance security by 5 years now. The CoC have now lost confidence in the SPICL as the SPICL failed to adhere to the terms and conditions and took the CIRP process and its compliance under the law very lightly.

17. That in the 41st meeting of CoC dated 04.05.2023, applications filed by Gout of Arunanchal Pradesh and by THDC India limited was discussed wherein vide an order dated 25.04.2023 this Hon'ble Adjudicating Authority has directed the CoC to file reply.

18. The members of CoC deliberated upon the applications filed by the Govt. of Arunanchal Pradesh and THDC India limited i.e., the present Applicant with respect to the reply to be filed before this Hon'ble Adjudicating Authority. The COC deliberated that considering the present scenario wherein the SPICL the successful Resolution Applicant is in default and in breach of its own Resolution Plan it was decided that for the maximization of value for all stakeholders the CoC should not object to the Applications filed by the Applicant and the Gout. of Arunanchal Pradesh for consideration of Resolution Plan/EoI submitted. The CoC further deliberated that it is the best possible step to avoid the Corporate Debtor going into the liquidation in line with the objective of the Code, 2016 in the best interest of the Corporate Debtor.

19. Therefore, in view of the detailed deliberation by the CoC based on the current situation as elaborated hereinabove. The CoC is not objecting to the Application filed by the Applicant in the best interest of the Corporate Debtor.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 22 In view of the above, the Answering Respondent prays that the Application may please be allowed in the interest of the Corporate Debtor."

16. The stand which was taken by the CoC before the Adjudicating

Authority is that the Appellant did not give any heed to submit Performance

Bank Guarantee and it failed to adhere to the terms and conditions. CoC in

its reply, therefore, clearly stated that after deliberation CoC is not objecting

to the applications filed by the State of Arunachal Pradesh and the THDC and

which applications need to be allowed in the interest of the Corporate Debtor.

17. The submission which has been pressed by the Counsel for the

Appellant is that reference by the Adjudicating Authority to Regulation 36B

(4-A) is erroneous since Clause (4-A) was inserted in the Regulation on

24.01.2019 i.e. much after submission of the Resolution Plan and approval of

the Resolution Plan. As noted above, the requirement of submission of

Performance Bank Guarantee was contained in the RFRP. RFRP was dated

21.05.2018. Clause (4-A) which was inserted in Regulation 36B only made it

mandatory for Request of Resolution Plan to provide a performance security

within time specified therein. There is no conflict in the provisions of the RFRP

in the present case and Regulation 36B (4-A). The fact that Clause (4-A) was

added subsequently has no bearing in the present case since in the present

case RFRP dated 21.05.2018 itself contained Clause 1.9.3 requiring

submission of the Performance Bank Guarantee of an amount equivalent to

20% of the bid consideration amount within two business days.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 23

18. Counsel for the Appellant has also relied judgment of the Hon'ble

Supreme Court in "Ebix Singapore Private Limited vs. Committee of

Creditors of Educomp Solutions Limited & Anr. (Civil Appeal No. 3224

of 2020)" to contend that the CoC has no jurisdiction to withdraw from

Resolution Plan already approved. The present is a case where CoC is not

withdrawing the Resolution Plan which was approved by it whereas the

Adjudicating Authority rejected the application for approval of the Resolution

Plan on the ground that Applicant failed to deposit the Performance Bank

Guarantee despite several reminders in period of five years. The judgment of

the Hon'ble Supreme Court in "Ebix Singapore Private Limited" (supra) has

no application in the facts of the present case.

19. Counsel for the Appellant contended that the State of Arunachal

Pradesh and the THDC could not have permitted to submit Resolution Plan

since they are not part of the CIRP process. The fact is undisputed that the

State of Arunachal Pradesh and the THDC did not file any plan in the CIRP of

the Corporate Debtor. The eligibility to submit the Resolution Plan by the State

of Arunachal Pradesh and the THDC arose only after the application for

approval of the plan of the Appellant was rejected by the Adjudicating

Authority on account of non-compliance by the Appellant itself. Thus, present

is not a case that the State of Arunachal Pradesh and the THDC who were not

part of the CIRP are permitted to file Resolution Plan rather their Resolution

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 24 Plans required to be submitted in pursuance of the fresh Form-G which was

to be issued under the directions of the Adjudicating Authority in the

impugned order.

20. Counsel for the Appellant has also submitted that the Appellant had

filed intervention application being IA No.3163 of 2023 and Appellant was not

heard, hence, the order is in violation of principle of natural justice.

21. The Application for approval of the Resolution Plan being CA No. 246 of

2019 was heard by the Adjudicating Authority and by impugned order, the

said application stood rejected. The application for intervention filed by the

Appellant became inconsequential when the application for plan approval of

the Appellant stood rejected on account of non-compliance by the Appellant.

We, thus, do not find any substance in the submission of the Appellant that

the order passed by the Adjudicating Authority is in violation of principle of

natural justice.

22. As noticed above, the Corporate Debtor was awarded a huge project of

1750 MW Hydro Electric Power Project at River Lohit, Arunachal Pradesh. The

Resolution Plan submitted by the Appellant was approved on 25.06.2018.

More than five years have elapsed when the Adjudicating Authority had

occasion to consider the plan approval application. The view taken by the CoC

that Resolution Applicant who has not been able to deposit the Performance

Bank Guarantee of Rs.72.72 Crores it cannot be trusted for implementation

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 25 of the huge project. Adjudicating Authority in the impugned order has

considered all aspects of the matter and has rightly come to the conclusion

that Appellant having not deposited the Performance Bank Guarantee inspite

of several opportunities/reminders given to the Appellant, Adjudicating

Authority has no option except to reject the application for approval of the

Resolution Plan. Giving opportunity to the State of Arunachal Pradesh and the

THDC to submit a Resolution Plan is in consequence of rejection of the

application for approval of the Resolution Plan. The Adjudicating Authority by

the impugned order has also clearly given liberty to the Appellant to submit a

Resolution Plan in response to EoI. Counsel for the Respondent submitted

that in response to the EoI issued in pursuance of the impugned order large

number of Resolution Applicants have submitted EoI and the process is

proceeding further.

23. In view of the foregoing discussions and our conclusion, we are of the

view that no grounds have been made out to interfere with the impugned

order. Looking to the fact that Appellant has filed this appeal and Appellant

was already permitted by the Adjudicating Authority to submit a Resolution

Plan, we are inclined to grant two weeks' time to the Appellant to submit a

Resolution Plan before the Resolution Professional which may also be

considered along with the other Resolution Plans which have already been

received in the CIRP of the Corporate Debtor.

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 26

24. Subject to the above liberty granted to the Appellant, the Appeal is

dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical

NEW DELHI

26th July, 2024

Ashwani/Anjali

Company Appeal (AT) (Insolvency) Nos.1006, 1007 & 1008 of 2024 27