National Company Law Appellate Tribunal: While deciding the appeal, Ashok Bhushan J., and Barun Mitra (Technical Member), held that the Adjudicating Authority cannot interfere with the decision of CoC to vote on the resolution plan as it is the wisdom of CoC to take a decision in this regard.
In the case at hand, the Adjudicating Authority initiated Corporate Insolvency Resolution Process (CIRP) against ‘Mittal Corp Limited' (Corporate Debtor). The Resolution Professional received resolution plans including the resolution plan submitted by the appellant as well as by Respondent 2. In a meeting, the Committee of Creditors (“CoC”) decided to adopt the Challenge mechanism for negotiation with the Resolution Applicants. All the Resolution Applicants were communicated the rules of the Challenge Process and after receipt of the unconditional acceptance, Challenge Process was conducted. All the Resolution Applicants submitted their resolution plans. Later, Respondent 2 revised its offer. In a meeting after qualitative or quantitative evaluation of the resolution plans, CoC resolved to put resolution plans to vote. Further, Respondent No.2 filed an application before the Adjudicating Authority seeking a direction that Resolution Professional to consider the increased offer and place the same before the CoC. The Adjudicating Authority ordered consideration of revised resolution plan. This order has been challenged by the appellant in the present appeal.
The question before the Tribunal is whether after closure of Challenge Process and consequent receipt of resolution plan, the Adjudicating Authority can direct consideration of the revised plan submitted thereafter?
The Tribunal after taking note of Regulation 39 (1A) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘CIRP Regulations') said that the regulation has been brought in place to enable the CoC to negotiate with all the Resolution Applicants by one alternative mechanism to find out the best resolution plan.
The Tribunal further noted that Clause 7 of the Challenge Process clearly contemplates that after conclusion of the Challenge Process, the eligible Resolution Applicants shall not revise their bid/commercial offer. It is relevant to note that Challenge Process also reserves the unconditional right of the CoC to cancel/ modify/ withdraw/ abandon/ amend the process of the Challenge Process at any stage. The approval of the plan submitted in CIRP is in the domain of the CoC. Under Regulation 39 of the CIRP Regulations, the committee is entitled to record its deliberation and vote on such resolution plan simultaneously.
The Tribunal said that there can be no fetter on the power of the CoC to cancel or modify any negotiation with the Resolution Applicant including a Challenge Process but it is the wisdom of the CoC to take a decision in that regard. CoC, in the facts of the present case, did not take any decision to disregard the Challenge Process, rather it decided to vote on the plan.
The Tribunal further noted that it is well settled that the timeline in the IBC has its salutary value, and it was the wisdom of the CoC which decided to vote on the Resolution Plan after completion of Challenge Process and not to proceed to take any further negotiation or further modification of the plan, that decision ought not to have been interfered with.
The Application was filed by the Respondent No.2 by which date CoC has already decided to resolve the vote on all the plans and voting has also commenced. The Adjudicating Authority should not have interfered without there being any valid reason.
Hence, the Tribunal allowed the appeal and set aside the order of the Adjudicating Authority.
[Jindal Stainless Ltd. v. Shailendra Ajmera, Comp. App. (AT) (Ins.) No. 1058 of 2022, decided on 18-01-2023]
Advocates who appeared in this case :
Counsel for Appellant: – Sr. Advocate Ramji Srinivasan, Advocate Rahul Kumar, Advocate Bishwajit Dubey, Advocate Neha, Advocate Madhvi Divan, Advocate Vikas Mehta, Advocate Sahil Monga, Advocate Apoorv Khator, Advocate Rashi Rampal
Counsel for Respondents: – Advocate Sumesh Dhawan, Advocate Shweta Dubey, Advocate Kanishka Prasad, Advocate Abhijit Sinha, Advocate Anuj Tiwari, Advocate Kaustubh Rai, Advocate Rahul Kumar, Advocate Saurabh Kumar Mishra, Advocate Aditya Shukla, Advocate Tuhina Mishra, Advocate Gaurav Mitra, Advocate Piyush Beriwal, Advocate Ankit Raj, Sr. Advocate Ritin Rai, Advocate Udit Mendiratta, Advocate Niharika Sharma, Advocate Tejas Jha, Advocate Shivkrit Rai