NCLAT (2020.10.19) in Panna Pragati Infrastructure Pvt. Ltd. & Anr. vs. Amit Pareek & Ors. [Company Appeal (AT) (Insolvency) No. 515 of 2020] held that there was no justification for rejection of revised resolution plan of appellant by the Resolution Professional who was duty bound to place the same before the Committee of Creditors especially when the ordinary CIRP period of 180 days was still subsisting.
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Excerpts of the order;
Company Appeal (AT) (Insolvency) No.515 of 2020 arises out of order dated 18th March, 2020 passed by the Adjudicating Authority (National Company Law Tribunal), Guwahati Bench, Guwahati in IA No.27 of 2020 in CP(IB) No.13/GB/2019 by virtue whereof Appellant’s Application seeking direction to Resolution Professional to take on record and consider the revised offer submitted by e-mail dated 14th February, 2020 has been rejected by the Adjudicating Authority keeping in view the fact that the Resolution Plan of the highest bidder has already been approved with 100% voting and the Application of Appellant suffered from latches and lacked bonafidies.
# 2. Company Appeal (AT) (Insolvency) No.516 of 2020 arises out of order dated 18th May, 2020 by virtue whereof the Adjudicating Authority (National Company Law Tribunal), Guwahati Bench, Guwahati approved the Resolution Plan of Ngaitlang Dhar (H1 Bidder) / Respondent No.4 / Successful Resolution Applicant.
# 3. The facts relevant for consideration of issues raised in these Appeals being heard together may briefly be summarized.
# 4. Meghalaya Infratech Ltd. (Corporate Debtor)/ Respondent No.1 had to undergo Corporate Insolvency Resolution Process as a sequel to admission of an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“I&B Code” for short) filed by Allahabad Bank (‘Financial Creditor’). Mr. Amit Pareek came to be appointed as the Interim Resolution Professional (IRP), who was subsequently confirmed as Resolution Professional at the first Committee of Creditors meeting held on 25th September, 2019. Public announcement made by IRP calling for claims from creditors was followed by constitution of Committee of Creditors. Expression of Interest was invited from prospective Resolution Applicants. Besides the Appellant and the Successful Resolution Applicant Mr. Abhishek Agarwal and Mr. Ashish Jaisasaria and others filed their Expression of Interest, which conformed to the eligibility criteria laid down in this regard. All the four submitted their Resolution Plans. Respondent No.4/ Ngaitlang Dhar emerged as H1 Bidder whereas Mr. Abhishek Agarwal as H2 Bidder. At the 7th Committee of Creditors meeting held on 6th March, 2020 the Committee of Creditors, with a 100% voting share, is said to have approved the Resolution Plan of H1 Bidder, which upon consideration by the Adjudicating Authority was found to be in conformity with the provisions of law and complying with the mandatory requirements. Same came to be approved in terms of impugned order dated 18th May, 2020.
# 5. It is contended on behalf of Appellants that it had submitted two Plans during the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. While the first Plan was placed before Committee of Creditors and considered on 11th February, 2020, Appellants were provided opportunity to place a revised Plan before the Committee of Creditors on 12th February, 2020. The Appellants requested for 1-2 extra days to submit a revised Resolution Plan but the request was declined and the Appellants were excluded from CIRP during the Committee of Creditors meeting on 12th February, 2020 on the sole ground of paucity of time. It is further submitted that the Appellants submitted a 2nd Plan (revised Plan) on 14th February, 2020, which was unilaterally rejected by the Resolution Professional and never placed before the Committee of Creditors though it was submitted only two days after the submission of revised Plan of Successful Resolution Applicant and that too well within the 180 day CIRP period. It is submitted that the Resolution Professional acted in violation of the provisions of the ‘I& B Code’ embodied in Sections 25(2)(i) and 30(3) by not placing the Appellants revised Resolution Plan before the Committee of Creditors especially when the CIRP period had not expired. It is further submitted that subsequently Resolution Professional sought and was granted extension of CIRP period by the Adjudicating Authority. Therefore, paucity of time as ground for exclusion of Appellants’ revised Plan would not survive. Lastly, it is submitted that the revised Resolution Plan of Appellants provided higher upfront payment than the Successful Resolution Applicant’s Plan and the Resolution Professional has acted contrary to the basic principle of I&B Code in regard to maximization of the assets of Corporate Debtor by not placing the revised Plan of Appellants before the Committee of Creditors.
# 14. In the instant case, Appellants submitted the Resolution Plan only two days after the revised plan of Respondent No.4 and well within the 180 days of ordinary timelines of CIRP under ‘I&B Code’. There was no justification for its rejection by the Resolution Professional who was duty bound to place the same before the Committee of Creditors especially when the ordinary CIRP period of 180 days was still subsisting. Therefore, the ground urged on behalf of Respondents that the time could not be extended by the Adjudicating Authority or by this Appellate Tribunal in appropriate cases is not in tune with the law interpreted by the Hon’ble Apex Court more so as the same was within the ordinary timelines and subsequently the Resolution Professional himself had sought extension of 90 days from the Adjudicating Authority for placing the Resolution Plan approved by Committee of Creditors before it for approval.
# 15. For the foregoing reasons, we find that the impugned orders in both the appeals cannot be supported. The impugned orders suffer from grave legal infirmity besides involving factual frailty. The impugned orders are accordingly set aside and the appeals are allowed. The CIRP is directed to resume from the stage of consideration of the Resolution Plans. The Resolution Professional shall place the Resolution Plans of H1 and H2 besides revised Resolution Plan of Appellants before the Committee of Creditors for consideration. The Committee of Creditors would take a call in according consideration to such Resolution Plans keeping in view the extended timelines. The period of judicial intervention shall stand excluded while computing the extended timelines of 270 days.
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