With the availability of abundant remote working technology, whether the Covid-19 pandemic would be tenable as grounds for grant of extension for submission of Resolution Plan, was a question considered by the NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI, before a bench consisting of Justice Anant Bijay Singh, Member (Judicial); Ms. Shreesha Merla, Member (Technical), in the matter of CRPL Infra Private Limited vs. Anil Agarwal, Resolution Professional and Ors. [COMPANY APPEAL (AT) (INSOLVENCY) No. 259 of 2021], on 17.01.22.
The facts of the case were that the present appeal challenged the Impugned Order dated 02.02.2021, passed by the Learned Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) under Section 61(1) of the Insolvency and Bankruptcy Code, 2016. By the Impugned Order, the Learned Adjudicating Authority has dismissed the application filed by the appellant herein against the Resolution Professional and the Members of Committee of Creditors (CoC) praying to set aside the resolution passed at the 12th CoC Meeting held on 10.09.2020, on the ground that the CoC had rejected the Applicant’s request for extension of time to submit the Resolution Plan and to consider the Resolution Plan proposed to be submitted by the appellant herein.
The Learned Counsel for the Appellants, vehemently contended that during the CoC Meeting on 03.09.2020, all the Resolution Applicants agreed for adjournment to file the revised Resolution Plan. On 08.09.2020, the RP sent an email conveying that the 10th COC Meeting would take place on 10.09.2020, without stating the agenda and giving only two days’ time which is not in conformity with Section 19 of the Code. It was also argued that the Resolution Professional was aware that the appellant was going to revise their offer to around Rs.55 Crs. and would become the highest bidder. It was argued that the appellant was not given any opportunity though no harm would have been caused had 10 to 15 days’ time been given to the appellant. It was further contended that the appellant’s submitted reasons for extension were valid, and that the delay of 60 days in pronouncement of judgement was an unjust waste of valuable time. The insertion of Regulation 40C by the Insolvency and Bankruptcy Board of India’s notification dated 29.03.2020, was cited in order to assert that the Government, various legislations and Courts across the Country have adopted a sympathetic approach and have duly extend timelines which were unable to be met as a result of the Pandemic Covid-19.
The Learned Counsel for the Respondents, contended that the Resolution Professional, in consonance with the CoC Members extended the time for submission of the Resolution Plan four times i.e., 01.04.2020 till 31.07.2020 (120 days). It was also noted that the 12th CoC Meeting was held on 10.09.2020, wherein the Resolution Professional brought to the notice of the CoC that an email was received from the appellant seeking extension of time, but the same was refused. A higher bid amount received was declared as H1 Bidder with a revised bid for Rs.43 Crs. The H1 Bidder had written to the Resolution Professional on 30.07.2020 and on 28.08.2020 that the extension in timeline might lead to their withdrawal from the Resolution Process of the ‘Corporate Debtor’ and that the funds earmarked for taking over the ‘Corporate Debtor’ may be deployed in some other Project. It was put forth that the timelines were published on 18.02.2020 through Form-G and the appellant had given declaration that they will abide by the timelines and the provisions of RFRT. After the Members of the COC conveyed to the appellant that extension could not be granted, the appellant decided to exit the Meeting and their open bidding process was conducted wherein H1 Company was declared the Bidder with Rs.49 Crs. Subsequently, payment was made in clearance of the government debts as well as to financial creditors. Placing reliance on precedents, it was asserted that the Respondent had taken control over the ownership and management of the ‘Corporate Debtor Company’, and that the Plan had been implemented. It was further asserted that Regulation 40-C is applicable only till the end of the period of lockdown.
The National Company Law Appellate Tribunal, Principal Bench, New Delhi, took into account the documentary evidence as well as the submissions and arguments, and placed reliance on several precedents, in order to hold that Sub-Section (3) of Section 30 of the Code provides that the Resolution Professional shall present the Resolution Plans, which conform to the requirement of Section 30, before the CoC for approval. After considering the feasibility and viability, as stipulated under sub-Section (4) of Section 30, the CoC may approve the Resolution Plan by a vote not less than 66%. It was observed in the instant case, if CoC has approved with 66% majority as provided under Section 12(2) of the Code and has decided not to extend the time to the appellant herein on the ground that several extensions have already been given, the Resolution Professional cannot take any contrary decision, thereby rendering the appellant’s challenge untenable. It was further noted that additionally, the appellant had not chosen to exercise their choice of participating in the open bidding process and chose to exit the Meeting and even accepted the refund of the EMD amount. It was held that it would defeat the scope and objective of the Insolvency and Bankruptcy Code, 2016, if the clock is turned back. Thus, it was held that the present appeal failed.
Judgement reviewed by Bhargavi