COURT:NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
CITATION: STEEL STRIPS WHEELS LTD. v/s SHRI AVIL MENEZES, RP of AMW AUTOCIMPONENT LTD & Ors.
Company Appeal (AT) (Insolvency) No. 89 of 2022
An appeal was filed by Successful Resolution Applicant of Steel Strips Wheels Ltd challenging the impugned order which was filed by the respondent 3 under section 61 of the Insolvency and Bankruptcy Code which the Adjudicating Authority has impugned.
The facts of the case are, the CIRP was already initiated against the Corporate Debtor, AMW Auto Component Ltd and Form G which is Invitation for Expression of Interest/Resolution Plan was issued.
The COC had fixed the final date for the submission of the resolution plan. Whereas, the appellant has submitted its Resolution Plan.Later, the Appellant was communicated by Resolution Professional that COC has decided to consider the Resolution Plan of the Appellant.
After that,the Adjudicating Authority allowed 8 weeks’ time to complete the CIRP and the Appellant submitted its revised Resolution Plan. In the COC meeting which was held the resolution plan which was submitted by the appellant was considered and approved by the COC with 98.55% voting shares.
Interim Application was filed by Resolution Professional for seeking approval of the Resolution Plan which was submitted by the Appellant. Respondent 3 requested Resolution Professional to submit joint resolution plan. So, this request was put forth by Resolution Professional before the COC.
In the COC meeting, it was held that the resolution plan was already submitted by the appellant and the same has been approved and the application for approval of plan has been filed by the Resolution Professional before Adjudicating Authority and due to that new Expression of Interest cannot be considered.
So, Respondent 3 filed an Interim Application to the Adjudicating Authority impleading the COC and the Resolution Professional and prayed for permitting the Applicant to intervene in the IA which was filed by the Respondent 1 seeking approval of resolution plan.
Also, the Resolution Professional and COC be directed not to not to consider the Resolution Plan of the Appellant.
This application was allowed and passed by the Adjudicating Authority.
Aggrieved by the said order, thelearned Senior Counsel for the Appellant submits that the Resolution Plan of the Appellant has been already approved by the COC with 98.55% voting shares and the Application for approval of the Resolution Plan has also filed and is pending before the Adjudicating Authority.So, there was no point for the Adjudicating Authority to pass an order for consideration of the Resolution Plan submitted by Respondent No.3.
Also, the period for submitting the Resolution Plan had expired and Respondent 3 has no authority to submit any Resolution Plan. According to the learned Senior Counsel appearing for Respondent 3 submits that the Resolution Plan submitted by them is a joint Resolution Plan.
It has also submitted that the Appellant itself had failed to submit the Resolution Plan before the final date of submission fixed by the COC so keeping in mind the object and purpose of the Code, in the interest of the Corporate Debtor the Respondent 3 should be permitted to submit Resolution Plan.
Both the parties have referred and relied on judgments of the Tribunal and the Supreme Court.
FINDINGS OF THE COURT:
The request which was received by the Respondent 3, the Resolution Professional stated that the joint expression of interest submitted by the respondent was discussed and deliberated and unanimously opined that since the appellant’s plan has already been approved by the COC and the Plan Approval Application has already been filed by the RP before the Learned Adjudicating Authority, so a new expression of interest cannot be considered.
Also, the COC in its meeting has clearly refused to consider the plan of Respondent 3 after over of CIRP which the fact was communicated by the Resolution Professional to the Respondent 3.
As per the code, COC could not consider the Resolution Plan of Respondent 3 after the approval of plan of the Appellant.
The respondent 3 has also not mentioned clearly why COC should consider the resolution plan of Respondent 3. There was no valid reason.
It was held by the Supreme Court that CIRP is a time-bound process with a specific aim of maximizing the value of asset with strict timelines which need to be adhered to by all the parties, at all stages of the CIRP.
After hearing both the parties and with the consideration of Supreme Court’s, it is said that there is no valid reason given by the Adjudicating Authority for permitting the consideration of plan of Respondent 3.
The consideration of the Resolution Plan of Respondent 3 shall be breaching both timeline as well as the finality of the Resolution Plan of the Appellant which was approved by the COC.
After discussion the learned counsel for the appellant, the IA filed by the respondent can be rejected on two grounds that:
- The respondent 3 has come after the submissions of approved resolution plan to the Adjudicating Authority and
- The COC or RP has not sought any relief to recall the approved resolution plan and for allowing them to reconsider the approved resolution plan along with the new resolution plan offering better value.
The Tribunal noticed the judgment of the Hon’ble Supreme Court that the Adjudicating Authority cannot direct the COC to consider the second Resolution plan submitted before the Authority.
So, in this present case the Tribunal supports the submissions of the Counsel for the Appellant.
Thus, after viewing everything there was no valid reason indicated in the order of the Adjudicating Authority for permitting the COC to consider the Resolution Plan of the Respondent 3. The Hon’ble Appellate Authority set aside the order passed by the Hon’ble Adjudicating authority.
Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Ltd &Anr
Chhattisgarh Distilleries Ltd vs Dushyant Dave &Ors
Committee Of Creditors of Essar Steel India Ltd vs Satish Kumar Gupta