Case Law Details
Kotak Investment Advisors Limited Vs Krishna Chamadia (NCLAT Delhi)
The issue under consideration is whether Resolution Plans submitted after the expiry of deadline for submission of Resolution Plan, without obtaining any CoC resolution to extend the deadline and issuing notice for inviting EoI from other potential resolution applicants is justified in law?
In the instant case, the Adjudicating Authority has not given any finding on the issues raised in MA 1039 of 2019 by the Appellant, specifically regarding illegalities committed, in accepting the Resolution Plan of the successful Resolution Applicant. The Adjudicating Authority has justified the actions of the Resolution Professional on the ground that the alleged act of accepting the Resolution Plan is based on the commercial decision of the CoC. It is important to mention that the approval of the Resolution Plan depends on the business decision of CoC. Still, the CoC is not empowered to approve the illegalities committed in the conduct of CIRP.
NCLAT states that, the Resolution Professional/Respondent No.1 received the EOI from a consortium of Respondents No.1 and 2 on 27th January 2019, i.e. much after the expiry of the deadline for submission of interest (i.e. 08th August 2018). The Resolution Professional allowed the Successful Resolution Applicant to have access to data Room post 08th January 2019 (cut of date to submit Resolution Plan) and also post 08th August 2018 (the last date to submit EOI) even without the approval of the Committee of Creditors or the Adjudicating Authority. However, access to the data Room of the Corporate Debtor had been closed for other concerned resolution applicants post 07th January 2019. The Bid/Resolution Plan submitted by the Appellant was opened, and deliberations took place on the Resolution Plans already submitted up to the deadline for submission of Resolution Plans. Indeed, the CoC was fully authorized to either accept or reject the Resolution Plan or negotiate with the Resolution Applicants in the exercise of its power under commercial wisdom. But in the exercise of commercial wisdom, CoC was not authorized to approve the arbitrary and illegal conduct of corporate insolvency resolution process, which has been done in this case. After expiry of the deadline for submission of EOI, CoC was fully competent to extend the timeline for submission of EOI. It could have done so by following the Rules and Regulations as per due process. NCLAT have noticed that earlier, the RP had thrice issued notices in ‘Form G’ for inviting Expression of Interest. As to why the same procedure was not adopted in accepting the Resolution Plan of successful Resolution Applicant/Respondents No. 2 and 3, the RP has failed to come up with any proper justification. At the cost of repetition, we reiterate that illegal exercise of power by the Resolution Professional in conducting CIRP cannot be treated as an exercise of power for maximization of value under Commercial Wisdom.
FULL TEXT OF ORDER OF NATIONAL COMPANY LAW APPELLATE TRIBUNAL
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