Fintech Restructuring LLP Vs Fairdeal Multifilament Private Limited (NCLAT Delhi)
Conclusion: RP could not be blamed for having breached the IBC for the CoC to have approved the resolution plan of Parth with requisite majority share which action was taken by the CoC in the exercise of its commercial wisdom.
Held: Assesssee challenged an order passed by Adjudicating Authority by which CIRP of the corporate debtor was directed to be reinitiated and completed within 90 days from the date of the impugned order. One appeal had been preferred by the financial creditor and another one had been filed by RP. The corporate debtor was admitted into the insolvency and in pursuance of which CoC comprising of the financial creditor as secured creditor was constituted. Fintech Restructuring LLP was appointed as the RP. On the instructions of the CoC, draft bidding documents were shared by RP with the CoC members and Prospective Resolution Applicants (PRAs). Thereafter, e-bidding process for negotiation in the resolution plan was conducted and completed. Later, the resolution plan submitted by the Parth was approved by the CoC with a majority of 84.52% via e-voting platform. Fintech issued the Letter of Intent to Parth. An IA was filed by the RP before the Adjudicating Authority seeking approval of the Resolution Plan under section 31 of the code. Adjudicating Authority had refused to approve the plan and directed to reinitiate the CIRP of the corporate debtor. Appellant-RP argued that when the CoC had decided to hold further negotiations and called for revised plans, the RP could not have come in the way of the CoC’s exercise of commercial wisdom towards seeking revised plans and hence the RP could not be faulted on this score for having committed any material irregularity in the conduct of CIRP. Financial Creditor submitted that once CoC had approved the resolution plan by requisite majority, there was limited scope of interference by the Adjudicating Authority since commercial wisdom of CoC was not justiciable. When the CoC had approved the resolution plan with majority share, Adjudicating Authority erred in setting aside the entire CIRP proceedings and re-initiating fresh proceedings merely on the grounds of irregularities purportedly committed by the RP. It was held that maximisation of the value of assets of the Corporate Debtor and the timely resolution of the Corporate Debtor constituted the bedrock of IBC scheme. In the present case, Adjudicating Authority had fixed a very tight time-line of 90 days from the date of impugned order for the new RP to complete the CIRP process. Moreover, the ongoing process had reached an advanced stage and the 90 days period fixed by the Adjudicating Authority was nearing an end. If the ongoing proceedings were stalled now it would be setting the clock back. This would add to delay which would only lead to further destruction of the value of the Corporate Debtor. Moreover, by inviting fresh resolution plans which had led to participation by six PRAs, the new RP had engendered sufficient competition to fetch an optimal value of the Corporate Debtor. Furthermore, since both the PRAs, namely Parth and Sanklecha who had earlier participated had been allowed to participate again with other competing PRAs in the fray, this was likely to yield more competitive resolution plan and lead to maximisation of assets. In the given facts and circumstances, the rationale of the Financial Creditor to set aside the ongoing CIRP proceedings undertaken by the new RP was not entertained and the earlier proceedings was restored. Tribunal directed to expunged the adverse remarks passed against the RP and partially modified the impugned order.
