Rejection Of Resolution Plan By Suspended Director Can't Be Interfered With If No Expression Of Interest Was Submitted Despite Participation In Meetings: NCLAT

Brief Facts:

By an order dated 22.07.2022, Corporate Insolvency Resolution Process (“CIRP”) proceedings against the Corporate Debtor commenced.

In pursuance of Form-G, several persons filed their EoIs. However, in pursuance of RFRP issued by Resolution Professional (“RP”) three Resolution Plans were received.

In the Meeting of the Committee of Creditors (CoC) on 30.01.2023, it was noticed in the Minutes that some new interested parties have approached the State Bank of India (“SBI”) after last date of Expression of Interest (EoI). The CoC deliberated whether to issue fresh Form-G or to invite interested parties. The CoC in its 12th meeting decided to extend the timeline within which the EoI and Resolution Plan could be submitted.

On 14.08.2023, Resolution Plan submitted by Pinax Group (Successful Resolution Applicant) was approved with 97% majority of the CoC.The CoC in its 19th meeting decided to vote on the Resolution Plan received.

Subsequently, a letter was sent by the Appellant requesting to permit the Appellant to give an offer equivalent to or higher than the offer already under consideration.

The CoC in its 20th meeting considered and rejected the Resolution Plan which was submitted by the Appellant. Thereafter, an Interlocutory Application (IA) was filed by the Appellant seeking to set aside the entire CIRP process and allow the Appellant to submit the Resolution Plan in freshly issued Expression of Interest.

The application which was filed by the Appellant was rejected by the Adjudicating Authority and the application filed by the Resolution Professional seeking approval of the Resolution Plan was allowed. Against these orders, the present appeal has been filed.

Contentions:

The Appellant submitted that the Form-G was required to be published afresh in the event the CoC considered permitting others to participate. The procedure adopted by CoC and RP is contrary to Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (Regulations).

It was also argued that no Resolution Plan, which has not been submitted within the timeline specified in Regulation 36B, could have been entertained. The entire process adopted being contrary to the Regulation deserve to be set aside.

It was also submitted that although the CoC has permitted Pinax to submit the Plan, but when the Appellant expressed its desire to submit a Plan, the Plan of Appellant was not considered and the Appellant was not given the opportunity to submit a Plan.

Per contra, the Respondent submitted that the Appellant is Suspended Director of the CD, who participated in all CoC Meeting and at no point of time, the Appellant expressed its intention to submit a Resolution Plan, nor submitted any EoI in pursuance of Form-G published by the RP.

Lastly, it was submitted that the Appellant's intent was only to delay the CIRP and he had neither any interest nor capacity to submit a Resolution Plan. The time chosen by the Appellant itself indicate that the Appellant was not serious.

The Successful Resolution Applicant ('SRA') submitted that the Resolution Plan submitted by the Appellant was not backed by a financial proposal as the letter which was submitted had already expired.

Observations:

The Tribunal noted that the appellant can have no grievance concerning the Resolution Plan received after the extension of timeline since the appellant himself did not submit any EoI either in pursuance of Form G published on October 10, 2022, or after the extension of timeline granted for submitting the resolution plan.

The Tribunal further noted that the Appellant as a Suspended Director participated in all meetings of the CoC and was aware of its decision. Despite issuance of Form G and extension of timeline by the CoC, the Appellant never expressed interest or submitted EoI. It was only on July 13, 2023 that a letter was written by the Appellant requesting to permit him to submit an offer.

The Tribunal further noted that the CoC was also of the opinion that the intention of the Appellant was only to disrupt the CIRP process and it was not really his intention to submit a plan therefore the CoC decided not to proceed further with the plan submitted by the Appellant. In light of the above, it cannot be said that the plan of the Appellant was not considered.

The Tribunal concluded that “the Resolution Plan of Pinax, which was approved with 97% vote share of the CoC has been rightly approved by the Adjudicating Authority by order dated 20.12.2024, which order need no interference, since no ground has been made out within meaning of Section 61(3) of the IBC.”

Case Title: Sanjeev Agarwal & Anr. Versus Avishek Gupta & Ors.

Case Number: Company Appeal (AT) (Insolvency) No.228 of 2025

Judgment Date: 19.02.2025

For Appellants : Mr. Gaurav Mitra, Sr. Advocate with Ms. Arushi Mishra, Mr. Dhruv Gupta and Mr. Rishav A., Advocates.

For Respondents : Ms. Swati Dalmia, Ms. Safura Ahmed and Ms. Neha Sinha, Advocates for R-1.

Mr. Krishnendu Dutta, Sr. Advocate with Mr. Sailendra Tiwari, Mr. Indranil Ghosh, Ms. Mehar Bedi and Mr. Rahul Gupta, Advocates for R-2 & R3.

Mr. Abhijeet Sinha, Sr. Advocate with Mr. Saikat Sarkar, Advocates for R-4.

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