NCLAT Delhi: New Resolution Applicants Aren't Entitled To Participate In CIRP And Submit Resolution Plan To NCLT Without Issuance Of Fresh Form G

Background Facts:

Ashdan Properties Pvt. Ltd. (Appellant) was declared as the highest bidder ('H1') post its participation in 33 rounds of bidding. Subsequently, an Interim Application was filed by Patanjali Ayurveda Ltd., along with two other applicants, B-Right Realestate Ltd. and MGN Agro Properties Private Limited wherein, NCLT issued a direction to submit their Resolution Plan for consideration before the Committee of Creditors ('CoC'). The NCLT's Orders dated 12.02.2024 and 21.02.2024 directed the CoC to consider the Resolution Plan with a fresh opportunity to revise the bid to all the Resolution Applicants.

Aggrieved by the Adjudicating Authority's Orders dated 12.02.2024 and 21.02.2024, the Appellant has filed an appeal before the NCLAT.

Contentions of the Appellant:

The Appellant relying upon Regulation 39(1)(b) of the CIRP Regulations, 2016 argued that neither Patanjali nor the other two applicants were included in the list of Prospective Resolution Applicants ('PRAs'), therefore, there was no basis for directing the CoC to consider their applications or Resolution Plans.

NCLAT Verdict:

The NCLAT Delhi allowed the appeal and held that new Resolution Applicants are not entitled to submit applications to the Adjudicating Authority to participate in the CIRP and submit a Resolution Plan when a fresh Form G hasn't been issued under Regulation 36A (1) of the CIRP Regulations 2016.

The Appellate Tribunal placed reliance on Regulation 39(1)(b) of CIRP Regulations, 2016 which is read as follows:

Regulation 39. Approval of resolution plan

(1B) The committee shall not consider any resolution plan- (a) received after the time as specified by the committee under regulation 36B; or (b) received from a person who does not appear in the final list of prospective resolution applicants; or (c) does not comply with the provisions of sub-section (2) of section 30 and sub-regulation (1).”

It observed that the Regulation provides that the CoC shall not consider a Resolution Plan received from an application whose name does not appear in the list of PRAs. It noted that neither Patanjali nor the other two applicants have submitted any Expression of Interest ('EOI') nor their name was reflected in the List of PRAs.

The Tribunal also referred to Regulation 36A of the CIRP Regulations 2016 which is read as follows:

Regulation 36A. Invitation of Resolution Plans

(1) The resolution professional shall issue an invitation, including evaluation matrix, to the prospective resolution applicants in accordance with clause (h) of sub-section (2) of section 25, to submit resolution plans at least thirty days before the last date of submission of resolution plans.

(5) The resolution professional shall publish brief particulars of the invitation in Form G of the Schedule: (a) on the website, if any, of the corporate debtor; and (b) on the website, if any, designated by the Board for the purpose.”

The Appellate Tribunal noted that Form G is issued for the invitation of EOIs for the submission of Resolution Plan under Regulation 36A (1) of the CIRP Regulations, 2016.

It pointed out that the invitation to EOIs grants the CoC the authority to adjust the invitation as needed. The CoC retains the discretion to decide not to proceed with the current applications and EOIs, opting instead to issue a new Form G to allow other interested parties to join the process. If a new Form G hasn't been issued, new applicants are not allowed to submit applications to the Adjudicating Authority to participate in the CIRP and submit a Resolution Plan.

In conclusion, NCLAT set aside the orders dated 12.02.2024 and 21.02.2024 observing that the CoC took the resolution to not consider any additional new entrants and will confine its consideration to Resolution Applicants whose names were reflected in the final list of PRAs dated 07.11.2023.

Case Title: Ashdan Properties Pvt. Ltd. vs. Mamta Binani (RP of Rolta India Ltd.) and Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 464 of 2024 with Company Appeal (AT) (Insolvency) No. 459 of 2024

Counsel for Appellant: Mr. Ramji Srinivasan, Sr. Advocate with Ms. Sonam Mhatre, Mr. Akash Kakade, Mr. Darshil Thakkar, Mr. Somnath Padhan, Ms. Namrata Saraogi, Mr. Swetab Kumar, Mr. Kartik Pandey, Mr. Pawan Kaushik, Advocates.

Counsel for Respondents: Mr. Sandeep Bajaj, Ms. Aakanksha Nehra, Ms. Gunjan Nauyar, Advocates for R1 Mr. Gautam Singh, Mr. Aditya Vaibhav Singh, Advocates for R3 Mr. Gaurav Mitra, Sr. Advocate for CoC Mr. Sameer Pandit, Ms. Sarreh Khambati, Mr. Aman Raj Gandhi, Ms. Saloni Kumar, Mr. Devanshu Behl, Advocates.

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