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Judgment
Ashok Bhushan, J.
This Appeal has been filed challenging order dated 11.03.2025 passed by National Company Law Tribunal, Kolkata Bench in IVN. P (IBC)/5(KB)2025. The Appellant aggrieved by the order has come up in this Appeal.
Brief background facts necessary to be noticed for deciding the Appeal are:
Corporate Insolvency Resolution Process (“CIRP”) was initiated against Hindusthan National Glass & Industries Ltd. – Corporate Debtor (“CD”) vide order dated dated 21.10.2021. Mr. Girish Sriram Juneja (Respondent No.2 herein) was appointed as Interim Resolution Professional (“IRP”), who was latter confirmed as Resolution Professional (“RP”) of the CD.
In the CIRP of the CD, three Resolution Plans were received, i.e. by the Appellant, AGI Greenpac (“AGI”) and Nirma Chemical Works Private Limited. CoC on 28.10.2022 approved the Resolution Plan of AGI with 98% vote share. The Resolution Plan of the Appellant received 88% vote share.
The AGI – Resolution Applicant had submitted an Application with the Competition Commission of India (“CCI”) seeking approval to enter into combination with the CD. The CCI on 15.03.2023 granted approval to AGI combination proposal with the CD. There have been challenge to the order of CCI. The NCLT rejected the Application on 28.04.2023. An Appeal and various Applications were filed in Company Appeal (AT) (Ins.) No.735 of 2023 before this Tribunal. This Tribunal vide order dated 18.09.2023 upheld the approval granted to the AGI observing that prior approval was only ‘directory’. The Appellant also challenged CCI approval dated 15.03.2023 before the NCLAT, which order was upheld by NCLAT on 28.07.2023. The Appellant filed Civil Appeal before the Hon'ble Supreme Court, challenging both the orders i.e. 28.07.2023 and 18.09.2023. The Hon'ble Supreme Court vide its order dated 29.01.2025 set aside the approval granted to the Resolution Plan of AGI, holding that approval of CCI is mandatory before Resolution Plan can be approved by the CoC. The Hon'ble Supreme Court by its judgment dated 29.01.2025, issued following directions:
“155.The upshot of the above discussion are the following orders:
155.1.The AGI Greenpac’s Resolution Plan is unsustainable as it failed to secure prior approval from the CCI, as mandated under the proviso to Section 31(4) of the IBC. Consequently, the approval granted by the CoC to the Resolution Plan dated 28.10.2022 without the requisite CCI approval, cannot be sustained and is hereby set aside and quashed.
155.2.Any action taken pursuant to the Resolution Plan shall stand nullified, and the rights of all stakeholders shall be restored as per status quo ante, prior to the approval of the Resolution Plan by the CoC on 28.10.2022.
155.3.Consequently, the CoC shall reconsider the Appellant’s Resolution Plan and any other Resolution Plans which possessed the requisite CCI approval as on 28.10.2022 i.e., the date on which the CoC voted upon the submitted Resolution Plans.”
On 30.01.2025, Insolvency and Bankruptcy Board of India (“IBBI”) issued a show cause notice to the RP - Mr. Girish Sriram Juneja . The Adjudicating Authority on 04.02.2025, taking into consideration the direction of the Hon'ble Supreme Court, directed the CoC to consider the Plan submitted by H2 Bidder i.e. Appellant. The CoC in its Meeting dated 04.02.2025 approved the Resolution Plan of the Appellant and also resolved to file an Application seeking extension of CIRP period. I.A. 269/KB/2025 has been filed by RP, praying for various reliefs, including extension of CIRP.
The Adjudicating Authority on 14.02.2025 framed certain questions with respect to resolution process. On 14.02.2025, the Adjudicating Authority observed that it hopes and trust that till the matter is finally heard, no further steps would be taken by the CoC or RP pursuant to the ‘resolution’ adopted on 04.02.2025. The Applications were heard on 27.02.2025. The RP also filed an Application before the Adjudicating Authority seeking approval of Resolution Plan being IA (Reso Plan) 6/KB/2025. An Appeal in this Tribunal was also filed challenging order dated 27.02.2025, which was dismissed by this Tribunal on 07.03.2025
The Application – INV. P (IBC) No.5/KB/2025 was filed by Soneko Marketing Pvt. Ltd., an Operational Creditor, praying for intervention. The said Application came for consideration before the Adjudicating Authority on 11.03.2025, on which date, following order was passed by the Adjudicating Authority:
“IVN.P (IBC)/5(KB)2025
Heard Ld. Sr. Counsel for the parties on the interim relief.
Let reply affidavit be filed to this application by the respondent within a period of five days from today. Consequent upon filing of reply affidavit, rejoinder if any, be filed within next five days. Both the parties are hereby directed to supply advance copy to each side as stated above.
In the meantime, RP is hereby directed not to proceed with the decisions on any resolution plan. However, he will continue to run the CIRP process and keep the company is going concern. It is made clear that pleadings should be completed in all eventuality before the date fixed and no further adjournment will be given for hearing of this application. The matter will be heard on the date fixed.
Registry is hereby directed to list the matter on the top of Board. Ld. Sr. Counsel for the parties are hereby directed to remain present for hearing on the date fixed. Ld. Counsel for the parties are further directed to file written submission, if any, not more than three pages in support of their arguments.
List the matter on 26/03/2025 for hearing.”
Subsequent to the order dated 11.03.2025, the Adjudicating Authority passed an order on 17.03.2025 in IA(IB) No.269/KB/2025, where various reliefs were claimed, including extension of CIRP period. The Adjudicating Authority in its order dated 17.03.2025 took the view that post the IA(IB) No.269/KB/2025 was reserved for orders, the CP-369/KB/2020 has been transferred to another Bench. Hence, Adjudicating Authority refrained from commenting on all other matters associated with the present case and the same may be taken up before the Bench, where the matter is transferred. The Adjudicating Authority however, on prayer of the RP for clarification, granted following clarification in paragraph 18:
“18.In regard to the prayer “a” of the application seeking clarification of the order dated 10.02.2025 we have already clarified in presence of all the parties that filing of IAs have not restrained and applications have already been filed by the CoC and RP which have been entertained by this Tribunal even after the order of 10.02.2025.”
This Appeal has been e-filed on 24.03.2025 challenging the order of Adjudicating Authority dated 11.03.2025. On 27.03.2025, the Appeal was taken for consideration and on the request made by learned Counsel for the Respondent, the matter was fixed for 28.03.2025. The Appeal was heard on the said date and the order was reserved.
We have heard Shri Ritin Rai, learned Senior Counsel appearing for the Appellant; Shri Joy Saha, learned Senior Counsel appearing for Respondent No.3, who had filed the Application for Intervention Petition No. IBC)/5(KB)2025. We have also heard Shri Krishnendu Datta, learned Senior Counsel for the RP and learned Counsel appearing for the CoC/ Respondent No.1.
Learned Counsel for the Appellant in support of the Appeal submits that by order of the Hon'ble Supreme Court dated 29.01.2025, the Hon'ble Supreme Court has directed for consideration of the Appellant’s Resolution Plan and any other Resolution Plan, which possessed the requisite CCI approval as on 28.10.2022, i.e. the date on which the CoC voted upon the Resolution Plan of AGI. In view of the direction of the Hon'ble Supreme Court, it was obligatory on the CoC and the RP to consider the Resolution Plan of the Appellant. After the order was passed by the Hon'ble Supreme Court, a show cause notice dated 30.01.2025 was issued to the RP by IBBI, which show cause notice has no effect on continuation of the RP in the present proceedings. Such initiation of show cause notice result in automatic suspension of RP’s Authorization for Assignment (“AFA”) granted to the RP, which debars the RP from taking any fresh assignment. However, issuance of show cause notice, does not prohibit the RP to continue with the existing engagement. After the order of the Hon'ble Supreme Court various applications have been filed by Operational Creditor, i.e. suspended Management, by filing different Intervention Applications to stall the process of approval of Resolution Plan. The Application - Inv. P (IBC)/5(KB)2025 was filed only with the said object and Adjudicating Authority committed error in passing an interim order on 11.03.2025, directing the RP not to proceed with the decision on any Resolution Plans, which interim order is unsustainable. It is submitted that the interim order passed by Adjudicating Authority has effect of stopping the RP and the CoC from complying the order of Hon'ble Supreme Court dated 29.01.2025. It is submitted that Adjudicating Authority itself by order dated 17.03.2025 clarified that filing of IAs have not restrained and Applications have already been filed by the CoC and RP, which have been entertained by the Tribunal even after the order of 10.02.2025 (correct date is 14.02.2025). Learned Counsel for the Appellant submits that Appellant’s only prayer in this Appeal is that Adjudicating Authority may be directed to proceed with the Plan approval application and all other Application/ Intervention Applications and decide the same. Learned Counsel for the Appellant submits that although by issue of show cause notice, there is no embargo on the RP with respect to continuing with the existing assignment, however, this Tribunal may direct the NCLT to treat all pending Applications as objections to the Plan approval application and decide the same, so that order of the Hon'ble Supreme Court dated 29.01.2025 be implemented.
Shri Joy Saha, learned Senior Counsel appearing for Respondent No.3 – Soneko Marketing Pvt. Ltd., who had filed Intervention Application No.(IBC)/5(KB)2025, opposing the Appeal contends that the effect of issuance of show cause notice by the IBBI is automatic suspension of AFA of the RP. The AFA having been suspended automatically, the RP cannot proceed, in the present proceedings. The Adjudicating Authority has rightly restrained the RP from proceeding with the Resolution Plan. Learned Counsel has relied on the judgment of High Court of Madras in CA. V. Venkata Sivakumar vs. Insolvency and Bankruptcy Board of India – (2024) SCC OnLine Mad 156 as well as judgment of High Court of Bomaby in Kairav Anil Trivedi vs. Insolvency and Bankruptcy Board of India and ors. – (2024) SCC OnLine Bom 2572.
Learned Counsel for the CoC submits that the Resolution Plan having been approved by the CoC on 04.02.2025, Application for approval of Resolution Plan needs to be considered. It is submitted that Intervenors, dissenting secured Financial Creditors and Suspended Management are trying to stall the CIRP by filing one after another Intervention Applications. It is submitted that by issuance of show cause notice, the RP is not prohibited from continuing the existing assignment. The RP cannot take any new assignment in view of suspension of AFA. Reference has been made to Regulation 7A of IBBI (Insolvency Professional) Regulations, 2016.
We have considered the submissions of learned Counsel for the parties and have perused the records.
The Appellant is aggrieved by the following part of the impugned order i.e. “In the meantime, RP is hereby directed not to proceed with the decisions on any resolution plan”. The submission of the Appellant is that all Intervention Applications and objections to the Resolution Plan need to be considered simultaneously by the Adjudicating Authority and the process need not be stopped. The issuance of show cause notice dated 30.01.2025 in no manner prohibit the RP to continue with the assignment. In any view of the matter, the Hon'ble Supreme Court has directed for consideration of Resolution Plan of the Appellant by the CoC and RP submitted as on 28.10.2022.
The submission canvassed before us by contesting parties is regarding engagement of RP to continue in the process or not. Admittedly, Intervention Petitions (IBC)/5(KB)2025 and other Applications are still pending and have still not been finally decided. When the Hon'ble Supreme Court had directed the CoC to reconsider the Resolution Plan of the Appellant as on 28.10.2022, we are of the view that the Resolution Plan Application along with all objections regarding continuance of the RP in the CIRP, need to be finally decided by the Adjudicating Authority. Stopping the process will further delay the resolution of the CD. We have already noticed that IA 269/KB/2025 has already been filed by the RP for extension of timeline of the CIRP. The Hon'ble Supreme Court having directed for consideration of Resolution Plan of the Appellant, the Adjudicating Authority has to consider and pass an appropriate order on the said Application, which Application is also now pending for adjudication.
Shri Joy Saha, learned Senior Counsel for Respondent No.3 has submitted that Adjudicating Authority has already passed an order on 14.02.2025, where the Adjudicating Authority directed “we hope and trust that till the matter is finally heard and disposed of, no further steps would be taken by the CoC or RP pursuant to the ‘resolution’ adopted on 04/02/2025 and 10/02/2025”. The submission is that the order dated 14.02.2025 being continuing and which order was never challenged, the Adjudicating Authority has rightly passed the impugned order on 11.03.2025. We noticed above that Adjudicating Authority in its order dated 17.03.2025 in IA 269/KB/2025 has issued clarification. The Adjudicating Authority, which had passed order on 14.02.2025, have clarified that ‘filing of IAs have not restrained and applications have already been filed by the CoC and RP, which have been entertained by this Tribunal even after the order of 10.02.2025 (correct date is 14.02.2025)’. In view of the above clarification dated 17.03.2025, we are of the view that order dated 14.02.2025, cannot be read in a manner as submitted by Learned Counsel for Respondent No.3. Learned Counsel for Respondent No.3 submitted that order was never challenged. However, Learned Counsel for RP has contended that Application for clarification was already filed being IA 269/KB/2025, which clearly covered the issue. We, thus, are of the view that in view of the clarification order dated 17.03.2025, order dated 14.02.2025, cannot be read as any kind of restraint put by the Adjudicating Authority.
The present is a case where CIRP has commenced as early as on 21.10.2021 and the process has not reached to its culmination. We are of the view that in view of the order of the Hon'ble Supreme Court dated 29.01.2025, the Adjudicating Authority need to proceed with the consideration of all pending Applications, including Plan approval Application and Application - IVN. P (IBC)/5(KB)2025 and decide all issues, including competency of the RP to participate in the ongoing process. Applications being pending before the Adjudicating Authority, we refrain ourselves from expressing any opinion on the submissions regarding continuance of the RP as noticed above. Ends of justice will be served in disposing the Appeal by deleting the following directions from the impugned order:
“….In the meantime, RP is hereby directed not to proceed with the decisions on any resolution plan. ….”
We further are of the view that Adjudicating Authority may proceed to consider all pending Applications, including Resolution Plan approval Application, i.e. I.A. 269/KB/2025 and IVN. P (IBC)/5(KB)2025 and all other pending Applications and decide the same at the earliest in accordance with law. The Appeal is disposed of accordingly. There shall be no order as to costs.