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Judgment
ASHOK BHUSHAN, J.
This Appeal by a Suspended Director of the Corporate Debtor M/s Drish Shoes Ltd. has been filed challenging the order dated 01.07.2024 passed by National Company Law Tribunal, Chandigarh Bench (Court I) in IA No.1420 of 2024. IA No.1420 of 2024 was filed by the Appellant, which came to be rejected by the impugned order. Aggrieved by order dated 01.07.2024 rejecting the IA No.1420 of 2024, this Appeal has been filed.
We need to notice brief background facts and the sequence of the events for deciding the Appeal:
(i) The account of the Corporate Debtor was declared a NPA on 09.11.2021 by the Financial Creditor - Bank of India.
(ii) In Section 9 Application filed by one M/s Reem Tanners Pvt. Ltd., Corporate Insolvency Resolution Process (“CIRP”) commenced against the Corporate Debtor vide order dated 12.05.2022. Respondent No.1 was appointed as an Interim Resolution Professional (“RP”), who was confirmed as RP on 01.09.2022.
(iii) An OTS proposal was given by the Appellant to the Bank of India on 05.07.2022. In the CIRP Form-G was issued thrice. The Appellant on 22.09.2022 revised his OTS offer for an amount of Rs.55 crores. In the 7th meeting of Committee of Creditors (“CoC”), Resolution Professional opened three Resolution Plans received in the CIRP. On 10.06.2023, the CIRP period was extended for 20 days by the Adjudicating Authority, by which the CIRP period of 330 days coming to end on 30.06.2023. In 18th CoC meeting held on 29.06.2023, the CoC resolved to seek further extension of CIRP period by 30 days. IA No.1529 of 2023 was filed by the RP on 30.06.2023 seeking further extension of 30 days.
(iv) On 27.07.2023, 19th CoC meeting was held in which by 100% vote share Resolution Plan of Saboo Tor Pvt. Ltd. was approved. After approval of the Resolution Plan, an Application was filed by the RP for approval of the Resolution Plan.
(v) On 29.07.2023, the Appellant filed IA No.1748 of 2023 praying for setting aside the Resolution Plan approved by the CoC in its 19th meeting. The Appellant also claimed that the Appellant has raised its offer on 27.03.2023 to Rs.67.50 crores under the OTS, which is more than that of H1 bidder.
(vi) IA No.1529 of 2023, which was filed by the RP for extension of time for 30 days, came for consideration before the Adjudicating Authority on 18.10.2023, on which date Adjudicating Authority granted extension of 30 days from the date of the order of the Adjudicating Authority, by excluding the period of pendency of the Application before the Adjudicating Authority.
(vii) On 22.12.2023, the Adjudicating Authority dismissed the IA No.1748 of 2023 filed by the Appellant. Appellant filed Company Appeal (AT) (Ins.) No.374 of 2024, which was dismissed by this Tribunal on 23.02.2024, which was also challenged by the Appellant before the Hon’ble Supreme Court in Civil Appeal, which too was dismissed on 13.05.2024.
(viii) On 10.06.2024, the Appellant filed IA No.1420 of 2024 seeking direction to declare 19th CoC meeting and all decision taken thereof including approval of Plan as illegal due to expiration of CIRP period on 30.06.2023, which Application was dismissed by the Adjudicating Authority on 01.07.2024. Aggrieved by which order, this Appeal has been filed.
We have heard Shri Abhijeet Sinha, learned Senior Counsel appearing for the Appellant; Shri Krishnendu Datta, learned Senior Counsel appearing for Respondent No.1; Shri V. Seshagiri, learned Counsel appearing for Respondent No.2; and Shri Harshit Agarwal, learned Counsel appearing for Successful Resolution Applicant (“SRA”).
Shri Abhijeet Sinha, learned Senior Counsel appearing for the Appellant submits that the Adjudicating Authority having passed an order on 10.06.2023 granting extension of 20 days in the CIRP, i.e. upto 30.06.2023, which was with a rider that no further extension may be granted, the decision of the CoC taken on 27.07.2023, approving the Resolution Plan was beyond the CIRP period and could not have been taken note of by the Adjudicating Authority. Beyond CIRP period, no Resolution Plan can be approved. It is submitted that subsequent order passed on 18.10.2023 by the Adjudicating Authority, allowing the extension of 30 days, cannot be used to the benefit of anyone. No Resolution Plan can be approved when the CIRP period has come to an end. The CoC had no power to approve the Resolution Plan after expiry of CIRP period as it has become functus officio on 30.06.2023. The CoC while approving the Resolution Plan on 27.07.2023 could not have presumed that application for extension will be allowed without obtaining the order for extension, hence, the CoC could not have proceeded any further.
Shri Krishnendu Datta, learned Senior Counsel appearing for Respondent No.1 submits that CoC on 29.07.2023 has already resolved to seek extension of 30 days to enable it to complete the process. In pursuance of which application was filed by the RP on 30.06.2023 and which is within the period of 30 days, which was sought by the CoC. The Resolution Plan of SRA was approved on 27.07.2023. It is submitted that the Appellant has filed IA No.1748 of 2023 on 29.07.2023 praying for setting aside the CoC resolution dated 27.07.2023, which application having already been dismissed by the Adjudicating Authority on 22.12.2023, it was not open for the Appellant to file another application, i.e. IA No.1420 of 2024 seeking declaration with regard to CoC minutes dated 27.07.2023. It is submitted that Company Appeal (AT) (Ins.) No.374 of 2024 filed by the Appellant challenging the order dated 22.12.2023 in IA No.1748 of 2023 has also been dismissed by this Tribunal on 23.02.2024. The Appellant cannot be allowed to re-agitate the correctness of the minutes dated 27.07.2023.
We have considered the submissions of learned Counsel for the parties and have perused the records.
The submissions which have been pressed by the learned Counsel for the Appellant regarding 19th CoC meeting held on 27.07.2023, in which Resolution Plan of SRA was approved, which according to the Appellant was after the expiry of CIRP period on 30.06.2023, hence, all the decisions taken in that meeting were illegal. From the facts which have been noticed above, it is clear that CoC on 29.07.2023 has already resolved to seek further extension of 30 days for completion of process beyond 30.06.2023. In pursuance of which, RP has filed an IA before the Adjudicating Authority being IA No.1529 of 2023 seeking extension of 30 days. It is undisputed that the said IA was allowed on 18.10.2023. The order dated 18.10.2023 passed in IA No.1529 of 2023 is as follows:
“IA No. 1529/2023
The present application has been filed under Section 12(2) of Insolvency and Bankruptcy Code, 2016 on behalf of the Resolution Professional seeking extension of CIRP period by 30 days beyond the period of 330 days. It is stated by learned counsel for the applicant that 330 days period of CIRP has expired on 30.06.2023. The said extension of 30 days was approved by the CoC in its 18th meeting dated 29.06.2023 in Item No. 14 with 100% voting rights. The Resolution plan has already been approved by the CoC on 27.07.2023 and the present application was e-filed on 29.06.2023. Keeping in view the statement made by learned counsel for the applicant and the facts and circumstances mentioned in the application, this application is allowed. However, the extention of 30 days beyond 330 days period is granted from the date of this order by excluding the period of pendency of this application before this Authority. Resolution professional is directed to utilize the extended time effectively and efficiently to conclude the CIRP within the stipulated time. IA No. 1529/2023 is allowed and disposed of accordingly.”
It is relevant to notice that RP has filed the Plan approval application being IA No.1734 of 2023, which was heard and decided on 01.07.2024, whichis subsequent to the order dated 18.10.2023.
From the perusal of the order dated 18.10.2023, the Adjudicating Authority has while allowing the extension has excluded the period of pendency of the IA No.1529 of 2023, which remained pending from 30.06.2023 to 18.10.2023. When the period between 30.06.2023 till 18.10.2023 has been excluded and further extension was granted by 30 days, it cannot be said that approval of the Plan in the CoC meeting dated 27.07.2023 was beyond CIRP period. It would have been otherwise, if the Adjudicating Authority has rejected IA No.1529 of 2023, in that event, approval of Plan on 27.07.2023 would have failed. But Adjudicating Authority having granted extension of time, the period stand extended and the decisions of the CoC fell within the extended period of CIRP and there is no merit in the submission of the Appellant that minutes of the meeting dated 27.07.2023 be declared illegal.
Learned Counsel for the Respondent has relied on judgment of this Tribunal in Company Appeal (AT) (Insolvency) No.63 of 2024 – Deepak Sakharam Kulkarani & Anr. Vs. Manoj Kumar Agarwal, RP of D.S. Kulkarni Developers Ltd. & Ors with other connected matters decided on 01.07.2024, where one of the issue raised was that Plan was approved by the CoC after expiry of CIRP period. In the above case also the period of CIRP came to an end on 13.06.2021 and the Plan was approved on 13.08.2021. In the Form-H, which was submitted by the RP, it was mentioned that date of expiry of extended period was 13.06.2021, however, it was noted in the Form-H that application for extension and exclusion has been filed on 10.06.2021 for seeking further exclusion of the time, which is awaiting hearing. In the above case also, the Adjudicating Authority has allowed exclusion by its subsequent order dated 11.01.2022. In the above case, the orders were passed subsequently after the CoC having approved the Plan on 13.08.2021. In the above case also the period was extended and on the said ground, it was held that since the Resolution Plan falls within the said period, the argument was rejected. In paragraph 109, following was concluded:
“109. When we look into the order dated 11.01.2022, as extracted above, it is clear that exclusion of 60 days’ time was granted from 24.03.2021 to 22.05.2021 meaning thereby that 60 days exclusion was allowed, and when we add this 60 days from after 13.06.2021, it goes to 12.08.2021. It appears that it is due to the aforesaid reasons a rectification application was filed by RP being I.A. No. 1563/2022, praying for exclusion of further two days’ time to complete the process and by order dated 20.06.2022, in addition to 60 days exclusion allowed by order dated 11.01.2022 two days further time was allowed which period clearly covered the date on which Resolution Plan was approved by the CoC i.e., 13.08.2021. The Form H although has noticed that application for exclusion is pending, but order dated 11.01.222 and 20.06.2022 were not referred to in the Form H and when we read Form H along with the orders dated 11.01.2022 and 20.06.2022 passed by the Adjudicating Authority, granting exclusion of time till 13.08.2021, which is the date of which the Resolution Plan falls well within the CIRP period, hence the submission of the Appellant that Resolution Plan was approved by the CoC after expiry of the CIRP period cannot be accepted.”
The above judgment fully supports the submission of the Respondent
It is further relevant to notice that the Appellant has filed IA No.1748 of 2023, immediately after CoC held its meeting dated 27.07.2023, which Application was filed on 29.07.2023, in which Application the Appellant has prayed for following reliefs:
“1. Set aside 19th CoC proceedings dated 27.7.23 approving the resolution plan and / or applicant be also allowed to submit his Resolution Plan under the current CIRP process for consideration of CoC as applicant is suspended director of MSME-CD and condone delay in submitting the same due to pendency of OTS proposal of the applicant offering Rs.11 crore more than the Final Plan received; or
Direct the Respondent No. 1 to publish Fresh form G for inviting competitive bids for the revival of the Corporate Debtor in order to maximise the value of the Corporate Debtor.
Pass such other or further order / order(s) as may be deemed fit and proper in the facts and circumstances of the instant case.”
The above IA 1748 of 2023 came to be rejected by the Adjudicating Authority on 22.12.2023, against which order Company Appeal (AT) (Ins.) No.374 of 2024 was filed, which also came to be dismissed by this Tribunal on 23.02.2024. The Appellant also challenged the order of this Tribunal dated 23.02.2024 in the Hon’ble Supreme Court, which Appeal also came to be dismissed. It is relevant to notice that in IA No.1748 of 2023, the Appellant has prayed for setting aside the minutes of the meeting of the CoC dated 27.07.2023, approving the Resolution Plan. In IA No.1420 of 2024, which has been rejected by the impugned order, the Appellant has again made a prayer to set aside the resolution of the CoC held on 27.07.2023. The Appellant having unsuccessfully challenged the Resolution Plan dated 27.07.2023 in IA No.1748 of 2023, which decision of NCLT was affirmed up to Hon’ble Supreme Court, it cannot be allowed to again question the same decision by filing IA No.1420 of 2024. The Adjudicating Authority while having noticed the order dated 18.10.2023 has concluded that by allowing the extension of 30 days and excluding the period of pendency of the IA filed by RP for seeking extension. In paragraph 15, following was concluded by the Adjudicating Authority:
“15. …. Thus, we find from the order (ibid) that this Adjudicating Authority had allowed the extension of 30 days beyond 330 days period from the date of the order (i.e., 18.10.2023) by excluding the period of pendency of the IA filed by RP for seeking extension. Hence, in view of the above, the contention raised by the Applicant that the Resolution Plan was approved by the COC after expiration of the CIRP period without an extension granted by this Adjudicating Authority, does not survive. In view of the above, we find no force in the objection raised by the Applicant and the same is rejected.”
We, thus, do not find any infirmity in the order of the Adjudicating Authority rejecting IA No.1420 of 2024. There is no merit in the Appeal. The Appeal is rejected. Parties shall bear their own costs.