Parivartan Investment and Finance Company vs Haryana Telecom Ltd.

Haryana Telecom Limited (“Corporate Debtor”) was admitted into the Corporate Insolvency Resolution Process ("CIRP") against a petition filed by Parivartan Investment and Finance Company (“Financial Creditor”) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code” or “IBC”) vide Order dated 07.02.2020 and Shri Sanyam Goel was appointed as the Interim Resolution Professional (“IRP”), who was later confirmed as the Resolution Professional ("RP") of the Corporate Debtor.

In terms of Section 25(2)(h) of the Code read with Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the RP published the "Invitation for Expression of Interest in Form-G" on 24.06.2020. The last date for submission of the Expression of Interest was fixed as 09.07.2020 and the last date for submission of the Resolution Plan was fixed as 02.09.2020. The RP received 3 resolution plans before the last date, i.e., 02.09.2020.

The RP filed an application seeking an extension of the CIRP period for a further 90 days beyond the prescribed period of 180 days (expired on 12.10.2020), which was allowed vide order dated 29.10.2020.

The Resolution Plan submitted by Mr. Abhimanyu Singh Mehlawat (“SRA”) for Rs. 25.14 crores was approved by the CoC in its 9th meeting dated 31.10.2020 with 100% voting share. SRA submitted Performance Security of a total of Rs.4,00,00,000/- (Rupees Four Crore only) as a Performance Bank Guarantee (PBG).

Application bearing I.A. No. 823 of 2020 was filed by the RP before this Adjudicating Authority for approval of the Resolution Plan.

SRA filed an additional affidavit dated 13.02.2023 stating that he undertakes to make payment in regard to any dues pending under any provision of the Employees Provident Fund dues and Miscellaneous Act, 1952 or the Pension Scheme or the Insurance Scheme or the Scheme, and under the Payment of Gratuity Act, 1972, as accruing prior to the insolvency commencement date.

This Adjudicating Authority vide order dated 15.02.2023 remanded back the Resolution Plan to the CoC with the directions to the RP to submit a fresh Resolution Plan in compliance with the latest decision of the Hon'ble Supreme Court in the matter of State Tax Officer (1) Vs. Rainbow Papers Limited in Civil Appeal No.1661 Of 2020 which provided that the definition of "secured creditor" in the Code does not exclude any Government or Governmental Authority. The Committee of Creditors, which might include financial institutions and other financial creditors, cannot secure their own dues at the cost of statutory dues owed to any Government or Governmental Authority or for that matter, any other dues.

The RP filed a compliance affidavit on 25.02.2023 along with a second addendum to the Resolution Plan, whereby the table of distribution was as below:

Vide order dated 12.04.2023 of this Adjudicating Authority, the Resolution Plan submitted by the Respondent No. 1 was approved.

Pursuant to the approval of the Resolution Plan, the Suspended Director of the Corporate Debtor, namely Sita Chaudhary, filed two Company Appeals under Section 61 of the Code, objecting to the Resolution Plan and consequently seeking the setting aside of the order dated 12.04.2023 wherein the Resolution Plan had been approved. The aforementioned Company Appeals were dismissed by the Hon’ble NCLAT vide order dated 09.11.2023.

Thereafter, Civil Appeal No(s.) 8218-8219/2023 were preferred by the same suspended director, i.e., Sita Chaudhary before the Hon’ble Supreme Court. The said Civil Appeal along with other applications filed, were dismissed vide order dated 22.04.2025.

SRA was required to make the entire payment of Rs.25,14,02,128/-within 90 business/working days from the date of the order dated 12.04.2023, but failed to make the said payment by 22.08.2023.

The Chairman vide email dated 05.05.2023, requested SRA to comply with the order dated 12.04.2023. An email dated 05.05.2023 was sent by SRA’s counsel, requesting to convene a meeting of the Monitoring Committee on 11.05.2023.

The Chairman convened the 1st Monitoring Committee meeting of the Corporate Debtor on 11.05.2023. The Chairman vide email dated 17.05.2023 informed the SRA that the physical possession of factory premises situated at village Kheri Sadh, Rohtak, Haryana-124021, has been handed over to Mr. Rakesh Kumar, who was authorized by the SRA.

Vide email dated 05.07.2023, the Chairman requested the SRA to act in accordance with the Resolution Plan, to which the SRA vide email dated 08.07.2023 responded as below:

The Chairman vide email dated 08.07.2023 informed the SRA as mentioned below:

On the request of the RP, the SRA further extended the PBG on 31.07.2023 till 30.01.2024 amounting to Rs.4,00,00,000/- (Rupees Four Crore Only).

The RP convened a Second Monitoring Committee of the Corporate Debtor on 19.08.2023, wherein It was categorically informed the Authorized Representative of SRA that no compliance in pursuance of the order dated 12.04.2023 has been made by the SRA and that the last date of making the payments as envisaged under the Resolution Plan is coming to an end on 22.08.2023.

An Appeal being Company Appeal (AT) (Insolvency) No. 727 & 728 of 2023, was filed against the order dated 12.04.2023, however, no interim order or any stay order was passed by the Hon'ble Appellate Tribunal.

This Adjudicating Authority vide order dated 12.04.2023 held that

In the event where a Resolution Plan approved by the Adjudicating Authority is contravened by the Resolution Applicant then an application may be made to the Adjudicating Authority for a liquidation order in terms of Section 33(3) of the Code and if the Adjudicating Authority determines that the Resolution Applicant has contravened the provisions of the Resolution Plan, it shall pass a liquidation order. This Adjudicating Authority in the matter of Vineet Gupta vs. Monitoring Committee Through Shri Kumar Gaurav has inter-alia held that

The present application is not legally tenable in view of the fact that Section 33(3) of the Code envisages that any person other than the Corporate Debtor, whose interests are prejudicially affected, may make an application to the Adjudicating Authority for liquidation of the Corporate Debtor; however, the Chairman has failed to establish or substantiate, in any manner, how the Chairman is an affected party as contemplated under Section 33(3) of the Code.

The Hon'ble Supreme Court in the matter titled Regen Powertech Private Limited vs. Giriraj Enterprises & Anr. [Civil Appeal No. (5985-6001/2023)] has recently opined that the Resolution Professional are "neutral" individuals appointed to assist the tribunals and only aggrieved parties, such as the Committee of Creditors (CoC), can file appeals.

As per the Resolution plan, a Monitoring Committee, comprising of 1 representative of Approving Financial Creditors, the RP and 2 representatives of the RA was formed and the first meeting of the monitoring committee of the Corporate Debtor was convened on 11.05.2023, wherein implementation of the Resolution Plan was discussed.

The RP vide Email dated 05.07.2023, pointed out that the SRA has not taken any steps qua the implementation of the Resolution Plan and requested for an extension of the PBG and in pursuance thereof, the SRA duly extended the PBG on 31.07.2023 and vide email dated 08.07.2023, duly informed the RP that in view of the pendency of the aforementioned Appeal, the implementation of the Resolution Plan be held back.

The 2nd meeting of the Monitoring Committee was convened on 19.08.2023 and the same could not be attended by the sole member of the CoC; however, the Counsel for the SRA in the said meeting informed the RP that the SRA has already initiated actions apropos to the implementation of the Resolution Plan and categorically expressed that the aforementioned pending Appeal is creating an impediment in the implementation of the Resolution Plan and any infusion by the SRA made prior to adjudication of the said Appeal, may cause irreparable loss and great inconvenience to the SRA, in case the Resolution Plan is thereafter rejected by the Hon'ble NCLAT.

On the date of hearing, i.e., 19.09.2023, the counsel appearing for the RP informed that the PBG amounting to Rs.4 crores, as submitted by the SRA in terms of the Resolution Plan, has been forfeited by the RP.

The RP scheduled the third meeting of the Monitoring Committee on 06.10.2023, wherein the SRA in the aforesaid third meeting, proposed the following plan of action, subject to the approval of the Monitoring Committee:

The PBG amounting to Rs. 4 Crore, as forfeited by the Chairman, be treated as an infusion by the SRA towards the implementation of the resolution plan and the same be utilized towards the payment of CIRP Costs (as provided by the RP till the date of approval of the plan), and the balance remaining amount be kept in an escrow account till the pendency of the appeals before the Hon'ble NCLAT.

The Chairman of the Monitoring Committee will file an Application before this Adjudicating Authority to bring on record the proposed plan of action as detailed in the third meeting and the decision taken by the Parties thereon. The date of listing of such Application, for the ease of convenience, will be hereafter called as "X''.

Lastly, the aforesaid infusion through Tl and T2 alongwith the remaining amount after deducting CIRP cost from forfeited amount, will be kept in an Escrow Account till the pendency of the Company Appeals before the Hon'ble NCLAT.

The Financial Creditor, was also of the view that an opportunity should be afforded to the SRA to implement the plan and the Corporate Debtor should not be forced into liquidation at this stage. Further, the Chairman also expressed that as long as other members of the Committee are of the view to implement the plan in view of the terms floated by the SRA, he, being the erstwhile RP does not have any objection.

It was suggested by the Chairman that an appropriate application should instead be filed by the SRA before this Tribunal seeking extension for the implementation of the plan as well as acceptance of the proposed terms.

However, if the Corporate Debtor is shoved into liquidation, all the stakeholders, including the SRA will be prejudicially affected.

The erstwhile RP being the Chairman of the Monitoring Committee, has preferred the present application unilaterally, without any prior approval or resolution or taking the opinion of other stakeholders into consideration, despite being made aware by the SRA that the delay in implementation of the resolution plan is due to the reasons and circumstances beyond the control of the SRA.

The present application is against commercial decisions made by the erstwhile member of the CoC. Moreover, the liquidation of the Corporate Debtor should be a matter of last resort as the Code recognizes a wider public interest in resolving corporate insolvencies and its object is not the mere recovery of monies due and outstanding. A beneficial reliance in this regard may be placed upon the order dated 09.10.2020, passed by the Hon'ble Supreme Court in Kridhan Infrastructure Pvt. Ltd. (Now Known as Krish Steel and Trading Pvt. Ltd.) vs. Venkatesan Sankaranarayan. [2020 SCC OnLine SC 889].

The bonafide of the SRA is clear from the fact that the SRA on 31.07.2023, without any protest or demur, extended the PBG amounting to Rs. 4,00,00,000/- till 30.01.2024 and is willing to infuse the total plan value in two tranches within 30 days of listing of an application before this Tribunal seeking extension for implementation of the Resolution Plan and acceptance of terms proposed by the SRA.

The Applicant has himself failed to fulfill the duty cast upon him by virtue of Section 20 of the Code, wherein the IRP is directed to make every endeavor to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern. It is submitted that the Answering Respondent has discovered that the Dy. Excise & Taxation Commissioner (Sale Taxes) has a lien/attachment on the land pertaining to the Corporate Debtor and the Applicant has failed to take any steps in order to remove the said attachment/lien.

The erstwhile RP, without obtaining any authorization and/or approval from the Financial Creditor, has filed the instant Application seeking liquidation of the Corporate Debtor. No discussion about the liquidation of the Corporate Debtor was ever held during the Monitoring Committee Meetings and no resolution to file the instant application was voted upon .

In terms of the timeline prescribed under the Resolution Plan, the SRA was to make the payment to the Financial Creditor, within 90 days, i.e., by 22.08.2023 from the approval of the Resolution Plan. However, till date the SRA has not made any payment to the Financial Creditor,.

Subsequently, upon the request of the SRA and the Financial Creditor, the erstwhile RP convened the 3rd Monitoring Committee on 06.10.2023 wherein the SRA presented a Proposed Action Plan and undertook to implement the Resolution Plan. Pursuant to which an understanding was arrived at by all the members of the Monitoring Committee that the SRA will file an Application before this Tribunal to place on record the Proposed Action Plan seeking liberty for an opportunity to implement the Resolution Plan.

The very objective of the Code is to provide resolution and not to put the company into liquidation. Reliance in this regard is placed upon the Hon'ble Supreme Court vide its order dated 09.10.2020 in case titled, Krish Steel and Trading (P) Ltd. vs. Venkatesan Sankaranarayan, (supra), wherein it reiterated the fact that the liquidation of the Corporate Debtor should be the matter of last resort.

The Financial Creditor, is of the view that an opportunity should be given to the SRA to implement the Resolution Plan, as it will in fact help in maximizing the yield out of the resolution process initiated against the Corporate Debtor. Accordingly, given that the SRA has shown its willingness to implement the Resolution Plan, the Proposed Action Plan put forth by the SRA in the 3rd Monitoring Committee Meeting is acceptable to the Financial Creditor, if the same is allowed by this Tribunal.

The reliance placed by the Answering Respondent on the judgment of the Hon’ble Supreme Court, i.e., Regen Powertech Pvt. Ltd. vs. Giriraj Enterprises & Anr. (supra), is misplaced and misconceived. The question in which the said judgment is passed is whether a Resolution Professional could have filed an appeal on the question of consolidation of CIRP. A bare perusal of the said judgment makes it clear that the same is applicable to the facts and circumstances of the said case and have no applicability in the present case, where the Answering Respondent has admittedly defaulted in adhering to the terms and conditions of the approved Resolution Plan.

The Answering Respondent forfeited the Performance Security of Rs.4 Crores as per the terms and conditions of the approved Resolution Plan passed by this Hon’ble Adjudicating Authority. It is also submitted that the said amount of Rs.4 crore has not been utilized by the Applicant till date and an interest-bearing Fixed Deposit has been made against the said amount.

The Applicant herein is not obligated to consult with the monitoring committee since the applicant had already sent numerous communications and emails to Respondent No. 1 for complying with the terms of the approved Resolution Plan.

The Hon’ble NCLAT in the matter of Yavar Dhala vs. JM Financial Asset Reconstruction Company Ltd. & Ors., Company Appeal (AT) (Ins) No. 13 of 2019, held that ‘on failure of the resolution applicant to implement the terms of the resolution plan, liquidation has to follow.

Once the timeline stated in the approved Resolution Plan lapses and there is non-implementation of the Resolution Plan, no extension/modification/alteration of the Resolution Plan is permissible.

No application for extension/stay on implementation of the resolution plan was made by the SRA during the 90 days i.e. till 22.08.2023. Any extension/modification after the expiry of the period would amount to ex-post facto i.e. retrospective revival/extension of the Plan which is impermissible.

SRA approached this Tribunal by filing an application bearing I.A. No. 2573 of 2023 on 10.10.2023 seeking an extension of time to fulfill the obligations under the Resolution Plan, much after the expiry of the time period for the implementation of the resolution plan.

The Hon’ble Apex Court in the case of Ebix Singapore Pvt. Ltd. vs. Committee of Creditors of Educomp Solutions Ltd. & Anr. (Civil Appeal No. 3224 of 2020) held that once the Resolution Plan is approved by the COC, the same cannot be withdrawn or modified by the SRA.

The flawed defense taken by the SRA that he did not comply with the Resolution Plan due to the pendency of an appeal against the same is devoid of merit as well as law. The obligations with respect to the payment schedule were binding on the SRA notwithstanding the pendency of any appeal before the Hon’ble NCLAT.

RP, who had initially opposed any deviation from the plan in the 2nd and 3rd Monitoring Committee meetings, has taken an opposite stance in the 5th meeting, permitting not only the extension but also adjustment of forfeited performance security, thus revealing conduct that is not only inconsistent but also prejudicial to the interests of stakeholders and contrary to law.

Once the resolution plan had failed and the performance security stood forfeited, and in view of the earlier pleadings and applications moved by the RP under Section 74(3) of the Code seeking penal consequences, no scope in law remained for condoning such failure. The direction to refer the matter to the Monitoring Committee, an administrative body that is not a creation of the statute, is wholly unsustainable.

The State of Haryana, which holds approximately Rs.80 crores in admitted dues and represents the single largest stakeholder, has not been given any representation in the MC. This exclusion of a critical public creditor renders the composition of the MC arbitrary, inequitable, and prejudicial to the larger public interest.

One of the MC members, Ms. Sunaina Chhabra, is a part of the Monitoring Committee. However, she no longer holds any position in the Corporate Debtor and stands removed as director w.e.f. 31.01.2024. Her continued participation vitiates the decisions of the MC, especially when key resolutions are being taken on extension and plan compliance. Despite her disqualification, she continues to participate and vote on key issues. Her continued presence also violates the mandate of Section 25A(3) of the Code, which obligates the authorized representatives to act strictly in accordance with the prior instructions of the financial creditors they represent.

Whether the SRA has displayed the bona fide intent to implement the Resolution Plan?

Whether under the facts and circumstances of the case, an extension can be granted to the SRA to implement the resolution plan?

If yes, whether such extension amounts to a modification of the resolution plan and not permissible under law?

Whether the PBG stood validly forfeited without a resolution of the Monitoring Committee to that effect?

The Suspended Directors, erstwhile RP and the applicants proposing an enhanced resolution plan have raised an allegation that the SRA has contravened the terms of the Resolution Plan under the guise of pendency of appeals before the Hon’ble NCLAT and the Hon’ble Supreme Court.

On the contrary, the SRA has argued that he has been and is still willing to implement the Resolution Plan. The delay has been attributed to the pendency of appeals, as mentioned above.

It is worthwhile to note that the SRA duly extended the PBG of Rs. 4 crores on 31.07.2023, which was originally submitted on 02.11.2020 before the Resolution Plan was approved vide order dated 12.04.2023. This act, despite pending litigation, signals a continued commitment to the plan.

In the 3rd meeting of the MC convened on 06.10.2023, the SRA proposed a plan of action for implementation of the Resolution Plan, and the same was accepted by all the members of the MC subject to the approval of this Adjudicating Authority. The email dated 07.11.2023 attached as Annexure-C to the written submissions filed in I.A. No. 2537/2023 is reproduced hereunder:

In the 4th MC meeting convened on 21.11.2023, the SRA proposed to hand over the said Demand Draft to the Chairman/RP. The sole Financial Creditor, also requested the Chairman/RP to accept the said Demand Draft bearing no. 301954 drawn on Bank of Baroda dated 07.11.2023 and keep the same as a custodian till the pendency of the proceedings before this Adjudicating Authority. The relevant part of the minutes of the said meeting is reproduced hereunder for ready reference:

The email dated 01.12.2023 attached as Annexure-F to the written submissions filed in I.A.NO. 2537/2023 reads as below:

The SRA was willing and demonstrably ready with the full plan amount on 07.11.2023, before the final adjudication of the aforementioned appeals on 09.11.2023 by the Hon’ble NCLAT and on 22.04.2025 by the Hon’ble Supreme Court. This proactive step, taken even before the appellate proceedings concluded, is a strong indicator of the SRA's genuine intent to complete the Resolution Plan, rather than merely waiting for a judgment to compel compliance.

From the facts mentioned above, particularly the consistent communication, extension of PBG, and the eventual deposit of the entire amount, it is evident that the SRA has rightfully established its willingness to implement the Resolution Plan, albeit with a delay. The delay, in this context, appears to be a consequence of navigating the uncertainties of the appellate process rather than a deliberate act of contravention.

Thus the first issue, ‘whether the SRA has displayed the bona fide intent to implement the Resolution Plan, is answered in the affirmative.

The appellants have vehemently argued against granting any extension, citing precedents such as the Hon’ble Supreme Court's decision in the Jet Airways Case and the Hon’ble NCLAT's decision in Darwin Platform Infrastructure Limited (supra). These judgments emphasize the importance of adhering to timelines stipulated in the Resolution Plan and the principle that pendency of litigation is not a valid ground for seeking extensions. The appellants, particularly in I.A. No. 1025 of 2025, highlighted the dictum from Jet Airways stressing strict compliance under Section 74(3) of the Code.

On the other hand, the SRA and the Financial Creditor have contended that a short extension is permissible under the unique circumstances of this case, especially considering the SRA's bona fide efforts and the deposit of the entire Resolution Plan amount. They have referred to the plenary powers of the Adjudicating Authority under Rule 15 of the National Company Law Tribunal Rules, 2016 (hereinafter referred to as the “NCLT Rules”) and have cited instances where extensions have been granted by appellate courts in the interest of maximizing value and ensuring the success of the Resolution Plan.

We have carefully considered the arguments of both sides and the judicial precedents cited. While the principle of strict adherence to timelines in the Resolution Plan, as underscored in Jet Airways and Darwin Platform, is a cornerstone of the insolvency resolution process; each case must be examined based on its own facts and circumstances.

The factual matrix in Jet Airways (supra) is materially distinct from the present case. In Jet Airways, the SRA had failed to implement the Resolution Plan despite having been granted more than 5 extensions and multiple accommodations. Crucially, the SRA therein failed to deposit the tranche amount despite specific orders of the Hon’ble Supreme Court. The delay was protracted and indicative of a lack of genuine intent to comply.

Similarly, The Bhushan Steel Judgment, cited by the appellants, involved a delay of around 540 days and 900 days in respect to the payment of the Financial Creditor and Operational Creditor, respectively. Two years and multiple extensions were granted. Apart from non-implementation despite multiple opportunities, the Hon’ble Supreme Court while ordering liquidation, also weighed on non-adherence of procedural and mandatory compliances, such as failure of the RP to certify Section 29A compliance, failure of the RP to submit a compliance certificate in FORM-H, failure of the RP to seek extension of the CIRP period and material concealments on the part of the applicant. Due to all of the said collective reasons, the Hon’ble Supreme Court was constrained to direct Liquidation of the Corporate Debtor. This case, therefore, involved a multitude of failures and a significantly longer delay than the present one. More so, the said order passed by the Hon’ble Supreme Court is under review and its implementation is already stayed by the Hon’ble Supreme Court pending review.

In contrast, in the present case, the resolution plan value has already been infused by the SRA, who is seeking an extension of a mere 78 days. This is the first and last extension being sought by the Applicant as the Resolution Plan amount stands infused in the Corporate Debtor. The SRA's actions, including the extension of the PBG and the deposit of the entire amount even before the conclusion of the appellate proceedings, demonstrate a proactive approach towards implementation, unlike the passive non-compliance observed in the cited precedents.

Furthermore, the argument that "pendency of litigation cannot be a ground to extend timelines for implementation," while a generally sound principle, is not an absolute bar, particularly when the litigation directly impacts the feasibility or clarity of implementing the plan, and no stay on implementation has been granted. In such situations, a short, reasonable extension sought in good faith, especially after the underlying cause of delay (the appeals) has been resolved and the funds have been infused, can be considered by the Adjudicating Authority in exercise of its plenary powers under Rule 15 of the NCLT Rules, in conjunction with Section 60(5) of the Code, which grants the NCLT jurisdiction over all matters arising under the Code.

We draw strength from the decisions of the Hon’ble NCLAT and the Hon’ble Supreme Court in cases like Cosmos Cooperative Bank Ltd. vs. Vaibhav Shah & Ors., Appeal (AT) (Insolvency) No. 363 of 2019 and State Bank of India Stressed Asset Resolution Group vs. MBL Infrastructure Limited and Another [Company Appeal (AT) (Ins.) No. 539 of 2022], where extensions were granted in certain circumstances, including those involving litigation, to facilitate the successful implementation of a Resolution Plan. These cases underscore that the Adjudicating Authority has the discretion to grant extensions when it is in the interest of maximizing the value of the Corporate Debtor and ensuring the success of the resolution process, provided the delay is not a result of willful default or a lack of bona fide intent. Apart from that, the depositing of the remaining amount was subject to the decision of the appellate authorities, including the Hon’ble Supreme Court. If at all the remaining amount was deposited by the SRA within the stipulated time, and the appeals preferred by the suspended director, Late Sita Chaudhary, would have succeeded, then this amount except the PBG would have been returned to the SRA, but in the case in hand, approval of the resolution plan by this Adjudicating Authority has been upheld by the Hon’ble Supreme Court. It is worthwhile to note that this Adjudicating Authority vide order dated 19.12.2023, referred the entire matter to the Monitoring Committee for consideration and the Monitoring Committee took the decision in favor of SRA. For a ready reference, the minutes of the 5th meeting of the Monitoring Committee convened on 21.12.2023, are reproduced hereunder, wherein the following resolutions were passed:

However, the said order dated 19.12.2023 of this Adjudicating Authority upon which the above mentioned decisions were taken by the Monitoring Committee, has not been challenged by any of the suspended directors or the erstwhile RP. Now, they are estopped by their own act and conduct from taking the plea that the said order was without any jurisdiction. No doubt, the Monitoring Committee is not a statutory authority, but it is a creation of the Resolution Plan, which is approved by this Adjudicating Authority and upheld up to the Hon’ble Supreme Court. Therefore, wisdom of the Monitoring Committee would prevail contrary to the contentions raised by the suspended directors or any third party.

Considering the above said resolutions passed by the Monitoring Committee in its 5th meeting on 21.12.2023 and the SRA's bona fide actions, the deposit of the entire Resolution Plan amount, after a very short duration of the requested extension, and the fact that this is the first such request, we are of the considered view that granting a limited extension to the SRA to regularize the implementation of the Resolution Plan is warranted under the given facts and circumstances of this case.

This extension is aimed at facilitating the successful conclusion of the Resolution Plan and preventing the Corporate Debtor from being pushed into liquidation, which, as noted in the MC minutes, should be the last resort.

The Monitoring Committee has acceded to the request of the SRA to grant an extension after the remaining amount of the Resolution Plan amount stood fully paid by the SRA, and it was also resolved that the application bearing I.A. No. 2096/2023 seeking liquidation of the Corporate Debtor could be withdrawn once this Adjudicating Authority grants an extension to the SRA.

Thus, in view of the judicial precedents cited above and the resolution passed in the 5th MC Meeting, the second question as to whether SRA is entitled to an extension is answered in the affirmative under the given facts and circumstances of the case.

The appellants have contended that granting an extension to the SRA amounts to a modification of the approved Resolution Plan, which is not permissible under the Code, particularly after the plan has been approved and is in the implementation stage. They argue that any deviation from the timelines constitutes a material alteration requiring fresh approval from the CoC and the Adjudicating Authority.

The appellants have referred to the judgment in the Bhushan Steel case, wherein it has been held that there cannot be any modification of terms of the plan. They have also referred to the Jet Airways Judgment. wherein liquidation of Jet Airways was ordered upon failure of the SRA to implement the resolution plan within the timelines and the Hon’ble NCLAT’s judgment in the case of Darwin Platform Infrastructure Limited v. Union Bank of India (supra), wherein an extension was not granted.

The SRA and the Financial Creditor, relying heavily on the judgments in Tricounty Premier Hearing Service Inc. vs. State Bank of India [Company Appeal (AT) (Insolvency) No. 1038 of 2021] and GP Global Energy Pvt. Ltd. vs. Sandeep Mahajan Monitoring Professional for Allied Strips Ltd. [2022 SCC Online NCLAT 189], conversely, argue that a mere extension of the timeline for implementation, especially a short one granted under exceptional circumstances and without altering the core terms of the plan (such as the payout amount or the nature of the resolution) do not constitute a "modification" in the sense that would require a full re-approval process. They view it as a procedural adjustment necessary to overcome unforeseen delays caused by external factors like litigation.

We have analyzed this issue in light of the provisions of the Code and relevant judicial pronouncements. Section 3(33) of the Code defines "Resolution Plan" as a plan approved by the Adjudicating Authority under Section 31. Section 31(1) states that "The Adjudicating Authority shall approve the Resolution Plan if satisfied that it meets the requirements of section 30 and sub-section (2) of section 31." Once approved, the Resolution Plan is binding on all stakeholders.

While the Code does not explicitly define "modification" of a Resolution Plan, judicial interpretation has generally held that any change that alters the fundamental terms of the plan, affects the rights of stakeholders, or changes the value proposition requires a formal modification process, including potential re-submission to the CoC and the Adjudicating Authority.

However, a distinction can be drawn between a material modification that changes the substance of the plan and a procedural adjustment, such as a short extension of time for implementation, necessitated by unforeseen circumstances and not impacting the core economic terms or the rights of stakeholders.

In the present case, the requested extension of 78 days is solely for the purpose of regularizing the implementation timeline. It does not alter the amount to be paid under the Resolution Plan, the manner of payment, the treatment of creditors, or any other substantive term. The entire Resolution Plan amount has already been deposited by the SRA. The extension is a pragmatic step to ensure the successful culmination of the approved plan, which has faced temporary hurdles due to the appellate process.

We are guided by the principle that the Adjudicating Authority, in exercise of its powers under Section 60(5) of the Code and Rule 15 of the NCLT Rules, has the inherent power to issue directions and make adjustments of a procedural nature to facilitate the effective implementation of an approved Resolution Plan, provided such adjustments do not amount to a material modification of the plan or prejudice the rights of any stakeholder.

Considering that the extension sought is minimal, the entire plan amount is infused, and the core terms of the Resolution Plan remain unchanged, we conclude that granting a 78-day extension for implementation in this case does not constitute a material modification of the Resolution Plan that would necessitate a full re-approval process. It is a necessary procedural adjustment to ensure the successful outcome of the insolvency resolution.

The judgments cited by the Suspended Directors and the erstwhile RP above do not apply to the facts of the case and are therefore distinguished as under:

Therefore, in light of the judgments cited above, it becomes clear that under the facts and circumstances of the case, an extension granted in the payment timelines envisaged under the Resolution Plan does not amount to modification in the resolution plan.

Hence, the third question is answered in negative.

This issue involves a critical inconsistency in the original order regarding the forfeiture of the PBG and raises questions about the adjustment of a forfeited PBG against the resolution amount, particularly in light of the ratio laid down in Jet Airways judgement.

The act of the erstwhile RP/Chairman of the Monitoring Committee forfeiting the PBG is not backed by any resolution of the Monitoring Committee. The erstwhile RP's action of treating the PBG as forfeited and keeping it in an interest-bearing FD, while perhaps done with the intention of protecting the interests of stakeholders, did not amount to a formal judicial forfeiture. A formal forfeiture of a PBG in the context of an insolvency resolution typically requires an order from the Adjudicating Authority, based on a clear finding of non-compliance with the terms of the Resolution Plan. Although it is contended on behalf of the Respondents that forfeiture of PBG is confirmed by this Adjudicating Authority vide order dated 19.09.2023, however, no such order dated 19.09.2023 was passed by this Adjudicating Authority allowing forfeiture of PBG; this question is answered in negative.

Further, while acknowledging the ratio laid down in Jet Airways judgement, we distinguish the present case on the grounds that the SRA's actions, including the deposit of the full amount, demonstrate a bona fide intent to implement the plan, albeit with a delay. The deposited funds can be treated as fulfilling the financial obligation under the Resolution Plan. The question of a "fresh PBG" becomes moot when the entire amount has been paid. The Monitoring Committee's resolution to withdraw the liquidation application and support the extension, coupled with the SRA's deposit of the funds, indicates a collective decision to move forward with the implemented plan, effectively overriding the earlier action of treating the PBG as forfeited in the absence of a formal judicial order and in light of the subsequent payment.

Regarding the proposed adjustment of the PBG, it is noted that as per the ratio laid down in Jet Airways judgement, PBG once invoked, cannot be adjusted against the resolution amount. The said adjustment is in violation of Regulation 36B (4A) of CIRP Regulations, 2016, which mandates that PBG has to be kept alive till the completion of the implementation period. However, in the present case, the Applicant is willing to submit a fresh PBG of an equal amount, subject to the direction passed by this Tribunal. It was clarified in the 5th MC meeting dated 21.12.2023, that a fresh PBG may be required to be issued, and the Applicant assured the members of the MC that he will comply with the directions of this Tribunal.

In this regard, it is to be considered that a Performance Guarantee is asked for to ensure full payment and implementation of the approved Resolution Plan. In the present case, since the entire payment under plan has already been made and if extension of timelines as asked for is granted, no useful purpose will be served by asking the SRA for a fresh PBG now, particularly when the amount of Rs.4 crores of the PBG is already adjusted as per the resolution of the Monitoring Committee in its 5th meeting convened on 21.12.2023.