Corporate Resolution Process - time limit ?=
By this judgment, the NCLAT granted relief as sought for by the IDBI Bank to exclude period from
17th September, 2018 till 4th June, 2019 for the purpose of counting 270 days Corporate Resolution Process period and issued consequential directions.= Appeals were filed before Apex court - Indeed, the third proviso to Section 12(3) predicates time limit for completion of Insolvency Resolution Process, which has come into effect from 16th August, 2019.The same reads thus :
“Provided also that where the insolvency resolution process
of a corporate debtor is pending and has not been completed
within the period referred to in the second proviso, such
resolution process shall be completed within a period of
ninety days from the date of commencement of the
Insolvency and Bankruptcy Code (Amendment) Act, 2019.”
Taking an overall view of the matter, we deem it just, proper and expedient to issue directions under Article 142 of the Constitution of India to all concerned to reckon 90 days extended period from the
date of this order instead of the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. That means, in terms of this order, the CIRP concerning JIL shall be
completed within a period of 90 days from today. =
Accordingly, we pass the following order to do substantial and complete justice to the parties and in the interest of all the stakeholders of JIL:
i) We direct the IRP to complete the CIRP within 90 days
from today. In the first 45 days, it will be open to the IRP
to invite revised resolution plan only from Suraksha
Realty and NBCC respectively, who were the final bidders
and had submitted resolution plan on the earlier
occasion and place the revised plan(s) before the CoC, if
so required, after negotiations and submit report to the
adjudicating authority NCLT within such time. In the
second phase of 45 days commencing from 21st
December, 2019, margin is provided for removing any
difficulty and to pass appropriate orders thereon by the
Adjudicating Authority.
ii) The pendency of any other application before the NCLT or
NCLAT, as the case may be, including any interim
direction given therein shall be no impediment for the IRP
to receive and process the revised resolution plan from
the abovenamed two bidders and take it to its logical
end as per the provisions of the I & B Code within the
extended timeline prescribed in terms of this order.
iii) We direct that the IRP shall not entertain any expression
of interest (improved) resolution plan individually or
jointly or in concert with any other person, much less
ineligible in terms of Section 29A of the I & B Code.
iv) These directions are issued in exceptional situation in the
facts of the present case and shall not be treated as a
precedent.
v) This order may not be construed as having answered the
questions of law raised in both the appeals, including as
recognition of the power of the NCLT / NCLAT to issue
direction or order not consistent with the statutory
timelines and stipulations specified in the I & B Code and
Regulations framed thereunder.
22. Both the appeals are disposed of in terms of this order with no
order as to costs. Along with the appeals, applications filed therein
also stand disposed of.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2019
(D. NO.27229/2019)
Jaiprakash Associates Ltd & Anr. … Appellant
Versus
IDBI Bank Ltd. & Anr. … Respondents
WITH
CIVIL APPEAL NO. 6486 of 2019
O R D E R
1. Permission to file the appeal is granted in Diary
No.27229/2019.
2. These appeals emanate from the Corporate Insolvency
Resolution Process (‘CIRP’ for short) concerning Jaypee Infratech
Ltd. (‘JIL’ for short) wherein the National Company Law Appellate
Tribunal, New Delhi (‘NCLAT’ for short) disposed of Company
2
Appeal (AT)(INS) No.536 of 2019 and Company Appeal (AT)(INS)
No.708 of 2019 and applications therein by a common judgment
and order dated 30th July, 2019. By this judgment, the NCLAT
granted relief as sought for by the IDBI Bank to exclude period from
17th September, 2018 till 4th June, 2019 for the purpose of counting
270 days Corporate Resolution Process period and issued
consequential directions.
3. Shorn of unnecessary details, the IDBI Bank had filed an
application being CP No. (I&B) 77/ALD/2017 under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for short, ‘the I & B Code’)
against JIL before the National Company Law Tribunal, Allahabad
(‘NCLT’ for short), as the JIL had turned NPA (NonPerforming
Asset). During the pendency of the said application, writ petitions
were filed in this Court by the home buyers concerning the stated
project of JIL, which came to be disposed of on 9th August, 2018 in
the case of Chitra Sharma & Ors. vs. Union of India & Ors.1
.
This Court issued the following directions :
“42. We, accordingly, issue the following directions:
1 2018 (9) SCALE 490
3
(i) In exercise of the power vested in this Court under Article
142 of the Constitution, we direct that the initial period of
180 days for the conclusion of the CIRP in respect of JIL
shall commence from the date of this order. If it becomes
necessary to apply for a further extension of 90 days, we
permit the NCLT to pass appropriate orders in accordance
with the provisions of the IBC;
(ii) We direct that a CoC shall be constituted afresh in
accordance with the provisions of the Insolvency and
Bankruptcy (Amendment) Ordinance, 2018, more
particularly the amended definition of the expression
“financial creditors”;
(iii) We permit the IRP to invite fresh expressions of interest for
the submission of resolution plans by applicants, in addition
to the three shortlisted bidders whose bids or, as the case
may be, revised bids may also be considered;
(iv) JIL/JAL and their promoters shall be ineligible to participate
in the CIRP by virtue of the provisions of Section 29A;
(v) RBI is allowed, in terms of its application to this Court to
direct the banks to initiate corporate insolvency resolution
proceedings against JAL under the IBC;
(vi) The amount of Rs 750 crores which has been deposited in
this Court by JAL/JIL shall together with the interest
accrued thereon be transferred to the NCLT and continue to
remain invested and shall abide by such directions as may
be issued by the NCLT.”
4. Consequent thereto, the matter proceeded before the NCLT
being the adjudicating authority. The Interim Resolution
Professional (‘IRP’ for short) had issued public notice inviting claims
from all JIL’s stakeholders including the home buyers. IRP
4
submitted his report on formation of Committee of Creditors (‘CoC’
for short) before the adjudicating authority on the following basis :
37.3% in case of Financial Institutions.
62.3% home buyers and
0.4% Fixed Deposit holders
5. One of the home buyers’ Association filed application before
the NCLT seeking clarification as to the manner in which the voting
percentage of the allottees (home buyers) will be reckoned. That
application was filed on 17th September, 2018 before the NCLT.
After hearing the concerned authorities, the members of NCLT
expressed difference of opinion on the issue as a result of which
reference was made to the President of the NCLT, to place the
matter before the third Member. Eventually, an order was passed
by the third Member on 24th May, 2019. The said order dated 24th
May, 2019 had been challenged by Jaypee Green Krescent House
Buyers Welfare Associations before the NCLAT being Company
Appeal (AT)(INS) No.708 of 2019.
5
6. In the meantime, the IDBI Bank filed an application before the
NCLT for excluding the period of pendency of the application for
clarification regarding the manner of counting votes of the
concerned financial creditors from the period of 270 days of
Corporate Insolvency Resolution Process (‘CIRP’ for short). While
the said application was pending, NCLT by order dated 6th May,
2019 called upon the authorities, representatives of the allottees
and others to file their reply on the necessity to proceed further
with the CIRP in accordance with law, for considering the
resolution plan received from the concerned bidder, subject to the
outcome of the pending application. The IDBI Bank, feeling
aggrieved by the opinion expressed by the NCLT to proceed further
with the CIRP despite pending clarificatory motions before the
NCLT/NCLAT respectively, including the application to exclude the
period during the clarificatory application from the total period of
270 days of the CIRP, assailed the order passed by the NCLT dated
6
th May, 2019 by way of Company Appeal (AT)(INS) No.536/2019
before the NCLAT.
6
7. The NCLAT, accordingly, thought it appropriate to proceed
with both the appeals together for consideration and disposed of
the same vide the impugned judgment. The relevant discussion
and the conclusion arrived at by the NCLAT can be discerned from
paragraph 19 onwards of the impugned judgment. The same read,
thus :
“19. The only question arises for consideration in these
appeals is whether in the facts and circumstances of the
case and the interest of the Allottees, which is of primary
importance in this ‘Corporate Insolvency Resolution Process’,
the ‘Jaypee Infratech Ltd.’ (Corporate Debtor) should be
allowed to go for ‘Liquidation’ on the ground that 270 days
has expired on 6th May, 2019 or the period from ‘17th
September, 2018 to 4th June, 2019’ during which the matter
remained pending for consideration before the Adjudicating
Authority relating to voting share of the Allottees should be
excluded for the purpose of counting 270 days in the light of
the decision “Quinn Logistics India Pvt. Ltd. vs. Mack Soft
Tech Pvt. Ltd. & Ors.” – ‘Company Appeal (AT) (Insolvency)
No.185 of 2018’ wherein this Appellate Tribunal observed:
“9. From the decisions aforesaid, it is clear that if an
application is filed by the ‘Resolution Professional’ or the
‘Committee of Creditors’ or ‘any aggrieved person’ for
justified reasons, it is always open to the Adjudicating
Authority/Appellate Tribunal to ‘exclude certain period’ for
the purpose of counting the total period of 270 days, if the
facts and circumstances justify exclusion, in unforeseen
circumstances.
10. For example, for following good grounds and unforeseen
circumstances, the intervening period can be excluded for
counting of the total period of 270 days of resolution
process:
7
(i) If the corporate insolvency resolution
process is stayed by ‘a court of law or the
Adjudicating Authority or the Appellate
Tribunal or the Hon’ble Supreme Court.
(ii) If no ‘Resolution Professional’ is
functioning for one or other reason during
the corporate insolvency resolution
process, such as removal.
(iii) The period between the date of order of
admission/moratorium is passed and the
actual date on which the ‘Resolution
Professional’ takes charge for completing
the corporate insolvency resolution
process.
(iv) On hearing a case, if order is reserved by
the Adjudicating Authority or the
Appellate Tribunal or the Hon’ble Supreme
Court and finally pass order enabling the
‘Resolution Professional’ to complete the
corporate insolvency resolution process.
(v) If the corporate insolvency resolution
process is set aside by the Appellate
Tribunal or order of the Appellate Tribunal
is reversed by the Hon’ble Supreme Court
and corporate insolvency resolution
process is restored.
(vi) Any other circumstances which justifies
exclusion of certain period.
However, after exclusion of the period, if further period is
allowed the total number of days cannot exceed 270 days
which is the maximum time limit prescribed under the
Code”.
20. Admittedly, no regulation was framed under the
‘Insolvency and Bankruptcy Code’ as to how the voting share
of thousands of Allottees will be counted, all of whom come
8
within the meaning of ‘Financial Creditors’ and thereby are
members of the ‘Committee of Creditors’. It was in this
background the Allottees Association preferred the
application before the Adjudicating Authority (National
Company Law Tribunal), Allahabad Bench on 17th
September, 2018 to decide such issue. The two Hon’ble
Members of NCLT differed on the principle on 13th December,
2018 as noticed above and referred the matter to the
Principal Bench for placing the matter before Third Hon’ble
Member who has delivered its decision by the order dated
24th May, 2019. In the meantime, 270 days lapsed, if
counted from the date the proceeding was remitted by the
Hon’ble Supreme Court, i.e. 6th May, 2019.
21. This is an extraordinary situation when the law was
silent and there was no guideline, which caused difference of
opinion between the two Hon’ble Members and finally
decided by the Third Hon’ble Member. In ‘Quinn Logistics
India P. Ltd. vs. Macksoft Tech P. Ltd.’ taking into
consideration different situations including extra ordinary
situation, this Appellate Tribunal held that certain period
can be excluded while counting the total period of 270 days.
The aforesaid principle has also been followed by the Hon’ble
Supreme Court in the case of ‘Arcelormittal India Private
Limited vs. Satish Kumar Gupta &” Ors.’ – (2019) 2 SCC 1
as also in the case of ‘Chitra Sharma’ (Supra).
22. In view of aforesaid extra ordinary situation, we are of
the view that the period from 17th September, 2018 i.e. the
date of application filed by the Association of the allottees for
clarification for the order and till the final decision i.e. 4th
June, 2019 i.e. the date the matter was finally decided by
the Third Hon’ble Member (Total 260 days), can be excluded
for the purpose of counting the 270 days. However, as the
matter is pending since long, we are not inclined to exclude
the total period of 260 days and instead in the interest of the
Allottees, we exclude 90 days for the purpose of counting the
period of 270 days of ‘Corporate Insolvency Resolution
Process’, which should be counted from the date of receipt of
the copy of this order.
9
23. The aforesaid period is excluded to enable the
‘Resolution Professional’/‘Committee of Creditors’ to call for
fresh ‘resolution plans’ and to consider them, if so required
after negotiations pass appropriate order under subsection
(5) of Section 30 of the I&B Code preferably within a period
of 45 days. Rest of the period of 45 days margin is given to
remove any difficulty and appropriate order as may be
passed by the Adjudicating Authority.
The voting share of the allottees should be counted in terms
of ‘I&B Code’ as existing on the date of voting/’Regulation’
and/or in accordance with majority decision of the
Adjudicating Authority.
24. It is made clear that all the earlier ‘resolution plan(s)’
including the plan submitted by the ‘NBCC’, cannot be
considered, having been rejected by the ‘Committee of
Creditors’. However, it will be open to the ‘NBCC’ to file a
fresh improved ‘resolution plan. It is informed that ‘Adani
Infra (I) Ltd.’ also proposed to file ‘resolution plan’ but we are
not expressing any opinion with regard to the same. We have
given opportunity to all the eligible persons to file ‘expression
of interest’/(improved) ‘resolution plan’, individually or
jointly or in concert with any person, but those who are
ineligible in terms of Section 29A, are barred from filing such
plan. No liberty is given to ‘Jaiprakash Associates Ltd.’, in
view of the aforesaid observation and decision of Hon’ble
Supreme Court in ‘Chitra Sharma’ (Supra)
25. In view of the aforesaid observations, we are not inclined
to interfere with the impugned order dated 24th (sic) May,
2019. Order of exclusion having already passed by this
Appellate Tribunal, C.A. No.115 of 2019 in C.P. No.(IB)
77/ALD/2017 preferred by the ‘Resolution Professional’ and
the order dated 6th May, 2019 as impugned in ‘Company
Petition (AT) (Insolvency) No.536 of 2019’ are declared
infructuous.
10
Both the appeals stand disposed of with aforesaid
observations and directions.”
8. This judgment is assailed by Jaiprakash Associates Ltd. (‘JAL’
for short). JIL is the subsidiary of JAL. Another appeal has been
filed by the Wish Town Home Buyers Welfare Society (one of the
home buyers’ Association). In the appeal filed by the JAL, two
principal questions of law have been urged. The first is as to
whether the NCLAT had power or authority in law to exclude 90
days from the statutory period of the CIRP, much less for the
reasons stated in the impugned judgment. The second question is
as to whether despite rejection of resolution plans of Suraksha
Realty and NBCC by the CoC on 5th May, 2019 and 10th June, 2019
respectively, could the NCLAT, after excluding 90 days period from
the total CIRP period, again start the CIRP afresh by allowing the
two bidders to submit their revised resolution plans and/or invite
fresh resolution plan from eligible persons and to call upon the CoC
to reconsider the same, if so required, after negotiations. The home
buyers’ Association, in its appeal have also questioned the power of
NCLAT to disregard the mandatory provisions of I & B Code and to
11
issue directions for inviting fresh resolution plans after expiry of the
statutory period for completion of the CIRP.
9. The limited issue that needs to be examined in these appeals
is about the power of the NCLT or NCLAT, as the case may be, to
exclude any period from the statutory period in exercise of inherent
powers sans any express provision in the I & B Code in that regard.
Further, is it open to allow the bidder whose resolution plan has
already been rejected by the CoC to submit revised plan or to invite
fresh resolution plans to be considered by the CoC after the
statutory period specified for submission of such plans? Learned
counsel appearing for the concerned parties have invited our
attention to the relevant provisions of the I & B Code to buttress
their respective arguments.
10. After cogitating over the submissions, it has become clear to
us that the inevitable fall out of accepting the stand taken by the
appellants would be to set aside the impugned judgment and
relegate the parties to a situation where the only option would be to
proceed with the liquidation process concerning JIL under Chapter
12
III of Part II of the I & B Code, on the premise that no resolution
plan has been received before the expiry of the Insolvency
Resolution Process under Section 12 of the I & B Code or being a
case of rejection of the resolution plan under Section 31 of the I & B
Code. However, during the arguments, there has been complete
unanimity between all the stakeholders including the appellants
before this Court that the liquidation of JIL must be eschewed as it
would do more harm to the interests of the stakeholders, in
particular the large number of home buyers, who aspire to have
their home at the earliest.
11. Considering the position taken by the stakeholders before this
Court and the pendency of other writ petitions and miscellaneous
applications filed by the home buyers and also by JAL to issue
directions and pass orders and, if necessary, in exercise of power
under Article 142 of the Constitution of India to salvage the
situation and provide for a wholesome solution which will subserve
the interests of all concerned and in particular of large number of
home buyers who have voting share of 62.3% (as mentioned in the
13
report submitted by IRP) being constituent of CoC, it may not be
appropriate nor necessary for us to dilate on the submissions made
across the Bar by the concerned parties and to answer the
questions of law urged by the appellants noted hitherto. Instead, we
may exercise our plenary powers under Article 142 of the
Constitution of India to effectuate the exposition in Chitra Sharma
(supra) and to do substantial justice to the parties before us. In
doing so, we may have to adopt the same course as noted in
paragraphs 22 to 24 of the impugned judgment with some
modulation thereto.
12. We are conscious of the fact that a section of the home buyers
have come up in appeal against the impugned judgment as they
entertain bona fide apprehension that the entire process would get
delayed further due to inviting fresh offers from eligible persons.
However, we must immediately note that we are not in favour of
inviting fresh resolution plans from other eligible persons, as noted
by the NCLAT, for being considered by the CoC afresh. We shall
elaborate on this a little later.
14
13. We also take note of the suggestion given by the home buyers
Association, appellants before this Court, that the entire process be
kept outside the I & B Code dispensation and to be monitored
directly by this Court. The temptation of accepting the said
submission, however, is fraught with being in conflict with the
opinion expressed by the threeJudge Bench of this Court in Chitra
Sharma (surpa). In paragraph 39 of the said decision, the Court
observed, thus :
“39. …Learned counsel for the IRP submitted that in the CoC
which will be reconstituted under the amended IBC, the
home buyers would have a substantial voting power so as to
be able to effectively protect their interests. Moreover, this
Court should follow the discipline of the IBC which has been
enacted by Parliament specifically to streamline the
resolution of corporate insolvencies. Matters involving
corporate insolvencies require expert determination. The
legislature has made specific provisions which are conceived
in public interest and to facilitate good corporate
governance. The Court should not take upon itself the
burden of supervising the intricacies of the resolution
process. Accepting the suggestion of Mr. Nariman (and one
of the two options proposed by Mr. Tripathi) of the Court
appointing a Committee to supervise the resolution process
outside the IBC will involve the Court in an insuperable
burden of evaluating intricate matters of financial expertise
on which Parliament has legislated to create specific
mechanisms. We are emphatically of the view that it would
not be appropriate for the Court to appoint a Committee to
oversee the CIRP and assume the task of supervising the
15
work of the Committee. We must particularly be careful not
to supplant the mechanisms which have been laid down in
the IBC by substituting them with a mechanism under
judicial directions. Such a course of action would in our view
not be consistent with the need to ensure complete justice
under Article 142, under the regime of law. Hence, the power
under Article 142 should be utilised at the present stage for
the limited purpose of recommencing the resolution process
afresh from the stage of appointment of IRP by the order
dated 9 August 2017 and resultantly renew the period which
has been prescribed for the completion of the resolution
process...”
The revival of CIRP in relation to JIL is on account of this decision
in Chitra Sharma and would, therefore, be binding on all
concerned. It is between the same parties.
14. We are conscious of the fact that adopting the course
indicated in the impugned judgment as our direction, may also
have the effect of modifying the directions given in paragraph 42(i)
in Chitra Sharma (supra) reproduced above, namely, that the
initial period of 180 days for the conclusion of the CIRP in respect of
JIL shall commence from the date of the order, i.e., 9th August,
2018 and the further extension could be only for 90 days. However,
it is one thing to accept the stand of the stakeholders to provide
mechanism outside the I & B Code than to say that the mechanism
16
provided by I & B Code be modulated in some respect whilst
ensuring that such modulation does not do any violence to the
legislative intent and at the same time, subserve the cause of justice
and provide a window to find out a viable solution to all the
stakeholders.
15. We are also conscious of the fact that the recent amendment
to the I & B Code has come into effect, thereby amending Section 12
to freeze or peg the maximum period of CIRP to 330 days from the
insolvency commencement date which in this case must be taken
as 9th August, 2018 in light of the direction given in Chitra
Sharma (supra). It is, however, noticed from several amendments
made to the I & B Code from time to time that the Legislature has
also continually worked upon introducing changes to the I & B
Code so as to address the problems faced in implementation of the
new legislation introduced as recently as in 2016. The case on
hand is a classic example of how the entire process has got
embroiled in litigation initially before this Court and now before the
NCLT and NCLAT respectively, because of confusion or lack of
clarity in respect of foundational processes to be followed by the
17
CoC. That becomes evident from the time consumed by IRP or the
adjudicating and appellate authority to remove the doubts on
matter such as how the vote share of CoC be computed on account
of inclusion of allottees/home buyers as financial creditors. The
home buyers have also expressed some doubt about their status as
secured creditors. All these issues are being ironed out by the
adjudicating authority. It is also a matter of record that NCLT was
functioning only on two days of the week and when it took decision
on the application for clarification, there was difference of opinion
between the members which was then required to be resolved by
the President of the NCLT. It is not a case where one party was
trying to march over the other by resorting to unnecessary or
avoidable litigation. The fact remains that the application for
clarification made by the home buyers on 17th September 2018 at
the earliest opportunity after commencement of the resolution
process pursuant to the order dated 9th August, 2018 passed by
this Court in Chitra Sharma (supra), remained pending for quite
some time. That delay is attributable to the law’s delay. Neither the
home buyers nor the other financial creditors can be blamed for the
18
pendency of the proceedings before the NCLT and later on before
the NCLAT. The NCLT realizing the uncertainty in resolving the
said issue, wanted to proceed with the resolution plan subject to
the outcome of the pending IA as is manifest from its order dated 6th
May, 2019. Even that became subject matter of challenge in the
appeal filed by the IDBI before the NCLAT which was finally
disposed of vide the impugned judgment.
16. Suffice it to note that an extraordinary situation had arisen
because of the constant experimentation which went about at
different level due to lack of clarity on matters crucial to the
decision making process of CoC. Besides that, in view of the recent
legislative changes, the scope of resolution plan stands expanded
which may now include provision for restructuring the corporate
debtor including by way of merger, amalgamation and demerger
and more so the power bestowed on the CoC to consider not only
the feasibility and viability of the resolution plan but also the
manner of distribution proposed, which may take into account the
order of priority amongst the creditors. Additionally, the recently
inserted Section 12A enables the adjudicating authority to allow the
19
withdrawal of an application filed under Section 7 or Section 9 or
Section 10, on an application made by the applicant with the
approval of 90% voting share of the CoC. Similarly, subclause (7)
of Regulation 36B inserted with effect from 4th July, 2018, dealing
with the request for resolution plans unambiguously postulates
that the Resolution Professional may, with the approval of the
Committee, reissue request for resolution plans, if the resolution
plans received in response to earlier request are not satisfactory,
subject to the condition that the request is made to all prospective
resolution applicants in the final list. In the present case, finally
only two bidders had participated and submitted their resolution
plan which was placed before the CoC and stated to have been
rejected. However, applying the principle underlying Regulation
36B(7), we deem it appropriate to permit the IRP to reissue request
for resolution plans to the two bidders (Suraksha Realty and NBCC)
and/or to call upon them to submit revised resolution plan(s),
which can be then placed before the CoC for its due consideration.
17. In the present case, as aforementioned, there is unanimity
amongst all the parties appearing before this Court including the
20
resolution applicant that liquidation of JIL must be eschewed and
instead an attempt be made to salvage the situation by finding out
some viable arrangement which would subserve the interests of all
concerned.
18. In view of the legislative changes referred to above, we are of
the considered opinion that we need to and must exercise our
plenary powers to make an attempt to revive the corporate debtor
(AIL), lest it is exposed to liquidation process under Chapter III of
Part II of the I & B Code. We are inclined to do so because the
project has been implemented in part and out of over 20,000 home
buyers, a substantial number of them have been put in possession
and the remaining work is in progress and in some cases at an
advanced stage of completion. In this backdrop, it would be in the
interest of all concerned to accept a viable plan reflecting the recent
legislative changes.
19. Indeed, the third proviso to Section 12(3) predicates time limit
for completion of Insolvency Resolution Process, which has come
into effect from 16th August, 2019.The same reads thus :
21
“Provided also that where the insolvency resolution process
of a corporate debtor is pending and has not been completed
within the period referred to in the second proviso, such
resolution process shall be completed within a period of
ninety days from the date of commencement of the
Insolvency and Bankruptcy Code (Amendment) Act, 2019.”
Taking an overall view of the matter, we deem it just, proper and
expedient to issue directions under Article 142 of the Constitution
of India to all concerned to reckon 90 days extended period from the
date of this order instead of the date of commencement of the
Insolvency and Bankruptcy Code (Amendment) Act, 2019. That
means, in terms of this order, the CIRP concerning JIL shall be
completed within a period of 90 days from today.
20. We do not deem it necessary to dilate on the arguments of the
respective counsel for the nature of order that we intend to pass,
including about the locus standi of JAL which, in our opinion,
already stands answered against JAL by virtue of Section 29A of the
Act as expounded in Chitra Sharma (supra).
22
21. Accordingly, we pass the following order to do substantial and
complete justice to the parties and in the interest of all the
stakeholders of JIL:
i) We direct the IRP to complete the CIRP within 90 days
from today. In the first 45 days, it will be open to the IRP
to invite revised resolution plan only from Suraksha
Realty and NBCC respectively, who were the final bidders
and had submitted resolution plan on the earlier
occasion and place the revised plan(s) before the CoC, if
so required, after negotiations and submit report to the
adjudicating authority NCLT within such time. In the
second phase of 45 days commencing from 21st
December, 2019, margin is provided for removing any
difficulty and to pass appropriate orders thereon by the
Adjudicating Authority.
ii) The pendency of any other application before the NCLT or
NCLAT, as the case may be, including any interim
23
direction given therein shall be no impediment for the IRP
to receive and process the revised resolution plan from
the abovenamed two bidders and take it to its logical
end as per the provisions of the I & B Code within the
extended timeline prescribed in terms of this order.
iii) We direct that the IRP shall not entertain any expression
of interest (improved) resolution plan individually or
jointly or in concert with any other person, much less
ineligible in terms of Section 29A of the I & B Code.
iv) These directions are issued in exceptional situation in the
facts of the present case and shall not be treated as a
precedent.
v) This order may not be construed as having answered the
questions of law raised in both the appeals, including as
recognition of the power of the NCLT / NCLAT to issue
direction or order not consistent with the statutory
24
timelines and stipulations specified in the I & B Code and
Regulations framed thereunder.
22. Both the appeals are disposed of in terms of this order with no
order as to costs. Along with the appeals, applications filed therein
also stand disposed of.
.……………………………,J.
[A.M. Khanwilkar]
.……………………………,J.
[Dinesh Maheshwari]
New Delhi;
November 6, 2019.
By this judgment, the NCLAT granted relief as sought for by the IDBI Bank to exclude period from
17th September, 2018 till 4th June, 2019 for the purpose of counting 270 days Corporate Resolution Process period and issued consequential directions.= Appeals were filed before Apex court - Indeed, the third proviso to Section 12(3) predicates time limit for completion of Insolvency Resolution Process, which has come into effect from 16th August, 2019.The same reads thus :
“Provided also that where the insolvency resolution process
of a corporate debtor is pending and has not been completed
within the period referred to in the second proviso, such
resolution process shall be completed within a period of
ninety days from the date of commencement of the
Insolvency and Bankruptcy Code (Amendment) Act, 2019.”
Taking an overall view of the matter, we deem it just, proper and expedient to issue directions under Article 142 of the Constitution of India to all concerned to reckon 90 days extended period from the
date of this order instead of the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. That means, in terms of this order, the CIRP concerning JIL shall be
completed within a period of 90 days from today. =
Accordingly, we pass the following order to do substantial and complete justice to the parties and in the interest of all the stakeholders of JIL:
i) We direct the IRP to complete the CIRP within 90 days
from today. In the first 45 days, it will be open to the IRP
to invite revised resolution plan only from Suraksha
Realty and NBCC respectively, who were the final bidders
and had submitted resolution plan on the earlier
occasion and place the revised plan(s) before the CoC, if
so required, after negotiations and submit report to the
adjudicating authority NCLT within such time. In the
second phase of 45 days commencing from 21st
December, 2019, margin is provided for removing any
difficulty and to pass appropriate orders thereon by the
Adjudicating Authority.
ii) The pendency of any other application before the NCLT or
NCLAT, as the case may be, including any interim
direction given therein shall be no impediment for the IRP
to receive and process the revised resolution plan from
the abovenamed two bidders and take it to its logical
end as per the provisions of the I & B Code within the
extended timeline prescribed in terms of this order.
iii) We direct that the IRP shall not entertain any expression
of interest (improved) resolution plan individually or
jointly or in concert with any other person, much less
ineligible in terms of Section 29A of the I & B Code.
iv) These directions are issued in exceptional situation in the
facts of the present case and shall not be treated as a
precedent.
v) This order may not be construed as having answered the
questions of law raised in both the appeals, including as
recognition of the power of the NCLT / NCLAT to issue
direction or order not consistent with the statutory
timelines and stipulations specified in the I & B Code and
Regulations framed thereunder.
22. Both the appeals are disposed of in terms of this order with no
order as to costs. Along with the appeals, applications filed therein
also stand disposed of.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2019
(D. NO.27229/2019)
Jaiprakash Associates Ltd & Anr. … Appellant
Versus
IDBI Bank Ltd. & Anr. … Respondents
WITH
CIVIL APPEAL NO. 6486 of 2019
O R D E R
1. Permission to file the appeal is granted in Diary
No.27229/2019.
2. These appeals emanate from the Corporate Insolvency
Resolution Process (‘CIRP’ for short) concerning Jaypee Infratech
Ltd. (‘JIL’ for short) wherein the National Company Law Appellate
Tribunal, New Delhi (‘NCLAT’ for short) disposed of Company
2
Appeal (AT)(INS) No.536 of 2019 and Company Appeal (AT)(INS)
No.708 of 2019 and applications therein by a common judgment
and order dated 30th July, 2019. By this judgment, the NCLAT
granted relief as sought for by the IDBI Bank to exclude period from
17th September, 2018 till 4th June, 2019 for the purpose of counting
270 days Corporate Resolution Process period and issued
consequential directions.
3. Shorn of unnecessary details, the IDBI Bank had filed an
application being CP No. (I&B) 77/ALD/2017 under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for short, ‘the I & B Code’)
against JIL before the National Company Law Tribunal, Allahabad
(‘NCLT’ for short), as the JIL had turned NPA (NonPerforming
Asset). During the pendency of the said application, writ petitions
were filed in this Court by the home buyers concerning the stated
project of JIL, which came to be disposed of on 9th August, 2018 in
the case of Chitra Sharma & Ors. vs. Union of India & Ors.1
.
This Court issued the following directions :
“42. We, accordingly, issue the following directions:
1 2018 (9) SCALE 490
3
(i) In exercise of the power vested in this Court under Article
142 of the Constitution, we direct that the initial period of
180 days for the conclusion of the CIRP in respect of JIL
shall commence from the date of this order. If it becomes
necessary to apply for a further extension of 90 days, we
permit the NCLT to pass appropriate orders in accordance
with the provisions of the IBC;
(ii) We direct that a CoC shall be constituted afresh in
accordance with the provisions of the Insolvency and
Bankruptcy (Amendment) Ordinance, 2018, more
particularly the amended definition of the expression
“financial creditors”;
(iii) We permit the IRP to invite fresh expressions of interest for
the submission of resolution plans by applicants, in addition
to the three shortlisted bidders whose bids or, as the case
may be, revised bids may also be considered;
(iv) JIL/JAL and their promoters shall be ineligible to participate
in the CIRP by virtue of the provisions of Section 29A;
(v) RBI is allowed, in terms of its application to this Court to
direct the banks to initiate corporate insolvency resolution
proceedings against JAL under the IBC;
(vi) The amount of Rs 750 crores which has been deposited in
this Court by JAL/JIL shall together with the interest
accrued thereon be transferred to the NCLT and continue to
remain invested and shall abide by such directions as may
be issued by the NCLT.”
4. Consequent thereto, the matter proceeded before the NCLT
being the adjudicating authority. The Interim Resolution
Professional (‘IRP’ for short) had issued public notice inviting claims
from all JIL’s stakeholders including the home buyers. IRP
4
submitted his report on formation of Committee of Creditors (‘CoC’
for short) before the adjudicating authority on the following basis :
37.3% in case of Financial Institutions.
62.3% home buyers and
0.4% Fixed Deposit holders
5. One of the home buyers’ Association filed application before
the NCLT seeking clarification as to the manner in which the voting
percentage of the allottees (home buyers) will be reckoned. That
application was filed on 17th September, 2018 before the NCLT.
After hearing the concerned authorities, the members of NCLT
expressed difference of opinion on the issue as a result of which
reference was made to the President of the NCLT, to place the
matter before the third Member. Eventually, an order was passed
by the third Member on 24th May, 2019. The said order dated 24th
May, 2019 had been challenged by Jaypee Green Krescent House
Buyers Welfare Associations before the NCLAT being Company
Appeal (AT)(INS) No.708 of 2019.
5
6. In the meantime, the IDBI Bank filed an application before the
NCLT for excluding the period of pendency of the application for
clarification regarding the manner of counting votes of the
concerned financial creditors from the period of 270 days of
Corporate Insolvency Resolution Process (‘CIRP’ for short). While
the said application was pending, NCLT by order dated 6th May,
2019 called upon the authorities, representatives of the allottees
and others to file their reply on the necessity to proceed further
with the CIRP in accordance with law, for considering the
resolution plan received from the concerned bidder, subject to the
outcome of the pending application. The IDBI Bank, feeling
aggrieved by the opinion expressed by the NCLT to proceed further
with the CIRP despite pending clarificatory motions before the
NCLT/NCLAT respectively, including the application to exclude the
period during the clarificatory application from the total period of
270 days of the CIRP, assailed the order passed by the NCLT dated
6
th May, 2019 by way of Company Appeal (AT)(INS) No.536/2019
before the NCLAT.
6
7. The NCLAT, accordingly, thought it appropriate to proceed
with both the appeals together for consideration and disposed of
the same vide the impugned judgment. The relevant discussion
and the conclusion arrived at by the NCLAT can be discerned from
paragraph 19 onwards of the impugned judgment. The same read,
thus :
“19. The only question arises for consideration in these
appeals is whether in the facts and circumstances of the
case and the interest of the Allottees, which is of primary
importance in this ‘Corporate Insolvency Resolution Process’,
the ‘Jaypee Infratech Ltd.’ (Corporate Debtor) should be
allowed to go for ‘Liquidation’ on the ground that 270 days
has expired on 6th May, 2019 or the period from ‘17th
September, 2018 to 4th June, 2019’ during which the matter
remained pending for consideration before the Adjudicating
Authority relating to voting share of the Allottees should be
excluded for the purpose of counting 270 days in the light of
the decision “Quinn Logistics India Pvt. Ltd. vs. Mack Soft
Tech Pvt. Ltd. & Ors.” – ‘Company Appeal (AT) (Insolvency)
No.185 of 2018’ wherein this Appellate Tribunal observed:
“9. From the decisions aforesaid, it is clear that if an
application is filed by the ‘Resolution Professional’ or the
‘Committee of Creditors’ or ‘any aggrieved person’ for
justified reasons, it is always open to the Adjudicating
Authority/Appellate Tribunal to ‘exclude certain period’ for
the purpose of counting the total period of 270 days, if the
facts and circumstances justify exclusion, in unforeseen
circumstances.
10. For example, for following good grounds and unforeseen
circumstances, the intervening period can be excluded for
counting of the total period of 270 days of resolution
process:
7
(i) If the corporate insolvency resolution
process is stayed by ‘a court of law or the
Adjudicating Authority or the Appellate
Tribunal or the Hon’ble Supreme Court.
(ii) If no ‘Resolution Professional’ is
functioning for one or other reason during
the corporate insolvency resolution
process, such as removal.
(iii) The period between the date of order of
admission/moratorium is passed and the
actual date on which the ‘Resolution
Professional’ takes charge for completing
the corporate insolvency resolution
process.
(iv) On hearing a case, if order is reserved by
the Adjudicating Authority or the
Appellate Tribunal or the Hon’ble Supreme
Court and finally pass order enabling the
‘Resolution Professional’ to complete the
corporate insolvency resolution process.
(v) If the corporate insolvency resolution
process is set aside by the Appellate
Tribunal or order of the Appellate Tribunal
is reversed by the Hon’ble Supreme Court
and corporate insolvency resolution
process is restored.
(vi) Any other circumstances which justifies
exclusion of certain period.
However, after exclusion of the period, if further period is
allowed the total number of days cannot exceed 270 days
which is the maximum time limit prescribed under the
Code”.
20. Admittedly, no regulation was framed under the
‘Insolvency and Bankruptcy Code’ as to how the voting share
of thousands of Allottees will be counted, all of whom come
8
within the meaning of ‘Financial Creditors’ and thereby are
members of the ‘Committee of Creditors’. It was in this
background the Allottees Association preferred the
application before the Adjudicating Authority (National
Company Law Tribunal), Allahabad Bench on 17th
September, 2018 to decide such issue. The two Hon’ble
Members of NCLT differed on the principle on 13th December,
2018 as noticed above and referred the matter to the
Principal Bench for placing the matter before Third Hon’ble
Member who has delivered its decision by the order dated
24th May, 2019. In the meantime, 270 days lapsed, if
counted from the date the proceeding was remitted by the
Hon’ble Supreme Court, i.e. 6th May, 2019.
21. This is an extraordinary situation when the law was
silent and there was no guideline, which caused difference of
opinion between the two Hon’ble Members and finally
decided by the Third Hon’ble Member. In ‘Quinn Logistics
India P. Ltd. vs. Macksoft Tech P. Ltd.’ taking into
consideration different situations including extra ordinary
situation, this Appellate Tribunal held that certain period
can be excluded while counting the total period of 270 days.
The aforesaid principle has also been followed by the Hon’ble
Supreme Court in the case of ‘Arcelormittal India Private
Limited vs. Satish Kumar Gupta &” Ors.’ – (2019) 2 SCC 1
as also in the case of ‘Chitra Sharma’ (Supra).
22. In view of aforesaid extra ordinary situation, we are of
the view that the period from 17th September, 2018 i.e. the
date of application filed by the Association of the allottees for
clarification for the order and till the final decision i.e. 4th
June, 2019 i.e. the date the matter was finally decided by
the Third Hon’ble Member (Total 260 days), can be excluded
for the purpose of counting the 270 days. However, as the
matter is pending since long, we are not inclined to exclude
the total period of 260 days and instead in the interest of the
Allottees, we exclude 90 days for the purpose of counting the
period of 270 days of ‘Corporate Insolvency Resolution
Process’, which should be counted from the date of receipt of
the copy of this order.
9
23. The aforesaid period is excluded to enable the
‘Resolution Professional’/‘Committee of Creditors’ to call for
fresh ‘resolution plans’ and to consider them, if so required
after negotiations pass appropriate order under subsection
(5) of Section 30 of the I&B Code preferably within a period
of 45 days. Rest of the period of 45 days margin is given to
remove any difficulty and appropriate order as may be
passed by the Adjudicating Authority.
The voting share of the allottees should be counted in terms
of ‘I&B Code’ as existing on the date of voting/’Regulation’
and/or in accordance with majority decision of the
Adjudicating Authority.
24. It is made clear that all the earlier ‘resolution plan(s)’
including the plan submitted by the ‘NBCC’, cannot be
considered, having been rejected by the ‘Committee of
Creditors’. However, it will be open to the ‘NBCC’ to file a
fresh improved ‘resolution plan. It is informed that ‘Adani
Infra (I) Ltd.’ also proposed to file ‘resolution plan’ but we are
not expressing any opinion with regard to the same. We have
given opportunity to all the eligible persons to file ‘expression
of interest’/(improved) ‘resolution plan’, individually or
jointly or in concert with any person, but those who are
ineligible in terms of Section 29A, are barred from filing such
plan. No liberty is given to ‘Jaiprakash Associates Ltd.’, in
view of the aforesaid observation and decision of Hon’ble
Supreme Court in ‘Chitra Sharma’ (Supra)
25. In view of the aforesaid observations, we are not inclined
to interfere with the impugned order dated 24th (sic) May,
2019. Order of exclusion having already passed by this
Appellate Tribunal, C.A. No.115 of 2019 in C.P. No.(IB)
77/ALD/2017 preferred by the ‘Resolution Professional’ and
the order dated 6th May, 2019 as impugned in ‘Company
Petition (AT) (Insolvency) No.536 of 2019’ are declared
infructuous.
10
Both the appeals stand disposed of with aforesaid
observations and directions.”
8. This judgment is assailed by Jaiprakash Associates Ltd. (‘JAL’
for short). JIL is the subsidiary of JAL. Another appeal has been
filed by the Wish Town Home Buyers Welfare Society (one of the
home buyers’ Association). In the appeal filed by the JAL, two
principal questions of law have been urged. The first is as to
whether the NCLAT had power or authority in law to exclude 90
days from the statutory period of the CIRP, much less for the
reasons stated in the impugned judgment. The second question is
as to whether despite rejection of resolution plans of Suraksha
Realty and NBCC by the CoC on 5th May, 2019 and 10th June, 2019
respectively, could the NCLAT, after excluding 90 days period from
the total CIRP period, again start the CIRP afresh by allowing the
two bidders to submit their revised resolution plans and/or invite
fresh resolution plan from eligible persons and to call upon the CoC
to reconsider the same, if so required, after negotiations. The home
buyers’ Association, in its appeal have also questioned the power of
NCLAT to disregard the mandatory provisions of I & B Code and to
11
issue directions for inviting fresh resolution plans after expiry of the
statutory period for completion of the CIRP.
9. The limited issue that needs to be examined in these appeals
is about the power of the NCLT or NCLAT, as the case may be, to
exclude any period from the statutory period in exercise of inherent
powers sans any express provision in the I & B Code in that regard.
Further, is it open to allow the bidder whose resolution plan has
already been rejected by the CoC to submit revised plan or to invite
fresh resolution plans to be considered by the CoC after the
statutory period specified for submission of such plans? Learned
counsel appearing for the concerned parties have invited our
attention to the relevant provisions of the I & B Code to buttress
their respective arguments.
10. After cogitating over the submissions, it has become clear to
us that the inevitable fall out of accepting the stand taken by the
appellants would be to set aside the impugned judgment and
relegate the parties to a situation where the only option would be to
proceed with the liquidation process concerning JIL under Chapter
12
III of Part II of the I & B Code, on the premise that no resolution
plan has been received before the expiry of the Insolvency
Resolution Process under Section 12 of the I & B Code or being a
case of rejection of the resolution plan under Section 31 of the I & B
Code. However, during the arguments, there has been complete
unanimity between all the stakeholders including the appellants
before this Court that the liquidation of JIL must be eschewed as it
would do more harm to the interests of the stakeholders, in
particular the large number of home buyers, who aspire to have
their home at the earliest.
11. Considering the position taken by the stakeholders before this
Court and the pendency of other writ petitions and miscellaneous
applications filed by the home buyers and also by JAL to issue
directions and pass orders and, if necessary, in exercise of power
under Article 142 of the Constitution of India to salvage the
situation and provide for a wholesome solution which will subserve
the interests of all concerned and in particular of large number of
home buyers who have voting share of 62.3% (as mentioned in the
13
report submitted by IRP) being constituent of CoC, it may not be
appropriate nor necessary for us to dilate on the submissions made
across the Bar by the concerned parties and to answer the
questions of law urged by the appellants noted hitherto. Instead, we
may exercise our plenary powers under Article 142 of the
Constitution of India to effectuate the exposition in Chitra Sharma
(supra) and to do substantial justice to the parties before us. In
doing so, we may have to adopt the same course as noted in
paragraphs 22 to 24 of the impugned judgment with some
modulation thereto.
12. We are conscious of the fact that a section of the home buyers
have come up in appeal against the impugned judgment as they
entertain bona fide apprehension that the entire process would get
delayed further due to inviting fresh offers from eligible persons.
However, we must immediately note that we are not in favour of
inviting fresh resolution plans from other eligible persons, as noted
by the NCLAT, for being considered by the CoC afresh. We shall
elaborate on this a little later.
14
13. We also take note of the suggestion given by the home buyers
Association, appellants before this Court, that the entire process be
kept outside the I & B Code dispensation and to be monitored
directly by this Court. The temptation of accepting the said
submission, however, is fraught with being in conflict with the
opinion expressed by the threeJudge Bench of this Court in Chitra
Sharma (surpa). In paragraph 39 of the said decision, the Court
observed, thus :
“39. …Learned counsel for the IRP submitted that in the CoC
which will be reconstituted under the amended IBC, the
home buyers would have a substantial voting power so as to
be able to effectively protect their interests. Moreover, this
Court should follow the discipline of the IBC which has been
enacted by Parliament specifically to streamline the
resolution of corporate insolvencies. Matters involving
corporate insolvencies require expert determination. The
legislature has made specific provisions which are conceived
in public interest and to facilitate good corporate
governance. The Court should not take upon itself the
burden of supervising the intricacies of the resolution
process. Accepting the suggestion of Mr. Nariman (and one
of the two options proposed by Mr. Tripathi) of the Court
appointing a Committee to supervise the resolution process
outside the IBC will involve the Court in an insuperable
burden of evaluating intricate matters of financial expertise
on which Parliament has legislated to create specific
mechanisms. We are emphatically of the view that it would
not be appropriate for the Court to appoint a Committee to
oversee the CIRP and assume the task of supervising the
15
work of the Committee. We must particularly be careful not
to supplant the mechanisms which have been laid down in
the IBC by substituting them with a mechanism under
judicial directions. Such a course of action would in our view
not be consistent with the need to ensure complete justice
under Article 142, under the regime of law. Hence, the power
under Article 142 should be utilised at the present stage for
the limited purpose of recommencing the resolution process
afresh from the stage of appointment of IRP by the order
dated 9 August 2017 and resultantly renew the period which
has been prescribed for the completion of the resolution
process...”
The revival of CIRP in relation to JIL is on account of this decision
in Chitra Sharma and would, therefore, be binding on all
concerned. It is between the same parties.
14. We are conscious of the fact that adopting the course
indicated in the impugned judgment as our direction, may also
have the effect of modifying the directions given in paragraph 42(i)
in Chitra Sharma (supra) reproduced above, namely, that the
initial period of 180 days for the conclusion of the CIRP in respect of
JIL shall commence from the date of the order, i.e., 9th August,
2018 and the further extension could be only for 90 days. However,
it is one thing to accept the stand of the stakeholders to provide
mechanism outside the I & B Code than to say that the mechanism
16
provided by I & B Code be modulated in some respect whilst
ensuring that such modulation does not do any violence to the
legislative intent and at the same time, subserve the cause of justice
and provide a window to find out a viable solution to all the
stakeholders.
15. We are also conscious of the fact that the recent amendment
to the I & B Code has come into effect, thereby amending Section 12
to freeze or peg the maximum period of CIRP to 330 days from the
insolvency commencement date which in this case must be taken
as 9th August, 2018 in light of the direction given in Chitra
Sharma (supra). It is, however, noticed from several amendments
made to the I & B Code from time to time that the Legislature has
also continually worked upon introducing changes to the I & B
Code so as to address the problems faced in implementation of the
new legislation introduced as recently as in 2016. The case on
hand is a classic example of how the entire process has got
embroiled in litigation initially before this Court and now before the
NCLT and NCLAT respectively, because of confusion or lack of
clarity in respect of foundational processes to be followed by the
17
CoC. That becomes evident from the time consumed by IRP or the
adjudicating and appellate authority to remove the doubts on
matter such as how the vote share of CoC be computed on account
of inclusion of allottees/home buyers as financial creditors. The
home buyers have also expressed some doubt about their status as
secured creditors. All these issues are being ironed out by the
adjudicating authority. It is also a matter of record that NCLT was
functioning only on two days of the week and when it took decision
on the application for clarification, there was difference of opinion
between the members which was then required to be resolved by
the President of the NCLT. It is not a case where one party was
trying to march over the other by resorting to unnecessary or
avoidable litigation. The fact remains that the application for
clarification made by the home buyers on 17th September 2018 at
the earliest opportunity after commencement of the resolution
process pursuant to the order dated 9th August, 2018 passed by
this Court in Chitra Sharma (supra), remained pending for quite
some time. That delay is attributable to the law’s delay. Neither the
home buyers nor the other financial creditors can be blamed for the
18
pendency of the proceedings before the NCLT and later on before
the NCLAT. The NCLT realizing the uncertainty in resolving the
said issue, wanted to proceed with the resolution plan subject to
the outcome of the pending IA as is manifest from its order dated 6th
May, 2019. Even that became subject matter of challenge in the
appeal filed by the IDBI before the NCLAT which was finally
disposed of vide the impugned judgment.
16. Suffice it to note that an extraordinary situation had arisen
because of the constant experimentation which went about at
different level due to lack of clarity on matters crucial to the
decision making process of CoC. Besides that, in view of the recent
legislative changes, the scope of resolution plan stands expanded
which may now include provision for restructuring the corporate
debtor including by way of merger, amalgamation and demerger
and more so the power bestowed on the CoC to consider not only
the feasibility and viability of the resolution plan but also the
manner of distribution proposed, which may take into account the
order of priority amongst the creditors. Additionally, the recently
inserted Section 12A enables the adjudicating authority to allow the
19
withdrawal of an application filed under Section 7 or Section 9 or
Section 10, on an application made by the applicant with the
approval of 90% voting share of the CoC. Similarly, subclause (7)
of Regulation 36B inserted with effect from 4th July, 2018, dealing
with the request for resolution plans unambiguously postulates
that the Resolution Professional may, with the approval of the
Committee, reissue request for resolution plans, if the resolution
plans received in response to earlier request are not satisfactory,
subject to the condition that the request is made to all prospective
resolution applicants in the final list. In the present case, finally
only two bidders had participated and submitted their resolution
plan which was placed before the CoC and stated to have been
rejected. However, applying the principle underlying Regulation
36B(7), we deem it appropriate to permit the IRP to reissue request
for resolution plans to the two bidders (Suraksha Realty and NBCC)
and/or to call upon them to submit revised resolution plan(s),
which can be then placed before the CoC for its due consideration.
17. In the present case, as aforementioned, there is unanimity
amongst all the parties appearing before this Court including the
20
resolution applicant that liquidation of JIL must be eschewed and
instead an attempt be made to salvage the situation by finding out
some viable arrangement which would subserve the interests of all
concerned.
18. In view of the legislative changes referred to above, we are of
the considered opinion that we need to and must exercise our
plenary powers to make an attempt to revive the corporate debtor
(AIL), lest it is exposed to liquidation process under Chapter III of
Part II of the I & B Code. We are inclined to do so because the
project has been implemented in part and out of over 20,000 home
buyers, a substantial number of them have been put in possession
and the remaining work is in progress and in some cases at an
advanced stage of completion. In this backdrop, it would be in the
interest of all concerned to accept a viable plan reflecting the recent
legislative changes.
19. Indeed, the third proviso to Section 12(3) predicates time limit
for completion of Insolvency Resolution Process, which has come
into effect from 16th August, 2019.The same reads thus :
21
“Provided also that where the insolvency resolution process
of a corporate debtor is pending and has not been completed
within the period referred to in the second proviso, such
resolution process shall be completed within a period of
ninety days from the date of commencement of the
Insolvency and Bankruptcy Code (Amendment) Act, 2019.”
Taking an overall view of the matter, we deem it just, proper and
expedient to issue directions under Article 142 of the Constitution
of India to all concerned to reckon 90 days extended period from the
date of this order instead of the date of commencement of the
Insolvency and Bankruptcy Code (Amendment) Act, 2019. That
means, in terms of this order, the CIRP concerning JIL shall be
completed within a period of 90 days from today.
20. We do not deem it necessary to dilate on the arguments of the
respective counsel for the nature of order that we intend to pass,
including about the locus standi of JAL which, in our opinion,
already stands answered against JAL by virtue of Section 29A of the
Act as expounded in Chitra Sharma (supra).
22
21. Accordingly, we pass the following order to do substantial and
complete justice to the parties and in the interest of all the
stakeholders of JIL:
i) We direct the IRP to complete the CIRP within 90 days
from today. In the first 45 days, it will be open to the IRP
to invite revised resolution plan only from Suraksha
Realty and NBCC respectively, who were the final bidders
and had submitted resolution plan on the earlier
occasion and place the revised plan(s) before the CoC, if
so required, after negotiations and submit report to the
adjudicating authority NCLT within such time. In the
second phase of 45 days commencing from 21st
December, 2019, margin is provided for removing any
difficulty and to pass appropriate orders thereon by the
Adjudicating Authority.
ii) The pendency of any other application before the NCLT or
NCLAT, as the case may be, including any interim
23
direction given therein shall be no impediment for the IRP
to receive and process the revised resolution plan from
the abovenamed two bidders and take it to its logical
end as per the provisions of the I & B Code within the
extended timeline prescribed in terms of this order.
iii) We direct that the IRP shall not entertain any expression
of interest (improved) resolution plan individually or
jointly or in concert with any other person, much less
ineligible in terms of Section 29A of the I & B Code.
iv) These directions are issued in exceptional situation in the
facts of the present case and shall not be treated as a
precedent.
v) This order may not be construed as having answered the
questions of law raised in both the appeals, including as
recognition of the power of the NCLT / NCLAT to issue
direction or order not consistent with the statutory
24
timelines and stipulations specified in the I & B Code and
Regulations framed thereunder.
22. Both the appeals are disposed of in terms of this order with no
order as to costs. Along with the appeals, applications filed therein
also stand disposed of.
.……………………………,J.
[A.M. Khanwilkar]
.……………………………,J.
[Dinesh Maheshwari]
New Delhi;
November 6, 2019.
