Introduction

The case of Interups Inc v. Kuldeep Kumar Bassi & Ors was adjudicated by the National Company Law Appellate Tribunal (NCLAT) on March 15, 2021. This appeal, filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), challenges the approval of a Resolution Plan for Asian Colour Coated Ispat Ltd by the Committee of Creditors (CoC). Interups Inc, the appellant, argued that its proposal for settling the outstanding debt was not considered despite offering a substantial financial package. The core issues revolved around the timing of the Expression of Interest (EOI) submission, the appellant's standing to appeal, and the adherence to procedural norms under the IBC.

Summary of the Judgment

The NCLAT dismissed the appeal filed by Interups Inc, holding that the appellant lacked both locus standi and maintainability to challenge the Resolution Plan approved by the CoC. The Tribunal emphasized the time-bound nature of the Corporate Insolvency Resolution Process (CIRP) under the IBC, noting that the appellant submitted its EOI well beyond the stipulated timelines. Consequently, Interups Inc was neither a prospective Resolution Applicant nor an aggrieved party as per Section 61(1) of the IBC. The Tribunal upheld the approval of the Resolution Plan by the CoC, affirming that procedural and commercial decisions made within the CIRP framework should not be interfered with by late entrants.

Analysis

Precedents Cited

The judgment references several key precedents that influenced the Tribunal's decision:

• Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. (2019): Clarified that the Adjudicating Authority cannot modify the Resolution Plan beyond rejection or sending it back for reconsideration if non-compliant.
• Chhatisgarh Distilleries Ltd. Vs. Dushyant Dave & Ors. (2019): Established that the Adjudicating Authority cannot direct the CoC to consider additional Resolution Plans once a plan has been approved.
• Shrawan Kumar Agarwal Consortium Vs. Rituraj Steel Private Limited (2020): Affirmed that commercial decisions by the CoC regarding value maximization are non-justiciable.
• Amit Gupta v. Yogesh Gupta and Ors. (2019): Highlighted that late EOIs are not entertained, reinforcing the importance of adhering to timelines.
• Venus Recruiters Private Limited Vs. Union of India & Ors. (2020): Clarified the limitations of the NCLT’s jurisdiction over avoidance applications post-CIRP conclusion.

Legal Reasoning

The Tribunal's legal reasoning centered on the strict observance of procedural timelines established under the IBC. Interups Inc submitted its EOI on June 12, 2020, which was nearly a year after the resolution plan was approved by the CoC. The Tribunal determined that:

• The appellant did not qualify as a prospective Resolution Applicant since it failed to submit its EOI within the prescribed timeframe.
• Under Section 61(1) of the IBC, only aggrieved parties—primarily stakeholders directly involved in the CIRP—are entitled to file an appeal.
• The appellant's appeal lacked substantive grounds as it merely sought reconsideration of an already approved plan without demonstrating any material irregularity in the process.
• The Adjudicating Authority acted within its jurisdiction by approving the plan and could not be compelled to entertain late proposals, maintaining the integrity of the CIRP’s time-bound framework.

Additionally, the Tribunal underscored that allowing late interventions would undermine the IBC’s objective of swift and efficient resolution of insolvency, thereby affecting public interest adversely.

Impact

This judgment reinforces the sanctity of procedural timelines under the IBC, ensuring that Resolution Plans are approved without undue delays or interference from non-compliant parties. The decision serves as a precedent that:

• Appellants must adhere strictly to the timelines for submitting EOIs and Resolution Plans.
• Outsiders without a legitimate stake in the CIRP cannot challenge Resolution Plans post-approval.
• The NCLAT will uphold the decisions of the Adjudicating Authority and the CoC, provided they comply with the statutory framework.

Consequently, future cases involving late submissions or attempts to interfere with approved Resolution Plans will likely follow this judgment, emphasizing adherence to IBC’s procedural mandates.

Complex Concepts Simplified

Corporate Insolvency Resolution Process (CIRP)

CIRP is a time-bound process under the IBC aimed at resolving insolvency by restructuring the debtor's liabilities and business operations. It involves submitting proposals by potential Resolution Applicants, which are then evaluated by the Committee of Creditors (CoC).

Expression of Interest (EOI)

EOI is a formal indication by a potential Resolution Applicant to participate in the CIRP by submitting a detailed Resolution Plan. This must be done within the timeframe specified in the invitation for EOI.

Committee of Creditors (CoC)

CoC comprises financial creditors of the corporate debtor. They evaluate different Resolution Plans and approve the one that best serves the interests of the creditors.

Resolution Plan

A Resolution Plan outlines how the corporate debtor's affairs will be restructured or resolved. It includes details on how to pay off creditors and may involve changes in management or ownership.

Locus Standi

Locus standi refers to the right or capacity to bring a legal action or participate in a case. In this context, only parties directly affected by the CIRP have the standing to appeal the decisions made during the process.

Conclusion

The NCLAT's dismissal of Interups Inc’s appeal underscores the critical importance of adhering to the procedural frameworks established by the Insolvency and Bankruptcy Code. By reinforcing the time-bound nature of the CIRP and limiting appeals to genuinely aggrieved stakeholders, the Tribunal ensures that insolvency resolutions are executed efficiently and without undue delays. This judgment not only upholds the integrity of the IBC but also provides clear guidelines for potential Resolution Applicants on the imperative of timely participation. Consequently, it fosters a more predictable and streamlined insolvency resolution environment, benefiting creditors, debtors, and the broader economic landscape.