Case Title:- Steel Strips Ltd v. Avil Menezes
The National Company Law Appellate Tribunal, New Delhi while dealing with an appeal filed against an order passed by NCLT Ahmedabad made certain observations. In the Impugned Order, directions were made to the CoC (Committee of Creditors) to consider a fresh resolution of Triton Electric Vehicle LLC even though the CoC had already approved the Resolution Plan submitted by Steel Strips.
The facts, in brief, are that CIRP was initiated against the Corporate Debtor- ‘AMW Auto Component Ltd.’ on 01.09.2020. Accordingly, Form-G was issued on 30.11.2020 and the Committee of Creditors had fixed 19.04.2021 as the final date of submission of the Resolution Plan. However, the Appellant submitted its Resolution Plan on 24.04.2021. A further extension of 60 days was given to everyone to file Revised/ Resolution Plans and finally, on 21.09.2021 the Appellant’s Resolution Plan was considered and approved with a 98.55% voting share of CoC. In pursuance of this, the Appellant had already tendered a Bank Guarantee of Rs 20 crores.
However, Respondent no 1 filed an IA in the Tribunal impleading CoC as a party and prayed for considering its Resolution Plan instead of that of the Appellant. The Tribunal further directed the Respondent to file a joint plan with the Appellant.
Hence, this appeal.
The Appellate Authority while giving its decision referred to the Supreme Court’s judgment in Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited and Another wherein it has been explicitly held by the top court that “... the Resolution Plan even prior to the approval of the Adjudicating Authority is binding inter se the CoC and the successful Resolution Applicant. The Resolution Plan cannot be construed purely as a ‘contract’ governed by the Contract Act, in the period intervening its acceptance by the CoC and the approval of the Adjudicating Authority. Even at that stage, its binding effects are produced by the IBC framework..”
Further, the importance of timelines has been highlighted in the Ebix Singapore judgment (supra). It has been emphasized that CIRP is a time-bound process with the specific aim of maximizing the value of assets. IBC and the regulations made under it lay down strict timelines which need to be adhered to by all the parties, at all stages of the CIRP.
In light of the above, the Appellate Authority allowed the appeal and set aside the Impugned Order of the Adjudicating Authority.