Submission & Approval Of Resolution Plan In Extended Timeline Of Expression Of Interest Cannot Be Questioned By Unsuccessful Resolution Applicant: NCLAT

The Tribunal also held that if based on such extension of timeline, a new resolution plan is submitted which is later approved by the Adjudicating Authority then such approval of the plan cannot be questioned by the Unsuccessful Resolution Applicants when they also took the benefit of extension and submitted the revised plans.

Brief Facts:

The Indian Pulp and Paper Private Limited (“Corporate Debtor”) was admitted into the Corporate Insolvency Resolution Process (“CIRP”) on 22.07.2022.

On 13.02.2023, a communication was sent by the Resolution Professional to all Resolution Applicants to submit revised plans, if any, in terms of the extended timeline. Pinax Paper Mills Ltd. in consortium with Pinax Steel Industries Pvt. Ltd. submitted EoI.

On 23.02.2023, a list of Prospective Resolution Applicants (“PRAs”) was published in which apart from the Appellant, the name of Pinax Paper Mills Ltd. was also mentioned as one of the PRAs.

The CoC approved the Resolution Plan submitted by Pinax Paper Mills Private Limited in consortium with Pinax Steel Industries Private Limited (“Successful Resolution Applicant/SRA”). An interlocutory application ('IA') filed by the appellant sought directions to disqualify the SRA on the grounds of it not having submitted the EoI initially.

Meanwhile, an application was filed by the Resolution Professional under section 31 of the Insolvency and Bankruptcy Code, 2016 (Code) by which the approval of the Resolution Plan was sought. The adjudicating authority accepted the application of the RP and approved the Resolution plan whilst rejecting the Interlocutory Application filed by the appellant.

Contentions:

The appellant argued that the name of Pinax Paper Mills Private Limited not being included in the list of PRA which was published on 14.11.2022. By virtue of Regulation 39(1B) of the CIRP Regulations, the Committee could not have considered the Resolution Plan of the Pinax Paper Mills Private Limited.

It was also argued that by virtue of Regulation 36A (4-A), it was incumbent on the Resolution Professional to publish fresh Form G in event the timeline for submitting EoI being extended. The process adopted by the Resolution Professional was in violation of Regulation 36A (4- A) and Regulation 39(1B) of the CIRP Regulations, 2016. Reliance was placed on Ashdan Properties Pvt. Ltd. vs. Mamta Binani (RP of Rolta India Ltd.) & Ors.(2024).

Per contra, the respondent submitted that the timeline for extending the receipt of EoI and Resolution Plan was extended after decision was taken by the CoC on 07.07.2023 and communication was sent to all the Resolution Applicants on 13.02.2023 informing that the timeline had been extended.

It was also argued that Appellant took benefit of extension of timeline by submitting a revised plan and thereafter CoC asked the applicants to enhance its financial offer and submit Resolution Plans. It cannot now turnover and object to the process adopted by the Resolution Professional and the CoC.

Observations:

The Tribunal noted that the timeline for EoI and submitting of the resolution plan was extended by the CoC. Clause 6 of the EoI itself provided that the timeline could be extended by the RP with the approval of the CoC therefore it cannot be said that Resolution Applicants were not aware of this clause in the EoI.

It further observed that Clause 6 only provided for extension of last date for submission of EoI and when we read Clause 6, it does not indicate that for extension of last date of EoI revised fresh Form G was required to be issued.

The tribunal after referring to Regulation 36A and 36B observed that as per sub-regulation (5) of Regulation 36B, any modification in the request for resolution plan has to be treated as fresh issue whereas extension of timeline with the approval of the committee has been separately dealt. Thus, modification of request for resolution plan and extension of timeline has been separately dealt in Regulation 36B.

It also observed that applying the aforesaid analogy in Regulation 36A, it is clear that although any modification in the Invitation for Expression of Interest requires publication of fresh Form G but Regulation 36A of the CIRP Regulations on its term does not contemplate publication of fresh Form G when timeline has been extended.

The tribunal further noted that the appellant participated in the process without raising any objections to the extension of timeline. Even if the argument that fresh 'Form G' was required to be issued is accepted, the appellant cannot claim to be aggrieved by the non-publication of the Form G as the appellant was a part of the process from the beginning and submitted the revised plan after time for EOI was extended.

The Tribunal also observed that even though the name of Pinax Paper Mills Private Limited was not included in the first final list of 'PRAs' but after extension of timeline when final list of PRA was published on 28.02.2023, the name of Pinax Paper Mills Private Limited was very much there. Thus, the submission was rejected that there was a breach of provisions of Regulation 39(1-B).

The NCLAT in Ashdan Properties Pvt. Ltd. (supra) held that “when no fresh Form G has been issued, it is not open for any new applicant to submit application before the Adjudicating Authority for being permitted to participate in the CIRP and submit Resolution Plan.”

The Tribunal distinguished the above case from the facts of the present case and observed that in the present case when time line for EoI was extended and a fresh list of PRAs was published in which name of the SRA appeared therefore the ratio of the above judgment is not applicable to the facts of the present case.

The Tribunal concluded that “there are no such material irregularity committed by the Resolution Professional so as to exercise our appellate jurisdiction under Section 61(3)(ii) to set aside the approval of the Resolution Plan by the Adjudicating Authority. It is well settled that the scope of interference with the decision of the CoC approving Resolution Plan is minimal.”

Case Title: Brand Steel & Power Pvt. Ltd. Versus Avishek Gupta & Ors.

Case Number: Company Appeal (AT) (Insolvency) No. 194 & 195 of 2025

Judgment Date: 18/02/2025

For Appellant: Mr. Rishav Banerjee, Mr. Arijit Mazumdar, Ms. Madhuja Burman, Mr. Shambo Nandy and Ms. Anoushka Dey, Advocates.

For Respondent: Mr. Krishnendu Dutta, Sr. Advocate with Mr. Sailedndra Tiwari, Mr. Inranil Ghosh, Mr. Palzer Moktan, Mr. Rahul Gupta, Mr. Harsh Tandon and Ms. Mehar Bedi, Advocates for R-2 & R-3. Mr. Abhijeet Sinha, Sr. Advocate with Mr. Saikat Sarkar and Mr. Saurav Jain, Advocates for R-4 & R-5.

Ms. Swati Dalmia, Ms. Neha Sinha and Ms. Safura Ahmed, Advocates for R-1/RP.