NCLAT Holds CoC Can Extend Timeline for EoIs and Resolution Plans Without Fresh Form-G, Affirms Commercial Wisdom in Approving Resolution Plan

The NCLAT held that the Committee of Creditors (CoC) is empowered to extend the timeline for submission of Expressions of Interest (EoIs) and Resolution Plans without re-issuing Form-G, and further affirmed the CoC's commercial wisdom in approving the resolution plan.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka, while adjudicating a set of two appeals, held that the Committee of Creditors (CoC), in its commercial wisdom and in accordance with the CIRP Regulations, is entitled to extend the timeline for submission of Expressions of Interest (EoIs) and Resolution Plans without reissuing Form-G. The Tribunal further observed that the CoC’s decision to reject a belated and unsupported resolution plan submitted by the suspended director did not merit judicial interference. The NCLAT affirmed that procedural flexibility, when exercised transparently with CoC’s approval, does not contravene the provisions of the IBC or its underlying regulations.

The National Company Law Appellate Tribunal (NCLAT) dismissed two appeals filed by the suspended director of Indian Pulp and Paper Pvt. Ltd. challenging (i) the rejection of his interlocutory application (IA No. 1325/KB/2023) seeking to set aside the Corporate Insolvency Resolution Process (CIRP) and (ii) the approval of the Resolution Plan (IA No. 1407/KB/2023) submitted by Pinax Paper Mill Pvt. Ltd. and approved by the Committee of Creditors (CoC) with 97% majority.

The Appellant argued that the process followed by the Resolution Professional (RP) and CoC was in violation of Regulations 36A, 36B, and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, particularly alleging that no fresh Form-G was issued when the CoC decided to extend the timeline for submission of Expressions of Interest (EoIs) and Resolution Plans. The Appellant also contended that the decision to allow Pinax to submit a Resolution Plan amounted to a backdoor entry, while he, as the promoter of a Micro, Small and Medium Enterprise (MSME), was unjustly denied the opportunity to submit a plan.

The NCLAT found no merit in these contentions. It observed that the CoC, in its commercial wisdom, had extended the timeline for submission of EoIs and Resolution Plans during its 12th meeting on 09.02.2023, with the participation of the Appellant. The RP, with CoC’s approval, had validly issued communications extending the timelines without re-issuing Form-G, as permitted under the original Form-G and RFRP terms. Despite being present and aware, the Appellant did not submit an EoI either during the initial timeline or after the extension. His first attempt to enter the process came only on 13.07.2023, well after voting had been initiated on other Resolution Plans.

Further, the Appellant’s Resolution Plan, submitted on 23.07.2023, was deliberated by the CoC in its 21st meeting but was found to be non-serious and unsupported by credible financial backing. The plan referred to an expired non-binding offer from Phoenix ARC and lacked necessary confirmations from other entities mentioned. The CoC found this to be a last-minute attempt to derail the process and declined to proceed with it. The NCLAT upheld this decision, emphasising the CoC’s discretion and commercial wisdom in evaluating plans.

The Tribunal also rejected the Appellant’s argument that the adjudicating authority had failed to provide reasons while dismissing his application. It referred to detailed reasoning in the NCLT's order, which recorded the lack of funding, belated submission, and absence of genuine intent in the Appellant's proposal. The approval of Pinax’s plan was found to be lawful and in accordance with the provisions of the IBC.

In conclusion, NCLAT held that no material irregularity was committed in the CIRP or in the approval of the Resolution Plan. Both appeals were dismissed without costs.

Mr. Gaurav Mitra, Sr. Advocate, with Ms. Arushi Mishra, Mr. Dhruv Gupta and Mr. Rishav A., Advocates, represented the Appellants.

Ms. Swati Dalmia, Ms. Safura Ahmed and Ms. Neha Sinha, Advocates, appeared for the Respondent No. 1.

Mr. Krishnendu Dutta, Sr. Advocate with Mr. Sailendra Tiwari, Mr. Indranil Ghosh, Ms. Mehar Bedi and Mr. Rahul Gupta, Advocates, appeared for Respondent No. 2 and Respondent No. 3.

Mr. Abhijeet Sinha, Sr. Advocate with Mr. Saikat Sarkar, Advocates, appeared for the Respondent No. 4.

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