The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Technical Member was hearing an appeal and observed that the Adjudicating Authority exceeded its authority by ordering the consideration of a revised resolution plan after the Challenge Process had concluded, emphasizing the need to uphold the CoC's decision and prohibiting post-process revisions to the plan.
In the present case, an appeal was filed against an order issued by the Adjudicating Authority (National Company Law Tribunal) on 11.08.2022. The order directed the Committee of Creditors (CoC) to consider a revised resolution plan submitted by Respondent No.2. The CoC had initiated a Challenge Process to allow resolution applicants to improve their plans. This process involved multiple rounds, and after its completion, resolution plans were required to be submitted by a specific deadline.
However, Respondent No.2 submitted a revised offer after the Challenge Process had concluded, which led to the Adjudicating Authority's order. Jindal Stainless Limited, the appellant, challenged the direction given by the Adjudicating Authority, arguing that Respondent No.2 had no right to revise its plan after the Challenge Process had ended.
The Committee of Creditors and Respondent No.2 argued in favour of the Adjudicating Authority's direction, stating that the objective of the Insolvency and Bankruptcy Code is to maximize the value of the corporate debtor's assets. The Resolution Professional also stated that the regulations did not permit multiple revisions of the resolution plan.
The Appellate Tribunal examined the relevant provisions of the Request for Resolution Plan (RFRP), Challenge Process rules, and applicable regulations. It also considered the legislative intent behind the Insolvency and Bankruptcy Code. The key question before the Tribunal was whether the Adjudicating Authority had the power to direct the consideration of a revised plan after the Challenge Process had ended.
After analysing the RFRP, Challenge Process rules, and amended regulations, the Tribunal concluded that the Adjudicating Authority's direction was not in accordance with the prescribed procedure. The Appellate Tribunal (NCLAT) emphasized the importance of respecting the CoC's decision to adopt the Challenge Process and disallowed revisions to the resolution plan after the process had been completed.
Consequently, the Appellate Tribunal allowed the appeal filed by Jindal Stainless Limited and set aside the NCLAT order. It was determined that Clause 7 of the Challenge Process prohibits eligible Resolution Applicants from revising their bid or commercial offer after the Challenge Process concludes.
The CoC's unconditional right to cancel, modify, withdraw, abandon, or amend the Challenge Process at any stage was acknowledged. The approval of the plan submitted in the Corporate Insolvency Resolution Process (CIRP) falls within the domain of the CoC. The CoC decided to proceed with voting on the final plans received after receiving a detailed evaluation report for each plan.
The judgment emphasized the importance of completing the process within the timeline prescribed by the Insolvency and Bankruptcy Code. The Adjudicating Authority's order to consider the revised Resolution Plan was deemed unjustified and lacking reasoning. The Supreme Court's judgment in the Ngaitlang Dhar case supported the position that a Resolution Applicant cannot submit a revised plan after adopting the Swiss Challenge Method.
The CoC's decision to vote on the Resolution Plans after the Challenge Process was upheld. Consequently, the impugned order was set aside, and the voting process was to commence afresh and be completed within one month. The CIRP of the Corporate Debtor was extended until February 28, 2023, allowing the Resolution Professional to file an appropriate application before the Adjudicating Authority to record relevant facts and developments in the CIRP.