EBIX SINGAPORE PRIVATE LIMITED v. COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED & ANR.

A “a) Allow the present application and permit the Applicant to withdraw its Resolution Plan as submitted and approved by the CoC on 14.11.2019; b) Direct that the Performance Bank Guarantee submitted by the Applicant be cancelled/revoked/returned/refunded to the B Applicant;” In its application, Kundan Care stated that there was no bar under the IBC on it withdrawing its Resolution Plan before it was confirmed by the NCLT. It sought to withdraw its Resolution Plan on account of four reasons: C (i) That there was uncertainty in relation to the PPA with GUVNL, since the GUVNL Appeal was pending before this Court. It noted that the PPA was central to the CIRP, and its termination would affect its Resolution Plan. Further, it noted that GUVNL had unilaterally refused permission to D Astonfield to change the solar panels which had been damaged in the floods of 2017, and had not made any payments to Astonfield for the electricity being supplied currently; (ii) That due to heavy floods in the State of Gujarat during 2019, E the solar panels and other equipment at the Project Site of Astonfield had been damaged. Further, it alleged that there was stagnant water at the Project Site, which continued to deteriorate them; (iii) That Astonfield’s insurance claim of Rs 46.40 crores in F relation to floods in 2017 had been repudiated by the insurer. Further, it also noted that this may also adversely affect the claim for the floods in 2019; and (iv) That the IM issued by A-RP represented that since Astonfield had not availed the benefit of “Accelerated Depreciation” under the PPA, hence, it was entitled to a sum of Rs 6.614 G crores from GUVNL, which was a “Trade Receivable”. However, it noted that Kundan Care had subsequently discovered a previous judgment of this Court upon identical facts, where it was noted that the Project Developer shall not be entitled to a higher/revised tariff in case of not availing H “Accelerated Depreciation”.

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EDUCOMP SOLUTIONS LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]

60Copy pinpoint60. On 6 January 2020, Kundan Care filed an additional affidavit outlining the additional costs it would face on account of: (i) deterioration of the solar panels due to GUVNL unilaterally not permitting their replacement, thereby leading to additional cost of Rs 30 crores (against an initial expected cost of Rs 9 crore); (ii) Astonfield’s Plant not producing electricity at its optimum level, thereby leading to a loss of revenue up to Rs 150 lacs per month; and (iii) CIRP costs on account of delay in CIRP, thereby leading to a loss of Rs 12 lacs per month (approx.). It noted: “5. I say and submit that after submission of the Resolution plan, the Applicant’s representatives had visited the site again and found that almost all the solar panels installed at the Project site are required to be changed/replaced at a total cost of over INR 30 crores instead of INR 9 crores ascertained by the Applicant at the time of submission of the Plan. […] D

17. I say and submit that the plant is capable of generating 18133200 KWH/Units of Electricity per annum (11.⁵ MW * 365 days * 24 hours* 1000 (from MW to KW) * 18% CUF = 18133200 KWH/ Units), when operating at the optimum capacity which would only be possible after change/replacement of solar panels, inverters etc. as contemplated in the Resolution Plan. This translates to E generation revenue of roughly INR 1800 lacs per annum or roughly INR 150 lacs per month which is being incurred by the Project.

18. I say and submit that in addition to the aforesaid generation loss, a sum of INR 12 lacs (approx.) is being incurred towards monthly CIRP cost on account of the delay in the CIR process.” F

61Copy pinpoint61. Thereafter, Kundan Care also filed an application for impleadment²⁷ in the GUNVL Appeal pending before this Court, along with an application for directions²⁸ praying, in exercise of this Court’s jurisdiction under Article 142 of the Constitution of India, for the following reliefs: G “a) Set aside/quash the Notice dated 28.03.2019 issued by Gujarat Urja Vikas Nigam Limited to Astonfield Solar (Gujarat) Private

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A Limited and declare that the Applicant/Corporate Debtor shall be free to change/replace the solar panels/modules and other equipment of the Project, as may be deemed fit by the Applicant/ Corporate Debtor; b) Declare that the Power Purchase Agreement dated 30.04.2010 B executed between Gujarat Urja Vikas Nigam Limited and Astonfield Solar (Gujarat) Private Limited shall stand extended by the period of moratorium declared under IBC during the CIR Process; c) In alternate to prayers a) and b), permit the Applicant to withdraw its Resolution Plan dated 12.11.2019 and direct that the Performance Bank Guarantee submitted by the Applicant to the Committee of Creditors shall stand cancelled/revoked and/or returned/refunded to the Applicant;”

62Copy pinpoint62. While the GUVNL appeal and its application remained pending, on 14 May 2020, Kundan Care requested the NCLT to take up its application for an early hearing. Following this, the application was listed on 15 June 2020.

63Copy pinpoint63. On 12 June 2020, A-RP filed its reply to Kundan Care’s application and additional affidavit, where it opposed the withdrawal of the Resolution Plan after its approval by the A-CoC and stated that: (i) In relation to the ongoing dispute with GUVNL, Kundan Care was aware of the same when it submitted the Resolution Plan; (ii) In relation to the damage to the solar panels, it pointed out that the A-RP had informed Kundan Care about the floods in 2019 and an Operation and Management Agency had been hired to clear the water at the Project Site, which had been done; (iii) In relation to the repudiation of the insurance claim, the G RFRP or IM never guaranteed that the claim would be successful. In any case, the A-RP was actively pursuing the challenge to its repudiation; (iv) In relation to the “Accelerated Depreciation”, that the same had been listed as a “doubtful debt” by the A-RP in the IM. H

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EDUCOMP SOLUTIONS LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]

Further, in any case, Kundan Care would have done their A own due diligence surrounding it; and (v) In relation to Astonfield’s Plant not operating at full capacity, the IM issued by A-RP noted that the floods in 2017 had affected the Plant and it may not be able to operate at full capacity. B

64Copy pinpoint64. Kundan Care filed its rejoinder to the A-RP’s reply on 29 June 2020, in which they argued that the Resolution Plan proposed by them and approved by the A-CoC, was no longer “feasible” and “viable” commercially, in accordance with Section 30(2)(d) read with proviso to Section 31(1) of the IBC, due to the intervening circumstances before its confirmation by the NCLT which had materially altered the financial projections. Hence, the NCLT should allow it to withdraw the Resolution Plan. In the alternative, Kundan Care proposed re-negotiation of the Resolution Plan by stating the following: “55. That Para 78 of the Reply is the Prayer Clause, which is wrong and denied. The Prayer Clause of C.A. No. 16798/2019 is reiterated and reaffirmed. Alternatively, and without prejudice to the above, it is prayed that the Applicant may be permitted to re- negotiate the financial proposal with the CoC”

65Copy pinpoint65. The A-CoC also filed its reply to Kundan Care’s application on 30 June 2020, where it stated that: (i) NCLT could not adjudicate upon the application since Kundan Care had filed another application before this Court in the GUVNL Appeal; and (ii) in any case, Kundan Care knew of the risks while entering the CIRP and should not be allowed to withdraw at such a belated stage. F

66Copy pinpoint66. The NLCT passed an order dated 3 July 2020, by which it rejected Kundan Care’s application by noting that: (i) it did not have jurisdiction to permit withdrawal; and (ii) the matter was also sub judice before this Court by the virtue of Kundan Care’s application in the GUVNL Appeal. The order stated: G “IA 1679/2019 Counsels for the Resolution Applicant, COC and IRP are present. The Resolution Applicant has prayed to withdraw the resolution plan which was submitted before this Tribunal after approval of the COC. After careful consideration of the matter, we are of the H

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A view that the NCLT has no jurisdiction to permit withdrawal of the resolution plan which has been placed before the authority with due approval of the COC. Notwithstanding this fact, it has been pointed out by the Counsel for the COC that another matter is subjudiced before the Hon’ble Supreme Court in which inter- alia a similar request has been made. This has been submitted by B the Cotinsel for the COC on page 31 of the reply filed by COC in response to the application. Keeping this in view, it will not be appropriate for this Tribunal to deal with an issue which is already subjudiced before the Hon’ble Supreme Court. The Application is hereby rejected.” C

67Copy pinpoint67. In view of the NCLT’s order, Kundan Care made an oral request for withdrawal of its application to this Court when the GUVNL Appeal was listed on 20 July 2020. This request was allowed by this Court.

68Copy pinpoint68. Thereafter, the appellant filed an appeal before the NCLAT, challenging the order dated 3 July 2020 passed by the NCLT. NCLAT did not issue notice in the appeal, but heard the submissions of all parties at the stage of admission and directed them to file their written submissions.

69Copy pinpoint69. By the impugned judgment dated 30 September 2020, the NCLAT dismissed the appeal by Kundan Care, relying on the judgment impugned in the Ebix Appeal. It noted: “7. Be it seen that the CIRP process undertaken involves filing of Expression of Interest by the prospective Resolution Applicants F which may ultimately manifest in the form of prospective Resolution Plan after negotiations as regards improvement or revision in terms of the proposed Resolution Plan. This process is in the nature of a bidding process where, based on consideration of the provisions of a Resolution Plan with regard to financial matrix, capacity of the Resolution Applicant to generate funds, G infusion of funds, upfront payment, the distribution mechanism and the period over which the claims of various stake holders are to be satisfied besides the feasibility and viability of the Resolution Plan, a Resolution Applicant emerges as the highest bidder (Hl) eliminating the Resolution Plans of Resolution Applicants, which are ranked H2 and H3. The approval of a Resolution Plan by the H

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EDUCOMP SOLUTIONS LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]

Committee of Creditors with requisite majority has the effect of A eliminating H2 and H3 from the arena. Though, such approved Resolution Plan would be binding on the Corporate Debtor and all stake holders only after the Adjudicating Authority passes an order under Section 31 of the I&B Code approving the Resolution Plan submitted by Resolution Professional with the approval of B Committee of Creditors in terms of provisions of Section 30(6) of the I&B Code, it does not follow that the Successful Resolution Applicant would be at liberty to withdraw the Resolution Plan duly approved by the Committee of Creditors and laid before the Adjudicating Authority for approval thereby sabotaging the entire Corporate Insolvency Resolution Process, which is designed to C achieve an object. A Resolution Applicant whose Resolution Plan stands approved by Committee of Creditors cannot be permitted to alter his position to the detriment of various stake holders after pushing out all potential rivals during the bidding process. This is fraught with disastrous consequences for the Corporate Debtor D which may be pushed into liquidation as the CIRP period may by then be over thereby setting at naught all possibilities of insolvency resolution and protection of a Corporate Debtor, more so when it is a going concern. That apart, there is no express provision in the I&B Code allowing a Successful Resolution Applicant to stage a U-tum and frustrate the entire exercise of Corporate Insolvency E Resolution Process. The argument advanced on behalf of the Appellant that there is no provision in the I&B Code compelling specific performance of Resolution Plan by the Successful Resolution Applicant has to be repelled on four major grounds:- (i) There is no provision in the l&B Code entitling the Successful F Resolution Applicant to seek withdrawal after its Resolution Plai¹ stands approved by the Committee of Creditors with requisite majority; (ii) The successful Resolution Plan incorporates contractual terms binding the Resolution Applicant but it is not a contract of personal G service which may be legally unenforceable; (iii) The Resolution Applicant in such case is estopped from wriggling out of the liabilities incurred under the approved Resolution Plan and the principle of estoppel by conduct would apply to it; H

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A (iv) The value of the assets of the Corporate Debtor is bound to have depleted because of passage of time consumed in Corporate Insolvency Resolution Process and in the event of Successful Resolution Applicant being permitted to walk out with impunity, the Corporate Debtor’s depleting value would leave all stake holders in a state of devastation.” B The NCLAT held that withdrawal of a Resolution Plan by the Resolution Application after its approval by the CoC cannot be permitted since: (i) it contravenes the principles of IBC, which require the CIRP to be conducted in a time-bound manner in order to maximise the value of the assets of the Corporate Debtor; (ii) permitting Kundan Care to withdraw would sabotage the CIRP, where the A-CoC had previously rejected other prospective Resolution Applicants in favor of Kundan Care; (iii) there is no specific provision in the IBC for allowing withdrawal; (iv) the Resolution Plan incorporated contractual terms binding the Resolution Applicant, and it is not akin to a contract of personal service which is legally unenforceable; (v) by the virtue of principle of estoppel of conduct, Kundan Care is estopped from withdrawing; and (vi) the withdrawal may lead to the Astonfield’s liquidation, and the value of its assets were bound to have depleted in the interim. C Civil Appeal No 295 of 2021 – the Seroco Appeal E C.¹ The appeal

70Copy pinpoint70. This is an appeal under Section 62 of the IBC from an order dated 10 December 2020 of the NCLAT. By its judgment, the NCLAT dismissed an appeal29 instituted by Seroco, under Section 61 of the IBC against an order dated 23 October 2020 of the NCLT. F

71Copy pinpoint71. The NCLT dismissed an application30 by Seroco under Section 60(5) seeking permission to modify its Resolution Plan submitted for the Corporate Debtor – Arya Filaments. NCLT relied on the impugned judgment in the Kundan Care Appeal. Further, it noted that while the application prayed for a modification of the Resolution Plan, its title was G “Application for withdrawal under section 60(5) of the Insolvency and Bankruptcy Code, 2016”.

72Copy pinpoint72. In appeal, the NCLAT partly upheld the NCLT’s decision and held that Seroco could not be allowed to modify or withdraw the 29 Company Appeal (AT) (Insolvency) No 1054 of 2020 H 30 IA No 96 of 2020 in CP (IB) No 29 of 2018

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Resolution Plan approved by the Arya-CoC since: (i) it was the sole A Resolution Applicant in the CIRP; (ii) Arya Filaments was an MSME; and (iii) it was aware of Arya Filaments’ financial condition when it submitted the Resolution Plan. However, it set aside the NCLT’s decision in relation to the costs imposed on Seroco. C.2 Initiation of CIRP B

73Copy pinpoint73. The second respondent, Kotak, being a financial creditor of Arya Filaments, filed a petition31 under Section 7 of the IBC seeking to initiate CIRP.

74Copy pinpoint74. By an order dated 17 August 2018, the NCLT initiated CIRP against Arya Filaments and appointed the first respondent, Mr Ravi C Kapoor, as the IRP. Thereafter, a CoC was constituted, which consisted of Kotak Mahindra and the third respondent, UBIL. The Arya-CoC then appointed Mr Ravi Kapoor as the RP. C.3 Submission and Approval of Resolution Plan D

75Copy pinpoint75. The Arya-RP thereafter invited Resolutions Plans for Arya Filaments. Seroco, being a company formed by the former employees of Arya Filaments, submitted a Resolution Plan on 13 March 2019 where, inter alia, they offered to pay Rs 6,79,22,000. This was the only Resolution Plan which was received. E

76Copy pinpoint76. At its 4th meeting held on 16 April 2019, the Arya-CoC noted that Seroco’s Resolution Plan needed some improvements and directed it to submit a revised Plan. Seroco’s revised Resolution Plan was then approved by the Arya-CoC in its 5th meeting held on 10 May 2019, with 100 per cent approval. F

77Copy pinpoint77. On or about 15 May 2019, the Arya-RP filed an application32 under Section 30(6) before NCLT for confirmation of the Resolution Plan. Form H under the CIRP Regulations was filed by way of an affidavit on 5 June 2020. C.4 Modification of the Resolution Plan G

78Copy pinpoint78. On 9 June 2020, Seroco addressed a letter to the Arya-RP and Arya-CoC highlighting that their Resolution Plan was based on the economic conditions which prevailed at that time, which had been 31 CP (IB) No 29 of 2018 32 IA No 280 of 2019 in CP (IB) No 29 of 2018 H

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A significantly altered due to the onset of the COVID-19 pandemic. In particular, it highlighted that: (i) The physical condition of Arya Filament’s machinery would have deteriorated; (ii) Financial losses must have been suffered by Arya Filaments B during the COVID-19 pandemic; (iii) Demand/sale of Arya Filaments’ products must have suffered during pandemic; and (iv) Due to the pandemic, the funds of Seroco have also been drastically reduced. It submitted a revised Resolution Plan to be considered by the Arya-CoC. In the revised Resolution Plan, Seroco offered to pay, inter alia, an amount of Rs 5,29,22,000. It also requested the Arya-RP and Arya-CoC to file the revised Resolution Plan before the NCLT, and keep the proceedings on the confirmation of the previous Resolution Plan in abeyance.

79Copy pinpoint79. Thereafter, on 10 July 2020, Seroco filed an application before the NCLT praying for the following reliefs: “a) permit the Applicant to revise the Resolution Plan dated E 13.3.2020 in terms of letter dated 09/06/2020 at Annexure C hereto; b) direct the Respondent No. 2 to consider the modified resolution plan as per Letter at Annexure C and vote afresh on the same; c) direct the Respondent No.¹ to provide an updated Information Memorandum providing financial condition of the Corporate F Debtor as on 1/07/2020; d) during the hearing of this Application, stay the implementation, operation and execution of the Resolution Plan dated 13.3.2020 of the Applicant;”

G It noted that its Resolution Plan was filed eighteen months ago and was based on an IM published two years previously, following which the conditions had materially altered. Hence, Seroco stated that while it was genuinely interested in Arya Filaments, its changed circumstances meant that it could not pay the entire consideration envisaged in the Resolution Plan approved by the Arya-CoC earlier. H

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80Copy pinpoint80. Seroco’s application was listed before the bench of the NCLT A which was hearing the Arya-RP’s application for confirmation of the Resolution Plan. By a common order on 23 October 2020, the NCLT allowed the Arya-RP’s application and confirmed Seroco’s Resolution Plan which had been approved by the Arya-CoC. In relation to Seroco’s application for modification, it noted: B “18. It is the matter of record that the instant application was filed subsequent to the filling of the above stated IA ie. IA 280 of 2019 filed under Section 30(6) of the IB Code. It is stated by the Applicant that the Resolution Plan, so submitted by the Applicant, is based on the Information Memorandum which was published two years ago. Considering the time of two years and outbreak of C Covid-19, the Applicant is not aware of the current financial condition of the Corporate Debtor and is now not in a position to bear the costs/losses of the Corporate Debtor and hence, is seeking for withdrawal of the Resolution Plan. This story is not believable as the Corporate Debtor, being a MSME, has filed the plan D considering the financial ‘condition of the Corporate Debtor and have shown his interest to take the Company. Hence, having no knowledge of the financial condition does not arise at all.

19. It is pertinent to mention herein that in view of the judgement passed by Hon’ble NCLAT in Kundan Care Products Ltd vs. Mr. E Amit Gupta Resolution Professional and-Ors (Company Appeal (AT) (Insolvency) No. 653 of 2020), the Resolution Plan, once submitted, cannot be withdrawn as there is no provision in the IB Code which allows withdrawal of an approved Resolution Plan & the successful Resolution Plan incorporates contractual terms binding the Resolution Applicant but it is not a contract of personal service which may be legally unenforceable.

20. Moreover, there is an ambiguity in the instant application with regard to the relief sought for, as the title of the application states “Application for withdrawal under section 60(5) of the Insolvency and Bankruptcy Code, 2016” whereas the prayer, as stated above, has no whisper regarding the withdrawal of the Resolution Plan.” Hence, it rejected Seroco’s application and imposed costs of Rs 50,000.

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81Copy pinpoint81. Seroco filed an appeal against the NCLT’s judgment, which came to be dismissed by the NCLAT by its impugned order dated 10 December 2020, where it noted: “2. After hearing learned counsel for the Appellant and having regard to the Judgments rendered by this Appellate Tribunal holding B that the Successful Resolution Applicant cannot be permitted to withdraw the approved Resolution Plan coupled with the fact that the Appellant in the instant case being the sole Resolution Applicant in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor which has been classified as an MSME and admittedly having knowledge of the financial health of the C Corporate Debtor as a promoter or a connected person cannot be permitted to seek revision of the approved Resolution Plan on that ground which would not be a material irregularity within the ambit of Section 61(3) of the Insolvency and Bankruptcy Code,

2016. We are of the considered opinion that there is no merit in D this appeal and the same is liable to be dismissed.” Considering Arya Filament’s position as an MSME, Seroco being a company formed by its former employees (who would have been aware of its financial condition) and also being the sole Resolution Applicant, the NCLAT refused to permit modification/withdrawal of the Resolution E Plan. D Submissions of counsel in the Ebix Appeal D.¹ Submissions for the appellant

82Copy pinpoint82. Mr K V Vishwanathan, learned Senior Counsel appearing on behalf of Ebix submitted that a successful Resolution Applicant may be permitted to withdraw the resolution plan (pending approval of the Adjudicating Authority), on account of: (a) subsequent developments in relation to Educomp (which in this case relate to investigations of fraud and mismanagement during the pre-CIRP period); and (b) due to an inordinate lapse of time, which has resulted in the complete erosion of the fundamental commercial substratum underlying the Resolution Plan. Further, he argues that the NCLAT did not correctly apply the doctrine of constructive res judicata. He has made the following submissions: (i) Ebix is not bound by the Resolution Plan prior to the approval of the Adjudicating Authority, in terms of the CIRP documents read with the scheme of IBC. In this regard, our attention was drawn to:

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(a) Section 31(1) of the IBC, which provides that the Resolution A Plan is “binding…on all stakeholders” only upon approval by the Adjudicating Authority; (b) Section 74(3) of the IBC, which provides that a person can be prosecuted or punished for contravening the Resolution Plan only after its approval by the Adjudicating Authority; B (c) The documents underlying the CIRP, i.e., invitation of EOI, the RFRP, sanction letter and Resolution Plan take effect of a binding contract only upon the approval of the Adjudicating Authority and the execution of definitive agreements thereafter; C (d) Clause 1.¹.6 of the RFRP provides that the Plan submitted by Ebix will have to be approved by the Adjudicating Authority and will be binding on all the stakeholders in relation to the Corporate Debtor and Ebix, only after it has been approved by the Adjudicating Authority; D (e) Clause 1.10(1) of the RFRP provides that Ebix shall be responsible for the implementation and supervision of the Resolution Plan from the date of approval by the Adjudicating Authority; and (f) Clause 2.2.9 of the RFRP provides that Ebix shall, pursuant to approval by the Adjudicating Authority, execute definitive agreements; (ii) The Resolution Plan constitutes an offer qualified by time and cannot be enforced against the parties after such a long period of time has elapsed. In this regard, the following terms of the documents underlying the CIRP were highlighted: (a) Clause 1.¹.⁵ of the RFRP, which invites Resolution Plans from prospective Resolution Applicants. Further, Clause 1 of the covering letter for submission of the Resolution Plan provides that Ebix is setting out the offer in relation to the insolvency resolution of Educomp; (b) The Resolution Plan was valid only for six months, since Clause 1.8.3 of the RFRP invites resolution plans/offers with a validity of six months; H

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A (c) In accordance with the RFRP, Clause 7 of the Resolution Plan provides that it is valid for a period of six months from the date of submission. The appellant is a liberty to withdraw the resolution plan if there is delay of several months beyond the period of six months. It was emphasized that the Resolution Plan is a qualified offer which is not open to acceptance for an indefinite period. Reliance was placed on the decision of this Court in Riya Travel & Tours (India) (P) Ltd. v. C.U. Chengappa33 to support this proposition; (d) The CSEB Application for the approval of the resolution plan continues to be pending before the Adjudicating Authority, while the Approval Appeal is pending before the Appellate Authority. A period of eighteen months has passed from the date of submission of the resolution plan (i.e., 19 February 2018) and twenty-seven months from the CIRP D commencement date. Such severe and inordinate delay is impermissible under Section 12 of the IBC and justifies the withdrawal of the Plan; (e) The delay in the approval was on account of the actions of members of the E-CoC, who had sought a special audit of E Educomp due to the concerns relating to mismanagement of its affairs. Several members had filed applications (IFC, Axis Bank and SBI) before the Adjudicating Authority in this regard. The Adjudicating Authority by orders dated 13 August 2018, 20 August 2018 and 31 August 2018 took cognizance of these applications and directed them to be placed before the E-CoC. The E-CoC approved the Investigation Audit Application filed on its behalf before the Adjudicating Authority for conducting a special audit by 77.85 per cent votes; (f) SFIO initiated investigation against Educomp. Ebix became aware of the investigation only through disclosures made to NSE/BSE and regulators on 12 June 2019; (g) Ebix had sent a notice dated 2 July 2018 to the E-CoC/E- RP stating that the severe delays in the CIRP have 33 H (2001) 9 SCC 512

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prejudiced the commercial considerations underlying the A Resolution Plan and, in any case, the Resolution Plan was valid only for six months. It urged the E-CoC/E-RP to expedite the process for obtaining the Adjudicating Authority’s approval. Thereafter, Ebix filed the First Withdrawal Application for seeking information relating to the financial position and other commercial aspects of Educomp. After the dismissal of the First Withdrawal Application, the appellant filed the Second and Third Withdrawal Applications for withdrawal of its Resolution Plan; and (h) The above sequence of events shows that Ebix had no role to play in the delays plaguing the CIRP of Educomp. Section 12 of the IBC stipulates that the insolvency resolution process should be completed in 270 days with an outer limit of 330 days. This Court in CoC of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors.34 has held that “[i]t is only in such exceptional cases that time can be extended, the general rule being that 330 days is the outer limit within which resolution of the stressed assets of the corporate debtor must take place beyond which the corporate debtor is to be driven into liquidation”; E (iii) The events that have taken place subsequent to the submission of Resolution Plan justify its withdrawal. In this regard, it was urged on behalf of Ebix that: (a) The Resolution Plan was based on certain considerations that were fundamental to the Ebix’s bid for the business of F Educomp, and were crucial for keeping the business of Educomp as a going concern. These were the government contracts and IP driven solutions in the education and health industries. However, due to the inordinate delay in the completion of the CIRP, many of the government contracts may have ended. Further, various technology driven solutions G and intellectual property owned and operated by Educomp, which Ebix had sought to acquire, were no longer valid;

34 (2020) 8 SCC 531 H

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A (b) The E-CoC passed a resolution with 77.85 per cent votes to conduct a special audit into the affairs of Educomp, which shows that evidence is available to conclude that the affairs of the company were mismanaged, which materially affect the economic considerations underlying the Resolution Plan; B (c) The affairs of Educomp are also being investigated by the SFIO and CBI, which provides further evidence that the affairs of Educomp were severally mismanaged and are susceptible to criminal investigations; (d) There has been a lapse of over three years resulting in an erosion of vital business prospects of Educomp; and (e) The implementation and viability of a Resolution Plan is to be assessed at the time of consideration of such plan by the competent Court/Tribunal, and not at the time of submission of the Plan. The subsequent events that have transpired after the submission of the Resolution Plan are relevant for evaluating the commercial viability and the capability to implement the plan. In the present case, the substratum forming the basis of the resolution plan has been eroded by the occurrence of the abovementioned events. Thus, the successful Resolution Applicant has the right to withdraw the Resolution Plan in such circumstances; (iv) Material information relating to the financial position and affairs of Ebix was not provided to Ebix after the submission of the Resolution Plan, as a consequence of which, there is an impairment of a fair process in the conduct of a commercial transaction. In this context: F (a) Section 29(2) of the IBC, provides that all relevant information should be provided to the Resolution Applicant; (b) Regulation 36 of the CIRP Regulations provides that the IM prepared under Section 29 of the IBC should contain information relating to, inter alia: (1) “assets and liabilities…”; (2) “the latest annual financial statement”; and (3) details of “…ongoing investigations or proceedings initiated by Government and statutory authorities”. While this information is relevant for the preparation of the Resolution Plan, there is a continuing obligation to disclose such information if there is a substantial delay in the CIRP

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(beyond the period prescribed under Section 12 of the IBC) A qua the Corporate Debtor; (c) The Resolution Applicant’s right to complete and accurate information relating to the Corporate Debtor has been recognized under the UNCITRAL Guide. The principle of “equality of information” to all stakeholders, including the B resolution applicant, has been underlined in the BLRC Report; and (d) The E-CoC/E-RP withheld information relating to mismanagement of affairs of Educomp between 2014-2018, and also in relation to the investigation into the affairs of C Educomp by governmental authorities; (v) The Adjudicating Authority has the power to permit the withdrawal of the Resolution Plan. Under Section 31 of the IBC, it has the power to independently satisfy itself that the “Resolution Plan as approved by the CoC… meets the requirements as referred to in sub- D section (2) of Section 30”. Section 30(2)(d) of the IBC provides that the Adjudicating Authority can assess whether adequate provisions have been made for the “implementation and supervision of the resolution plan”. This Court in K Sashidhar v. IOC35 has emphasized that the Adjudicating Authority has the discretion to reject the Resolution Plan if it does not conform to the stated requirements of Section 30(2)(d). The E proviso to Section 31(1) of the IBC expressly prohibits the Adjudicating Authority from approving a plan that is incapable of being effectively implemented. The NCLAT, in the impugned judgement, has not considered whether the exercise of the jurisdiction by the Adjudicating Authority under Section 31(1) read with Section 30(2)(d) was valid. In the present F circumstances, the Resolution Plan is no longer capable of being implemented due to the erosion of the commercial basis of the Resolution Plan and an inordinate lapse of time; (vi) The NCLT had good and valid reasons allowing for the withdrawal of the resolution plan since: G (a) There was no approval by the E-CoC with the requisite majority of 75 per cent. When the voting took place on the resolution plan submitted by the Appellant on 22 February 2018, there was a

35 (2019) 12 SCC 150 H

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A shortage in the votes required to achieve the statutory requirement of 75 per cent of votes in the E-CoC. On 23 February 2018, one of the financial creditors who was not present at the meeting of the E-CoC intimated its agreement with the resolution plan and accordingly the Approval Application was filed on 7 March 2018. Orders have been reserved on the Approval Application on 10 B January 2018; and (b) Fulfilment of the Plan cannot be foisted on an unwilling Applicant. This view of the NCLT is consistent with the legal position which vests it with the power to permit a withdrawal from a resolution plan for good and substantial reasons; and C (vii) The doctrine of res judicata does not bar the relief that Ebix had sought in its Third Withdrawal Application of its Resolution Plan. The First Withdrawal Application arose from a different cause of action, namely seeking information and re-evaluation of the financial position of Educomp due to a lapse of time. The order dated 10 July 2019 passed by the Adjudicating Authority in the First Withdrawal Application had only adjudicated the issue relating to the non-disclosure of information and material sought by Ebix, and had not considered the relief of withdrawal of Resolution Plan. This was also confirmed in the express finding of the Adjudicating Authority in its order dated 2 January 2020, which was appealed before the NCLAT. D.2 Submissions for the first respondent

83Copy pinpoint83. Mr Shyam Divan, learned Senior Counsel appearing on behalf of E-CoC, has urged the following submissions:

F (i) Ebix submitted its Resolution Plan on 27 January 2018, after month-long negotiations. Meetings between the E-CoC and Ebix were conducted on 17 February 2018, 19 February 2018 and 21 February 2018. Addendums were submitted on 21 February 2018. The mutually approved and negotiated plan was put to vote, and approved by 75.36 per cent of the G E-CoC. This constituted a binding contract between Ebix and the E-CoC; (ii) The IBC is a complete code as held by this Court in M/s Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors.36 and M/s Innoventive Industries H 36 (2020) 13 SCC 308

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Ltd. v. ICICI Bank & Anr. 37. It does not envisage withdrawals of Resolution Plans after mutual negotiations between the Resolution Applicant and the CoC, which culminates into a binding agreement. The Adjudicating Authority cannot contravene the text to invoke the spirit/ object of the IBC without a conscious statutory prescription, as held by this Court in Gujarat Urja Vikas Nigam Limited v. Amit Gupta38; (iii) The basic tenets of any insolvency law are to ensure the sanctity of the prescribed processes and timelines. Maximization of the value of assets and resolution of the Corporate Debtor are the core objectives of the IBC, as held by this Court in Swiss Ribbons (P) Ltd v. Union of India39. Enabling withdrawals, especially at the tail end of the process, would push financially distressed Corporate Debtors into liquidation; (iv) The Specific Relief (Amendment) Act 2018, as is evinced from the speech of the Union Minister of Law & Justice before the Rajya Sabha while introducing the amendments, shifted the paradigm on contract enforcement in India where specific performance is now the norm, rather than the exception; E (v) The resolution process involves significant public money, resources and time. Enabling withdrawals would undermine the goals of predictability and finality, which the legislature had recognized as the need of the hour in the Rajya Sabha debates on the IBC; F (vi) Non-implementation of Resolution Plans after approval from the Adjudicatory Authority under Section 31 of the IBC, pertinently on a narrow scope of judicial review, is liable to criminal prosecution under Section 74(3) of the IBC. This Court should not allow a successful Resolution Applicant G to withdraw from a duly concluded contract;

37 (2018) 1 SCC 407 38 2021 SCCOnLine SC 194, para 181 39 (2019) 4 SCC 17, paras 27-28 H

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A (vii) The consequences of permitting a withdrawal by Ebix would push Educomp towards liquidation, which would risk thousands of crores of public monies owed to public sector banks during the economic crisis caused by the COVID-19 pandemic; B (viii) Permitting withdrawal of an approved Resolution Plan would tread on the exclusive domain of the CoC, which has the power to determine the feasibility and viability of a Resolution Plan. The mandate of Section 30(2)(d) of the IBC, which envisages ‘implementation and supervision of the resolution plan’, would be breached if the Court would allow withdrawals by holding that an unwilling Resolution Applicant would make a Resolution Plan itself un- implementable; (ix) The scope of judicial review with the Adjudicatory Authority, under Section 31 of the IBC, is confined to parameters delineated in Section 30(2), which does not envisage the withdrawal or unwillingness of the Resolution Applicant to continue with a CoC-approved Resolution Plan. The Adjudicating Authority, as a creature of the statute, cannot exercise jurisdiction beyond the scope of the IBC or second- E guess the commercial wisdom of the CoC, as held by this Court in Essar Steel (supra), after noting the observations of this Court in K Sashidhar (supra); (x) The Supreme Court, in Essar Steel (supra) and K Sashidhar (supra), has held that the Adjudicating Authority F cannot trespass upon the majority decision of the CoC, except on the grounds enumerated under Section 30(2)(a) to (e) of the IBC; (xi) The provisions of the RFRP were designed to ensure predictability and finality. The provisions which elucidated G this aim were: (a) Clause 1.13.⁵, which did not envisage any change or supplemental information to the Resolution Plan, after the submission date; (b) Clause 1.8.4, which stated that a submitted Resolution H Plan shall be irrevocable; and

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(c) Clause 1.10(l), which stipulated that the Resolution A Applicant will not be permitted to withdraw the Resolution Plan; (xii) The RFRP did not envisage six months to be the validity of the Resolution Plan. Clause 1.8.3, which stipulated a minimum six-month validity of the Resolution Plan, is relatable to the acceptance of the plan by the E-CoC and not the Adjudicating Authority. This is evident from the clauses of the RFRP which stipulate that the submitted plan is irrevocable; (xiii) The resolution process belies the claim that withdrawals were permissible after the six-month period. The process was delineated in the following terms: (a) Clause 1.3.¹ and 1.3.2 empowers the E-RP to issue an invitation to prospective resolution applicants, subject to, inter alia, non-disclosure agreements and participation fees; (b) Clause 1.3.6, read with Clause 1.9.¹, enables a party to submit a Resolution Plan upon payment of an earnest money deposit of Rs 2 crore. Along with the Resolution Plan, the Resolution Applicant was required to submit an undertaking accepting the terms of the RFRP, including the minimum six-month period of Resolution Plan validity; (c) Clause 1.9.3, read with Clause 1.9.⁵, ensures that a CoC approved Resolution Plan becomes a binding contract between the E-CoC and Ebix, since the earnest money deposit needs to be replaced with a performance guarantee, which is 10 per cent of the Resolution Plan value. Any violation of the concluded contract, which would be the approved Resolution Plan in this case, would give the E-CoC the right to invoke the performance guarantee; (d) The above clauses, in addition to clause 1.8.3, read with 1.9.⁵, evince that the six-month validity is with respect of the EMD alone, and is hence only related to a period until acceptance by the E-CoC; H

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A (e) The consequence of approval by the Adjudicating Authority under Section 31 of the IBC is that the parties enter into definitive binding agreements, the implementation of the Resolution Plan commences and the performance guarantee is returned. A Section 31- approval binds all stakeholders to a concluded contract B between the Ebix and the E-CoC; (f) The CoC or the RP do not have the authority to impose a time limit on the Adjudicating Authority. Therefore, it would not be plausible to construe Clause 1.8.3 to impose a maximum validity period on a Resolution Plan; C and (g) In any event, Ebix had waived the term of validity of the plan being six months by pursuing the plan after six months, i.e., from August 2018 till reserving of orders by the Adjudicating Authority in January 2019, and not raising any claims till July 2019. Therefore, Ebix is estopped from raising the plea, after the purported expiry of the validity period; (xiv) Clause 1.¹.6 of the RFRP, which reiterated Section 31 of the IBC and states that the Resolution Plan will be binding on all stakeholders only after the approval of the Adjudicating Authority, does not militate against E-CoC’s proposition that the CoC-approved Resolution Plan is a concluded contract. This is because: (a) Section 30(4) of the IBC does not contemplate any statutory exit after the approval of the Resolution Plan by the CoC, which determines its feasibility and viability; (b) Clause 1.¹.6 paraphrases Section 31(1) of the IBC, which merely makes the Resolution Plan binding on all other stakeholders. The Adjudicating Authority’s G approval under Section 31(1) amounts to a ‘super-added imprimatur’ to the concluded terms between the CoC and the Successful Resolution Applicant; and (c) A conjoint reading of Clause 1.¹.6, along with Clause 1.8.4, which declares a submitted Resolution Plan to be H irrevocable, and Clause 1.10(l), which prohibits

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withdrawal of a submitted Resolution Plan, belies the A claim that the Resolution Plan is binding on the Successful Resolution Applicant only after approval of the Adjudicating Authority; (xv) The delay in the resolution process is not attributable to the E-CoC. It cannot be cited to allow Ebix to withdraw from a B legally binding plan; (a) The E-CoC approved the submitted Resolution Plan within 270 days, and it was promptly filed before the Adjudicating Authority in March 2018. The orders on the plan approval were reserved in January 2019 and C pronounced only in January 2020. The delay cannot be attributable to the E-CoC or used to withdraw from a plan which provided a 90 per cent haircut; and (b) actus curiae neminem gravabit, i.e., the act of Court shall harm no man, is a settled principle in law; D (xvi) Ebix’s argument that the substratum or commercial viability has eroded due to the subsequent circumstances is facetious since: (a) Ebix had conducted its own due diligence, in accordance with the RFRP. Section 29 of the IBC also enabled the E appellant to access to an IM on Educomp, which would include all relevant information, including financial position and pending disputes. Clause 1.13.7 of the RFRP also stipulates that failure to conduct adequate due diligence is not a ground to relieve the Resolution F Applicant from its obligations under a submitted Resolution Plan; (b) Ebix continued to be interested in Educomp as late as 1 June 2020, when it addressed a letter stating that the software licenses for online education, issued by G Educomp, have become even more relevant in the circumstances of the pandemic; (c) The Investigation Audit Application for investigations into the affairs of Educomp was filed in May 2018 and disposed of by August 2018, which was prior to the H

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A Adjudicating Authority reserving its orders on the Resolution Plan. In any event, no such audit by the Special Investigation Team was undertaken; (d) According to the information available with the E-CoC, the E-RP had provided all the information available with B Educomp regarding the CBI and SFIO investigations, on a best effort basis. Additionally, Ebix was also appearing before the NCLT when the E-CoC sought an investigation into the affairs of Educomp, as recorded in the order of the NCLT dated 9 August 2018; C (e) Ebix had evaluated the business and business conduct of Educomp, before submitting a Resolution Plan worth Rs 314 crores, against an admitted financial debt worth Rs 3003 crores. This 90 per cent haircut indicates that the appellant was aware of the conditions of Educomp; and D (f) In any event, Section 32A of the IBC grants immunity to a Resolution Applicant from any offences committed by the Corporate Debtor, prior to the commencement of the CIRP, and provides certainty that the assets of the Corporate Debtor, as represented, would be available E in the same manner as at the time of submission of a Resolution Plan. Section 25(2)(j) of the IBC empowers and obligates the RP to file applications for avoidance of certain transactions, to protect the interests of the Resolution Applicant; and F (xvii) The Third Withdrawal Application is barred by res judicata since the grounds raised by Ebix were rejected by the NCLT in the First Withdrawal Application on 10 July 2019. The liberty granted by the NCLT to file a fresh application on 5 September 2019 was with respect to filing a proper pleading G without defects, and not on merits. This conditional liberty cannot be construed as a waiver of the objection of res judicata. In any event, the issue of limited validity of the approved Resolution Plan and delay of seventeen months, is barred by the principles of constructive res judicata.

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84Copy pinpoint84. In the alternative, if Ebix were to succeed before this Court, A the learned Senior Counsel on behalf of the E-CoC has prayed that this Court exercise its powers under Article 142 of the Constitution of India, and extend the limitation period for conducting the insolvency process by three to four months for a fresh process to be initiated, subject to the consent of the E-CoC. B D.3 Submissions for the second respondent

85Copy pinpoint85. Supporting the submissions of the E-CoC, Mr Nakul Dewan, learned Senior Counsel, has appeared on behalf of the E-RP. He has submitted that: (i) Upon the approval of a Resolution Plan by the CoC, a C concluded contract comes into existence between the Resolution Applicant and CoC. Any withdrawal of the Resolution Plan would violate the concluded contract; (ii) In the present case, Clauses 1.9.3 and 1.9.⁵, give the right to the E-CoC to invoke the PBG submitted by Ebix if it attempts D to renege from its contractual obligation to implement the Resolution Plan; (iii) The withdrawal would also be in violation of the objective of the IBC, as noted by this Court in Swiss Ribbons (supra), which is to ensure the revival and continuation of the Corporate E Debtor. The withdrawal of the Resolution Plan at a belated stage, would lead to the Corporate Debtor going into liquidation; (iv) The withdrawal of a Resolution Plan after its approval by the CoC is not contemplated by: F (a) The UNCITRAL Guide, according to which the role of judicial authorities is limited to approving the Resolution Plan after ensuring that it was approved by the CoC properly. It does not envisage that the role of the judicial authorities would extend to questioning the commercial G wisdom of the CoC, much less allow for the withdrawal of the Resolution Plan at the behest of the Resolution Applicant; (b) The BLRC Report: (1) notes that the UNCITRAL Guide was used as a benchmark by Parliament while enacting H

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(viii) Ebix is a professional corporate entity, and through the express provisions of its own Resolution Plan, has stated that it has significant previous experience in the revival of stressed assets. Before submitting its Resolution Plan for Educomp, Ebix was provided access to the Virtual Data Room D by the E-RP and conducted its due diligence. Hence, it should not be allowed to seek a withdrawal, by arguing that certain facts were not within its knowledge; and (ix) In view of the decision of this court in Nagabhushanammal v. C Chandikeswaralingam 44, the Third Withdrawal E Application was barred by the principles of res judicata since it sought the same prayer which was raised in the First Withdrawal Application, and rejected by the NCLT in its order dated 10 July 2019. E Submissions of counsel in the Kundan Care Appeal F E.¹ Submissions for the appellant

86Copy pinpoint86. Mr Ramji Srinivasan, learned Senior Counsel appearing on behalf of Kundan Care, has urged the following submissions: (i) The IBC vests the Adjudicating Authority with inherent G powers to direct withdrawal: (a) Section 60(5)(c) of the IBC vests the Adjudicating Authority with wide powers and jurisdiction to “entertain

44 (2016) 4 SCC 434, para 15 H

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A and dispose of any question of law or facts, arising out of or in relation to” the CIRP. Rule 11 of the NCLT Rules 2016 also endows the NCLT with inherent powers. This Court, in Gujarat Urja (supra), has held that disputes arising in relation to insolvency can be adjudicated under Section 60(5)(c). Accordingly, the B dismissal of Kundan Care’s application on “lack of jurisdiction” is impermissible. Declining to go into merits of its application amounts to an impermissible refusal to exercise jurisdiction, as noted by this Court in National Thermal Power Corporation Ltd. v. Siemens C Atkeingesellschaft 45; (b) The NCLT erred in rejecting Kundan Care’s contention by confining its jurisdiction to Section 31(1) of the IBC which specifically deals with approval or rejection of Resolution Plans; D (c) The NCLAT incorrectly proceeded on the assumption that its powers in disposing off Kundan Care’s application seeking withdrawal were circumscribed by Section 61(3) of the IBC, which concerns appeals against approval of a Resolution Plan. Kundan Care sought to invoke jurisdiction under Section 61(1) of the IBC which provides a right of appeal against any order of the NCLT; (d) The facts and circumstances, on the basis of which the ‘feasibility and viability’ of the Resolution Plan were approved by the A-CoC in its commercial wisdom, have changed. Since the edifice of the A-CoC’s satisfaction had altered, the NCLT has power to look into the facts which warrant withdrawal or modification of the Resolution Plan; (e) The legislative background of Section 31 of the IBC G does not contemplate circumstances that could arise after submission of the Resolution Plan to the Adjudicating Authority. The UNCITRAL Guide and the BLRC Report place the viability of the Corporate Debtor at the heart of the insolvency process. The CIRP mandates interests 45 H AIR 2007 SC 1491, para 5

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of stakeholders to be better preserved by reorganization than liquidation. The BLRC Report was relied upon by this Court in K Sashidhar (supra) to propound the principle of “commercial wisdom of the CoC” which the Adjudicating Authority cannot interfere with as the creditors, as the loss-making party in the insolvency, are best placed to determine the terms of the resolution. However, this principle does not touch upon instances where there is a conflict between the CoC and the Resolution Applicant where the latter will prima facie suffer a loss. The Resolution Applicant has no stake in the process until their Plan is approved by the NCLT C and the probability of a complete loss, prior to the approval of the Plan, is justiciable; (f) The IBC contemplates strict timelines, and therefore did not envisage a scenario of withdrawal, prior to approval of the Resolution Plan under Section 31(1) of the IBC. D This Court, in Essar Steel (supra), held that the 330- day outer limit is directory which has resulted in Kundan Care’s Plan remaining pending before the NCLT for over a year, resulting in unviability and losses. Therefore, Section 31 cannot be asserted while adjudicating a plea for withdrawal or modification of a plan due to intervening factors having a material adverse effect in this case; (g) Kundan Care’s Resolution Plan was contingent on the continuance of the PPA with GUVNL. If the contingency does not arise, the Plan would become impossible. This Plan was accepted by the A-CoC on this contingency. Therefore, disabling withdrawals or modifications would in fact violate the commercial wisdom of the A-CoC; (h) The Resolution Plan has become unviable and impossible to implement. If mandatorily implemented, Astonfield is bound to suffer losses and eventually declare itself insolvent. These events hinder its effective implementation and warrant the Plan’s rejection by the A-CoC since the first proviso of Section 31(1), read with H

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A Sub-section (2)(d) warrants a determination by the Adjudicating Authority of the Resolution Plan’s effective implementation. The determination by the Adjudicating Authority under Section 31(1) cannot be equated to that of a rubberstamp where a holistic analysis is precluded; B (i) BLRC’s Interim Report of February 2015 mentions that ‘viability’ is determined by providing that the cost of financial arrangement (resolution amount invested by the Resolution Application) should be lower than the Net Present Value of future cash flows of the Corporate Debtor. In Kundan Care’s calculation, the computed Net C Present Value for future cash flow of Astonfield demonstrates loss and a potential repeated CIRP; and (j) The proposition that a Resolution Plan approved by the CoC cannot be withdrawn or modified under any circumstance, no matter the extent of impossibility or unviability that may have arisen subsequently, is seriously flawed and is likely to lead to draconian and absurd consequences. In the event that the basis of the Resolution Plan is completely eroded, a Resolution Applicant’s failure to implement the Plan would invite penal prosecution under Section 74 of the IBC and a repeated CIRP. This will discourage prospective Resolution Applicants from coming forward with their Plans in the future, thus defeating the very purpose and object behind the IBC;

F (ii) There is no concluded and binding contract between the Resolution Applicant and the CoC, prior to approval by the Adjudicating Authority: (a) There is no concluded contract between the Resolution Applicant and the CoC until the NCLT approves of the G same. Section 7 of the Contract Act requires the acceptance of offer to be absolute, unconditional and unqualified. Clauses 1.¹.9, 1.2, 1.9.4 and 2.2.6 of the RFRP record the fact that the Plan would be binding only after the approval of the Adjudicating Authority;

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(b) The RFRP is in the nature of an invitation to offer. A Kundan Care’s Resolution Plan is an offer that is made in pursuance of the RFRP. A contract is concluded and becomes binding between the parties, only upon the communication of its acceptance under Regulation 39(5) of the CIRP Regulation, after the approval of the B Adjudicating Authority under Section 31 of the IBC. It would be incorrect to term it as a concluded contract, since it would have unforeseeable public ramifications; (c) Since there is no concluded contract, withdrawal of an offer prior to acceptance is a settled principle in contract law and the Adjudicating Authority can give effect to this under Section 60(5) of the IBC; (d) Arguendo, if there is a concluded contract, it has become void under Sections 32 and 35 of the Contract Act. Clause 1.8.3 of the RFRP provided that the Plan must be valid for not less than six months. On this representation, Kundan Care prepared financial projections on the assumption that they would take over the project on 1 January 2020 and make it operational by 1 April 2020. The projections were based on the continuation of GUVNL’s PPA with Astonfield till 2037. E Kundan Care even furnished revised projections based on the assumption that they would be able to take over the project by 30 September 2020 and make it operational by 1 January 2021. Owing to this delay, Kundan Care had noted that its original projections for the year 2038 went from a cumulative profit of Rs 886.53 lakhs to a F cumulative loss of Rs 760.71 lakhs. The A-RP’s statement was recorded by the NCLT on 20 February 2020 that Astonfield is incurring a daily loss of Rs 5 lakhs. This takes the cumulative loss of Astonfield to Rs 1647.24 lakhs; G (e) Sl.No. 5.¹ of Kundan Care’s Resolution Plan also clearly stated that they would be at liberty to withdraw the Resolution Plan in the event that there is any change in the information provided in the IM or new information is available, which constitutes a ‘material adverse change’. H

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A Kundan Care contends that this was specifically introduced due to GUVNL’s attempts to terminate the PPA. The A-CoC was not obligated to accept this provision in the Plan, but since it has, the provision must be enforced; B (f) Withdrawal was necessitated because of uncertainty over the continuation of the sole contract of Astonfield, deterioration of the assets of Astonfield owing to the floods in Gujarat, repudiation of Astonfield’s insurance claim due to the alleged failure of the A-RP to provide supporting documents and misrepresentation in respect C of trade receivables towards non-availing the benefit of accelerated depreciation; and (g) Kundan Care had also demonstrated good faith since it sought to withdraw the Resolution Plan on 17 December 2019, soon after GUVNL Appeal was listed before this D Court. This interim application for withdrawal was filed within a month of the A-RP submitting the plan to the Adjudicating Authority. The NCLAT erred in noting that this was a ploy on behalf of Kundan Care to frustrate the CIRP after pushing out all rivals during the bidding process; (iii) Alternatively, the CoC-approved Resolution Plan is a contingent contract under Section 32 of the Indian Contract Act: (a) The contract has become void since the contingency of certainty of PPA with GUVNL within a specified time through approval of the NCLT has become impossible; (b) GUVNL’s Appeal against the continuation of the PPA, resolved by this Court in Gujarat Urja G (supra), compounded by the COVID-19 pandemic and the lockdown, is primarily responsible for the delay in the conclusion of the CIRP. The delay, as of 14 July 2021, in concluding the CIRP is 608 days. The CIRP costs (Rs 12 lakhs per month approx.) are also increasing, which have to be borne entirely H

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by Kundan Care. The NCLT should have A considered the alternative prayer of permission to re-negotiate the financial proposal with the CIRP; (c) The A-CoC’s approval through voting constitutes ‘provisional acceptance of offer’, as was held analogously by this Court in Haridwar Singh v. B Bagun Sumbrui46 which held that the contract was not concluded in the absence of the confirmation by the Government of the conditional acceptance by the Divisional Forest Officer. A statutory reading of Resolution Plans as contingent contracts under Section 7 and 32 of the Contract C Act would align with the intention of the IBC in attracting investors to make offers as conditional acceptance of the Plan, until it becomes binding upon approval under Section 31(1) of the IBC; and (d) Only section 31(1) of the IBC makes the Resolution D Plan binding on all stakeholders, including the Resolution Applicant and the CoC. This view is bolstered by the fact that criminal sanctions for non-implementation on a Resolution Applicant under Section 74(2) of the IBC are applicable only after E approval of the Resolution Plan under Section 31(1). Regulation 36-A(7)(f) of the CIRP Regulations also states that the refundable deposit can be forfeited only in case of discovery of any false information or record by the prospective Resolution Applicant. Regulation 36-B(4A) also states that the non- F refundable deposit shall be forfeited only on failure to perform after approval of the Plan under Section 31 of the IBC. The impugned judgement’s effect is to make it binding prior to the Adjudicating Authority’s approval which does violence to the G unambiguous language of S.31(1). This is further supported by the provisions of the IBC as noted by this Court in ArcelorMittal India Private

46 (1973) 3 SCC 889 H

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A Limited v. Satish Kumar Gupta 47 , that disapproval by the CoC of a Plan on the grounds of Section 29A of the IBC is still appealable by the Resolution Applicant before the NCLT, and therefore an approved Plan by CoC can still be replaced by another Plan which has been able to B satisfy the criteria under section 29A before the NCLT. In other words, a Plan approved by the CoC does not result in a concluded contract because it is replaceable by another party.

87Copy pinpoint87. In the course of the final stage of the hearings, Kundan Care C submitted that it had mutually negotiated a settlement with A-RP/A- CoC and requested the exercise of this Court’s powers under Article 142 of the Constitution of India for a one-time relief of modification, which would enable them to arrive at a mutually acceptable modification to the Resolution Plan. D E. 2 Submissions for the first respondent

88Copy pinpoint88. Mr Nakul Dewan, learned Senior Counsel appeared on behalf of the A-RP in the Kundan Care Appeal. He has also appeared on behalf of the E-RP in the Ebix Appeal, both being collectively disposed of by this judgement. He has made the following submissions, in addition to the arguments recorded above in the Ebix Appeal: (i) There is no direct provision with respect to withdrawal of a Resolution Plan under the IBC by a Resolution Applicant, once approved by the CoC. Consequently, the Adjudicating or Appellate Authority has no jurisdiction to direct withdrawals or modification of Resolution Plans; (ii) Section 12 of the IBC provides for a time bound period of 180 days extendable up to 330 days for the completion of the CIRP. Permitting the Resolution Applicant to withdraw the Resolution Plan after the approval of the CoC sets at naught the entire time period subsumed in negotiating and voting upon a Resolution Plan; (iii) Kundan Care was permitted to submit its Resolution Plan in spite of a failure to submit an EOI in time. Kundan Care

47 H Civil Appeal No. 9402 of 2018

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was aware of the pending litigation regarding the A continuance of the PPA with GUVNL and had negotiated with the A-CoC on that basis. Yet, Kundan Care filed an application to withdraw its Plan within a month of its approval and filing before the Adjudicating Authority. The plea of withdrawal is an opportunistic tactic for re- B negotiation; (iv) Clause 1.8.4 of the RFRP stated that a submitted Resolution Plan shall be irrevocable. The format of the cover letter annexed to the RFRP also makes statements on the binding effect of the submission and its irrevocability. The LOI issued by Kundan Care also states that the Resolution Applicant C will not be permitted to withdraw; (v) Clause 1.6.2 of the RFRP explicitly stated that any ‘Condition Precedents’ to the Plan had to be set out, for the CoC to specifically consider. Any walk-away conditions also had to be conspicuously set out with a heading, and under a D consolidated paragraph. Sl. No.⁵.¹ of the Resolution Plan was not set out in this format, which clearly evinces that it is being deployed as an afterthought to evade the consequences of a submitted Resolution Plan. In any event, none of the claims of Kundan Care constitute a material adverse change that they did not account for, after perusing the IM; (vi) Sl.No. 5.¹ of Kundan Care’s Resolution Plan was not introduced as a condition precedent to the Resolution Plan. Sl.No. 12 of the Form H, that is required to be mandatorily submitted by the RP to the Adjudicating Authority, as per Regulation 39(4) of the CIRP Regulations expressly stipulates ‘Conditionalities’ that need to be specified, for the benefit of the Adjudicating Authority. Attempts at subsequent modification and withdrawal are not supported by the Resolution Plan, the RFRP or the provisions of the G IBC; (vii) The CIRP costs currently stand at Rs 2.⁵ crore which Kundan Care had committed to paying in full. As of 26 July 2021, the unpaid CIRP cost is Rs 1.66 crores which would H

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A probably be payable from the pending insurance claim. A table detailing the financial health of Astonfield for the last three years was also annexed, to bolster the claim that financial health has improved and profits can still be generated; and B (viii) The delay in approval of the Resolution Plan by the Adjudicating Authority is an imponderable which cannot be used to resile from a binding contract. The delay is also not attributable to the A-RP or the A-CoC. E.3 Submissions for the second respondent

89Copy pinpoint89. Mr V Giri, learned Senior Counsel appearing for EXIM Bank on behalf of the A-CoC, has made the following submissions: (i) A Resolution Plan approved by the CoC is submitted by the RP to the NCLT under Section 30(6) of the IBC. Once the NCLT is satisfied that the Resolution Plan complies with D the requirements of Section 30(2), it grants its approval to the Plan, which becomes binding on all the stakeholders involved in the Resolution Plan. Thus, in the above scheme of things, IBC does not contemplate withdrawal of Resolution Plan once it has been approved by the CoC; E (ii) The penal provision under Section 74(3) is applicable to a successful Resolution Applicant as it is a stakeholder in the CIRP. The existence of a penal provision indicates that the legislature intended to deter and discourage withdrawals of Resolution Plans; F (iii) CIRP is a time bound process of 180 days, which can be further extended up to 330 days. If a successful Resolution Applicant is allowed to withdraw its Resolution Plan, it will set the clock back on the time spent on receiving the Resolution Plan, evaluating it under Section 30(2) of the IBC, putting it to vote before the CoC and finally obtaining G its approval from the Adjudicating Authority; (iv) Withdrawal of the Resolution Plan at this stage would result in the failure of the CIRP and Astonfield will go into liquidation. IBC envisages liquidation as the last resort; H

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(v) The process of issuing the RFRP and proposal of a A Resolution Plan, and its subsequent approval by the CoC is statutorily mandated. The formats of the documents underlying the CIRP process are also provided by the statute and the Regulations made thereunder. There is some room for maneuverability provided to the parties to negotiate the B terms of the documents, however, that does not make any difference to the statutorily prescribed nature of the documents; and (vi) The approval of the Resolution Plan under Section 30(3) of the IBC by the CoC creates a binding contract between the CoC and the successful Resolution Applicant because: C

(a) The proposed Resolution Plan has been approved by the CoC and has been further submitted before the NCLT by the RP; (b) A Resolution Applicant is aware of the conditions stipulated under the IM and conducts its own due diligence. It is given an opportunity to raise queries on the information that is provided in the IM. Thus, once the Resolution Applicant decides to submit a Resolution Plan and a substantial time and effort is spent by the RP and the CoC in the process of finalizing and approving a Resolution Plan, it cannot simply withdraw the Resolution Plan without being subjected to necessary consequences; (c) The approval of the plan by the CoC indicates the ad idem between the parties to enter into a contract. The F resulting contract is conditional only upon the approval by the NCLT; (d) Pursuant to the approval of the Resolution Plan by the CoC, the CoC issues an unconditional LOI to the successful Resolution Applicant stating that it has been G selected as the successful Resolution Applicant subject to the approval of the NCLT. The successful Resolution Applicant accepts the LOI and submits a PBG. The successful Resolution Applicant is required to state that the LOI is “accepted unconditionally”. It is only after H

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A the LOI is unconditionally accepted by the successful Resolution Applicant and the PBG is furnished, that the RP makes an application to the NCLT for approval of the Resolution Plan; and (e) Contracting parties cannot renege on their promise to perform the contract without facing any consequences. F Submissions of counsel in the Seroco Appeal F.¹ Submissions for the appellant

90Copy pinpoint90. Mr Tirth Nayak has made the following submissions on behalf of Seroco: (i) The Resolution Plan was submitted on the basis of information that was provided under the IM issued by the Arya-RP in August 2018. Over 18 months have passed since the Resolution Plan was submitted. The inordinate delay in the approval of the Resolution Plan by the NCLT, along with the outbreak of COVID-19 pandemic, has substantially affected the valuation of Arya Filaments, apart from impacting its business operations and financial position. Thus, Seroco is entitled to re-evaluate and modify the Resolution Plan based on such considerations; E (ii) The delay cannot be attributed to Seroco; (iii) The value of assets and the working capital funds of Arya Filaments have plummeted due to the losses that have occurred in the past eighteen months rendering the implementation of the current Resolution Plan impossible, thereby making it necessary to modify the Plan to suit the current circumstances; (iv) Seroco was not made aware of the updated financial status of Arya Filaments. It will be unjust if it is made to abide by a Resolution Plan that was submitted eighteen months ago based on the IM that was issued over twenty-four months ago; (v) Clause 5.3.2. of the BLRC Report provides that the “RP must provide the most updated information about the entity as accurate as is reasonably possible to this range of solution H

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providers. In order to do this, the RP has to be able to verify A claims to liabilities as well as the assets disclosed by the entity. The RP has the power to appoint whatever outside resources that she may require in order to carry out this task including accounting and consulting services…”. Seroco cannot be expected to make a huge investment in B Arya Filaments without being given information on its current financial status; (vi) Seroco is genuinely interested in investing in Arya Filaments, however, due to the change in circumstances, it is incapable of paying the entire consideration as was stipulated under the current Resolution Plan; and C

(vii) A Resolution Plan is an offer under Section 2(a) of the Contract Act. The Resolution Applicant becomes bound by the offer only if the Resolution Plan is approved by the NCLT. At present, the Plan is still under the consideration of the NCLT. Thus, Seroco can withdraw or seek D modification of the Plan. F.2 Submissions for the second and third respondents

91Copy pinpoint91. Mr Jayant Mehta appearing on behalf of the Arya-CoC, consisting of Kotak and UBIL, has supported the arguments of the E- E CoC and A-CoC. He has urged the following additional submissions: (i) There is no scope for modification of a Resolution Plan, once it has been submitted by the RP to the Adjudicating Authority, after voting by the CoC. The only ground sought by Seroco for modification of the submitted Resolution Plan F here is the exigency that has arisen due to the pandemic. This is evinced from the fact that the application for modification was made within 2 months of the outbreak of the pandemic; (ii) The Resolution Plan of Seroco was approved by the Arya- G CoC on 10 May 2019 and submitted to the Adjudicating Authority for approval on 14 May 2019. When Seroco filed their application before the NCLT for modification of the Resolution Plan, Kotak and UBIL, by their emails dated 13 July 2020 and 17 July 2020 respectively, had informed the Arya-RP that they record their disapproval for any such H

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A attempts at modification of the Resolution Plan which sought to reduce the resolution amount payable to secured creditors by Rs 1.⁵ crore; (iii) There has been no material change in the assets or valuation of Arya Filaments. Seventy-five per cent of the funds were to be generated by Seroco by the sale of the Arya Filament’s assets; and (iv) The following authorities were cited to elucidate on the power of the Adjudicating Authority, which is tightly circumscribed by the IBC, and designed to uphold the commercial wisdom of the CoC: K Sashidhar48 (supra), Essar Steel49 (supra), Committee of Creditors AMTEK Auto Limited Through Corporation Bank v. Dinkar T Venkatasubramanian & Ors.50, Kalparaj Dharamshi v. Kotak Investment Advisors Ltd. 51 , Jaypee Kensington Boulevard Apartments Welfare D Association & Ors. v. NBCC (India) Ltd. & Ors. 52 and Ghanashyam Mishra and Sons Private Limited through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Limited through the Director & Ors.53 An appeal under Section 61(3) of IBC, E is therefore not maintainable for a Resolution Applicant seeking modification of its approved Resolution Plan. The Adjudicating Authority in allowing any such modification, cannot do indirectly, what the statute does not permit it to do directly.

92Copy pinpoint92. The rival submissions in the three appeals shall now be F considered. G Purpose of a law on insolvency

93Copy pinpoint93. An examination of the raison d’etre of the IBC must necessarily precede its analytical interpretation. A purposive interpretation of the statute, as is argued by the contesting parties, cannot be evinced G 48 Paras 52-58, 62, 68, 65 49 Paras 65, 67, 69 and 88 50 (2021) 4 SCC 457 51 2021 SCC OnLine SC 204, para 143 52 2020 SCC OnLine SC 1192, para 170 53 H 2021 SCC OnLine SC 313, paras 55-57, 67, 77

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without examining the aims and objectives of the legislation. The IBC A was introduced as a water-shed moment for insolvency law in India that consolidated processes under several disparate statutes such as the 2013 Act, SICA, SARFAESI, Recovery of Debts Act, Presidency Towns Insolvency Act 1909 and the Provincial Insolvency Act 1920, into a single code. A comprehensive and time-bound framework was introduced with smooth transitions between reorganization and liquidation, with an aim to inter alia maximize the value of assets of all persons and balance the interest of all stakeholders54.

94Copy pinpoint94. Before we analyse the framework of the statute, the UNCITRAL Guide, which was instructive for the Indian experience on drafting the IBC55, provides some critical guidance on what an insolvency law represents. Notably, the UNCITRAL Guide explicitly refrains from prescribing mandates for the specific choices (procedural or substantive) that an insolvency law should provide. Instead, it clarifies that each jurisdiction evolves its own insolvency regime based on its social, political and economic goals. It notes56: D “15. Since an insolvency regime cannot fully protect the interests of all parties, some of the key policy choices to be made when designing an insolvency law relate to defining the broad goals of the law (rescuing businesses in financial difficulty, protecting employment, protecting the interests of creditors, encouraging the E development of an entrepreneurial class) and achieving the desired balance between the specific objectives identified above. Insolvency laws achieve that balance by reapportioning the risks of insolvency in a way that suits a State’s economic, social and political goals. As such, an insolvency law can have widespread effects in the broader economy….. F

17. There is no universal solution to the design of an insolvency law because States vary significantly in their 54 Statement of Objects and Reasons, IBC, 2016 G 55 3.3.¹, The report of the Bankruptcy Law Reforms Committee Volume I: Rationale and Design (November 2015), available at < https://ibbi.gov.in/BLRCReport Vol1_ 04112015.pdf > accessed on 20 August 2021 56 Pgs 14-16 of the UNCITRAL Legislative Guide to an Insolvency Law, available at < https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/05- 80722_ebook.pdf > accessed on 20 August 2021 H

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A needs, as do their laws on other issues of key importance to insolvency, such as security interests, property and contract rights, remedies and enforcement procedures. Although there may be no universal solution, most insolvency laws address the range of issues raised by the key objectives discussed above, albeit with different emphasis and focus. Some laws favour B stronger recognition and enforcement of creditor rights and commercial bargains in insolvency and give creditors more control over the conduct of insolvency proceedings than the debtor (sometimes referred to as “creditor-friendly” regimes). Other laws lean towards giving the debtor more control over the proceedings C (referred to as “debtor-friendly” regimes), while yet others seek to strike a balance in the middle…..” (emphasis supplied)

95Copy pinpoint95. With this legislative guidance from international law, the BLRC was commissioned by the Government of India for submitting a report with recommendations of reforms for the existing regime and a draft of the proposed Insolvency and Bankruptcy Code. In November 2015, the BLRC Report published its report in two volumes, with the first volume57 delineating the rationale and the second volume providing the design of the proposed legislation.

96Copy pinpoint96. The BLRC report noted that the insolvency regime was due for a major overhaul as the recovery rates in India were among the lowest in the world⁵⁸ and a revamped, coherent code was envisaged with speed and predictability woven into its underlying design to ensure higher recovery rates and immediate liquidation, in the event of a failed resolution. As noted by this Court in Essar Steel (supra), the insolvency regime in India was overhauled after the provisions of SICA, SARFAESI F and Recovery of Debts Act, in spite of providing for expeditious determination, were used by defaulting companies to enjoy extended moratorium periods and failure to enforce timelines meant legal proceedings would drag on for years and not result in recovery of stressed assets⁵⁹. Similarly, in its observation on “Speed is of Essence”, the BLRC G report elaborated the commercial purpose of a revamped insolvency regime in the following terms⁶⁰:

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“Speed is of essence for the working of the bankruptcy code, for A two reasons. First, while the “calm period” can help keep an organisation afloat, without the full clarity of ownership and control, significant decisions cannot be made. Without effective leadership, the firm will tend to atrophy and fail. The longer the delay, the more likely it is that liquidation will be the only answer. Second, B the liquidation value tends to go down with time as many assets suffer from a high economic rate of depreciation. From the viewpoint of creditors, a good realisation can generally be obtained if the firm is sold as a going concern. Hence, when delays induce liquidation, there is value destruction. Further, even in liquidation, the realisation is lower when there are delays. Hence, C delays cause value destruction. Thus, achieving a high recovery rate is primarily about identifying and combating the sources of delay.” In identifying the sources of delay, adjudicating mechanisms were identified as one of the two important sources of delay which need to be D equipped with the right resources. In order to respond to the rapid changes in the economy, the BLRC report recommended the formation of an IBBI which would function as a regulator and formulate regulations that dynamically detail the procedural norms of the working of the IBC with the necessary immediacy. It is also important for this Court, as a E constitutional authority which determines questions of law concerning the IBC framework, to note that a rapid liquidation may sometimes be preferable to a protracted CIRP. This sentiment was stressed in the BLRC Report, in its concluding statement in the Executive Summary, which noted: F “Conclusion The failure of some business plans is integral to the process of the market economy. When business failure takes place, the best outcome for society is to have a rapid re-negotiation between the financiers, to finance the going concern using a new arrangement G of liabilities and with a new management team. If this cannot be done, the best outcome for society is a rapid liquidation. When such arrangements can be put into place, the market process of creative destruction will work smoothly, with greater competitive vigor and greater competition. H

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A India is in the process of laying the foundations of a mature market economy. This involves well drafted modern laws, that replace the laws of the preceding 100 years, and high performance organisations which enforce these new laws. The Committee has endeavored to provide one critical building block of this process, with a modern insolvency and bankruptcy code, and the design of associated institutional infrastructure which reduces delays and transaction costs. We hope that the implementation of this report will increase GDP growth in India by fostering the emergence of a modern credit market, and particularly the corporate bond market. GDP growth will accelerate when more credit is available to new firms including firms which lack tangible capital. While many other things need to be done in achieving a sound system of finance and firms, this is one critical building block of that edifice.”

97Copy pinpoint97. A reading together of the UNCITRAL Guide and the BLRC D Report clarifies, in no uncertain terms, that the procedure designed for the insolvency process is critical for allocating economic coordination between the parties who partake in, or are bound by the process. This procedure produces substantive rights and obligations. For instance, the composition of the CoC, the method and percentage of its voting, the timelines for CIRP, the obligation on the RP to file specific forms after every stage of the process and the obligation to explain to the Adjudicating Authority reasons for any deviations from the timeline while submitting a Resolution Plan, and other such procedural requirements create a mechanism which tightly structures the conduct of all participants in the insolvency process. This process invariably has an impact on the conduct of the Resolution Applicant who participates in the process and consents to be bound by the RFRP and the broader insolvency framework. An analysis of the framework of the statute and regulations provides an insight into the dynamic and comprehensive nature of the statute. Upholding the procedural design and sanctity of the process is critical to its functioning. The interpretative task of the Adjudicating Authority, Appellate Authority, and even this Court, must be cognizant of, and allied with that objective. The UNCITRAL Guide has echoed this position by noting the interplay between the procedural design of the insolvency law and the corresponding institutional infrastructure by observing61: 61 H page 20, UNCITRAL Guide, supra note 56

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“27. While the institutional framework is not discussed in any detail in the Legislative Guide, some of the issues are touched upon below. Notwithstanding the variety of substantive issues that must be resolved, insolvency laws are highly procedural in nature. The design of the procedural rules plays a critical role in determining how roles are to be allocated between the various participants, in particular in terms of decision-making. To the extent that the insolvency law places considerable responsibility upon the institutional infrastructure to make key decisions, it is essential that that infrastructure be sufficiently developed to enable the required decisions to be made.”

98Copy pinpoint98. Any claim seeking an exercise of the Adjudicating Authority’s C residuary powers under Section 60(5)(c) of the IBC, the NCLT’s inherent powers under Rule 11 of the NCLT Rules 2016 or even the powers of this Court under Article 142 of the Constitution must be closely scrutinized for broader compliance with the insolvency framework and its underlying objective. The adjudicating mechanisms which have been specifically D created by the statute, have a narrowly defined role in the process and must be circumspect in granting reliefs that may run counter to the timeliness and predictability that is central to the IBC. Any judicial creation of a procedural or substantive remedy that is not envisaged by the statute would not only violate the principle of separation of powers, but also run the risk of altering the delicate coordination that is designed by the IBC E framework and have grave implications on the outcome of the CIRP, the economy of the country and the lives of the workers and other allied parties who are statutorily bound by the impact of a resolution or liquidation of a Corporate Debtor. H Nature of a Resolution Plan F

99Copy pinpoint99. Before we advert to whether withdrawals or modifications by successful Resolution Applicants are permissible under the IBC, we must begin by understanding the nature of a Resolution Plan. “Resolution Plan” has been defined in Section 5(26) of the IBC in the following terms: G “(26) “resolution plan” means a plan proposed by resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II; Explanation.—For the removal of doubts, it is hereby clarified that a resolution plan may include provisions for the restructuring H

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A of the corporate debtor, including by way of merger, amalgamation and demerger;” The Explanation to the provision was added by the Insolvency and Bankruptcy Code (Amendment) Act 2019. Further, the term “Resolution Applicant” was substituted for “any person” by the B Insolvency and Bankruptcy Code (Amendment) Act 2018.

100Copy pinpoint100. The term “Resolution Applicant” has been defined in Section 5(25) of the IBC as follows: “(25) “resolution applicant” means a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of Section 25 or pursuant to Section 54-K, as the case may be”

101Copy pinpoint101. The IBC provides a roadmap for the entire CIRP in Chapter II of Part II. This process is tightly regulated to include, inter alia, timelines of the CIRP specified by Section 12, duties of the RP to provide adequate information to propose a Resolution Plan in Section 29 and restrictions on who can be a Resolution Applicant in Section 29A. Thereafter, Section 30 provides for the submission of a Resolution Plan, and it reads as follows: E “30. Submission of resolution plan.—(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under Section 29-A to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan— (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor; (b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than— (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under Section 53; or

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(ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of Section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of Section 53 in the event of a liquidation of the corporate debtor. Explanation 1.—For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.—For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor— (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under Section 61 or Section E 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan; F (c) provides for the management of the affairs of the corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the G time being in force; (f) conforms to such other requirements as may be specified by the Board. Explanation.—For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of H

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A 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). (4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent of voting share of the financial creditors, after considering its feasibility and viability the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of Section 53, including the priority and value of the security interest of a secured creditor, and such other requirements as may be specified by the Board:

D Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under Section 29-A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: E Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of Section 29-A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of Section F 29-A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub- section (3) of Section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub- G section. Provided also that the eligibility criteria in Section 29-A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement H

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