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

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approved by the Adjudicating Authority or that it is not binding between A the CoC and the successful Resolution Applicant. Regulation 39(4) of CIRP Regulations mandates that the RP should endeavour to submit the Plan at least fifteen days before the statutory period of the CIRP under Section 12 is due to expire along with a receipt of a PBG and a compliance certificate as Form H. It is pertinent to note that sub-Section (3) to B Section 12 mandates that the CIRP process, including legal proceedings, must be concluded within 330 days. This three-hundred-and-thirty-day period can be extended only in exceptional circumstances, if the process is at near conclusion and serves the object of the IBC, as held by a three judge Bench of this Court in Essar Steel (supra). Therefore, after accounting for all statutorily envisaged delays which the RP has to explain C in its Form H and otherwise through Regulation 40B, the procedure envisages a fifteen-day window between submission of Resolution Plan and its approval or rejection by the Adjudicating Authority. This clearly indicates that the statute envisages a certain level of finality before the Resolution Plan is submitted for approval to the Adjudicating Authority. D Even the CoC is not permitted to approve multiple Resolution Plans or solicit EOIs after submission of a Resolution Plan to the Adjudicating Authority, which would possibly be in contemplation if the Resolution Applicant was permitted to withdraw from, or modify, the Plan after acceptance by the CoC. Regulation 36B(4A) requires the furnishing of a performance security which will be forfeited if a Resolution Applicant E fails to implement the Plan. This is collected before the Adjudicating Authority approves the Plan. Notably, the regulations also direct forfeiture of the performance security in case the Resolution Applicant “contributes to the failure of implementation”, which could potentially include any attempts at withdrawal of the Plan. F

151Copy pinpoint151. The report of the BLRC also notes that the negotiations in the CIRP must be time bound and it envisages that one of the ways in which the CIRP comes to a close is that the RP is able to obtain a binding agreement from the CoC113. Such a binding agreement is placed before the Adjudicating Authority, which orders the closure of the CIRP. If the Adjudicating Authority does not receive a binding agreement, it G can send the Corporate Debtor into liquidation. The relevant paragraphs are extracted below:

113 5.3.4, BLRC Report, supra note 55 H

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A “5.3.4 Rules to close the IRP The Committee agrees that it is critical for the Code to preserve the time value of the entity by ensuring that negotiations in the IRP are time bound. The Code states that the IRP has a default maximum time limit that is strictly adhered to, regardless of whether the creditors committee has identified a solution. On the other side, the Committee is also of the view that, if a solution can be identified within a shorter time frame, the process must accommodate closing the IRP in a shorter time period also. The Committee proposes that the IRP can come to a close in either of two ways. Either the RP is able to get a binding agreement from the majority of the creditors committee or the calm period reaches the default maximum date set by the Adjudicator at the start of the IRP. If either condition is met, the Adjudicator will issue an order to close the IRP. However, the orders will vary depending upon the condition. If the RP submits D a binding agreement to the Adjudicator before the default maximum date, then the Adjudicator orders the IRP case to be closed. If the Adjudicator does not receive a binding agreement by this date, the Adjudicator issues an order to close the IRP case along with an order to liquidate the entity.” E (emphasis supplied)

152Copy pinpoint152. The binding nature, as between the CoC and the successful Resolution Applicant, of the Resolution Plan submitted for approval by the Adjudicating Authority is further evidenced from the fact that the F CoC issues a LOI to a successful Resolution Applicant stating that it has been selected as the successful Resolution Applicant and its Plan would be submitted to the Adjudicating Authority for its approval. The successful Resolution Applicant is typically required to accept the LOI unconditionally and submit a PBG. Sequentially, the issuance of an LOI is followed by its unconditional acceptance by the successful Resolution Applicant. In G Amtek Auto (supra), this court thwarted a similar attempt by a successful Resolution Applicant who had relied on certain open-ended clauses in its Resolution Plan to seek a direction compelling the CoC to negotiate a modification to its Resolution Plan. The Resolution Plan had been approved by the Adjudicating Authority and the Resolution Applicant’s H IA was not entertained. The Resolution Applicant had then sought to

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challenge the approval of the Resolution Plan under Section 61(3) of the A IBC by seeking the same relief. This Court rejected the claim and observed that, “[t]o assert that there was any scope for negotiations and discussions after the approval of the resolution plan by the CoC would be plainly contrary to the terms of the IBC”.

153Copy pinpoint153. Regulation 38(3) mandates that a Resolution Plan be feasible, viable and implementable with specific timelines. A Resolution Plan whose implementation can be withdrawn at the behest of the successful Resolution Applicant, is inherently unviable, since open-ended clauses on modifications/withdrawal would mean that the Plan could fail at an undefined stage, be uncertain, including after approval by the Adjudicating Authority. It is inconsistent to postulate, on the one hand, that no withdrawal or modification is permitted after the approval by the Adjudicating Authority under Section 31, irrespective of the terms of the Resolution Plan; and on the other hand, to argue that the terms of the Resolution Plan relating to withdrawal or modification must be respected, in spite of the CoC’s approval, but prior to the approval by the Adjudicating D Authority. The former position follows from the intent, object and purpose of the IBC and from Section 31, and the latter is disavowed by the IBC’s structure and objective. The IBC does not envisage a dichotomy in the binding character of the Resolution Plan in relation to a Resolution Applicant between the stage of approval by the CoC and the approval of the Adjudicating Authority. The binding nature of a Resolution Plan E on a Resolution Applicant, who is the proponent of the Plan which has been accepted by the CoC cannot remain indeterminate at the discretion of the Resolution Applicant. The negotiations between the Resolution Applicant and the CoC are brought to an end after the CoC’s approval. The only conditionality that remains is the approval of the Adjudicating F Authority, which has a limited jurisdiction to confirm or deny the legal validity of the Resolution Plan in terms of Section 30 (2) of the IBC. If the requirements of Section 30(2) are satisfied, the Adjudicating Authority shall confirm the Plan approved by the CoC under Section 31(1) of the IBC. G

154Copy pinpoint154. If the appellants’ claim were to succeed, a clause enabling a Resolution Applicant to withdraw/seek modification for reasons such as a ‘Material Adverse Event’ could also be set up by a Resolution Applicant when it is being prosecuted under Section 74 (3). It was contended before us that Form H, which is a compliance certificate that is to be H

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A submitted by the RP to the Adjudicating Authority along with the Resolution Plan, mentions that the RP can enter details as to whether the Resolution Plan is subject to any conditionalities under Clause 12. Thus, the argument goes that this permits the Resolution Applicant to stipulate in the Resolution Plan certain contingencies under which it can withdraw the Plan, for instance if there is an occurrence of an ‘Material B Adverse Event’. A form is subservient to the statute. The conditionalities contemplated in Form H could be those which do not strike at the root of the IBC. They can include commercial conditions and business arrangements with the CoC. However, conditions for withdrawal or re- negotiation of the Resolution Plan cannot pass the test of ‘viability’ and C ‘implementability’ as they would make the resolution process indeterminate and unpredictable. A two judge Bench of this Court in K Sashidhar (supra), while discussing the jurisdiction of the Adjudicating Authority under Section 31 to evaluate a Resolution Plan, has observed that the Resolution Plan should “be an overall credible plan, capable of achieving timelines specified in the Code generally, assuring successful revival of the corporate debtor and disavowing endless speculation”114. Section 30(2)(d) of the IBC and Regulation 38 of the CIRP Regulations also provide that the Resolution Plan should be implementable. In the absence of specific statutory language allowing for withdrawals or even modifications by the successful Resolution Applicant, it would be difficult to imply the existence of such an option based on the terms of the Resolution Plan, irrespective of, and especially when they do not form a part of Clause 12 in Form H, as is the case in all the three Resolution Plans that are in dispute in this present appeal.

155Copy pinpoint155. The Insolvency and Bankruptcy Law Committee in its report released in March 2018115 noted that many conditional Resolution Plans were being approved by the Adjudicating Authority on account of the uncertainty on statutory clearances, such as by the Competition Commission of India, and the approval by the Adjudicating Authority was being regarded as a “single window approval”. This was in contravention of the intent of the IBC. The relevant extracts of the report are reproduced below: “16.1 Regulation 37(l) of the CIRP Regulations states that a resolution plan shall provide for obtaining necessary approvals

114 Para 60 supra note 35 H 115 supra note 100

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from the Central and State Governments and other authorities. A However, the timeline within which such approvals are required to be obtained, once a resolution plan has been approved by the NCLT, has not been provided in the Code or the CIRP Regulations. The Committee deliberated that as the onus to obtain the final approval would be on the successful resolution applicant as per B the resolution plan itself, the Code should specify that the timeline will be as specified in the relevant law, and if the timeline for approval under the relevant law is less than one year from the approval of the resolution plan, then a maximum of one year will be provided for obtaining the relevant approvals, and section 31 shall be amended to reflect this. C 16.2 Further, the Committee noted that there is no provision in the Code on the requirement to obtain an indication on the stance of the concerned regulators or authorities, if required, on the resolution plan prior to the resolution plan being approved by the NCLT. It was brought to the attention of the Committee that this was resulting in several conditional resolution plans being approved by the NCLT, and that the approval by the NCLT was being regarded as a ‘single window approval.’ This not being the intent of the Code, the Committee deliberated on introduction of a mechanism for obtaining preliminary observations from the concerned regulators and authorities in relation to a resolution plan approved by the CoC and submitted to the NCLT for its approval, but prior to the NCLT’s approval.” (emphasis supplied) F The Insolvency and Bankruptcy Law Committee in its report dated February 2020 116 stated that the current practice of obtaining governmental approvals after the approval of the Resolution Plan has created an uncertainty about the implementation of the Resolution Plan. The committee suggested that this uncertainty can be mitigated if amendments are made to the IBC to provide that once the Resolution G Plan is approved by the CoC, it will be shared with the governmental and regulatory authorities, for approvals that are necessary for running the business of the Corporate Debtor. If no objections are raised within forty-five days, it would be deemed that they have granted an approval. 116 supra note 90 H

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A If objections are raised or conditional approvals are granted, the Resolution Applicant should attempt to clear the objections or meet the conditions before placing the Resolution Plan before the Adjudicating Authority. This Plan would thereafter be placed before the Adjudicating Authority for its approval. The committee further suggested that this timeline of forty-five days should be excluded from calculating the timelines under Section 12 of the IBC. The relevant extract is reproduced below: “14.8. To enable approvals or no-objections to be taken within the scheme of the Code, the Committee decided that amendments should be made to the Code such that once a resolution plan is approved by the CoC, it should be sent to all concerned government and regulatory authorities whose approvals are core to the continued running of the business of the corporate debtor, for their approvals or objections. If they do not raise their objections within forty-five days, they will be deemed to have no objections. This plan would then be placed before the Adjudicating Authority for its approval. If the government and regulatory agencies raise any objections or grant conditional approvals, the resolution applicant can attempt to clear the objections or meet the conditions for approval before placing the plan for the approval of the Adjudicating Authority, where this can be done within the time limit provided under Section 12. However, where this is not possible, the plan may still be placed before the Adjudicating Authority for its approval, and the successful resolution applicant should clear the objections or comply with the conditions for approval within a period of one year from the approval of the resolution plan. 14.9. To ensure that this aligns with the time-line for resolution provided in the Code, the Committee recommended that the window of forty-five days given to government and regulatory agencies should be excluded from the computation of the time limit under Section 12 of the Code. Although some members of the Committee were of the view that this time-line should ideally run concurrently with the CIRP period, the Committee felt that this exclusion would be justified since it would streamline the process of gaining government H

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approvals considerably, which would lead to more value maximising resolutions, offsetting value lost, if any, in this forty-five day period in which the corporate debtor will be run as a going concern.” (emphasis supplied) The aim to tighten timelines for receiving regulatory approvals through the provision of in-principal approvals, prior to the approval of the Adjudicating Authority, indicates that the statutory framework under the IBC has consistently attempted to avoid situations which may introduce unpredictability in the insolvency resolution process and has sought to make the process as linear as it can be. Further, the recommendations made in the Insolvency Law Committee Report of C February 2020117 discussed above indicate that the aim is to ensure that the Resolution Plan placed before the Adjudicating Authority should reach a certain finality, even in the context of governmental approvals. A conditionality which allows for further negotiations, modification or withdrawal, once the Resolution Plan is approved by the CoC would only derail the time-bound process envisaged under the IBC. D

156Copy pinpoint156. Regulation 40A envisages a model-time line for the CIRP. Any deviation from this timeline needs to be specifically explained by the RP in Clause 10 of Form H. Regulation 40B imposes a time-limit on the RP for filing the requisite forms at different stages of the CIRP, including forms seeking extensions on account of delays at any stage. E The failure to fill these forms within the stipulated deadline results in disciplinary action against the RP by the IBBI. Further, as discussed in Section I of the judgement, various mandatory timelines have been imposed for undertaking specific actions under the CIRP. If the legislature intended to allow withdrawals or subsequent negotiations by successful F Resolution Applicants, it would have prescribed specific timelines for the exercise of such an option. The recognition of a power of withdrawal or modification after submission of a CoC-approved Resolution Plan, by judicial interpretation, will have the effect of disturbing the statutory timelines and delaying the CIRP, leading to a depletion in the value of the assets of a Corporate Debtor in the event of a potential liquidation. Hence, G it is best left to the wisdom of the legislature, based on the experiences gained from the working of the enactment, to decide whether the option of modification or withdrawal at the behest of the Resolution Applicant should be permitted after submission to the Adjudicating Authority; if so, 117 supra note 90 H

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A the conditions and the safeguards subject in which it can be allowed and the statutory procedure to be adopted for its exercise.

157Copy pinpoint157. Based on the plain terms of the statute, the Adjudicating Authority lacks the authority to allow the withdrawal or modification of the Resolution Plan by a successful Resolution Applicant or to give effect to any such clauses in the Resolution Plan. Unlike Section 18(3)(b) of the erstwhile SICA which vested the Board for Industrial and Financial Reconstruction with the power to make modifications to a draft scheme for sick industrial companies, the Adjudicating Authority under Section 31(2) of the IBC can only examine the validity of the plan on the anvil of the grounds stipulated in Section 30(2) and either approve or reject the plan. The Adjudicating Authority cannot compel a CoC to negotiate further with a successful Resolution Applicant. A rejection by the Adjudicating Authority is followed by a direction of mandatory liquidation under Section 33. Section 30(2) does not envisage setting aside of the Resolution Plan because the Resolution Applicant is unwilling to execute it, based on terms of its own Resolution Plan.

158Copy pinpoint158. Further, no such power can be vested with the Adjudicating Authority under its residuary jurisdiction in terms of Section 60 (5)(c). In a decision of a three judge Bench of this Court in Gujarat Urja (supra), it was held that, “the NCLT’s residuary jurisdiction [under Section E 60(5)(c)] though wide, is nonetheless defined by the text of the IBC. Specifically, the NCLT cannot do what the IBC consciously did not provide it the power to do”. Further, the court observed that “this Court must adopt an interpretation of the NCLT’s residuary jurisdiction which comports with the broader goals of the IBC”118. The effect of allowing the Adjudicating Authority to permit withdrawals of resolution plans that are submitted to it, would be to confer it with a power that is not envisaged by the IBC and defeat the objectives of the statute, which seeks a timely and predictable insolvency resolution of Corporate Debtors.

159Copy pinpoint159. After the amendment to Section 12 in 2019 which mandate a 330 days outer-limit for conclusion of the CIRP (which can be breached only under exceptional circumstances as held in Essar Steel (supra)), it would be antithetical to the purpose of the IBC to allow the Adjudicating Authority to use its plenary powers under Section 60(5)(c) to potentially extend these timelines to enable the CoC to either issue a fresh RFRP if

118 H Para 163-164, supra note 38

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the Resolution Plan is withdrawn by a successful Resolution Applicant A or direct further negotiations with the Resolution Applicant who is seeking a modification of the plan, whose failure could result in withdrawal as well. The likely consequence of a withdrawal by a successful Resolution Applicant after going through the stages of the CIRP for nearly 180 days (provided all statutory timelines have been strictly followed) would B inevitably be a delayed liquidation after the value of the assets has further depreciated. In the event of intervening delays on account of litigation or otherwise, the delay would be even more severe. If a CoC, could be compelled by the Adjudicating Authority to negotiate with the successful Resolution Applicant, it would have to resign itself to a commercial bargain at a much lower value. If Parliament intended to permit such withdrawals/ C modifications sought by successful Resolution Applicants as being beneficial to the economic policy, which it has sought to pursue while enacting the IBC, it would have prescribed timelines for setting the clock- back or directing immediate liquidation if the withdrawals occur after a certain period. For instance, under Regulation 36B (5) any modification to the RFRP or the evaluation matrix is deemed as a fresh issue of the RFRP and the timeline for submission of Resolution Plan starts afresh. Parliament has not legislated to provide for the eventuality argued by the appellants.

160Copy pinpoint160. Permitting the Adjudicating Authority to exercise its residuary powers under Section 60(5) to allow for further modifications or withdrawals at the behest of the successful Resolution Applicant, would be in the teeth of the decision of this Court in Essar Steel (supra) which held that “[s]ection 60(5)(c) cannot be used to whittle down Section 31(1) of the IBC, by the investment of some discretionary or equity jurisdiction in the Adjudicating Authority outside Section 30(2) of the F Code, when it comes to a resolution plan being adjudicated upon by the Adjudicating Authority”119. K Factual Analysis

161Copy pinpoint161. We have held in Section H of this judgement that Resolution Plans are not in a nature of a traditional contract per se, and the process G leading up to their formulation and acceptance by the CoC is comprehensively regulated by the insolvency framework. In Section J, we have further held that the IBC framework, does not enable withdrawals or modifications of Resolution Plans, once they have been 119 Para 68-69, supra note 34 H

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A submitted by the RP to the Adjudicating Authority after their approval by the CoC. In any event, and without affecting the legal position formulated above, we will also deal with the submissions of the parties that the contractual terms of their respective Resolution Plans enabled withdrawal or re-negotiation of terms. We will be undertaking an analysis on whether the individual Resolution Applicants before us had specifically negotiated with the respective CoCs for a right of modification or withdrawal and are contractually entitled to the same in the present case. K.1 The Ebix Appeal

162Copy pinpoint162. Before we begin our analysis on the factual matrix pertaining to Ebix’s Appeal, we must deal with the preliminary issue alleged by the respondents during the course of the Ebix Appeal- whether the Third Withdrawal Application by Ebix was barred by res judicata; while this will not have a bearing on the final outcome of the appeal, we shall analyze it briefly.

D K.1.1 Res Judicata

163Copy pinpoint163. To begin our inquiry, it is important to first consider the contours of the principle of res judicata. In Indian law, the principle has been recognized in Section 11 of the Code of Civil Procedure 1908. Section 11, in so far as is relevant, reads as follows: E “11. Res judicata.—No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court. […] Explanation IV.—Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. Explanation V.—Any relief claimed in the plaint, which is not expressly granted by the decree, shall, for the purposes of this section, be deemed to have been refused. H

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164Copy pinpoint164. In Satyadhyan Ghosal v. Deorajin Debi , a three judge Bench of this Court, speaking through Justice KC Das Gupta, explained the doctrine of res judicata in the following terms: “7. The principle of res judicata is based on the need of giving a finality to judicial decisions. What it says is that once a res is judicata, it shall not be adjudged again. Primarily it applies as between past litigation and future litigation. When a matter — whether on a question of fact or a question of law — has been decided between two parties in one suit or proceeding and the decision is final, either because no appeal was taken to a higher court or because the appeal was dismissed, or no appeal lies, neither party will be allowed in a future suit or proceeding between the same parties to canvass the matter again. This principle of res judicata is embodied in relation to suits in Section 11 of the Code of Civil Procedure; but even where Section 11 does not apply, the principle of res judicata has been applied by courts for the purpose of achieving finality in litigation. The result of this is that the original court as well as any higher court must in any future litigation proceed on the basis that the previous decision was correct.” From the above extract, it is clear that while res judicata may have been codified in Section 11, that does not bar its application to other judicial proceedings, such as the one in the present case.

165Copy pinpoint165. Before proceeding further, it is important to compare the reliefs sought by Ebix in the First, Second and Third Withdrawal Applications. They have been tabulated below, for an easy comparison: F

120 (1960) 3 SCR 590 H

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A iii. Withhold approval of the of Creditors to refund the of Creditors to refund the Resolution Plan sanctioned by Earnest Money Deposit of Rs. Earnest Money Deposit of Rs. the Committee of Creditors of 2,00,00,000/- furnished by the 2,00,00,000/- furnished by the the Corporate Debtor, as filed Resolution Applicant in respect Resolution Applicant in respect before this Hon'ble Tribunal on of the Resolution Plan; of the Resolution Plan; 11.04.2018, pending detailed consideration of the same by iii. Withhold approval of the iii. Withhold approval of the the Resolution Applicant; Resolution Plan sanctioned by Resolution Plan sanctioned by the Committee of Creditors of the Committee of Creditors of B iv. Grant the Resolution the Corporate Debtor, as filed the Corporate Debtor, as filed Applicant sufficient time to re- before this Hon'ble Tribunal on before this Hon'ble Tribunal on evaluate its proposals 07.03.2018 and recorded vide 07.03.2018 and recorded vid contained in the Resolution order dated 1.1.04.2018, order dated 11.04.2018, Plan, and also to suitably pending detailed consideration pending detailed consideration revise/modify and/or withdraw of the same by the Resolution of the same by the Resolution its Resolution Plan; Applicant; Applicant;

C From the above table, it is clear that the prayers in the Second and Third Withdrawal Applications were identical. Further, prayer (iii) of both corresponds to prayer (iii) of the First Withdrawal Application, in almost identical terms, while prayer (ii) was not present in the First Withdrawal Application at all. At the same time, prayers (i) and (ii) in the First Withdrawal Application have not been repeated in the Second and D Third Withdrawal Applications. However, what is at issue is prayer (iv) of the First Withdrawal Application and prayer (i) of the Second and Third Withdrawal Applications. Through the former, Ebix sought permission to re-evaluate its Resolution Plan and to suitably “revise/ modify and/or withdraw” it, while through the latter, Ebix sought permission to withdraw its Resolution Plan. Now we must analyse whether this would attract the principle of res judicata.

166Copy pinpoint166. In a judgment of this Court in Sheodan Singh v. Daryao Kunwar121, a four judge Bench of this Court elaborated on the various conditions which must be satisfied before the doctrine of res judicata can apply in a given case. Justice KN Wanchoo, speaking for the Court, held: “9. A plain reading of Section 11 shows that to constitute a matter res judicata, the following conditions must be satisfied, namely— (i) The matter directly and substantially in issue in the subsequent suit or issue must be the same matter which was directly and substantially in issue in the former suit; (ii) The former suit must have been a suit between the same parties or between parties under whom they or any of them claim; H 121

(1966) 3 SCR 300

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(iii) The parties must have litigated under the same title in the former suit; (iv) The court which decided the former suit must be a court competent to try the subsequent suit or the suit in which such issue is subsequently raised; and (v) The matter directly and substantially in issue in the subsequent suit must have been heard and finally decided by the court in the first suit…” (emphasis supplied)

167Copy pinpoint167. In the present case, conditions (i) is not in dispute since the parties were the same. As regards (ii), in the First Withdrawal Application, the prayer was to enable Ebix to re-evaluate its proposals and to revise/ modify and also withdraw its Resolution Plan. A prayer for withdrawal of the Resolution Plan was raised in the Second and Third Withdrawal Applications. Conditions (iii) and (iv) are also not in issue. What remains to be assessed is compliance with condition (v), i.e., whether Ebix’s D prayer in the First Withdrawal was in fact “heard and decided finally”. While dismissing the First Withdrawal Application, the NCLT had held: “This is an application filed by one Ebix Singapore Ptd. Limited seeking re-valuation of the Resolution Plan submitted by it before the Resolution Professional. E No ground for considering the prayer sought in the application is made out. The application is dismissed as such.” NCLT dismissed the First Withdrawal Application in a summary F manner. Further, the order does not make mention of the prayer to “revise/ modify and/or withdraw” of the Resolution Plan, but only refers to its re-evaluation.

168Copy pinpoint168. The meaning of the phrase “heard and finally decided” was considered by a judgment of a two judge Bench of this Court in Krishan G Lal v. State of J&K122, where it was held that the matter must have been heard on merits to have been “heard and finally decided”. Justice BL Hansaria, speaking for the Court, held:

122 (1994) 4 SCC 422 H

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A “12. Insofar as the second ground given by the High Court — the same being bar of res judicata — it is clear from what has been noted above, that there was no decision on merits as regards the grievance of the appellant; and so, the principle of res judicata had no application. The mere fact that the learned Single Judge while disposing of the Writ B Petition No. 23 of 78 had observed that: “This syndrome of errors, omissions and oddities, cannot be explained on any hypothesis other than the one that there is something fishy in the petitioner’s version….” C which observations have been relied upon by the High Court in holding that the suit was barred by res judicata do not at all make out a case of applicability of the principle of res judicata. The conclusion of the High Court on this score is indeed baffling to us, because, for res judicata to operate the involved issue must have been “heard and finally decided”. There was no D decision at all on the merit of the grievance of the petitioner in the aforesaid writ petition and, therefore, to take a view that the decision in earlier proceeding operated as res judicata was absolutely erroneous, not to speak of its being uncharitable.” E (emphasis supplied)

169Copy pinpoint169. In Daryao v. State of U.P.123, a Constitution Bench of this Court held that orders dismissing writ petitions in limine will not constitute res judicata. It was noted that while a summary dismissal may be considered as a dismissal on merits, it would be difficult to determine what weighed with the Court without a speaking order. Justice PB Gajendragadkar, speaking for the Court, held: “26...If the petition is dismissed in limine without passing a speaking order then such dismissal cannot be treated as creating a bar of res judicata. It is true that, prima facie, dismissal in limine even without passing a speaking order in that behalf may strongly suggest that the Court took the view that there was no substance in the petition at all; but in the absence of a speaking order it would not be easy to decide what factors weighed in the mind of the Court and that makes it difficult and unsafe to hold that such H 123

(1962) 1 SCR 574

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a summary dismissal is a dismissal on merits and as such constitutes A a bar of res judicata against a similar petition filed under Article 32…”

170Copy pinpoint170. Another two judge Bench of this Court, in its judgment in Erach Boman Khavar v. Tukaram Shridhar Bhat124, has held that the doctrine of res judicata can only apply when there has been a B conscious adjudication of the issue on merits. Justice Dipak Misra, speaking for the Court, held: “39. From the aforesaid authorities it is clear as crystal that to attract the doctrine of res judicata it must be manifest that there has been a conscious adjudication of an issue. A plea C of res judicata cannot be taken aid of unless there is an expression of an opinion on the merits. It is well settled in law that principle of res judicata is applicable between the two stages of the same litigation but the question or issue involved must have been decided at earlier stage of the same litigation.” D (emphasis supplied)

171Copy pinpoint171. Res judicata cannot apply solely because the issue has previously come up before the court. The doctrine will apply where the issue has been “heard and finally decided” on merits through a conscious adjudication by the court. In the present case, the NLCT’s order E dismissing the First Withdrawal Application makes it clear that it had only considered only that part of prayer (iv) which related to re-evaluation of the Resolution Plan, possibly because Ebix had hoped to re-evaluate the Resolution Plan on the basis of the information received as a consequence of prayers (i) and (ii) and those prayers were rejected since such information was not available. F

172Copy pinpoint172. In the impugned judgment, the NCLAT has relied upon Explanation (V) to Section 11 to state that since withdrawal was also prayed for as a relief in prayer (iv) of the First Withdrawal Application, it would have also been assumed to have been rejected. Mulla’s The Code of Civil Procedure states that Explanation V can only apply upon G the fulfilment of two conditions: (i) the relief claimed must have been substantial, and not merely auxiliary; and (ii) the relief claimed must

124 (2013) 15 SCC 655 H

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A have been one which the Court is bound to grant, and not one which it is discretionary for the Court to grant125.

173Copy pinpoint173. In Jaswant Singh v. Custodian of Evacuee Property126, a two judge Bench of this Court held that res judicata will only apply if the cause of action the same and that the party also had an earlier opportunity to apply for the relief it is now seeking. Justice ES Venkataramiah held: “14…It is well-settled that in order to decide the question whether a subsequent proceeding is barred by res judicata it is necessary to examine the question with reference to the (i) forum or the competence of the Court, (ii) parties and their representatives, (iii) matters in issue, (iv) matters which ought to have been made ground for defence or attack in the former suit, and (v) the final decision…A cause of action for a proceeding has no relation whatever to the defence which may be set up, nor does it depend upon the character of the relief prayed for by the plaintiff or the applicant. It refers entirely to the grounds set forth in the plaint or the application as the case may be as the cause of action or in other words to the media upon which the plaintiff or the applicant asks the court to arrive at a conclusion in his favour. In order that a defence of res judicata may succeed it is necessary to show that not only the cause of action was the same but also that the plaintiff had an opportunity of getting the relief which he is now seeking in the former proceedings. The test is whether the claim in the subsequent suit or proceedings is in fact founded upon the same cause of action which was the foundation of the former suit or proceedings…” F (emphasis supplied)

174Copy pinpoint174. The prayer for withdrawal of the Resolution Plan in the First Withdrawal Application was not substantial and one that the Court was bound to grant, since it was contingent upon a re-evaluation, which in G itself was contingent upon receiving the information sought in prayers (i) and (ii). Since the latter two contingencies never arose, the NCLT did not apply its mind to the prayer for withdrawal independently. When it filed the Second Withdrawal Application, it was dismissed on a technical

125 Sir Dinshaw Fardunji Mulla, The Code of Civil Procedure (18 th edn, LexisNexis) H 126 (1985) 3 SCC 648

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ground and not on its merits. When a revised Third Withdrawal Application A was filed, the NCLT then adjudicated it on its merits and allowed it. Hence, since the NCLT did not adjudicate Ebix’s prayer for withdrawal of their Resolution Plan on its merits while dismissing the First Withdrawal Application, the opportunity to seek the relief was not available to Ebix in a real sense. Therefore, we reverse the finding of the NCLAT on this B issue and hold that Ebix’s Third Withdrawal Application was not barred by res judicata. K.1.2 Analysis of the Resolution Plan of Ebix

175Copy pinpoint175. To briefly recount the relevant facts for determination of the dispute over the terms of the resolution plan – the CIRP of Educomp C commenced on 30 May 2017. After consultation with the E-CoC, the E-RP invited EOIs on 18 October 2017. The RFRP was issued on 5 December 2017, and was revised on 17 January 2018 and 20 January

2018. Ebix submitted its draft Resolution Plan after the last date of 27 January 2018, and after securing an extension from the Adjudicating Authority, on 29 January 2018. Ebix took the benefit of an extension of time which was granted to it to submit its Resolution Plan. In the absence of an extension of time, it would not have been permitted to enter the fray. After multiple rounds of negotiations, on 9 February 2018, Ebix was declared the successful Resolution Applicant and a LOI was issued by the E-CoC. On 17 February 2018, Ebix’s Resolution Plan was approved by a 74.16 per cent voting share of the E-CoC, which was subsequently upgraded to 75.35 per cent by CSEB’s vote being added belatedly on 23 February 2018. While it is true that the votes of CSEB were received in favour of the Resolution Plan on a later date, all the parties including Ebix proceeded on the notion that the Resolution Plan has been approved by the requisite majority of seventy-five per cent of the voting share of the E-CoC as was required then (now the requisite percentage has been reduced to sixty-six per cent pursuant to an amendment). Thus, the CSEB Application filed before the NCLT seeking a clearance of its delayed vote was a mere formality and there was no controversy raised in relation to that application at that stage. In fact, the G Approval Application for the approval of the Resolution Plan was filed before the NCLT on the basis that the Plan has been duly approved by the requisite majority of the CoC. No objections were raised against the Approval Application on the ground that the threshold of seventy-five per cent of votes was not met. The Resolution Plan dated 19 February H

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A 2018 and the addendum dated 21 February 2018 for a total bid amount of Rs 400 crores were then submitted by the E-RP to the Adjudicating Authority for approval on 7 March 2018.

176Copy pinpoint176. Owing to the intervening applications for investigation into the accounts of Educomp (pertinently, no internal special audit has been conducted till date), Ebix filed the First Withdrawal Application on 5 July 2019, on account of a delay in approval of seventeen months. Thereafter, it filed the Second and Third Withdrawal Applications.

177Copy pinpoint177. Ebix has alleged before this Court that it is entitled to withdraw its Resolution Plan by relying on: (i) the terms of the RFRP, which indicates that the Resolution Plan is binding on the Resolution Applicant only after approval by the Adjudicating Authority under Section 31; (ii) the terms of the Resolution Plan which indicate that the Plan was valid for six months; and (iii) the principles of contract law to urge frustration on account of fraud and an erosion of the commercial substratum.

178Copy pinpoint178. Clause 1.8.3 of the RFRP, produced below, invited Resolution Plans with a validity of not less than six months: “1.8.3 A Resolution Plan once made/submitted must be valid for a period not less than 6 (six) months from the Resolution Plan Submission Date including any revisions to such Resolution plan E Submission Date (“Resolution Plan Validity Period”). In case of extension of the Resolution Plan Submission Date by the Resolution Professional, the validity period of the Resolution Plan shall also be deemed to be valid for a period of 6 (six) months from such revised Resolution Plan Submission date.

F If any Resolution Plan as approved by the CoC and submitted to the Adjudicating Authority is rejected by the Adjudicating Authority, then the Resolution Professional and the CoC shall act in accordance with the instructions/directions issued by the Adjudicating Authority.” Ebix urges that in compliance with the above clause of the RFRP, G Clause 7 of its Resolution Plan specified that it shall be valid for a term of six months from the date of submission: “7. Term of the Resolution Plan This Resolution Plan proposed by the Resolution Applicant is valid H for a term of six months from the date of submission of this plan”

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Ebix urges that these matching terms of the offer (the RFRP) A and the acceptance (the Resolution Plan) are binding on the E-CoC and the Resolution Plan is voidable and revocable at the instance of Ebix, upon the failure to seek timely approval under Section 31.

179Copy pinpoint179. This submission of Ebix cannot be accepted since the terms of the RFRP or the Resolution Plan relate to the validity of the Resolution B Plan for the period of negotiation with the E-CoC and not for a period after the Resolution Plan is submitted for the approval of the Adjudicating Authority. The time which may be taken before the Adjudicating Authority is an imponderable which none of the parties can predict. In fact, this is emphasized by Clause 1.3.7 of the RFPF which contains a schedule of the Resolution Plan submission process. As regards the approval of the C Adjudicating Authority, it provides clearly that there is no time-line: “1.3.7 Schedule of Resolution Plan Submission Process […]

11. Approval of NCLT regarding the Resolution Plan of Successful D Resolution Applicant – As per NCLT.” Parties cannot indirectly impose a condition on a judicial authority to accept or reject its Plan within a specified time period, failing which the CIRP process will inevitably come to an end. In this case, the draft Resolution Plan of Ebix was submitted on 29 January 2018 and remained valid for the term of the multiple rounds of negotiations with the E-CoC, until its submission to the Adjudicating Authority on 7 March 2018, which was within the six-month period envisaged in the Plan.

180Copy pinpoint180. Even if it were to be assumed, for the sake of argument, that the term in the submitted Resolution Plan was in the nature of a qualified offer which would expire after six months of its submission, failing the imprimatur of the Adjudicating Authority under Section 31 which would make it binding on all parties, the surrounding terms of the RFRP and the subsequent legal materials including the LOI and the Compliance Certificate (Form H) under CIRP Regulations make it clear that there was no scope to resile from the implementation of the Resolution Plan, once it had been submitted to the Adjudicating Authority, except in the event of a rejection. Clause 1.9.3 of the RFRP required Ebix to replace its EMD with a PBG equivalent to ten per cent of the Resolution Plan value, if it were to be declared as the ‘successful Resolution Applicant’. H

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A This PBG can be invoked under Clause 1.9.5 of the RFRP if the Resolution Applicant fails to implement the Resolution Plan. Further, Clause 1.8.4 of the RFRP states that “[a] Resolution Plan submitted by a Resolution Respondent shall be irrevocable”. Clause 1.10(l) of the RFRP also provides that a successful Resolution Applicant is not permitted to withdraw an approved Resolution Plan: B “Clause 1.10 of the RFRP “By procuring this RFRP and obtaining access to the Data room and Information Memorandum, in accordance with the terms of this RFRP, the Resolution Respondent is deemed to have made C the following acknowledgements and representations: [...] (l) The Resolution Respondent upon declaration as Successful Resolution Respondent shall remain responsible for the implementation and supervision of the Resolution D Plan from the date of approval by the Adjudicating Authority, and will not be permitted to withdraw the Resolution Plan and the Resolution Professional, PwC or the CoC assume no responsibility or liability in this respect.” (emphasis supplied) E Ebix’s submission that Clause 1.10(l) is applicable only upon approval of the Adjudicating Authority is not plausible since the Resolution Plan becomes binding on all stakeholders as a consequence of the approval under Section 31. The E-RP’s argument holds much weight when it is argued that Clause 1.10(l) cannot be construed to infer that F the Adjudicating Authority would declare Ebix as the ‘Successful Resolution Applicant’ once again, which would then impose the obligation of barring withdrawals for the first time. Mr Nakul Dewan, learned Senior Counsel for the E-RP, has also submitted before us that the validity of the Resolution Plan being six months was not mentioned as a specific conditionality in Form H that was submitted by the E-RP along with the G Resolution Plan to the Adjudicating Authority, which evinces that the six-month validity was only vis-à-vis the acceptance by the E-CoC.

181Copy pinpoint181. Ebix has also tried to argue that its position has changed manifestly because of new allegations which have come up in relation to the financial conduct of Educomp. However, in this regard, it is pertinent H

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to note Clause 1.3.2 of the RFRP which directs prospective Resolution A Applicants to conduct their own due diligence. In so far as is relevant, it reads: “1.3.2 The Resolution Applicant(s) shall be provided access to the electronic as well as physical data room (“Data Room”) established and maintained by the Company acting through the B Resolution Professional and coordinated by PwC in order to conduct a due diligence of the business and operations of the Company” Similarly, Clause 1.13.6 also requires prospective Resolution Applicants to conduct independent investigations: C “1.13.6 This RFRP does not purport to contain all the information required by the Resolution Applicant. The Resolution Applicant should conduct independent investigations and analysis and should check the accuracy, reliability and completeness of the information in this RFRP and obtain independent advice from appropriate sources, prior to making an assessment of the Company.” Ebix was responsible for conducting their own due diligence of Educomp and could not use that as a reason to revise/modify their approved Resolution Plan. In any event, Section 32A of the IBC grants immunity to the Corporate Debtor for offences committed prior to the commencement of CRIP and it cannot be prosecuted for such offences from the date the Resolution Plan has been approved by the Adjudicating Authority under Section 31, if the Resolution Plan results in a change of management or control of the Corporate Debtor subject to certain conditions. Section 32A reads as follows: F “32A. (1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been G approved by the Adjudicating Authority under section 31, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not- (a) a promoter or in the management or control of the corporate debtor or a related party of such a person; or H

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A (b) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court: B […] (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a C resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not – (i) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (ii) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court. […] (3) Subject to the provisions contained in sub-sections (1) and (2), and notwithstanding the immunity given in this section, the corporate debtor and any person, who may be required to provide assistance under such law as may be applicable to such corporate debtor or person, shall extend all assistance and co-operation to any authority investigating an offence committed prior to the commencement of the corporate insolvency resolution process.” Thus, in any case even if it is found that there was any misconduct in the affairs of Educomp prior the commencement of the CIRP, Ebix will be immune from any prosecution or punishment in relation to the same. The submission that Ebix has been placed in a prejudicial position due to the initiation of investigation into the affairs of Educomp by the CBI and SFIO is nothing but a red herring since such investigations have no bearing on Ebix. H

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182Copy pinpoint182. Finally, it is also important to note that no clause of Ebix’s A own Resolution Plans provides them with a right to revise/withdraw their Resolution Plan after its approval by the E-CoC, but before its confirmation by the Adjudication Authority. Clause 9.1 permits withdrawal in the event the Resolution Plan is not approved in its entirety by the NCLT, while Clause 9.7 allows for an amendment for the purposes of implementation of the Resolution Plan but only when the E-CoC approves it with a seventy-five per cent vote. Hence, Ebix did not have any right under their own Resolution Plan to revise/withdraw it.

183Copy pinpoint183. It is also pertinent to note that Ebix did not stop pursuing their Resolution Plan after the expiry of six months, if the true import of the commercial bargain was a withdrawal of the Resolution Plan after six months of its submission. The First Withdrawal Application was filed on 10 September 2019, which was after one year of the alleged expiry of the six-month period. Therefore, even if the submitted Resolution Plan was considered as a conditional offer the terms did not enable a withdrawal of the Resolution Plan in the event that the Adjudicating D Authority does not approve it under Section 31 within six months of its submission.

184Copy pinpoint184. Before we conclude our analysis on the substantive arguments raised by Ebix, we will be briefly dealing with its arguments that the RP had failed in its obligation to provide information under Section 29 of the E IBC. K.1.3 Duties of the RP

185Copy pinpoint185. Appearing on behalf of Ebix, Mr KV Vishwanathan has argued before this Court that the E-RP failed in its duties under Section 29 of the IBC when it failed to inform Ebix about the ongoing investigations against Educomp. While this argument was made in order to justify Ebix’s withdrawal of its Resolution Plan, which we have already rejected, we shall assess it nonetheless. On behalf of the E-RP, Mr Nakul Dewan has appeared and argued that the obligation on an RP to provide information under Section 29 has to be understood on a “best effort basis”.

186Copy pinpoint186. Section 29 of the IBC places a duty upon the RP to provide an IM to the Resolution Applicant, containing such information which may be relevant to the Resolution Applicant to draft its Resolution Plan. It states: H

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A “29. Preparation of information memorandum.—(1) The resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan. (2) The resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes— (a) to comply with provisions of law for the time being in force relating to confidentiality and insider trading; (b) to protect any intellectual property of the corporate debtor it may have access to; and (c) not to share relevant information with third parties unless clauses (a) and (b) of this sub-section are complied with. Explanation.—For the purposes of this section, “relevant information” means the information required by the resolution applicant to make the resolution plan for the corporate debtor, which shall include the financial position of the corporate debtor, all information related to disputes by or against the corporate debtor and any other matter pertaining to the corporate debtor as may be specified.” E

187Copy pinpoint187. The BLRC Report elucidates the duties of the RP: “1. The RP must provide the most updated information about the entity as accurately as is reasonably possible to this range of solution providers. In order to do this, the RP has to be able to verify 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.

2. The information collected on the entity is used to compile an information memorandum, which is signed off by the debtor and the creditors committee, based on which solutions can be offered to resolve the insolvency. In order for the market to provide solutions to keep the entity as a going concern, the information memorandum must be made available to potential financiers within a reasonable period of time from her appointment to the IRP. If the information is not

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comprehensive, the RP must put out the information memorandum with a degree of completeness of the information that she is willing to certify. For example, as part of the information memorandum, the RP must clearly state the expected shortfall in the coverage of the liabilities and assets of the entity presented in the information memorandum. Here, the asset and liabilities include those that the RP can ascertain and verify from the accounts of the entity, the records in the information system, the liabilities submitted at the start of the IRP, or any other source as may be specified by the Regulator. C

3. Once the information memorandum is created, the RP must make sure that it is readily available to whoever is interested to bid a solution for the IRP. She has to inform the market (a) that she is the RP in charge of this case, (b) about a transparent mechanism through which interested third parties can access the information memorandum, (c) about the time frame within which possible solutions must be presented and (d) with a channel through which solutions can be submitted for evaluation. The Code does not specify details of the manner or the mechanism in which this should be done, but rather emphasises that it must be done in a time-bound manner and that it is accessible to all possible interested parties.” (emphasis supplied)

188Copy pinpoint188. Similarly, the UNCITRAL Guide notes: “5. Duties and functions of the insolvency representative F […] (e) Obtaining information concerning the debtor, its assets, liabilities and past transactions (especially those taking place during the suspect period), including examining the debtor and any third person having had dealings with the debtor…” G

189Copy pinpoint189. Under the IBC, there is a duty upon the RP to collect as much information about the Corporate Debtor as is accurately possible to do. When such information is communicated through an IM to the Resolution Applicant, the RP must be careful to clarify when its information is not comprehensive and what factors may cause a change. H

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190Copy pinpoint190. In the present case, Ebix has alleged that the E-RP did not inform it of the financial investigations into the conduct of Educomp in a timely fashion. To assess this claim, it is important to underline a few dates: (i) 5 December 2017 – E-RP provided Virtual Data Room access B to Ebix and other prospective Resolution Applicants in relation to Educomp, and the final RFRP was issued; (ii) 7 March 2018 – E-RP filed the Approval Application before NCLT in relation to Ebix’s Resolution Plan, after its approval by the E-CoC; C (iii) 3 April 2018 and 26 April 2018 – two articles are published in The Wire in relation to financial mismanagement of Educomp; (iv) 4 May 2018 – the IFC Application came up before NCLT, having been filed by a financial creditor of Educomp seeking investigation of the affairs/transactions, in which the E-RP was D directed file its reply and IFC was directed to serve a notice on Ebix; (v) 12 June 2019 – Educomp made regulatory disclosures to the BSE and NSE in relation to the ongoing investigations by SFIO and CBI; and E (vi) 5 July 2019 – Ebix filed the First Withdrawal Application.

191Copy pinpoint191. Ebix cannot dispute that E-RP had provided it the relevant information required under Section 29 to formulate its Resolution Plan. The issues in relation to financial investigations into the conduct of Educomp arose when the two articles were published by The Wire, both F of which were after the Approval Application had been filed by the E-RP. Further, Ebix was aware of all the proceedings before the NCLT since the various applications were often listed along with the Approval Application, in which it continued to appear. Finally, Ebix has brought nothing on record to prove that E-RP knew of the SFIO and CBI G investigations before a regulatory disclosure was made by Educomp. Hence, it cannot be stated that the E-RP had faltered in its duty to provide relevant information to Ebix. K.2 The Kundan Care Appeal

192Copy pinpoint192. The CIRP of Astonfield commenced on 27 November 2018. H On 1 May 2019, GUVNL issued a default notice under Article 9.3.1(e)

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of the PPA, taking the initiation of the CIRP as an event of default for A the termination of the PPA. The validity of the default notice was adjudicated upon by the NCLT in a judgment dated 29 August 2019. The NCLT set aside the default notice on the ground that the termination of the PPA would adversely affect the “going concern” status of Astonfield. On 15 October 2019, the NCLAT dismissed an appeal filed by GUVNL. B On 29 October 2019, Kundan Care submitted a Resolution Plan for being considered by the A-CoC, which was followed by a final version on 12 November 2019. On 14 November 2019, the Resolution Plan submitted by Kundan Care was approved by the A-CoC with a vote of 99.28 per cent. On 15 November 2019, a Letter of Award was issued by the A-RP to Kundan Care, and the Resolution Plan was submitted to the C NCLT for approval to under Section 31 of the IBC.

193Copy pinpoint193. On 27 November 2019, GUVNL moved this Court in appeal against the order of the NCLAT dated 15 October 2019 (this Court eventually dismissed the appeal). During the pendency of the appeal, the appellant moved an application before the NCLT for withdrawal of D its Resolution Plan and for return of its PBG. In view of the pendency of the appeal before this Court, NCLT deferred consideration of the Resolution Plan till the disposal of the appeal. On the request of Kundan Care, their application was listed for hearing and dismissed on 3 July 2020 for want of jurisdiction to enable withdrawals. This decision of the NCLT was confirmed by the NCLAT on 30 September 2020. While E Kundan Care’s appeal against this decision of the NCLAT was pending before this Court, Gujarat Urja (supra) was decided by this Court on 8 March 2021.

194Copy pinpoint194. Kundan Care had initially sought to rely on Clause 5.1 of their Resolution Plan to argue that it had reserved the right to modify or F withdraw its submitted Resolution Plan in the event of a ‘material adverse change’ which affects Astonfield. Clause 5.1 reads as follows: “5.1 Basis of Preparation The preparation of the Resolution Plan is based on the Information G Memorandum provided to the Resolution Applicant by the Resolution Professional. If at any time before or after submission of this Resolution Plan, should the information on the basis of which this Resolution Plan has been prepared, change, or new information becomes available, or if there is a material adverse H

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A change i.e. shall there have occurred any fact, matter, event, circumstance, condition or change which materially and adversely affects, or could reasonably be expected to materially and adversely affect: individually or in aggregate, the business, operations, assets, liabilities, conditions (whether financial, trading or otherwise), prospects or operating results of the Corporate Debtor, the B Resolution Applicant shall have the right to reconsider, revise and/ or withdraw the Resolution Plan on assessment of such additional information and/or make a fresh submission of resolution plan at its sole discretion” However, the A-RP has pointed out to the court that the LOI C awarded to Kundan Care clearly stipulated that the submitted Resolution Plan is irrevocable and there were no conditionalities mentioned in the Form H that was submitted to the Adjudicating Authority. Clause 9 of Kundan Care’s Resolution Plan confirms this position, since it states: “9 Condition Precedent D THERE ARE NO CONDITION PRECEDENT FOR APPROVAL OF THIS RESOLUTION PLAN” This is also reaffirmed by the fact that Clause 1.6.2 of the RFRP issued by the A-RP, specifically indicated that the A-CoC may reject a E Resolution Plan if it did not agree with any of the conditions precedent in the nature of “walk away conditions”. Clause 1.6.2 states: “1.61 The CoC reserves the right to reject the Resolution Plan, if any of the Conditions Precedent (as defined in Format VA - Resolution Plan), are not acceptable to the CoC. The Conditions F Precedent, if any, in a Resolution Plan would mean the ‘walk- away conditions’ and shall be required to be specifically mentioned as such in the said Plan, with a conspicuous heading and placement of a paragraph in the Plan, and all such conditions shall be placed in a consolidated manner in the said paragraph.” This indicates that the condition of a material adverse event could G be exercised only until the A-CoC was considering the Resolution Plan, and not after it had been submitted to the Adjudicating Authority.

195Copy pinpoint195. During the course of the hearing of the present appeal, the compilation of additional documents has been filed by Kundan Care. On 5 July 2021, Kundan Care had addressed a communication to EXIM H

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Bank and PFCL “seeking a revision/renegotiation of the resolution amount/financial proposal” of Kundan Care for the resolution of Astonfield. Responding to the above communication, EXIM Bank has addressed a letter dated 12 July 2021 stating that a meeting was held by “the lenders” (EXIM Bank and PFCL) on 9 July 2021, on a without prejudice basis to deal with the issues raised by Kundan Care in their letter dated 5 July 2021. Responding to the request of Kundan Care, it has been stated that: “4… lenders were prima facie agreeable to deliberate the financial proposal seeking revision in resolution plan amount in the COC convened by the RP post the directions of the Hon’ble Supreme Court in accordance with the processes laid down by the IBC”. C

Pursuant to the above exchange of communications, a joint request has been made by Mr Ramji Srinivasan, learned Senior Counsel appearing on behalf of Kundan Care and Mr V Giri, learned Senior Counsel appearing on behalf of the A-CoC in the following terms: D “In view of the letter dated 12 July 2021 issued by the lenders who are members of the CoC, the appellant may be permitted to withdraw Civil Appeal 3560/2020 with liberty to the RA and the CoC to file the revised plan (in terms of the letter dated 12 July 2021) before the NCLT (through the RP) for approval. The CoC shall convene and take a call on the revised plan within one week and the NCLT shall dispose of the matter within two weeks upon receiving IA from RP for approval of revised plan.”

196Copy pinpoint196. This Court had been informed that EXIM Bank and PFCL represent 98 per cent of the financial creditors of Astonfeld. In view of the above agreement which has been arrived at, we deem it appropriate to exercise our jurisdiction under Article 142 of the Constitution of India for a one-time relief and direct that: (i) The A-CoC shall convene and take a decision on the proposal submitted by Kundan Care on 5 July 2021, and the response by EXIM Bank and PFCL dated 12 July 2021; G (ii) In the event, that a revised Resolution Plan is agreed upon by the A-CoC, it shall be submitted through the A-RP for the approval of the NCLT within a week thereafter. In the event that a revised Resolution Plan is not agreed upon, the H

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A original Resolution Plan, as submitted before the NCLT on 15 November 2019, shall prevail; and (iii) The NCLT shall dispose of the application with the revised Resolution Plan expeditiously, and preferably within a period of two weeks from the date of receipt of an application from the A-RP for the approval of the revised Resolution Plan.

197Copy pinpoint197. We clarify that the above directions have been issued in view of the submission which has been urged as noted, and shall not amount to any finding by this Court on the issues raised with regard to modification or withdrawal of Resolution Plans at the behest of the Resolution Applicant. K.3 The Seroco Appeal

198Copy pinpoint198. The CIRP of Arya Filaments, an MSME, was instituted on 17 August 2018. Seroco submitted a draft Resolution Plan on 13 March D 2019 for an amount of Rs 6.79 crores (approx.). Subsequent to meetings with the Arya-CoC and revisions to the Resolution Plan, Seroco’s plan was approved by the Arya-CoC on 10 May 2019. On 15 May 2019, the Arya-RP filed the Resolution Plan for approval before the NCLT. Form H was filed by Arya-RP on 5 June 2020.

199Copy pinpoint199. Seroco addressed a letter to Arya-RP and Arya-CoC on 9 June 2020 seeking a modification of the Resolution Plan and the resolution amount to Rs 5.29 crores (approx.) on account of the economic slowdown caused by the COVID-19 pandemic, and subsequently filed applications before the NCLT and an appeal before the NCLAT seeking F a modification of the Resolution Plan on account of the original being filed over eighteen months ago.

200Copy pinpoint200. Seroco has relied on the terms of its Resolution Plan which envisage payment to the Arya-CoC by sale of land and building, and old/ unusable/spare plant and machineries to urge that there has been a frustration of the contract because of the economic slowdown which G must have impacted the value of these assets. The proposed revised solution envisages a further haircut to the Arya-CoC where Rs 1.5 crores less would be paid, over an extended timeline. There are no terms in the Resolution Plan or the Form H submitted by Arya-RP that could provide such a benefit to Seroco. To the contrary, Clause 19(vii) of the Resolution H

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Plan provides that the preliminary approval of the Resolution Plan by the A Arya-CoC is binding on Seroco: “19. Others: […] (vii) We understand that the preliminary approval of the resolution pian is the prerogative of the Committee of Creditors and the final approval of the same lies with the Hon’ble Adjudicating authority i.e. NCLT and we undertake that the decision of the Committee of Creditors and NCLT will be final and binding on us.” Therefore, there is no scope to grant reliefs even on the terms of the Resolution Plan. As held in Section H of this judgement, common law remedies available under the Contract Act are not available to the parties since a submitted Resolution Plan is not a contract which can be otherwise voidable on account of frustration, force majeure or other such instances. Hence, parties can only seek reliefs that are specifically envisaged in the IBC. D L Conclusion

201Copy pinpoint201. This Court is cognizant that the extraordinary circumstance of the COVID-19 pandemic would have had a significant impact on the businesses of Corporate Debtors and upon successful Resolution E Applicants whose Plans may not have been sanctioned by the Adjudicating Authority in time, for myriad reasons. But the legislative intent of the statute cannot be overridden by the Court to render outcomes that can have grave economic implications which will impact the viability of the IBC. F

202Copy pinpoint202. The residual powers of the Adjudicating Authority under the IBC cannot be exercised to create procedural remedies which have substantive outcomes on the process of insolvency. The framework, as it stands, only enables withdrawals from the CIRP process by following the procedure detailed in Section 12A of the IBC and Regulation 30A of the CIRP Regulations and in the situations recognized in those provisions. G Enabling withdrawals or modifications of the Resolution Plan at the behest of the successful Resolution Applicant, once it has been submitted to the Adjudicating Authority after due compliance with the procedural requirements and timelines, would create another tier of negotiations which will be wholly unregulated by the statute. Since the 330 days H

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A outer limit of the CIRP under Section 12(3) of the IBC, including judicial proceedings, can be extended only in exceptional circumstances, this open-ended process for further negotiations or a withdrawal, would have a deleterious impact on the Corporate Debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time. A failed negotiation for modification after submission, or a B withdrawal after approval by the CoC and submission to the Adjudicating Authority, irrespective of the content of the terms envisaged by the Resolution Plan, when unregulated by statutory timelines could occur after a lapse of time, as is the case in the present three appeals before us. Permitting such a course of action would either result in a down- C graded resolution amount of the Corporate Debtor and/or a delayed liquidation with depreciated assets which frustrates the core aim of the IBC.

203Copy pinpoint203. If the legislature in its wisdom, were to recognize the concept of withdrawals or modifications to a Resolution Plan after it has been submitted to the Adjudicating Authority, it must specifically provide for a tether under the IBC and/or the Regulations. This tether must be coupled with directions on narrowly defined grounds on which such actions are permissible and procedural directions, which may include the timelines in which they can be proposed, voting requirements and threshold for approval by the CoC (as the case may be). They must also contemplate at which stage the Corporate Debtor may be sent into liquidation by the Adjudicating Authority or otherwise, in the event of a failed negotiation for modification and/or withdrawal. These are matters for legislative policy.

204Copy pinpoint204. n the present framework, even if an impermissible understanding of equity is imported through the route of residual powers or the terms of the Resolution Plan are interpreted in a manner that enables the appellants’ desired course of action, it is wholly unclear on whether a withdrawal of a CoC-approved Resolution Plan at a later stage of the process would result in the Adjudicating Authority directing mandatory liquidation of the Corporate Debtor. Pertinently, this direction has been otherwise provided in Section 33(1)(b) of the IBC when an Adjudicating Authority rejects a Resolution Plan under Section 31. In this context, we hold that the existing insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC-approved Resolution Plans, at the behest of the successful H

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

Resolution Applicant, once the plan has been submitted to the Adjudicating A Authority. A Resolution Applicant, after obtaining the financial information of the Corporate Debtor through the informational utilities and perusing the IM, is assumed to have analyzed the risks in the business of the Corporate Debtor and submitted a considered proposal. A submitted Resolution Plan is binding and irrevocable as between the CoC and the successful Resolution Applicant in terms of the provisions of the IBC and the CIRP Regulations. In the case of Kundan Care, since both, the Resolution Applicant and the CoC, have requested for modification of the Resolution Plan because of the uncertainty over the PPA, cleared by the ruling of this Court in Gujarat Urja (supra), a one-time relief under Article 142 of the Constitution is provided with the conditions prescribed in Section K.2.

205Copy pinpoint205. It would also be sobering for us to recognize that whilst this Court has declared the position in law to not enable a withdrawal or modification to a successful Resolution Applicant after its submission to the Adjudicating Authority, long delays in approving the Resolution Plan D by the Adjudicating Authority affect the subsequent implementation of the plan. These delays, if systemic and frequent, will have an undeniable impact on the commercial assessment that the parties undertake during the course of the negotiation. The thirty-second report of the Ministry of Corporate Affairs’ Standing Committee on Finance (2020-2021) on the ‘Implementation of Insolvency and Bankruptcy Code- Pitfalls and E Solutions’127 represented a despondent state of affairs with regard to pendency of applications before the Adjudicating Authority. It noted 128:

15. The age-wise pending cases in NCLT under IBC as on 31 May, 2021 are as under: F

127 Standing Committee on Finance, Seventeenth Lok Sabha, Ministry of Corporate Affairs, ‘Implementation of Insolvency and Bankruptcy Code- Pitfalls and Solutions: Thirty-second Report’ (August 2021) <available at https://www.ibbi.gov.in/uploads/ whatsnew/fc8fd95f0816acc5b6ab9e64c0a892ac.pdf> accessed on 20 August 2021 128 Ibid., page 6 H

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A In its observations, the Report noted that a delay in the resolution process with more than seventy-one per cent cases pending for more than 180 days is in deviation of the original objective and timeline for CIRP that was envisaged by the IBC129. The delays were attributable to: (i) the NCLT taking considerable time in admitting CIRPs; (ii) late and unsolicited bids by Resolution Applicants after the original bidder B becomes public upon passage of the deadline for submission of the Plan; and (iii) multiplicity of litigation and the appellate process to the NCLAT and the Supreme Court130. Such inordinate delays cause commercial uncertainty, degradation in the value of the Corporate Debtor and makes the insolvency process inefficient and expensive. We urge the NCLT C and NCLAT to be sensitive to the effect of such delays on the insolvency resolution process and be cognizant that adjournments hamper the efficacy of the judicial process. The NCLT and the NCLAT should endeavor, on a best effort basis, to strictly adhere to the timelines stipulated under the IBC and clear pending resolution plans forthwith. Judicial delay was one of the major reasons for the failure of the insolvency regime that was in D effect prior to the IBC. We cannot let the present insolvency regime meet the same fate.

206Copy pinpoint206. In light of the above, the appeals preferred by Ebix (Civil Appeal 3224 of 2020) and Seroco (Civil Appeal 295 of 2021) stand dismissed. The parties to the appeal preferred by Kundan Care (Civil E Appeal 3560 of 2020) shall abide by the directions issued by this Court in exercise of its Article 142 powers as a one-time relief, as specified in paragraph 196 (Section K.2) of this judgement.

207Copy pinpoint207. Pending application(s), if any, shall stand disposed of.

F Ankit Gyan Appeals disposed of.

129 Ibid., Page 20-21 130 H Ibid., Page 23-25