Jindal Stainless Ltd. V MR Shailendra Ajmera
Jindal Stainless Ltd. V MR Shailendra Ajmera
For Appellant: Mr. Ramji Srinivasan, Sr. Advocate with Mr. Rahul
Kumar, Mr. Bishwajit Dubey, Ms. Neha, Advocates
Ms. Madhvi Divan, Mr. Vikas Mehta, Mr. Sahil Monga,
Mr. Apoorv Khator, Ms. Rashi Rampal, Advocates for
IBBI.
For Respondents: Mr. Sumesh Dhawan, Ms. Shweta Dubey, Ms.
Kanishka Prasad, Advocates for R-1/RP.
Mr. Abhijit Sinha, Mr. Anuj Tiwari, Mr. Kaustubh Rai,
Mr. Rahul Kumar, Mr. Saurabh Kumar Mishra, Mr.
Aditya Shukla, Ms. Tuhina Mishra, Advocates for R-
2.
Mr. Gaurav Mitra, Mr. Piyush Beriwal, Ms. Ankit Raj,
Advocates for R-3.
Mr. Ritin Rai, Sr. Advocate with Mr. Udit Mendiratta,
Ms. Niharika Sharma, Mr. Tejas Jha and Mr. Shivkrit
Rai, Advocates for ACRE (Intervenor)
JUDGMENT
(18 January, 2023)
th
Ashok Bhushan, J.
This Appeal has been filed against the order dated 11.08.2022 passed
for Resolution Plan (RFRP). On 31.05.2022 which was the last date for
receiving the plans, the Resolution Professional received six Resolution Plans
Limited’ as well as by Respondent No.2- ‘Shyam Sel and Power Limited’. The
issued a process note on the Challenge Process mechanism. All the Resolution
rules of the said Challenge Process in the interest of maximising the value of
communicated the rules of the Challenge Process and after receipt of the
meeting held on 15.07.2022. All the Resolution Applicants were invited in the
13th CoC meeting. The Challenge Process continued for seven rounds until
Challenge Process. All the Resolution Applicants were notified that the signed
the Respondent No.1 sent an e-mail to the Resolution Professional stating that
Comp. App. (AT) (Ins.) No. 1058 of 2022
3
27.07.2022, 16th CoC meeting was held where deliberation upon the
29.07.2022, Respondent No.2 sent another e-mail further improving his offer.
On 03.08.2022, 17th CoC meeting took place, where after considering the
CoC resolved to put four plans to vote. Voting was to commence from
Professional to consider the offer dated 29.07.2022 and place the same before
the CoC. Further prayer was made that the Resolution Professional be
order:-
pursuance of the 17th CoC meeting dated 03.08.2022. The Appellant aggrieved
Dubey, Advocate appearing for the Appellant submits that the Adjudicating
the revised plan of Respondent No.2. It is submitted that the CoC having
taken decision to adopt Challenge Process for obtaining the optimum value
has made its highest offer, had no right or jurisdiction to further revise his
plan. After going through the Challenge Process, the Respondent No.2 cannot
be permitted to revise its plan which is against the Challenge Process rules as
has been approved by the CoC. The Respondent No.2 in his Application did
not even implead the CoC nor any of the Resolution Applicants including the
Appellant who may be affected by the prayers made by the Respondent No.2.
30.09.2021. The CIRP has to be completed in the timeline and any interdiction
bound to delay the completion of the process which is not object and purpose
of the IBC.
Affidavit along with the Intervention Application has also been filed. We have
Creditors submits that the Adjudicating Authority ought to have given liberty
to all the Resolution Applicants to revise their plans. It is submitted that the
objective of the Code is to maximise the value of the assets of the Corporate
Debtor within the stipulated timeline. It is submitted that the CoC has full
revise the Resolution Plan. Regulation 39 (1A) is only directory. The legislative
intent of the provisions of the Code is to ensure that most commercially viable
submits that the object of the Code is maximisation of the assets of the
the Resolution Professional to place the revised offer of the Respondent No.2
before the CoC. It is submitted that looking to the object of the Code which is
No.2 was required to be placed before the CoC. It is submitted that in the
meeting of the CoC, it was noticed that even the Appellant has sent some oral
communication to the IDBI Bank that it also intends to increase its offer. It is
submitted that the Regulation 39(1A) is only directory and CoC is fully
Comp. App. (AT) (Ins.) No. 1058 of 2022
6
Applicants has to submit their revised and updated plan by 18.07.2022 which
was the last date fixed. Appellant received e-mail dated 29.07.2022 from
Respondent No.2 which was placed before the CoC in 15th CoC meeting held
7. We have considered the submissions of the Counsel for the parties and
need to notice the relevant clauses of RFRP and the Challenge Process rules.
Para 2 (viii) & (ix) of the RFRP reserves the right of CoC to negotiate with the
the CoC in its 12th meeting decided to adopt the challenge mechanism for
negotiation with the Resolution Applicants. In the 12th CoC meeting, CoC has
directed to proceed to take the vote. After approval of the rules of process by
CoC, 13th CoC meeting was convened for 15.07.2022 where all Resolution
Applicants were invited. The Resolution Professional in his reply filed in this
Appeal has given details of 15th CoC meeting. It is useful to extract para 4 (g),
10. Now, we need to notice the Regulation 39 (1A) of the Insolvency and
Persons) Regulations, 2016 which has been substituted in the Code w.e.f.
11. Prior to the aforesaid amendment in the CIRP Regulation, there was no
regulation for inserting a mechanism and CoC to opt Swiss Challenge Method.
Para 2.44, 2.45 & 2.46 of the Insolvency Law Committee Report dated
20.05.2022 is as follows:-
12. The IBBI has also issued Discussion Paper on 27.08.2021 where use of
the Regulation was amended as noticed above. The Regulation has been
brought in place to enable the CoC to negotiate with all the Resolution
Applicants by one alternative mechanism to find out the best Resolution Plan.
In the present case, the Challenge Process continued in seven rounds and all
better their plans. The Respondent No.2 who was part of the Challenge
Process gave his best plan in the Challenge Process which had been recorded.
from the Respondent No.2 was noticed. The revised communication from
was recorded in the minutes that pursuant to the Challenge Process, revised
took place regarding the future course of action. Some of the members
14. 16th CoC meeting held on 27.07.2022 where with regard to all
15. The last meeting of the CoC was held on 03.08.2022 when qualitative
was placed before the members of the CoC, following decision was taken in
16. Consequent to the decision of the CoC dated 03.08.2022 voting process
begun w.e.f. 07.08.2022 and it was due to the order passed by the
17. The Respondent No.2 herein who had filed an Application before the
which was finalised by the CoC to which all Resolution Applicants have given
and as follows:-
A. Process
xxx xxx xxx
3. The challenge process shall be conducted in the
following manner;
Process also reserves the unconditional right of the CoC to cancel/ modify/
stage. The approval of the plan submitted in CIRP is in the domain of the CoC.
Challenge Process also reserves the unconditional right of the CoC to cancel/
19. When we come to the facts of the present case, it is relevant to notice
that after revised offer was received from Respondent No.2, the said factum
was brought into the notice of the CoC in its 15th CoC meeting held on
25.07.2022. In 15th and 16th CoC meeting, CoC deliberated how to proceed
permitting modification. The present is a case where CoC did not finally took
any decision to permit the Respondent No.2 to revise its bid after close of
proposing different course of action decided to vote all the Resolution Plans
received in the process. We had already noticed the resolution of the 17th CoC
meeting. The CoC did not exercise any power reserve to it under the Challenge
Process Rules to undo the Challenge Process rather CoC decided to go ahead
with the voting on the final plans received after the Challenge Process. The
CoC also received their detailed report of ‘Resurgent India’ on the qualitative
and quantitative evaluation on each plan which has been noticed in para 10
20. There can be no fetter on the power of the CoC to cancel or modify any
it is the wisdom of the CoC to take a decision in that regard. CoC, in the facts
of the present case, did not take any decision to disregard the Challenge
21. The Respondent No.2 who had filed an Application before the
order, as noted above, has not given any reason as to why direction is being
Pramod Kumar Sharma- Civil Appeal No. 1358 of 2022” but we failed to
see that how the said judgment helped the Respondent No.2 in seeking the
22. We may also notice a judgment of the Hon’ble Supreme Court in Civil
Infrastructure Private Limited & Ors.”. In the above case, the CoC has
adopted the Swiss Challenge Method and after finalisation of the negotiation
by Swiss Challenge open biding method plans were considered for approval
and was approved on 12.02.2020. The Respondent No.1 who was also
had sent revised Resolution Plan dated 14.02.2020. An I.A No. 27 of 2020 was
against which Appeal was filed by Respondent No.1 before NCLAT which
Appeal was allowed by order dated 19.10.2020. The judgment of this Appellate
Tribunal was challenged before the Hon’ble Supreme Court. The Hon’ble
Supreme Court after considering the facts of the said case and after noticing
that Resolution Plans were approved adopting Swiss Challenge open biding
method allowed the Appeal, setting aside the order passed by this Appellate
23. The Hon’ble Supreme Court has also emphasised on the completion of
the process within the timeline prescribed by the IBC. In para 31, following
24. The above judgment of the Hon’ble Supreme Court fully supports the
case of the Appellant that after adoption of Swiss Challenge Method to find
out the best plan one Resolution Applicant cannot be allowed to submit a
revised plan.
25. It is well settled that the timeline in the IBC has its salutary value and
it was the wisdom of the CoC which decided to vote on the Resolution Plan
after completion of Challenge Process and not to proceed to take any further
negotiation or further modification of the plan, that decision ought not to have
been interfered with. The Application was filed by the Respondent No.2 on
07.08.2022 by which date CoC has already decided to resolve the vote on all
26. We have gone through the whole Application filed by the Respondent
No.2. There is not even mention of the fact that voting has already commenced
w.e.f. 07.08.2022. The Adjudicating Authority without there being any valid
reason ought not to have been interfered with the voting on the Resolution
Plans which had already commenced w.e.f. 07.08.2022. As result of the order
27. In view of the foregoing discussion, we are of the view that the order
deserves to be set aside. When this Appeal was heard on 01.09.2022, we have
28. CoC having already resolved to vote on all the Resolution Plans
including the Resolution Plan submitted by the Appellant and the Respondent
No.2 which voting process having commenced and was disrupted due to
impugned order, we are of the view that the voting process in pursuance of
the CoC decision dated 03.08.2022 may commence afresh and be completed
is set aside.
(ii) As per the decision of the CoC dated 03.08.2022, the Resolution
one month.
30. The CIRP of the Corporate Debtor is extended till 28.02.2023 by which
CIRP on record.
[Barun Mitra]
Member (Technical)
Anjali