Approval of Resolution Plan Validated Despite Extension of Timeline

Overview of the Case

On February 18, 2025, the National Company Law Appellate Tribunal (NCLAT) upheld the approval of a resolution plan for Indian Pulp and Paper Private Limited, dismissing appeals from Brand Steel & Power Pvt. Ltd., an unsuccessful resolution applicant. The tribunal's decision centered on the validity of the resolution process conducted by the Resolution Professional, particularly regarding the extension of timelines for submitting expressions of interest (EoIs) and resolution plans.

Key Parties Involved

• Appellant : Brand Steel & Power Pvt. Ltd.
• Respondents : Avishek Gupta & Others, including the Successful Resolution Applicant (SRA), Pinax Paper Mills Ltd.
• Bench : Justice Ashok Bhushan , Barun Mitra , and Arun Baroka .

Background of the Case

The Corporate Insolvency Resolution Process (CIRP) for Indian Pulp and Paper Private Limited commenced on July 22, 2022. Brand Steel & Power Pvt. Ltd. submitted its EoI in consortium with Bhagwati Vintrade Private Limited. However, the SRA, Pinax Paper Mills Ltd. , was not initially included in the list of prospective resolution applicants (PRAs). Following a series of meetings and discussions, the Committee of Creditors (CoC) decided to extend the timeline for submissions, allowing new applicants to participate without issuing a fresh Form G.

Arguments Presented

Appellant's Arguments

Brand Steel & Power Pvt. Ltd. contended that the Resolution Professional violated the Insolvency and Bankruptcy Code (IBC) by allowing Pinax Paper Mills Ltd. to submit a resolution plan without a fresh Form G. They argued that this constituted a material irregularity under Regulation 39(1B) of the IBC, which prohibits consideration of plans from applicants not listed as PRAs.

Respondents' Arguments

The respondents, including the Resolution Professional and the CoC, argued that the extension of the timeline was within the rights granted by the original EoI invitation. They maintained that all actions taken were approved by the CoC and that the inclusion of Pinax Paper Mills Ltd. in the final list of PRAs was valid. They emphasized that the appellant had participated in the process without objection until after the voting commenced.

Legal Precedents and Principles

The tribunal referenced the judgment in Kalpraj Dharamshi and Anr. vs. Kotak Investment Advisors Limited , which established that actions taken by the Resolution Professional with the approval of the CoC are generally upheld unless there is a clear violation of the IBC. The NCLAT noted that the extension of the timeline did not require a fresh Form G, as it was merely an extension of the existing invitation.

Court's Reasoning

The NCLAT found that: - The original EoI allowed for extensions with CoC approval. - The appellant had not raised objections during the process and had benefited from the extended timeline by submitting a compliant resolution plan. - The final list of PRAs, which included Pinax Paper Mills Ltd. , was published after the extension, and no objections were raised by the appellant at that time.

Final Decision

The NCLAT dismissed the appeals from Brand Steel & Power Pvt. Ltd., affirming the approval of the resolution plan submitted by Pinax Paper Mills Ltd. The tribunal emphasized the importance of the CoC's commercial wisdom and the procedural integrity of the resolution process.

This ruling reinforces the authority of the CoC in managing the resolution process and clarifies the conditions under which extensions to submission timelines can be made without necessitating a fresh invitation for expressions of interest.