Ebix Singapore Private Limited vs Committee of Creditors of Educomp Solutions Limited

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(SC) 584

SUPREME COURT OF INDIA
DHANANJAYA Y. CHANDRACHUD, M.R. SHAH, JJ.
Ebix Singapore Private Limited - Appellant
Versus
Committee of Creditors of Educomp Solutions Limited & Anr. – Respondent
Civil Appeal No. 3224 of 2020
With
Kundan Care Products Limited - Appellant
Versus
Mr Amit Gupta and Ors. - Respondents
Civil Appeal No. 3560 of 2020
With
Seroco Lighting Industries Private Limited - Appellant
Versus
Ravi Kapoor RP for Arya Filaments Private Limited & Ors. – Respondents
Civil Appeal No. 295 of 2021
Decided on : 13-09-2021

Advocates appeared:
For the Appellant(s) : Mr. K.V. Vishwanathan, Sr. Adv, Ritin Rai, Sr. Adv. Mr. Rajat Sehgal, AOR Mr. Gautam Swarup, Adv Mrs. Vandana Anand,Adv. Mr. Mandavya Kapoor, Adv Mr. Karthikeya Jaiswal, Adv. Ms. Gunjan Jindal, Adv. Mr. Ramji Srinivasan, Sr. Adv. Mr. Prithu Garg, AOR Mr. Shailendera Singh, Adv. Ms. Harimohana N, Adv. Mr. Ankush Bhardwaj, Adv. Mr. Shivkrit Raj,Adv. Mr. Tirth Nayak, Adv. Mr. Vinam Gupta, AOR
For the Respondent(s): Mr. Shyam Divan, Sr. Adv. Ms. Misha, Adv. Mr. Siddhant Kant, Adv. Ms. Moulshree Shukla, Adv. Mr. S. S. Shroff, AOR Mr. Nakul Dewan, Sr. Adv. Ms. Pooja Mahajan, Adv. Mr. Avinash B. Amarnath, AOR Ms. Mahima Singh, Adv. Mr. S. Mahajan Adv. Ms. Neelu Mohan, Adv. Mr. Nakul Dewan, Sr. Adv. Mr. Atul Sharma, Adv. Mr. Abhishek Sharma, Adv. Ms. Ashly Cherian, Adv Ms. Anisha Mahajan, Adv Ms. Harshita Agarwal, Adv. Mr. Gautam Talukdar, AOR Mr. V. Giri, Sr. Adv. Mr. Ashish Rana, AOR Mr. Anurag Singh, Adv. Mr. Jayant Mehta, Sr. Adv. Ms. Sonia Dube, Adv. Mr. Shatadru Chakraborty, Adv. Ms. Kanchan Yadav, Adv. Ms. Surbhi Anand, Adv. Mr. Surya Kapoor, Adv. For M/S. Legal Options, AOR

Headnote:
Constitution of India,1950 - Articles 19(1)(g), 9.2.1(e) , 142 and 14 - IBC - Sections 61, 60(5), 10 , 5(12) , 25(2)(h) , 30(4) 30(6) , 43, 45, 50, 66 and 29 Indian Contract Act - Section 32 and 7 - Electricity Supply Act 1948 - Section 43-A(1) - Seeking to initiate voluntary CIRP - Insolvency Commencement - NCLT allowed Third Withdrawal Application filed by Ebix under Section 60(5) of IBC to withdraw its Resolution Plan - While reversing that order, NCLAT held that application to withdraw from Resolution Plan could not have been allowed since: (i) it was barred by res judicata; and (ii) NCLT does not have jurisdiction to permit such a withdrawal - Constituted which it appointed - E-RP took over information, documents, reports and records pertaining to Educomp from IRP - Resolutions Plans were received by E-RP from Ebix and another entity - Both Applicants were invited to give their presentations - -CoC commenced e-voting on Ebix’s Resolution Plan voting lines were kept open in terms of voting share percentage members of E-CoC voted to approve the Resolution Plan members voted to reject Resolution Plan; and (iii) remaining members, having cumulatively share – Held, Court has declared the position in law to not enable a withdrawal or modification to a successful Resolution Applicant after its submission to Adjudicating Authority, long delays in approving the Resolution Plan by Adjudicating Authority affect subsequent implementation of the plan - These delays, if systemic and frequent, will have an undeniable impact on commercial assessment that parties undertake during the course of the negotiation - Thirty-second report of Ministry of Corporate Affairs’ Standing Committee on Finance - Implementation of Insolvency and Bankruptcy Code- Pitfalls and Solutions - 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 delays were attributable NCLT taking considerable time in admitting CIRPs; (ii) late and unsolicited bids by Resolution Applicants after the original bidder becomes public upon passage of the deadline for submission of Plan (iii) multiplicity of litigation and appellate process to the NCLAT and Supreme Court - Such inordinate delays cause commercial uncertainty, degradation in value of Corporate Debtor and makes the insolvency process inefficient and expensive – Court urge NCLT and NCLAT to be sensitive to the effect of such delays on insolvency resolution process and be cognizant that adjournments hamper efficacy of judicial process - NCLT and the NCLAT should endeavor, on a best effort basis, to strictly adhere to the timelines stipulated under IBC and clear pending resolution plans forthwith. Judicial delay was one of major reasons for the failure of insolvency regime that was in effect prior to IBC - Appeals preferred by Ebix (Civil Appeal 3224 of 2020) and Seroco (Civil Appeal 295 of 2021) stand dismissed

JUDGMENT :

Dr. Dhananjaya Y. Chandrachud, J.

This judgment has been divided into sections to facilitate analysis. Further, a Glossary of defined terms which have been used throughout the judgment has also been provided. The sections in the judgment are as follows:

Glossary ................................................................................................ ............

A.1 The appeal .......................................................................................... 11

A.2 Initiation of CIRP ................................................................................. 11

A.3 Invitation, submission and approval of Resolution Plan ...................... 12

A.4 Investigations into financial transactions of Educomp ........................ 15

A.5 Applications for withdrawal of the Resolution Plan ............................. 20

A.6 Orders of NCLT and NCLAT ............................................................... 24

A.7 Present status of SFIO and CBI investigation ..................................... 28

B. Civil Appeal No 3560 of 2020 – the Kundan Care Appeal ........................ 29

B.1 The appeal .......................................................................................... 29

B.2 Initiation of CIRP ................................................................................. 30

B.3 Invitation, submission and approval of Resolution Plan ...................... 31

B.4 Astonfield’s dispute with GUVNL ........................................................ 32

B.5 Withdrawal of the Resolution Plan ...................................................... 35

C. Civil Appeal No 295 of 2021 – the Seroco Appeal .................................... 43

C.1 The appeal .......................................................................................... 43

C.2 Initiation of CIRP ................................................................................. 44

C.3 Submission and Approval of Resolution Plan ..................................... 44

C.4 Modification of the Resolution Plan ..................................................... 45

D. Submissions of counsel in the Ebix Appeal .............................................. 48

D.1 Submissions for the appellant ............................................................. 48

D.2 Submissions for the first respondent ................................................... 56

D.3 Submissions for the second respondent ............................................. 64

E. Submissions of counsel in the Kundan Care Appeal ................................ 68

E.1 Submissions for the appellant ............................................................. 68

E.2 Submissions for the first respondent ................................................... 76

E.3 Submissions for the second respondent ............................................. 78

F. Submissions of counsel in the Seroco Appeal .......................................... 80

F.1 Submissions for the appellant ............................................................. 80

F.2 Submissions for the second and third respondents ............................ 82

G. Purpose of a law on insolvency.............................................................. 84

H. Nature of a Resolution Plan ...................................................................... 90

I. Statutory framework governing the CIRP ................................................ 115

J. Withdrawal of the Resolution Plan by a successful Resolution Applicant under the IBC ................................................................................................ 134

J.1 The absence of a legislative hook or a regulatory tether to enable a withdrawal ........................

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