Point of Law: Rules and regulations which are framed by Central Government or IBBI are to be placed before Parliament in terms of Section 241 of IBC.

JUDGMENT :

Prathiba M. Singh, J.

1. This hearing has been done through hybrid mode.

2. The present writ petition has been filed by the Petitioner - Insolvency and Bankruptcy Board of India (hereinafter, “IBBI”) challenging the impugned order dated 5th September, 2018 passed by the NCLT in CA-809(PB)/2018 titled State Bank of India v. Su Kam Power Systems Ltd. Vide the said impugned order, the NCLT has held that Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“Regulation 36A”) is ultra vires Section 240(1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The said provision reads:

“36A. INVITATION OF RESOLUTION PLANS

(1) The resolution professional shall issue an invitation, including evaluation matrix, to the prospective resolution applicants in accordance with clause (h) of sub-section (2) of section 25, to submit resolution plans at least thirty days before the last date of submission of resolution plans.

(2) Where the invitation does not contain the evaluation matrix, the resolution professional shall issue, with the approval of the committee, the evaluation matrix to the prospective resolution applicants at least fifteen days before the last date for submission of resolution plans.

(3) The resolution professional may modify the invitation, the evaluation matrix or both with the approval of the committee within the timelines given under sub regulation (1) or sub regulation (2), as the case may be.

(4) The timelines specified under this regulation shall not apply to an ongoing corporate insolvency resolution process-

(a) where a period of less than thirty-seven days is left for submission of resolution plans under sub-regulation (1);

(b) where a period of less than eighteen days is left for submission of resolution plans under sub-regulation (2).

(5) The resolution professional shall publish brief particulars of the invitation in Form G of the Schedule:

(a) on the website, if any, of the corporate debtor; and

(b) on the website, if any, designated by the Board for the purpose.”

Section 25(2)h of the IBC, 2016

25.(2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:-

(a) to (g)………

(h) invite prospective lenders, investors, and any other persons to put forward resolution plans;”

3. The matter came to the NCLT by way of an application filed under Section 12(2) of the IBC by the Respondent No. 1 - State Bank of India (SBI) where extension was sought for the completion of the Corporate Insolvency Resolution Process (CIRP) by a further period of 90 days. During the course of hearing this application, the NCLT noticed that an expression of interest was floated however, no resolution plans were filed in response to the same.

4. This splitting of the CIRP into inviting expression of interest and then seeking resolution plans as provided in Regulation 36A became the subject matter of the impugned order. The NCLT then held Regulation 36A[Inserted vide Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2018] to be ultra vires of Section 240(1) of the IBC, despite there being no specific challenge to the said Regulation. The reason given by the NCLT was that it was contrary to the speedy disposal of the Resolution Process. The operative portion of the impugned order reads as under:

“We are further of the view that Section 25 (2) (h) added on 23.11.2017 by way of amendment does not contemplate floating of any expression of interest. It is beyond our understanding as to how the IBBI has taken upon itself the task of framing Regulation 36A of IBBI (Insolvency Resolution Process for Corporate Persons), Regulations, 2016 using the expression 'invitation of expression of interest' along with Form 'G'. Such an assumption of power would be beyond the competence of IBBI as the source of power to frame Regulation under the IBC is drawn from Secti