Failure to implement approved resolution plan due to contingent funding triggers liquidation under section 33(4); successful resolution applicant liable as new corporate debtor for contravention under section 74(3). (28 words)

ORDER`

Per: Prabhat Kumar, Member (Technical)

1. This Application IA 108/2024 is filed under Section 60(5) of the Insolvency & Bankruptcy Code, 2016 (“Code”) by Mr. Ankur Kumar (“Applicant in 108/2024”) in the Corporate Insolvency Resolution Process (“CIRP”) of General Composite Private Limited (“Corporate Debtor”), seeking following reliefs:

a. Pass an order directing SRA to comply with the terms of the approved resolution plan of the Corporate Debtor;

b. To impose cost on the Respondent under Section 74(3) of the Code for contravention of the Resolution Plan;

c. Pass any other orders as this Hon'ble NCLT may deem fit and

2. The CIRP of Corporate Debtor had commenced vide order dated 03 September 2019 passed by this Hon'ble NCLT in Company Petition No. CP (IB)-703/MB/2019 U/s 7 of the Code. The Applicant in 108/2024 states that in the 13 COC meeting convened on 23 July 2021 the COC had decided to reject the Resolution Plan submitted by the suspended director on 19 June 2021 and further decided to liquidate the Corporate Debtor under section 33 of the Code. In view thereof the Interlocutory Application ("IA") bearing IA no.1974 of 2021 (the Liquidation Application) was filed with the NCLT on 19 August 2021

2.1. That pending the hearing of the Liquidation Application filed by the Applicant herein, the Suspended Director of the Corporate Debtor had filed an IA bearing no. 2128 of 2021 seeking to stay the initiation of liquidation proceedings against the Corporate Debtor and further to direct the COC to consider the fresh resolution plan submitted by the suspended director. Thereafter vide order dated 21 October 2021, the Hon'ble NCLT allowed the suspended director to submit fresh Resolution Plan and directed the Resolution Professional and the COC to consider the fresh Resolution Plan submitted by SRA, if any, before proceeding with the liquidation Application.

2.2. Pursuant to the directions passed by the NCLT, the resolution plan was submitted by the suspended director of the Corporate Debtor. Subsequently, the resolution plan was discussed and negotiated by the COC members and the Suspended Director in the several COC meetings. Thereafter, in the 19th meeting of COC held on 04 June 2022, the COC decided to put the resolution for approval of the resolution plan for e-voting and the same was approved by 100% voting in favor. Accordingly IA no. 2293 of 2022 was filed by the Applicant in 108/2024 before the NCLT for approval of the resolution plan and subsequently the NCLT had vide order dated 11 August 2023 approved the resolution plan of the Corporate Debtor.

2.3. That as per the directions passed by the NCLT a monitoring committee (hereinafter referred as "MC") was constituted in terms of the approved resolution plan for supervising the implementation of the Resolution Plan of the Corporate Debtor comprising of erstwhile Resolution Professional, Authorized Representative of the Financial creditors i.e., UBI and Resolution Applicant. The erstwhile Resolution Professional was appointed as the Chairman of the MC.

2.4. During MC meeting held on 03 October 2023, the Applicant (in 108/2024) in the capacity of the Chairman of the MC informed the MC that the SRA vide email dated 26 September 2023 had requested extension of 60 days period to make the up- front payment as envisaged in the approved resolution plan to the stakeholders of the Corporate Debtor, reason stated that the SRA was in process of arrangements to make the upfront payment as per Resolution Plan. However, the MC had informed the SRA that the MC is not authorized to grant extension of time and advised SRA to make upfront payment in terms of approved Resolution Plan.

2.5. That in terms of the approved resolution plan, the following payments were to be made by the SRA to the creditors from effective date i.e., 11 August 2023 (date of a