In a significant judgment, the National Company Law Tribunal (NCLT) has admonished the Committee of Creditors (CoC) for rejecting a resolution plan submitted by Ashdan Properties Private Limited due to a one-day delay. The NCLT emphasised that the primary objective of the Insolvency and Bankruptcy Code (IBC) is to maximize the value of the assets of the Corporate Debtor and ensure a fair resolution process.
The tribunal's 14-page judgment, a copy of which is with FPJ, underscores the need for these principles to guide decision-making in insolvency cases.
The case involves an insolvency proceeding initiated by Ashdan Properties against A A Estate Private Limited. Ashdan Properties was actively engaged in the process of submitting a resolution plan, frequently communicating with the appointed Resolution Professional (RP) to obtain necessary information. According to the order, the RP had been responsive to Ashdan's queries but had not provided complete information required for the resolution plan.
Ashdan Properties argued that due to the incomplete information provided by the RP, they requested additional documents on multiple occasions. On February 13, 2024, one day before the deadline for submitting the resolution plan, the RP informed Ashdan Properties that certain documents had been received from A A Estate Private Limited and were subsequently uploaded. However, Ashdan Properties reported that they were unable to access these documents and promptly notified the RP.
The RP then forwarded the documents on February 14, 2024, but crucial information, including a technical due diligence report on the project RNA Address, was still missing. Ashdan Properties requested an extension of time to submit the resolution plan due to these delays, but they received no response.
As a result, the physical copy of the resolution plan was dispatched on February 15, 2024, a day after the deadline, and was handed over to the RP in Pune. The RP accepted the resolution plan without raising any immediate objections and informed Ashdan Properties that it would be presented to the CoC after obtaining legal advice on the one-day delay.
However, the CoC rejected the resolution plan solely based on the one-day delay in its submission.
In its judgment, the NCLT criticized the CoC and RP for failing to consider the purpose and objective of the IBC. The tribunal noted, "To appreciate the peculiar facts and circumstances of the present case, we need to keep in mind the purpose and objective of the Code, which is to maximize the value of the assets of the Corporate Debtor and to ensure a fair resolution process." The NCLT further stated that both the RP and CoC "seem to have lost sight of Regulation IBBI and thus failed to exercise the discretion granted under the regulations."
The NCLT concluded that the 24-hour delay in submitting the resolution plan was caused by legitimate challenges in accessing necessary information and, therefore, should be condoned.
