Situation-1: If a Resolution Plan is conditional/contingent in nature and the applicant had indicated in their resolution plan about exit midway, even if, the applicant would have been declared as a Successful Resolution Applicant, after following the due process of bidding and evaluation by CoC.
Solution to Situation-1: The Adjudicating Authority was of the view that such mid way exit condition is contrary to the objective of the Code and held that now it is a settled law as decided by Hon’ble Supreme Court in M/s. Maharashtra Seamless Limited Vs. Padmanabhan Venkatesh & Ors, wherein The Hon’ble Supreme Court held that “The exit route prescribed in Sec12-A is not applicable to Resolution Applicant. The procedure envisaged in the said provision only applies to applicants invoking Section 7, 9 and 10 of the Code.” The Supreme Court held that such mid way exit would not only defeat the very objective of the Code, after having been declared as a Successful Resolution Applicant, as this would lead to the Corporate Debtor in such a situation, where it would be very difficult to fetch new Resolution Applicant for the Corporate Debtor. The Corporate Debtor would then be thrown into a helplesss situation wherein it would be left with no other option but to opt for forced liquidation, without any of the default but only due to the callous approach of the Resolution Applicant backing out of its committment midway.
Situation-2: Applicability of Regulation 39 (1B) of the CIRP Regulations
Solution to Situation-2: In the instant case, the Respondent had stated in their Resolution Plan, that neither Respondent nor their related parties had failed or contributed to the failure of implementation of any other resolution Plan approved by the Adjudicating Authority at anytime in the past. The Respondent had mentioned that they had sought extension of time for final payment from CoC and NCLT for reasons beyond their control.
Branch: NCLAT
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