EBIX SINGAPORE PRIVATE LIMITED versus COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED & ANR.

Citation: [2021] 14 S.C.R. 321 · Decided: 13-09-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Disposed off

Cited by 9 judgment(s) · cites 18 · see the full citation network in Lexace

Judgment (excerpt)

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[2021] 14 S.C.R.321
321
EBIX SINGAPORE PRIVATE LIMITED
v.
COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS
LIMITED & ANR.
(Civil Appeal No. 3224 of 2020)
SEPTEMBER 13, 2021
[DR DHANANJAYA Y. CHANDRACHUD AND
M. R. SHAH, JJ.]
Insolvency and Bankruptcy Code, 2016 – ss.5(26), 7, 9, 10,
12, 23, 25, 30, 31, 60(5), 61 & 74(3) – National Company Law
Tribunal Rules, 2016 – r.11 – Insolvency and Bankruptcy Board of
India (Insolvency Resolution Process For Corporate Persons)
regulations, 2016 – regn. 36A, 36B and 39 – Whether withdrawals
or modifications by successful Resolution Applicants are permissible
under IBC – Held: The framework, as it stands, only enables
withdrawals from the CIRP process by following the procedure
detailed in Section 12A of the IBC and Regulation 30A of the CIRP
Regulations and in the situations recognized in those provisions –
Enabling withdrawals or modifications of the Resolution Plan at
the behest of the successful Resolution Applicant, once it has been
submitted to the Adjudicating Authority after due compliance with
the procedural requirements and timelines, would create another
tier of negotiations which will be wholly unregulated by the statute
– Since the 330 days outer limit of the CIRP u/s. 12(3) of the IBC,
including judicial proceedings, can be extended only in exceptional
circumstances, this open-ended process for further negotiations or
a withdrawal, would have a deleterious impact on the Corporate
Debtor, its creditors, and the economy at large as the liquidation
value depletes with the passage of time – A failed negotiation for
modification after submission, or a withdrawal after approval by
the CoC and submission to the Adjudicating Authority, irrespective
of the content of the terms envisaged by the Resolution Plan, when
unregulated by statutory timelines could occur after a lapse of time,
as is the case in the present appeals – Permitting such a course of
action would either result in a down-graded resolution amount of
the Corporate Debtor and/or a delayed liquidation with depreciated
assets which frustrates the core aim of the IBC – If the legislature in
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SUPREME COURT REPORTS
[2021] 14 S.C.R.
its wisdom, were to recognize the concept of withdrawals or
modifications to a Resolution Plan after it has been submitted to the
Adjudicating Authority, it must specifically provide for a tether under
the IBC and/or the Regulations – These are matters for legislative
policy – In the present framework, even if an impermissible
understanding of equity is imported through the route of residual
powers or the terms of the Resolution Plan are interpreted in a
manner that enables the appellants’ desired course of action, it is
wholly unclear on whether a withdrawal of a CoC-approved
Resolution Plan at a later stage of the process would result in the
Adjudicating Authority directing mandatory liquidation of the
Corporate Debtor – Pertinently, this direction has been otherwise
provided in Section 33(1)(b) of the IBC when an Adjudicating
Authority rejects a Resolution Plan under Section 31 – In this
context, the existing insolvency framework in India provides no
scope for effecting further modifications or withdrawals of CoC-
approved Resolution Plans, at the behest of the successful Resolution
Applicant, once the plan has been submitted to the Adjudicating
Authority – A Resolution Applicant, after obtaining the financial
information of the Corporate Debtor through the informational
utilities and perusing the IM, is assumed to have analyzed the risks
in the business of the Corporate Debtor and submitted a considered
proposal – A submitted Resolution Plan is binding and irrevocable
as between the CoC and the successful Resolution Applicant in terms
of the provisions of the IBC and the CIRP Regulations.
Insolvency and Bankruptcy Code, 2016 – Res judicata –
Applicability of – Held: The prayer for withdrawal of the Resolution
Plan in the First Withdrawal Application was not substantial and
one that the Court was bound to grant, since it was contingent upon
a re-evaluation, which in itself was contingent upon receiving the
information sought in prayers (i) and (ii) – Since the latter two
contingencies never arose, the NCLT did not apply its mind to the
prayer for withdrawal independently – When it filed the Second
Withdrawal Application, it was dismissed on a technical ground and
not on its merits – When a revised Third Withdrawal Application
was filed, the NCLT then adju

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