When the Regulation 36A, as it stood during the period from 06.02.2018 to 04.07.2018, did not mandate the publication of the invitation of Resolution Plans, either in Form G or otherwise, in newspapers. It is only the amended Regulation 36A, which came into effect from 04.07.2018, that requires the publication of Form G in newspapers. Therefore, the publication in newspapers made by the Resolution Professional, in the case on hand, on 30.03.2018, was something that was statutorily not required of him and hence the Promoter/Director of the corporate debtor cannot take advantage of the amendment that came later, to attack the advertisement.

When the Regulation 36A, as it stood during the period from 06.02.2018 to 04.07.2018, did not mandate the publication of the invitation of Resolution Plans, either in Form G or otherwise, in newspapers. It is only the amended Regulation 36A, which came into effect from 04.07.2018, that requires the publication of Form G in newspapers. Therefore, the publication in newspapers made by the Resolution Professional, in the case on hand, on 30.03.2018, was something that was statutorily not required of him and hence the Promoter/Director of the corporate debtor cannot take advantage of the amendment that came later, to attack the advertisement.

1
REPORTABLE


IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2955 OF 2020
THE KARAD URBAN COOPERATIVE
BANK LTD. ….APPELLANT(S)
VERSUS
SWWAPNIL BHINGARDEVAY & ORS. ….RESPONDENT(S)
WITH
CIVIL APPEAL NO. 2902 OF 2020
J U D G M E N T
V. RAMASUBRAMANIAN, J.

  1. Challenging an order passed by the National Company Law
    Appellate Tribunal (hereinafter referred to as ‘NCLAT’) (i) setting
    aside the approval granted by the National Company Law
    Tribunal (hereinafter referred to as ‘NCLT’) to a Resolution Plan
    and (ii) remanding the matter back to the NCLT with a direction
    to have the Resolution Plan re­submitted before the Committee of
    Creditors, the financial creditor and the Resolution Professional
    have come up with these appeals.
    2
  2. We have heard learned counsel appearing on both sides.
  3. The Karad Urban Cooperative Bank Ltd., which is the
    financial creditor, filed an application on 04.09.2017 under
    Section 7 of the IBC before the NCLT against M/s. Khandoba
    Prasanna Sakhar Karkhana Limited, which is the corporate
    debtor. NCLT admitted the application on 01.01.2018 and an
    Interim Resolution Professional was appointed. The first meeting
    of the Committee of Creditors (hereinafter referred to as ‘CoC’)
    took place on 02.03.2018. As per the decision taken therein, one
    Mr. Jitendra Palande was appointed by the NCLT, by an order
    dated 06.03.2018, as Resolution Professional.
  4. Pursuant to the second meeting of the Committee of
    Creditors held on 27.03.2018, the Resolution Professional issued
    an advertisement on 30.03.2018 inviting Expression of Interest.
    In the meantime, a Director/Promoter of the corporate debtor
    moved the High Court of Judicature at Bombay by way of a writ
    petition in Writ Petition No.4746 of 2018, challenging the orders
    of the NCLT dated 01.01.2018 and 06.03.2018. Initially, the High
    Court granted stay of further proceedings before the NCLT on
    3
    18.04.2018. However, the writ petition was eventually dismissed
    on 23.08.2018.
  5. Several meetings of the Committee of Creditors were held
    thereafter and eventually the Committee of Creditors, in its 8th
    Meeting held on 09.02.2019 resolved to approve the Resolution
    Plan submitted by one M/s. Sai Agro (India) Chemicals. On the
    basis of the approval of the Resolution Plan by the Committee of
    Creditors, the Resolution Professional moved an application on
    15.02.2019 before the NCLT, Mumbai. At this stage, the
    Director/Promoter of the corporate debtor also came up with an
    application seeking permission to file a resolution plan. But by a
    common order dated 01.08.2019, NCLT, Mumbai Bench, rejected
    the application filed by the Director/Promoter of the corporate
    debtor and approved the Resolution Plan submitted by M/s. Sai
    Agro (India) Chemicals. Thus, M/s. Sai Agro (India) Chemicals,
    have become the Successful Resolution Applicant (hereinafter
    referred to as the ‘SRA’).
  6. The Director/Promoter of the corporate debtor (who
    unsuccessfully approached the High Court of Bombay at the
    earliest point of time), filed an appeal before the NCLAT in
    4
    Company Appeal (AT) (Ins) No.943 of 2019, as against the order
    of the NCLT dated 01.08.2019, granting approval of the
    Resolution Plan of the SRA.
  7. By an order dated 02.06.2020, NCLAT allowed the appeal
    and remanded the matter back to the adjudicating authority,
    with a direction to send back the Resolution Plan to the
    Committee of Creditors. The operative portion of the order of
    NCLAT dated 02.06.2020 reads as follows:­
    “The Appeal is allowed. For the above reasons,
    we set aside the Impugned Order and remit the matter
    back to the Adjudicating Authority with a direction to
    send back the Resolution Plan to the Committee of
    Creditors to resubmit the Plan taking into consideration
    observations made above and after satisfying the
    parameters as laid down by the Hon’ble Supreme Court
    in the Judgment in the matter of “Essar Steel” referred
    (supra) and IBC. The Adjudicating Authority may give
    specific time period to the Resolution Professional to
    place matter before Committee of Creditors for
    resubmitting the Resolution Plan taking into
    consideration observations made above and after
    satisfying the parameters laid down by the Hon’ble
    Supreme Court and IBC. Further incidental Orders may
    also be passed.
    On resubmission of the Resolution Plan, the
    Adjudicating Authority will deal with the same in
    accordance with law.
    The Appeal is disposed accordingly. No costs.”
  8. It is against the aforesaid order of remand passed by
    NCLAT that the financial creditor has come up with one appeal
    5
    and the Resolution Professional has come up with another
    appeal.
  9. It is seen from the order of the NCLAT that the Appellate
    Tribunal was convinced to interfere with the order of NCLT
    granting approval of the Resolution Plan, on four grounds. They
    are:­
    (i) That the Resolution Plan suffers from issues of
    viability and feasibility;
    (ii) That in as much as the liquidation value
    mentioned by the Successful Resolution Applicant in its
    Resolution Plan tallied exactly with the liquidation value
    obtained by the Resolution Professional, there appears
    to have been a breach of confidentiality, violating
    Regulation 35(2);
    (iii) That the Resolution Plan does not take note of
    one important fact namely, that the ethanol plant and
    machinery shown as part of the assets of the corporate
    debtor, actually belonged to another company by name,
    Sarvadnya Industries Private Limited, and that a bank
    6
    by name, Janata Sahkari Bank Limited, Pune had taken
    possession of the same under the SARFAESI Act; and
    (iv) That even the advertisement issued by the
    Resolution Professional on 30.03.2018 inviting
    Expression of Interest, was vitiated in as much as the
    invitation contained therein was for outright sale of the
    Company as a going concern, and was in violation of
    Regulation 36A.
  10. The order of the NCLAT is assailed by the appellants on the
    ground, inter alia, (i) that the question of viability and feasibility,
    is to be left to the commercial wisdom of the CoC and the same
    cannot be lightly interfered with by the Tribunal, in view of the
    law laid down by this court in Essar Steel India Ltd.1 and K.
    Sashidhar;
    2
    (ii) that a mere suspicion that there was breach of
    confidentiality cannot take the place of proof; (iii) that once the
    Successful Resolution Applicant has taken note of the issue
    relating to the ethanol plant and machinery and submitted a
    resolution plan, the Director/Promoter of the corporate debtor
    cannot make an issue out of it, and (iv) that the advertisement
    1
    Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and others, (2019) SCC OnLine SC 1478
    2
    K. Sashidhar vs. Indian Overseas Bank, (2019) 12 SCC 150
    7
    issued was actually in tune with the regulations, including
    Regulation 36A.
  11. Supporting the order of the NCLAT, it is contended by Mr.
    Jayant Bhushan, learned Senior Counsel, (i) that the Resolution
    Plan proceeds on the basis as though the ethanol plant, owned
    by a third party, is part and parcel of the assets of the corporate
    debtor and hence, the examination of the viability and feasibility
    on the basis of such wrong notion stands vitiated; (ii) that the
    very self­declaration accompanying the Resolution Plan bears
    the date 09.02.2019, but the email exchanged between the
    Resolution Professional and the Successful Resolution Applicant,
    on the question of leakage of information relating to the
    liquidation value is dated 07.02.2019, showing thereby that
    there was collusion between the Resolution Professional and the
    Successful Resolution Applicant; (iii) that the issue relating to
    legal possession of the ethanol plant and machinery had already
    been left open by NCLAT in a collateral proceeding between its
    legal owner namely, Sarvadnya Industries Pvt. Ltd. and its
    banker, Janata Sahkari Bank Ltd. and hence, this machinery
    could not have formed part of the assets of the corporate debtor
    8
    to enable the Successful Resolution Applicant to take over the
    corporate debtor as a going concern and run it; and (iv) that the
    very fact that the Successful Resolution Applicant was the only
    person who submitted a bid in response to the advertisement
    and the fact that the Resolution Plan was approved within 2­3
    hours in the 8th meeting of the CoC in a hasty manner, would
    show that the Resolution Plan was tainted, and that therefore,
    NCLAT was justified in setting aside the approval granted by the
    NCLT to the Resolution Plan.
  12. We have carefully considered the rival submissions. On the
    first question regarding the viability and feasibility of a
    resolution plan, the law is now well­settled. In K. Sashidhar
    (supra), it was held as follows:
    (i) “There is an intrinsic assumption that financial
    creditors are fully informed about the viability of the
    corporate debtor and feasibility of the proposed
    resolution plan…The opinion on the subject matter
    expressed by them after due deliberations in the CoC
    meetings through voting, as per voting shares, is a
    collective business decision. The legislature, consciously,
    has not provided any ground to challenge the
    “commercial wisdom” of the individual financial creditors
    or their collective decision before the adjudicating
    authority. That is made nonjusticiable.”(paragraph 52)
    (ii) “The provisions investing jurisdiction and
    authority in NCLT or NCLAT as noticed earlier, have not
    made the commercial decision exercised by CoC of not
    approving the resolution plan or rejecting the same,
    9
    justiciable. This position is reinforced from the limited
    grounds specified for instituting an appeal that too
    against an order “approving a resolution plan” under
    Section 31.” (paragraph 57)
    (iii) “Further, the jurisdiction bestowed upon the
    appellate authority (NCLAT) is also expressly
    circumscribed. It can examine the challenge only in
    relation to the grounds specified in Section 61(3) of the
    I&B Code, which is limited to matters “other than”
    enquiry into the autonomy or commercial wisdom of the
    dissenting financial creditors.” (paragraph 58)
    (iv) “At best, the adjudicating authority (NCLT) may
    cause an enquiry into the “approved” resolution plan on
    limited grounds referred to in Section 30(2) read with
    Section 31(1) of the I&B Code. It cannot make any other
    inquiry nor is competent to issue any direction in relation
    to the exercise of commercial wisdom of the financial
    creditors — be it for approving, rejecting or abstaining, as
    the case may be. Even the inquiry before the appellate
    authority (NCLAT) is limited to the grounds under Section
    61(3) of the I&B Code. It does not postulate jurisdiction
    to undertake scrutiny of the justness of the opinion
    expressed by financial creditors at the time of voting.”
    (paragraph 64)
    Thereafter, in Essar Steel India Ltd. (supra), this Court held:
    (i) “Thus, it is clear that the limited judicial review
    available, which can in no circumstance trespass upon a
    business decision of the majority of the Committee of
    Creditors, has to be within the four corners of Section
    30(2) of the Code, insofar as the Adjudicating Authority is
    concerned, and Section 32 read with Section 61(3) of the
    Code, insofar as the Appellate Tribunal is concerned.”
    (paragraph 48)
    (iv) “Thus, while the Adjudicating Authority cannot
    interfere on merits with the commercial decision taken by
    the Committee of Creditors, the limited judicial review
    available is to see that the Committee of Creditors has
    taken into account the fact that the corporate debtor
    needs to keep going as a going concern during the
    insolvency resolution process; that it needs to maximise
    the value of its assets; and that the interests of all
    stakeholders including operational creditors has been
    taken care of.” (paragraph 54)
    10
  13. The principles laid down in the aforesaid decisions, make
    one thing very clear. If all the factors that need to be taken into
    account for determining whether or not the corporate debtor can
    be kept running as a going concern have been placed before the
    Committee of Creditors and the CoC has taken a conscious
    decision to approve the resolution plan, then the adjudicating
    authority will have to switch over to the hands off mode. It is not
    the case of the corporate debtor or its promoter/Director or
    anyone else that some of the factors which are crucial for taking
    a decision regarding the viability and feasibility, were not placed
    before the CoC or the Resolution Professional. The only basis for
    the corporate debtor to raise the issue of viability and feasibility
    is that the ownership and possession of the ethanol plant and
    machinery is the subject matter of another dispute and that the
    resolution plan does not take care of the contingency where the
    said plant and machinery may not eventually be available to the
    Successful Resolution Applicant.
  14. But the aforesaid argument, coming as it does from the
    Promoter/Director of the corporate debtor is like the wolf
    shedding tears for the lamb getting drenched in rain. The
    11
    records very clearly show that the Successful Resolution
    Applicant, the Resolution Professional and the financial creditor
    were fully aware of the said issue. The order passed by the
    NCLAT in Company Appeal (AT) (Insolvency) No.897 of 2019 on
    16.12.2019 shows that the possession of the ethanol plant and
    machinery was restored to Sarvadnya Industries Pvt. Ltd., in the
    appeal to which the Successful Resolution Applicant was also a
    party. The Successful Resolution Applicant also appears to have
    offered to Janata Sahkari Bank to purchase the said plant and
    machinery. In the appeal before the NCLAT out of which the
    present Civil Appeals arise, Sarvadnya Industries Pvt. Ltd. which
    claims ownership of the ethanol plant and machinery, were also
    a party.
  15. In any case, the Resolution Professional has taken a
    specific plea in his grounds of appeal before this Court, that the
    Successful Resolution Applicant is itself into the ethanol
    manufacturing business and that they have sufficient ethanol
    production capacity required to fulfil their Resolution Plan. In
    paragraph 4.P of the Civil Appeal filed by the Resolution
    Professional, he has stated as follows:
    12
    “Further, the said Ethanol Plant was functional only
    between April 2016 and August 2016. That Respondent
    No. 3/SRA is itself into the ethanol manufacturing
    business and has sufficient ethanol production capacity
    required to fulfil its resolution plan. Additionally, there is
    a provision for capital expenditure in the approved plan
    of SRA which includes the cost of a new ethanol facility, if
    required. Additionally, Janata Bank Pune, which holds
    symbolic possession of the ethanol plant, had
    approached Respondent No. 3/ Successful Resolution
    Applicant for the sale of the said ethanol plant to the said
    SRA. That further the Respondent No. 3/ successful
    resolution applicant was planning to expand and
    integrate other facilities with the distillery plant of the
    Corporate Debtor which was functional since 2007;”
  16. Therefore, the fact that there was an issue with regard to
    the ethanol plant and machinery, had been taken note of by the
    Resolution Professional, the Committee of Creditors and the
    Successful Resolution Applicant. Once all these three parties
    have taken note of the said fact and taken a conscious decision
    to go ahead with the Resolution Plan, it cannot be stated that
    the question of viability and feasibility was not examined in the
    proper perspective.
  17. Therefore, the first ground and actually the main ground on
    which NCLAT interfered with the decision of the NCLT to approve
    the Resolution Plan, is wholly untenable, misconceived and
    unjustified.
    13
  18. In fact, our discussion could have ended here without going
    into the other grounds, for one simple reason. Though the
    Director/Promoter of the corporate debtor, who was the
    appellant before the NCLAT, raised other grounds apart from
    viability and feasibility, NCLAT issued limited notice in the
    appeal, on 12.09.2019, only with regard to viability and
    feasibility. Even in the impugned order dated 02.06.2020, it is
    made clear in the last sentence of paragraph 1 that “this appeal
    on 12.09.2019 was admitted to limited extent of examining
    viability and feasibility of the Plan”.
  19. It is true that in the last paragraph of the impugned order,
    namely paragraph 14, the Appellate Tribunal holds that the
    CIRP suffered from material irregularities and the Resolution
    Plan approved suffers from feasibility and viability. But then the
    operative portion of the impugned order does not take the
    findings on other issues to their logical end. For instance, the
    Tribunal holds that the advertisement inviting Expression of
    Interest itself was defective and that there was breach of
    confidentiality in as much as the liquidation value appears to
    have been leaked out. These findings should have taken the
    14
    Appellate Tribunal to the point of setting aside the entire process
    and directing the Resolution Professional to start the process all
    over again from the stage of issue of a fresh advertisement. The
    NCLAT did not do so. In the operative portion, NCLAT merely
    remanded the matter back to the Adjudicating Authority with a
    direction to send back the Resolution Plan to the Committee of
    Creditors to resubmit the plan after taking into consideration
    the law laid down by this Court.
  20. In other words, the reliefs that would normally flow in the
    light of the findings with regard to breach of confidentiality and
    defective Invitation to Offer, were not granted by NCLAT. The
    Director/Promoter of the corporate debtor has not come up with
    any appeal against the failure of NCLAT to grant appropriate
    reliefs, connectable to the aforesaid findings. The
    Director/Promoter of the corporate debtor is obviously happy
    with the limited relief, if at all it is one, granted to him for the
    resubmission of the Resolution Plan.
  21. It must be pointed out at this stage that the order of the
    NCLT, Mumbai Bench dated 01.08.2019 became the subject
    matter of a single appeal before NCLAT. But it was actually a
    15
    common order passed in three applications namely, MA
    Nos.1509/2019, 2104/2019 and 662/2019. The details of these
    applications are as follows:
    (i) MA No.1509/2019 was filed by an operational
    creditor, by name Sarvadnya Industries Pvt. Ltd. (whose
    ethanol plant and machinery also became a matter of
    dispute). Their claim was that they had a rental
    agreement with the corporate debtor with regard to the
    plant and machinery and that there was default in
    payment of the rent.
    (ii) MA No.2104/2019 was filed by the
    Director/Promoter of the corporate debtor seeking to
    submit a resolution plan. But it was obviously filed after
    270 days and also after the approval of the Resolution
    Plan by the CoC.
    (iii) The third application, MA No.662/2019, was by
    the Resolution Professional for the approval of the
    Resolution Plan which was accepted by the CoC.
    16
  22. By its common order dated 01.08.2019, the NCLT
    dismissed MA Nos.1509 and 2104 of 2019, filed respectively by
    the operational creditor (lessor of the ethanol plant) and the
    Promoter/Director of the corporate debtor. But the application
    filed by the Resolution Professional was allowed.
  23. But the Director/Promoter of the corporate debtor filed only
    one appeal and the Memorandum of Appeal suggests that the
    Director/Promoter of the corporate debtor prayed for two reliefs,
    namely (i) to set aside the approval of the Resolution Plan, and
    (ii) to consider his own resolution plan.
  24. By the order impugned in the present Civil Appeals, the
    NCLAT granted only a limited relief, as can be seen from the
    operative portion of the order of NCLAT which we have extracted
    earlier.
  25. Therefore, in the light of the above facts, the consideration
    of all other issues, such as breach of confidentiality and
    defective Invitation to Offer would only be academic, as NCLAT
    did not grant any relief to the Promoter/Director of the corporate
    debtor, which could logically flow out of those other grounds.
    17
  26. But be that as it may, we will still deal with the other three
    grounds also, as the same would put things in the right
    perspective and clear any air of suspicion.
  27. The second ground on which NCLAT interfered with the
    decision of the NCLT is the alleged breach of confidentiality. The
    contention of the Promoter/Director of the corporate debtor is
    that the liquidation value mentioned in the Resolution Plan
    submitted by the SRA exactly tallied with the liquidation value
    obtained by the Resolution Professional and that the whole
    sequence of events would show clearly that there was an attempt
    to cover up.
  28. According to the Director/Promoter of the corporate debtor,
    the self­declaration signed by the Resolution Applicant, and
    which forms part of the Resolution Plan, bears the date 9th
    February 2019. This document mentions the liquidation value as
    Rs. 13.53 crores. It was the same value as obtained by the
    Resolution Professional. It is the contention of the Director/
    Promoter of the corporate debtor that the Resolution Professional
    wrote an email on 07.02.2019 itself (2 days before the
    submission of the Resolution Plan by the SRA), asking for
    18
    clarification as to how the liquidation value matched. This,
    according to the Director of the corporate debtor, was proof
    enough to show that there was not merely a leakage of
    information, but also an attempt to cover­up.
  29. But we are unable to accept the above contention. The
    Resolution Plan actually runs to 31 pages. Pages 30 and 31
    contain Annexure A, which provides the business plan. Page 29
    contains a self­declaration certificate signed by the partners of
    the SRA. Just below the signatures of the partners at page 29,
    the date “09th February 2019” is type­written.
  30. But the cover page of the entire document contains the
    date “7th February 2019” as the date of submission of the
    Resolution Plan. The last date for submission of the resolution
    plan was 08.02.2019.
  31. Nowhere in the Memorandum of Appeal filed by the
    Promoter/Director of the corporate debtor before the NCLAT, has
    he claimed that the Resolution Plan was submitted by the SRA
    after the last date. We have perused the Memorandum of Appeal
    filed by the Promoter/Director of the corporate debtor before the
    NCLAT. It was not his case at all that the Resolution Plan was
    19
    submitted by the SRA after the last date, but the same was
    predated by the Resolution Professional acting in collusion.
  32. It appears from the impugned order of NCLAT that only in
    the course of hearing of the appeal, the date “09th February
    2019” type­written at the bottom of the self­declaration (page 29
    of the Resolution Plan) was sought to be taken advantage of.
    Since this was not raised as one of the grounds in the
    Memorandum of Appeal but raised in the course of arguments,
    the Resolution Professional could do no more than to file the
    print­out of the email correspondence between him and the SRA
    dated 07.02.2019. In the first email dated 07.02.2019, the
    Resolution Professional had sought a clarification from the SRA
    as to how they discovered the liquidation value and the source
    for the same. In response to this mail, the SRA sent a reply email
    contending that they undertook a due diligence to know the
    current market value and liquidation value and that what was
    quoted by them in the Resolution Plan, was something that an
    independent agency provided to them.
  33. Unfortunately, NCLAT rejected the print­out of the email
    correspondence dated 07.02.2019 on the sole ground that the
    20
    same was not supported by affidavit and that it was filed after
    the conclusion of the oral arguments.
  34. But NCLAT failed to take note of the fact that the
    Resolution Professional did not have any alternative except to
    respond in the manner that he did, to a point raised only in the
    course of arguments, but not raised in the Memorandum of
    Appeal. If the Promoter/Director of the corporate debtor had
    raised the issue of collusion or the submission of the Resolution
    Plan after the expiry of the last date, even in the Memorandum
    of Appeal, a duty would have been cast upon the Resolution
    Professional to respond in an appropriate manner. But that was
    not the case. Therefore, we do not approve the manner in which
    NCLAT rejected the contents of the email correspondence.
  35. The fact that there was an email correspondence between
    the Resolution Professional and the SRA on 07.02.2019,
    touching upon one of the contents of the Resolution Plan, would
    show (i) that the SRA had submitted the Resolution Plan before
    the last date and (ii) that the Resolution Professional had
    obviously scrutinised it, as otherwise he could not have found
    21
    out the liquidation value mentioned therein matching the
    confidential information that he had.
  36. In any case, the proof of the pudding is in the eating. The
    liquidation value mentioned in the Resolution Plan of the SRA is
    Rs. 13.53 crores. But the actual total pay­out as per the
    Resolution Plan is Rs. 29.74 crores.
  37. This meant that the workers and employees of the
    corporate debtor were to be paid 100% of their dues; that all
    statutory dues would be cleared 100% and that the financial
    creditors who constituted the CoC were to be paid 60% of their
    dues.
  38. It offends common sense to think that a resolution
    applicant who had the benefit of leakage of information relating
    to liquidation value would quote a figure of Rs. 29.74 crores as
    the total pay­out, as against a liquidation value of Rs. 13.53
    crores. The question of breach of confidentiality and leakage of
    confidential information can easily be tested on the touchstone
    of the benefit that accrued to the party who got the information.
    In the case on hand, no benefit accrued to the SRA.
    22
  39. It is obvious from the material on record that the
    Promoter/Director of the Corporate Debtor has tried to take
    advantage of two small mistakes on the part of the SRA, one of
    which was a typographical error mentioning the date “09th
    February 2019” at the bottom of the self­declaration and the
    other, which happened as a matter of coincidence. The NCLAT
    appears to have made a mountain out of a molehill and has
    recorded a finding even beyond the pleadings in the
    Memorandum of Appeal. Hence, the second ground on which the
    NCLAT was convinced to pass the impugned order, is legally and
    factually untenable.
  40. The third ground on which NCLAT proceeded, related to the
    ethanol plant and machinery. We have already dealt with this
    issue in detail, while dealing with the first issue. As stated
    therein, the SRA admittedly did not make his Resolution Plan on
    the strength of the ethanol plant and machinery in question. The
    threat looming large over the availability of the ethanol plant and
    machinery has admittedly been taken note of by the SRA and
    the CoC. The Resolution Plan does not give an indication
    anywhere that without this plant and machinery the whole
    23
    resolution plan will fail. In paragraph 8.04 of the Resolution
    Plan, the SRA has undertaken to continue the operations in the
    normal course of business. It is a commercial decision that they
    have taken. The corporate debtor cannot cry wolf over the said
    decision. Therefore, the third ground on which NCLAT chose to
    interfere, is also bound to be rejected.
  41. The last ground revolves around the advertisement issued
    by the Resolution Professional on 30.03.2018. NCLAT holds that
    the advertisement was not in conformity with Regulation 36A of
    The Insolvency and Bankruptcy Board of India (Insolvency
    Resolution Process for Corporate Persons) Regulations, 2016 and
    as per Form G of the Schedule.
  42. But the conclusions reached by NCLAT in this regard
    cannot hold water for two reasons. If NCLAT was convinced that
    the very process of inviting Expression of Interest was vitiated,
    NCLAT should have issued a direction to start the process afresh
    all over again by issuing a fresh advertisement. NCLAT did not
    do this and the person who raised this point is not on appeal.
  43. In any case, it does not lie in the mouth of the
    Promoter/Director of the corporate debtor to raise any issue in
    24
    this regard. It is seen from the Minutes of the 2nd Meeting of the
    Committee of Creditors that the Promoter/Director of the
    corporate debtor attended the meeting held on 27.03.2018. In
    Item No. 3 of the Agenda for the said meeting, the draft of the
    Invitation for Expression of Interest was approved. The
    Promoter/Director did not raise any objections either on
    27.03.2018 in the meeting in which the draft was approved or at
    any time thereafter, until the approval of the Resolution Plan.
  44. The Promoter/Director of the corporate debtor who was the
    appellant before NCLAT attended the 3rd meeting of the CoC on
    15.09.2018, the 4th meeting of the CoC held on 12.10.2018 and
    the 5th meeting of the CoC held on 26.11.2018. He did not raise
    any whisper about the contents of the advertisement. Even when
    the very same Promoter/Director of the corporate debtor went
    before the High Court of Judicature at Bombay by way of a writ
    petition challenging the orders of NCLT dated 01.01.2018 and
    06.03.2018, his focus was on his own application under Section
    10 of the Insolvency and Bankruptcy Code. His grievance before
    the High Court was that his own application under Section 10
    was dumped by the NCLT and the application of the financial
    25
    creditor was admitted thereafter. In fact the conduct of the
    Promoter/Director of the corporate debtor came to adverse
    notice before the Bombay High Court.
  45. Regulation 36A was inserted only with effect from
    06.02.2018 under Notification No. IBBI/2017­18/GN/REG024
    dated 06.02.2018. It underwent a change under Notification No.
    IBBI/2018­19/GN/REG031 dated 03.07.2018, with effect from
    04.07.2018. Regulation 36A, as it stood during the period from
    06.02.2018 to 04.07.2018, did not mandate the publication of
    the invitation of Resolution Plans, either in Form G or otherwise,
    in newspapers. It is only the amended Regulation 36A, which
    came into effect from 04.07.2018, that requires the publication
    of Form G in newspapers. Therefore, the publication in
    newspapers made by the Resolution Professional, in the case on
    hand, on 30.03.2018, was something that was statutorily not
    required of him and hence the Promoter/Director of the
    corporate debtor cannot take advantage of the amendment that
    came later, to attack the advertisement. The unamended and
    amended Regulation 36A are provided in a tabular column for
    easy comparison and appreciation.
    26
    Regulation 36­A before
    amendment
    Regulation 36­A after amendment
    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 sub­section (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 sub­regulation (1) or
    sub­regulation (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 thirtyseven days is left for submission of
    resolution plans under subregulation (1);
    (b) where a period of less than
    eighteen days is left for submission
    of resolution plans under subregulation (2).
    (5) The resolution professional shall
    36A. Invitation for expression of
    interest – (1) The resolution
    professional shall publish brief
    particulars of the invitation for
    expression of interest in Form G of
    the Schedule at the earliest, not
    later than seventy­fifth day from the
    insolvency commencement date,
    from interested and eligible
    prospective resolution applicants to
    submit resolution plans.
    (2) The resolution professional shall
    publish Form G­
    (i) in one English and one regional
    language newspaper with wide
    circulation at the location of the
    registered office and principal office,
    if any, of the corporate debtor and
    any other location where in the
    opinion of the resolution
    professional, the corporate debtor
    conducts material business
    operations;
    (ii) on the website, if any, of the
    corporate debtor;
    (iii) on the website, if any,
    designated by the Board for the
    purpose; and
    (iv) in any other manner as may be
    decided by the committee.
    (3) The Form G in the Schedule shall
    ­
    (a) state where the detailed invitation
    for expression of interest can be
    downloaded or obtained from, as the
    case may be; and
    (b) provide the last date for
    27
    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.
    submission of expression of interest
    which shall not be less than fifteen
    days from the date of issue of
    detailed invitation.
    (4) The detailed invitation referred to
    in sub­regulation (3) shall­
    (a) specify the criteria for prospective
    resolution applicants, as approved
    by the committee in accordance with
    clause (h) of sub­section (2) of
    section 25;
    (b) state the ineligibility norms
    under section 29A to the extent
    applicable for prospective resolution
    applicants;
    (c) provide such basic information
    about the corporate debtor as may
    be required by a prospective
    resolution applicant for expression
    of interest; and
    (d) not require payment of any fee or
    any non­refundable deposit for
    submission of expression of interest.
    (5) A prospective resolution
    applicant, who meet the
    requirements of the invitation for
    expression of interest, may submit
    expression of interest within the
    time specified in the invitation under
    clause (b) of sub­regulation (3).
    (6) The expression of interest
    received after the time specified in
    the invitation under clause (b) of
    sub­regulation (3) shall be rejected.
    (7) An expression of interest shall be
    unconditional and be accompanied
    by­
    (a) an undertaking by the
    prospective resolution applicant that
    28
    it meets the criteria specified by the
    committee under clause (h) of subsection (2) of section 25;
    (b) relevant records in evidence of
    meeting the criteria under clause (a);
    (c) an undertaking by the
    prospective resolution applicant that
    it does not suffer from any
    ineligibility under section 29A to the
    extent applicable;
    (d) relevant information and records
    to enable an assessment of
    ineligibility under clause (c);
    (e) an undertaking by the
    prospective resolution applicant that
    it shall intimate the resolution
    professional forthwith if it becomes
    ineligible at any time during the
    corporate insolvency resolution
    process;
    (f) an undertaking by the prospective
    resolution applicant that every
    information and records provided in
    expression of interest is true and
    correct and discovery of any false
    information or record at any time
    will render the applicant ineligible to
    submit resolution plan, forfeit any
    refundable deposit, and attract
    penal action under the Code; and
    (g) an undertaking by the
    prospective resolution applicant to
    the effect that it shall maintain
    confidentiality of the information
    and shall not use such information
    to cause an undue gain or undue
    loss to itself or any other person and
    comply with the requirements under
    sub­section (2) of section 29.
    (8) The resolution professional shall
    conduct due diligence based on the
    29
    material on record in order to satisfy
    that the prospective resolution
    applicant complies with­
    (a) the provisions of clause (h) of
    sub­section (2) of section 25;
    (b) the applicable provisions of
    section 29A, and
    (c) other requirements, as specified
    in the invitation for expression of
    interest.
    (9) The resolution professional may
    seek any clarification or additional
    information or document from the
    prospective resolution applicant for
    conducting due diligence under subregulation (8).
    (10) The resolution professional
    shall issue a provisional list of
    eligible prospective resolution
    applicants within ten days of the last
    date for submission of expression of
    interest to the committee and to all
    prospective resolution applicants
    who submitted the expression of
    interest.
    (11) Any objection to inclusion or
    exclusion of a prospective resolution
    applicant in the provisional list
    referred to in sub­regulation (10)
    may be made with supporting
    documents within five days from the
    date of issue of the provisional list.
    (12) On considering the objections
    received under sub­regulation (11),
    the resolution professional shall
    issue the final list of prospective
    resolution applicants within ten
    days of the last date for receipt of
    objections, to the committee.
    30
  46. The second meeting of the Committee of Creditors was held
    on 27.03.2018. The advertisement was approved in the said
    meeting. It was the unamended Regulation 36A that was in force
    at that time. This has not been appreciated by NCLAT. Therefore,
    the NCLAT was wrong in its approach even in this regard.
  47. Therefore, in fine, the impugned order of NCLAT is flawed
    and hence, liable to be set aside. Accordingly, the Civil Appeals
    are allowed, the impugned order of the NCLAT is set aside and
    the order of the National Company Law Tribunal, Mumbai Bench
    dated 01.08.2019 is restored. There will be no order as to costs.
    …………………………..CJI.
    (S. A. Bobde)
    ……………………………..J.
    (A. S. Bopanna)
    …..………………………….J.
    (V. Ramasubramanian)
    NEW DELHI
    SEPTEMBER 04, 2020