National Company Law Appellate Tribunal, New Delhi: In an appeal filed by the appellant, an ex-Promoter of the Corporate Debtor challenging the order by the Adjudicating Authority, NCLT, a bench comprising of Ashok Bhushan*, J., and Barun Mitra (Technical Member) held that the Adjudicating Authority has not committed any error in rejecting the appellant's application praying to keep the respondent's application in abeyance.
In the instant matter, the Adjudicating Authority passed an order for initiation of Corporate Insolvency Resolution Process (CIRP) against the respondent, Corporate Debtor — Pawan Doot Estate (P) Ltd. Resolution Professional (RP) presented the one and only Resolution Plan which was received after an advertisement was issued inviting Expression of Interest, in the 10th Meeting of Committee of Creditors (CoC). The Letter of Intent issued by the RP was unconditionally accepted by the Successful Resolution Applicant (SRA) and Performance Bank Guarantee amount was deposited. An application, IA No.1077 of 2020, under S. 30(6) IBC was filed by the RP before the NCLT for approval of the Resolution Plan, meanwhile the appellant filed an application praying for hearing in IA No.1077 of 2020 be kept in abeyance. Vide order dated 23.11.2022, the NCLT rejected the application filed by the appellant and vide order dated 02.12.2022, the NCLT heard IA No.1077 of 2020 and reserved the order. Aggrieved by the impugned order dated 23.11.2022 by the NCLT rejecting the application filed by the appellant, the appellant filed the present appeal before this Tribunal.
Whether after approval of the Resolution Plan by CoC under S. 30(4) and filing an application before the Adjudicating Authority for its approval, any Settlement Proposal under S. 12A (filed by Ex-Promoter) can be entertained deferring consideration of approval of Resolution Plan by the Adjudicating Authority?
The Tribunal observed that if it was the intention of the IBC that application under S. 12A can be entertained even after approval of the Resolution Plan by the CoC, then the proviso would not have confined to issue invitation for Expression of Interest, rather, it could have been conveniently mentioned that after approval of Resolution Plan, applicant should justify withdrawal. Therefore, it was never intended that an application under S. 12A could be entertained after approval of the Resolution Plan by the CoC.
“The intendment of the proviso is that there has to be special reason for making Application under Section 30A(1)(b), when it is filed after publication of invitation for Expression of Interest. The Regulation clearly indicate that when ‘Expression of Interest' is issued inviting Resolution Plan, there has to be sufficient reason justifying withdrawal.”
The Tribunal observed that the Regulation making authority was aware of the entire process under IBC, including approval of the Plan by the CoC and filing of the application before the Adjudication Authority for approval of the Resolution Plan.
The Tribunal observed that even after the approval of the Plan by the CoC, the CoC be given power to entertain a Settlement Proposal by the Ex-Promoter, the timelines for the different process and its finality shall be breached. Approval by the CoC of a Resolution Plan has to be in accordance with its commercial wisdom and when CoC approves a Plan and the Resolution Applicant is prohibited to modify or withdraw from the Plan, same embargo has to be accepted on CoC also from changing its stand.
The Tribunal noticed Ebix Singapore (P) Ltd. v. Educomp Solutions Ltd., 2021 SCC OnLine SC 707 where the Supreme Court laid down that the timelines provided in the Code have to be adhered to and held that the approval of a Resolution Plan by the CoC is not in the realm of contract but is insulated by the Scheme under the Code and thus bind both the SRA as well as CoC. The Supreme Court further held that after approval of Resolution Plan by the CoC, CoC itself is bound by its decision and cannot be allowed to go back from its decision and pass any other resolution.
The Tribunal observed that CoC's decision to approve the Resolution Plan was taken in its commercial wisdom and the NCLT has not interfered with any decision of the CoC by rejecting the appellant's application.
Finding no merit in the appeal, the Tribunal dismissed the appeal and held that there was no strong reason to keep the respondent's application in abeyance therefore, the Adjudicating Authority has not committed any error in rejecting the appellant's application.
[Hem Singh Bharana v. Pawan Doot Estate (P) Ltd., 2023 SCC OnLine NCLAT 34, order dated 05-01-2023]
*Judgment by Justice Ashok Bhushan
Advocates who appeared in this case :
Mr. Arun Kathpalia (Senior Advocate), Mr. Abhijeet Sinha and Mr. Manav Goyal, Counsel for the Appellants
Mr. Krishnendu Datta (Senior Advocate), Mr. IPS Oberoi and Ms. Neha Agarwal, Counsel for the SRA
Mr. Sanjay Bhatt, Ms. Renuka Iyer and Mr. Aditya Vashisth and Ms. Himanshi Rajput, Counsel for the Respondent No. 3
Mr. Ashish Rana, Mr. Anurag Singh, Debasmita Goswami and Mr. Nilesh Mudhi, Counsel for the Respondent No. 5
*Ritu Singh, Editorial Assistant has put this report together