National Company Law Appellate Tribunal, New Delhi: In an appeal against the impugned order of Adjudicating Authority rejecting the appellant’s application seeking rejection of the Resolution Plan, a division bench comprising of Ashok Bhushan,* J., and Mr. Barun Mitra (Technical Member), deemed the Resolution Plan valid, meeting all mandatory requirements under the IBC. The NCLAT upheld the commercial wisdom of the CoC.
Factual Matrix
In the instant matter, the National Highway Authority of India (NHAI) invited proposals for the upgradation of Hajipur Muzajfarpur Section of NH-77. A concession agreement was executed between NHAI and Corporate Debtor-Patna Highway Project Ltd. An EPC Agreement executed between Corporate Debtor and the appellant. NCLT approved the Scheme of arrangement, transferring the EPC Contract to the appellant.
Disputes arose between the appellant, Corporate Debtor, and NHAI, leading to non-completion of the project. The appellant invoked arbitration and the Arbitral Tribunal ordered maintenance of status quo on EPC Contract. An insolvency proceeding initiated against the Corporate Debtor and the Resolution Professional informed the Appellant of an outstanding amount. The appellant disputed the amount and submitted a claim of Rs. 481,57,58,500/- to the Resolution Professional. The CoC approved Resolution Plan submitted by Respondent 3 and the appellant challenged the plan, leading to the present appeal. The present appeal challenged the order dated 10-05-2022, issued by the Adjudicating Authority, rejecting the application filed by the appellant seeking the rejection of the Resolution Plan submitted by Respondent 3.
Parties’ Arguments
The appellant argued that the Resolution Plan wrongly kept its claim under dispute while seeking the same amount from NHAI. It was alleged that the Resolution Plan was arbitrary and prejudicial to its interests. The respondents contended that the Resolution Plan was approved by NCLT and upheld by this Tribunal. It was contended that the commercial wisdom of the CoC is paramount, and no non-compliance with Section 30(2) of the IBC was demonstrated.
Moot Point
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Whether the Adjudicating Authority erred in rejecting the appellant’s application seeking rejection of the Resolution Plan?
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Whether the Resolution Plan is in compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016 (IBC)?
NCLAT’s Assessment
The NCLAT noted that the Resolution Plan had been previously approved by the CoC and upheld by the Tribunal. The NCLAT rejected the appellant’s argument that the resolution plan’s approval was unjust, emphasising the commercial wisdom of the CoC. The NCLAT noted that the Resolution Plan was in compliance with Section 30(2) of the IBC. The NCLAT held that the appellant failed to establish any legal infirmity or non-compliance with the insolvency laws in the approval process.
“The Approval of the Resolution Plan by the CoC is the commercial wisdom of the CoC challenge to which approval can be on limited ground when it is shown that Resolution Plan is not in compliance with 30(2) of the Code. No ground has been made out in the Appeal to show that Resolution Plan is in non-compliance of Section 30(2) of the Code.”
The NCLAT dismissed the appeal, citing the K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 and Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531 upholding the Resolution Plan. The NCLAT held that the commercial wisdom of the CoC is paramount, and no grounds were established to interfere with the Adjudicating Authority’s decision. The NCLAT found no merit in the appeal and upheld the rejection of the appellant’s application seeking rejection of the Resolution Plan.
[Gammon Engineers & Contractors (P) Ltd. v. Sutanu Sinha, 2024 SCC OnLine NCLAT 91, order dated 16-01-2024]
*Judgment by Ashok Bhushan
Advocates who appeared in this case :
Mr. Rajshekhar Rao, Sr. Advocate with Mr. Raghavendra M. Bajaj, Mr. Agnish Aditya, Mr. Kumar Karan and Mr. Shivansh Dwived, Counsel for the Appellants
Mr. Krishnendu Datta, Sr. Advocate with Ms. Pooja Mahajan, Ms. Mahima Singh, Mr. Karanvir Khosla, Mr. Rahul Gupta, Counsel for the Respondent No. 1
Mr. Ramji Srinivasan, Sr. Advocate with Mr. Abhijeet Sinha, Mr. Samar Bansal, Mr. Vedant Kapur, Counsel for the CoC
Mr. Arun Kathpalia, Sr. Advocate with Mr. Prateek Kumar, Ms. Raveena Rai, Mr. Rohit Ghosh, Counsel for the SRA
