National Company Law Appellate Tribunal, New Delhi: While deciding an appeal related to remission of Resolution Plan back to the CoC for reconsideration, the bench of Ashok Bhushan*, J. and Shreesha Merla (Technical Member) held that the Resolution Plan can be sent back to the CoC to review, if the Adjudicating Authority finds that on the given set of facts that parameters under S. 30(2)(e) IC have not been kept in view of the Plan.
Factual Matrix
In the present matter, an application for approval of Resolution Plan was filed before the Adjudicating Authority. On the other hand, another application was preferred before the Adjudicating Authority by certain creditors (Financial creditors) dissenting the Resolution Plan and further seeking permission for placing Resolution Plan before the CoC for withdrawal of consent to the Resolution Plan dealing with relinquishment of the rights of the secured creditor to enforce personal guarantee on the grounds that the same violates S. 128 of the Contract Act, 1872 and therefore violates of S. 30(2)(e) IBC.
The Adjudicating Authority vide order 30-03-2022, held that if the majority of the CoC has taken a view that matter should go back for reconsideration before the CoC, no impediment will be caused to allow the CoC to have a relook in the issue. The Adjudicating Authority opined that it is open to the CoC to deliberate the plan in accordance with law.
Aggrieved by impugned order passed by the Adjudicating Authority, an appeal was preferred before the Tribunal by the appellant, Successful Resolution Applicant (SRA) challenging the same.
Parties’ Contentions
The appellant contended that the Adjudicating Authority has no jurisdiction to send back the Resolution Plan for reconsideration at the request of Financial Creditor. Relying on Ebix Singapore (P) Ltd. v. CoC of Educomp Solutions Ltd., (2022) 2 SCC 401, the appellant contended that an approved Resolution Plan is binding on the CoC and can neither be withdrawn nor sent back for modification.
The respondent contended that the entire Plan, need not to be reconsidered but only a clause which provide for mandatory release of the personal guarantee given by the promoters because the clause is contrary to S. 128 of the Contract Act, therefore, is liable to be deleted from the Plan. Moreover, the Resolution Plan has to be in compliance with S. 30(2)(e) IBC.
The respondent further contended that the Order was passed on the consent of the SRA, therefore the Adjudicating Authority sent the Plan back without expressing any opinion on the stand taken by the CoC. Moreover, the SRA has no right to appeal in this particular matter.
Moot Point
Whether, there are any circumstances and conditions, where Resolution Plan can be sent back for carrying out any changes?
Tribunal’s Observation
The Tribunal observed that it is well settled law that once a Resolution Plan is approved by the CoC, it is binding between the CoC and SRA.
The Tribunal referred to Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531 where the Supreme Court considered the scope of judicial review of the Adjudicating Authority in the context of Resolution Plan approved by the CoC and held that
“…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. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters.”
The Tribunal opined that if the Adjudicating Authority finds on given set of facts that parameters under S. 30(2)(e) IBC have not been kept in view, the Resolution Plan can be sent back to the CoC to review such plan after satisfying the parameters.
The Tribunal observed that the SRA cannot challenge the order in this appeal as SRA himself consented that the matter be sent back to the CoC for consideration.
The Tribunal opined that present is a case where COC is not asking to withdraw from the plan or asking for reviewing the entire Resolution Plan rather COC has asked for leave of the court for deleting clause in the plan which sought to release the promoters from personal guarantee given to the financial Creditors.
Tribunal’s Decision
On not finding any grounds to interfere with the impugned order of the Adjudicating Authority, the Tribunal upheld the order of the Adjudicating Authority. The Tribunal directed the CoC to complete its process within four weeks of the date of order and asked the SRA to file an application with the Resolution Plan before the Adjudicating Authority within a further period of two weeks.
[Noble Marine Metals Co WLL v. Kotak Mahindra Bank Ltd., 2023 SCC OnLine NCLAT 83, decided on 09-02-2023]
*Judgment by Justice Ashok Bhushan
Messiah of the sufferers: Bidding adieu to Justice Ashok Bhushan
Advocates who appeared in this case:
Mr. Avinash Bhati, Mr. Aditya Pande, Mr. Prasook Jain and Ms. Kshirja Agarwal, Counsel for the Appellant;
Mr. Arvind Nayar (Senior advocate), Mr. Amit Mahaliyan and Mr. Akshay Joshi, Counsel for the Respondent No. 1;
Mr. Bishwajit Dubey, Ms. Srideepa Bhattacharya, Ms. Aishwarya Gupta and Ms. Shubhangi Agarwal, Counsel for the Respondent No. 2.