NCLAT Delhi: Extension Of Time In Payment Is Not Modification Of Resolution Plan
The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member) held that an extension of time in payment is not a modification of the Resolution Plan. Background Facts: State Bank of India ('SBI') as the sole member of the Committee of Creditors ('CoC') having a 100% voting share approved...
The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Arun Baroka (Technical Member) held that an extension of time in payment is not a modification of the Resolution Plan.
Background Facts:
State Bank of India ('SBI') as the sole member of the Committee of Creditors ('CoC') having a 100% voting share approved the Resolution Plan submitted by Ashok Dattatray Atre and Ors. (Appellants) for the revival of Transparent Energy Systems Pvt. Ltd. (Corporate Debtor). On 16.04.2021, the said Resolution Plan was approved by NCLT Mumbai.
The total amount had to be paid in six installments as per the Resolution Plan. The Appellants were not able to pay the first three tranches the fourth tranche due on 15.04.2023 and and fifth tranche was due in October 2023. The Resolution Plan was to be implemented within three years from from 16.04.2021 to 16.04.2023.
An interlocutory application was filed by the Appellant praying for an extension of time to make the payment. Subsequently, an interlocutory application was filed by SBI to pass a liquidation order against the Corporate Debtor due to default in payments by the SRA which was duly opposed by the SRA.
The Appellant has filed the appeal against NCLT Mumbai's order allowing SBI's application to liquidate the Corporate Debtor and dismissing its application for an extension of time. NCLT Mumbai also observed that the Tribunal should refrain from modifying the terms of the approved Resolution Plan unless the same is concurred by the CoC.
NCLAT Verdict:
The NCLAT New Delhi allowed the appeal and held that an extension of time in payment is not a modification of the Resolution Plan.
The Appellate Tribunal referred to NCLAT's ruling in Tricounty Premier Hearing Service Inc. vs. State Bank of India and Ors., emphasizing that extending the payment deadline as per a Resolution Plan does not constitute a modification of the Plan.
It observed that such a jurisdiction falls under the purview of the Adjudicating Authority/Appellate Tribunal and the extension of payment timelines cannot be construed as withdrawing or altering the Resolution Plan. Further, this interpretation is supported by the Supreme Court's decision in Ebix Singapore Pvt. Ltd. vs. CoC of Educomp Solutions Ltd. & Anr.
NCLAT also cited its judgment in GP Global Energy Pvt. Ltd. vs. Mr. Sandeep Mahajan, affirming that extending deadlines for meeting financial obligations outlined in the Resolution Plan does not constitute a modification of the Plan.
In conclusion, NCLAT set aside NCLT Mumbai's liquidation order and Order rejecting the extension of time as unsustainable since the extension of time is not modification in the Resolution Plan.
Case Title: Ashok Dattatray Atre and Ors. vs. State Bank of India and Ors.
Case No.: Company Appeal (AT) (Insolvency) Nos. 221 and 222 of 2024
Counsel for Appellants: Mr. Pankaj Jain and Mr. Sarthak Dugar, Advocates
Counsel for Respondent: Mr. Harshit Khare and Mr. Prafful Saini, Advocates
for R-1. Ms. Udita Singh, Advocate for R-2