Claims That Were Not A Part Of The Resolution Plan, Can't Be Claimed After Approval Of The Resolution Plan: NCLT Mumbai Reiterates
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), while adjudicating an application filed in State Bank of India v Rohit Ferro Tech Limited, has held that claims or reliefs which were not a part of the Resolution Plan, cannot be claimed after the said Resolution Plan is approved by...
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), while adjudicating an application filed in State Bank of India v Rohit Ferro Tech Limited, has held that claims or reliefs which were not a part of the Resolution Plan, cannot be claimed after the said Resolution Plan is approved by the Adjudicating Authority. The Order was passed on 14.06.2022.
Background Facts
The Corporate Insolvency Resolution Process ("CIRP") was initiated against Rohit Ferro Tech Limited ("Corporate Debtor") by NCLT Mumbai Bench ("Adjudicating Authority"). Subsequently on 17.12.2021, Angaraj Vanijya Private Limited ("Applicant") had raised 16 purchase orders upon the Corporate Debtor for purchase of 4323 MT of stainless-steel flat and had sent reminders to the Resolution Professional regarding the supply of entire consignment. On 07.04.2022 a Resolution Plan was approved for the Corporate Debtor by the Adjudicating Authority. The Applicant had sent several reminders to the Resolution Professional regarding delivery of the consignment to which no response was received.
On 25.04.2022 the Resolution Professional ultimately informed the Applicant that Bishnupur plant of the Corporate Debtor was shut down since 03.10.2021, therefore, all the purchase orders of the Applicant stood cancelled.
Thereafter, the Applicant filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 ("IBC") before the Adjudicating Authority against the Corporate Debtor (Respondent No. 1) and the Resolution Professional (Respondent No. 2), seeking compensation to the tune of Rs. 5,70,90,760/- for the losses suffered by the Applicant due to cancelled supply of stainless steel flat and requested that such compensation be paid out of CIRP cost.
Decision Of The Adjudicating Authority
The Bench observed that the Applicant had not approached the Adjudicating Authority when the Resolution Plan was pending approval and post approval the role of a Resolution Professional comes to an end. The Bench relied on the Delhi High Court judgment in Venus Recruiters Private Limited vs. Union of India & Ors., 2020 SCC OnLine Del 1479, wherein it was held that once a Resolution Plan is approved, the moratorium order under Section 14 of the IBC shall cease to have effect and the Resolution Professional shall forward all the records relating to the CIRP and the Resolution Plan to the Board to be recorded on its database. Thus, the role of a Resolution Professional comes to an end.
Further reliance was placed on the Supreme Court judgment in Ghanashyam Mishra & Sons Pvt Ltd v Edelweiss Asset Reconstruction Company Ltd., 2021 SCC OnLine SC 313, wherein it was held that:
"once a resolution plan is duly approved by the Adjudicating Authority Under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan"
Accordingly, the Bench held that as the Applicant had not approached the Adjudicating Authority while the Resolution Plan was under consideration, therefore, the Applicant had no right to file any application or seek any relief after the approval of the Resolution Plan.
The Application was dismissed by the Bench.
Case Title: State Bank of India v Rohit Ferro Tech Limited, C.P. (IB) No. 1214/KB/2018
Counsel For Applicant: Ms. Manju Bhuteria, Mr. Tridib Bose and Mr. Sourv Roy, Advocates.
Counsel For Respondent: Ms. Pooja Chakrabarti and Ms. Kiran Sharma, Advocates.