Monthly Digest Of IBC Cases: March 2024

Supreme Court IBC | Resolution Plan Approved By CoC Can't Be Withdrawn or Modified By Resolution Applicant: Supreme Court Case Title: Deccan Value Investors L.P. & Anr. Versus Dinkar Venkatasubramanian & Anr. Citation: 2024 LiveLaw (SC) 265 The Supreme Court has reiterated that once a resolution plan is approved by the Committee of Creditors (“CoC”) then it becomes impermissible for the resolution applicant to withdraw or modify the resolution plan. The Bench Comprising Justices Sanjiv Khanna and Dipankar Datta referred to the Judgment of Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited and Another, where the Supreme Court elaborated and set out several reasons why the resolution applicant cannot be permitted to withdraw or modify the resolution plan after approval by the Committee of Creditors, and before an order under Section 31(1) of the Code is passed. The court observed that due to the absence of any statutory provision in the Insolvency and Bankruptcy Code, it is impermissible for the resolution applicant to modify or withdraw the resolution plan after the plan was approved by the CoC. “The effect of approval by the adjudicating authority under Section 31(1) of the Code makes the resolution plan binding on all stakeholders, even those who are not members of the Committee of Creditors. The scrutiny by the adjudicating authority for grant of approval in terms of Section 31(1), read with other provisions of the Code, is limited and restricted. It does not allow or permit the resolution applicant to unilaterally amend/modify or withdraw the resolution plan post approval by the Committee of Creditors.”, the court said. NCLAT Voting For Section 12A Proposal To Be Computed As Per Proviso To Section 25A(3A) R/w Section 25A(3) Of IBC: NCLAT Delhi Case title: Vijay Saini v Shri Devender Singh & Ors Case No.: Comp. App. (AT) (Ins.) No. 1194 of 2023 The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that for computing voting with regard to proposal under Section 12A of IBC, the voting has to be computed as per proviso to Section 25A(3A) read with Section 25A(3) of IBC. It has been further clarified that a proposal under Section 12A which statutorily requires 90% votes for approval, would not stand approved if majority (more than 50%) homebuyers/financial creditors vote in favour of it. The threshold of 90% votes must be met for approval of proposal. Section 25A(3) of IBC provides that when the Authorised Representative represents several financial creditors, then he shall cast his vote for each financial creditor according to the instructions received from each financial creditor, to the extent of his voting share. The Proviso to Section 25A(3A) of IBC states that when voting takes place in respect of proposal under Section 12A, then the Authorised Representative of Financial Creditor shall cast his vote in accordance with Section 25A(3). “When the statute i.e. Section 12A provides 90% voting for approval of Section 12A proposal, 90% of the voting share of the creditor in class have to be taken into consideration. Since voting by each homebuyers who represented creditor in class has to be computed as per his voting share and adding all vote shares of the creditor in class with any other Financial Creditor if it is at least up to 90% only then 12A proposal is held to be passed”, the Bench held. NCLAT Delhi: Treatment Of Income Tax Dues In The Resolution Plan As 'Operational Creditor' Doesn't Violate Section 30(2) Of IBC Case Title: Jaiprakash Associates Ltd. vs. Jaypee Infratech Ltd. and Ors. Case No.: Company Appeal (AT) (Insolvency) No. 548 of 2023 The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that treatment of the Income Tax Department's dues in the Resolution Plan as 'Operational Creditor' is not violative of Section 30(2) of IBC. NCLT Can't Direct CoC To Consider Suspended Management's Settlement Proposal, Without Opportunity To SRA: NCLAT Delhi Case title: One City Infrastructure Pvt. Ltd. v Pratham Expofab Private Limited & Ors. Case No.: Company Appeal (AT) (Insolvency) No.287 of 2024 The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that the NCLT cannot direct the CoC to consider settlement proposal of Suspended Management of Corporate Debtor, without granting an opportunity to be heard to the Successful Resolution Applicant (SRA). During the pendency of plan approval application before NCLT, the Suspended Management filed an application seeking ...

Monthly Digest Of IBC Cases: March 2024

Pallavi Mishra

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