NCLAT Chennai: CoC's Commercial Wisdom Includes Approval Of Resolution Plan Below Liquidation Value
Sachika Vij
24 Jan 2024 4:30 AM GMT
The National Company Law Appellate Tribunal ('NCLAT') Chennai Bench, comprising Justice Rakesh Kumar Jain (Judicial Member) and Shreesha Merla (Technical Member) held that the approval of the Resolution Plan below the Liquidation value is within the commercial wisdom of the Committee of Creditors ('CoC') as the Insolvency and Bankruptcy Code, 2016 ('IBC') does not expressly bar that...
The National Company Law Appellate Tribunal ('NCLAT') Chennai Bench, comprising Justice Rakesh Kumar Jain (Judicial Member) and Shreesha Merla (Technical Member) held that the approval of the Resolution Plan below the Liquidation value is within the commercial wisdom of the Committee of Creditors ('CoC') as the Insolvency and Bankruptcy Code, 2016 ('IBC') does not expressly bar that the Resolution Plan value should be over and above the Liquidation value.
Background Facts:
On 17.07.2023, CA Jasin Jose, the Resolution Professional of SD Pharmacy Pvt Ltd. (Corporate Debtor) filed an application seeking approval of the Resolution Plan. The Resolution Plan was approved by the CoC with a 100 % voting share in its 12th meeting on 26.06.2023.
On 13.10.2023, NCLT Kochi allowed the Resolution Plan and observed that the Plan was in accordance with Sections 30 & 31 of IBC and complied with Regulations 38 & 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
The present appeal has been preferred by Mr. Ramesh Kesavan (Appellant), Promoter and Suspended Director of the Corporate Debtor against NCLT Kochi's Order dated 13.10.2023 approving the Resolution Plan.
NCLAT Verdict:
The NCLAT Chennai dismissed the appeal and held that the approval of the Resolution Plan below the Liquidation value is within the commercial wisdom of the CoC as IBC does not expressly bar that the Resolution Plan value should be over and above the Liquidation value.
NCLAT observed that Kerala Ayurvedic Limited (Operational Creditor) had voluntarily agreed to accept an amount lower than the Liquidation value and thus, the Appellant's contention that the Operational Creditor is getting an amount lower than the Liquidation value and the Resolution Plan is discriminatory is unacceptable.
Further, the Supreme Court's decision in Kalparaj Dharamshi v. Kotak Investment Advisors Ltd. is squarely applicable as the Resolution Plan has been approved by a 100 % voting share of the CoC with no material irregularity.
Thus, NCLAT observed that the Resolution Plan conforms to the requirement set out in Section 30(2) of IBC and complied with Regulations 38 & 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Case Title: Mr. Ramesh Kesavan vs. CA Jasin Jose, RP SD Pharmacy Pvt. Ltd.
Case No.: Company Appeal (AT)(CH)(Ins.) No. 422 of 2023 and (IA No. 1288 & 1289/ 2023)
Counsel for Appellant: Mr. Avinash Krishnan Ravi and Mr. Ujjwal Jain, Advocates
Counsel for Respondents: Mr. Akhil Suresh, Advocate for R1 / RP, Mr. Ramasubramaniam Raja, Advocate, For R2
