Order Approving Resolution Plan Passed Beyond 330 Days Cannot Be Questioned When Application Seeking Approval Was Filed Within CIRP Period: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) has held that when an order approving the Resolution Plan is passed by the Adjudicating Authority after expiry of 330 days but the application seeking approval was filed within the stipulated time period, it cannot be said the plan was approved after the Corporate Insolvency Resolution Process (CIRP) period. Brief Facts: An application under section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) was filed by allottees of a housing project launched by Suman Vilas Private Ltd. (corporate debtor) , Corporate Insolvency Resolution Process (CIRP) against the corporate debtor commenced by an order dated 08.04.2022. In pursuance of publication made by Interim Resolution Professional (IRP) on 10.04.2022, claim was filed by DKY Finance Private Limited & Ors. as a Financial creditor of the corporate debtor, in 'Form – C'. Tribhawan K. Parnami also filed claim as a Financial creditor in 'Form – C'. Mohinder Kaur Sachdeva, Appellant has also filed a claim. The claim of all the appellants as unsecured Financial creditor was admitted by the Resolution Professional (RP). The claim of all the appellants as unsecured Financial creditor was admitted by the Resolution Professional (RP).The RP published list of unsecured Financial creditor as on 25.06.2022, which included name of all the appellants along with the claims admitted. The Committee of Creditor (CoC) by voting share of 85.56% approved the resolution plan. On 31.01.2023, RP filed an Interlocutory Application (IA), seeking approval of the resolution plan. Adjudicating Authority by the impugned order, 14.05.2024 has approved the resolution plan. The unsecured financial creditors which included appellants in the present appeal has been allocated total 13.81% vote shares. Against this order, the present appeal has been filed. Contentions: The Appellant submitted that the resolution plan was approved after expiry of CIRP period. Although application for extension of period was pending, but the resolution plan was approved by the Adjudicating Authority beyond 330 days. It was also argued that the appellant has not been allocated amount as per their entitlement under Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016 (Code). Per contra, the RP submitted that the payment is to the unsecured financial creditor who are dissenting financial creditor is according to the Section 30(2)(b). The SRA while supporting the submissions of the RP submitted that homebuyer constitute more than 85% of total financial creditors and their admitted claim is Rs.77.12 Crore against the claim of non related unsecured creditors claim of Rs.10.94 Crores have been admitted corresponding to 13.44% voting shares against the claim of Rs.10.47Crore they are being paid Rs.1.50 Crore. Observations: The Tribunal noted that the Resolution Plan was approved by 86.67 percent of the vote share by which the dissenting financial creditors are also bound and they are entitled to receive an amount as per section 30(2)(b) of the code which cannot be less than what they would receive under section 53 of the code if the corporate debtor had been liquidated. It further said that vote share of dissenting financial creditor is 13.44, hence the payout of Rs.1.5 Crore to the dissenting financial creditor in no manner violates Section 30(2)(b). The NCLAT in 'Beacon Trusteeship Limited' Vs. 'Jayesh Sanghrajka, RP of Radius Estates & Developer Pvt. Ltd. & Ors.' (2024) held that comparison of claim of dissenting financial creditor with those of homebuyers is not appropriate comparison. Homebuyer, having already paid consideration for the allotted units are entitled to possession as per the commitment of the corporate debtor. The claims of dissenting financial creditor cannot be equated to those of homebuyers i.e., creditor in class. The Tribunal observed that the Adjudicating Authority and the Appellate Tribunal have limited jurisdiction to interfere with the approval of the Resolution Plan. They can interfere only when there is a non-compliance of section 30(2) of the code. The Tribunal concluded that “when the resolution plan has been approved within 330 days and the application was also filed by the RP for approval, the date of the passing of the order by Adjudicating Authority cannot be relied for contending that the said date is beyond 330 days.” Accordingly, the present appeal was dismissed. Case Title: DKY Finance Pvt. Ltd. and Ors. Versus Mr. Sanjay Garg and Anr. Case Number: Company Appeal (AT) (Insolvency) No. 1367 of 2024 & I.A. No. 4973 of 2024 Judgment Date: 28/02/2025 For Appellants: Mr. Abindra Maheshwari, Advocate. For Respondents : Mr. Karan Gandhi and Mr. Sikhar Tiwari, Advocates for RP. Mr....

Order Approving Resolution Plan Passed Beyond 330 Days Cannot Be Questioned When Application Seeking Approval Was Filed Within CIRP Period: NCLAT

Mohd Malik Chauhan

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