Question Of Value Can't Be Raised Post Approval Of Resolution Plan By CoC: NCLAT Delhi

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has upheld an order passed by NCLT herein it was held that the question of valuation of assets cannot be raised after the resolution plan has been approved by the Committee of Creditors (“CoC”). Background Facts Horizon Buildcon Pvt. Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the NCLT. Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) provides the manner in which Fair and Liquidation value of Corporate Debtor is to be determined. Regulation 35 states that two registered valuers appointed by the Resolution Professional shall submit report on fair value and liquidation value of Corporate Debtor. Further, Resolution Professional may appoint a third valuer if (i) the two estimates given by existing valuers of a value in an asset class are significantly different; (ii) or if the CoC proposes appointment of a third valuer. The Resolution Professional of the Corporate Debtor appointed two valuers under Regulation 35 of CIRP Regulations and they submitted their valuation reports. A third valuer was appointed by the Resolution Professional since there was a difference of more than 10% in the valuation of the two valuers. Post completion of the valuation exercise, the resolution plan submitted by the Resolution Applicant was placed before the CoC for consideration. The Resolution Plan was approved by the CoC and the Resolution Professional filed an application before NCLT for approval of plan. The homebuyers in the CoC filed an application before NCLT seeking rejection of the valuation obtained by Resolution Professional. It was further prayed that the valuation reports given by homebuyers be considered or in the alternative, a fresh valuer be appointed. On 16.02.2024, the NCLT noted that the CoC has already approved a Resolution Plan on 06.10.2022 and accordingly rejected the application. The CoC (“Appellant”) filed an appeal against the NCLT order dated 16.02.2024 before the NCLAT. The CoC argued that valuation obtained by the Resolution Professional is at higher side which shall affect the homebuyers. NCLAT Verdict The Bench noted that the Resolution Professional had placed reliance on the Supreme Court judgment in Ramkrishna Forgings Limited vs. Ravindra Loonkar, Resolution Professional of ACIL Ltd. & Anr., Civil Appeal No.1527 of 2022, wherein question of valuation was raised post approval of resolution plan. The NCLT had directed for valuation post approval of plan, however, the Supreme Court had set aside the NCLT direction. Accordingly, the Bench held that since the valuation has been obtained as per CIRP Regulations and Resolution Plan has been already approved, the NCLT rightly rejected the application filed by CoC (homebuyers) raising questions on valuation and seeking appointment of a fresh valuer. The Bench dismissed the appeal and upheld the NCLT order. Case title: Committee of Creditors v Anil Tayal Case No.: Company Appeal (AT) (Ins.) No.1633 of 2023 Counsel for Appellants: Mr. Aditya Nayyar, Advocate. Counsel For Respondents: Mr. Abhishek Anand and Ms. Jasleen Singh Sandha, Advocates for RP. ClickHere To Read/Download Order

Question Of Value Can't Be Raised Post Approval Of Resolution Plan By CoC: NCLAT Delhi

Pallavi Mishra

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