Resolution Applicant Whose Plan Was Rejected By CoC Can Participate In Freshly Issued Invitation For Expression Of Interest: NCLAT

The NCLAT New Delhi Bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) has held that once resolution plan including revised plan submitted by the resolution applicant is disapproved by the CoC, a fresh plan can be submitted by the same resolution applicant in a freshly issued invitation to expression of interest. Brief Facts This appeal has been filed challenging an order passed by the NCLT by which the application of the appellant was dismissed. The corporate debtor was admitted into insolvency after which Interim Resolution Professional invited expression of interest. In pursuance of the invitation, the appellant submitted its Resolution Plan. The Resolution plan submitted by the appellant was approved by the CoC. In pursuance of which an IA was filed before the Adjudicating Authority seeking approval of the plan. Meanwhile, an unsecured financial creditor also filed an IA in which directions were sought to send the plan back to the CoC for reconsideration. This IA was allowed by the AA and directed the RP to engage a valuer for assessing the value of intangible assets of the corporate debtor and put the same before the CoC. The AA further directed the CoC to vote again on the plan submitted by the appellant after valuation report is submitted. Resolution Professional brought into the notice of the CoC that Appellant has sent communication on 05.03.2024 that it shall increase offer by Rs.125 lakhs to overall plan value. CoC decided not to accept revised offer of the Appellant. Consequently, plan stood rejected. The Adjudicating Authority after noting that the plan submitted by the appellant was rejected, dismissed the IA pending for approval of the plan. Thereafter, an IA was filed by the appellant seeking directions to submit a revised plan. However, the application was dismissed on the ground that the appellant is disqualified from submitting a plan in a freshly issued form G as clarified by RP. Contentions The appellant submitted that there was gross material irregularity in the conduct of the CIRP. Fresh valuation of intangible assets after approval of the plan was impermissible under law. IRP did not amend the Information Memorandum even after fresh valuation. It was also argued that Under Section 30(2), the Adjudicating Authority is entitled to examine the validity of the Resolution Plan and cannot direct the CoC to further negotiate with the Successful Resolution Applicant. Adjudicating Authority travelled beyond its scope while issuing direction on 04.08.2023 and by directing reissuance of Form G, there is no consideration of substantially revised financial proposals given by the Appellant. Refuting the submissions, the respondent submitted that the Appellant was fully aware of the IA No.1434 of 2020 filed by the unsecured financial creditor. Appellant also participated in the proceeding in IA No.1434 of 2020. Resolution Professional has sent email to all the stakeholders including the Appellant apprising about NCLT proceedings including IA No.1434 of 2020. It was also contended that Resolution Plans were received in pursuance of the fresh Form G, Appellant did not file any Resolution Plan. IA No.1891 of 2024 was filed by the Appellant seeking direction to permit the revised Resolution Plan to be reconsidered which has been rightly rejected by the Adjudicating Authority noticing the submissions of the Resolution Professional that it is open for the Appellant to submit Resolution Plan in pursuance of fresh Form G. Observations: The tribunal noted that the order dated 11.03.2024 was not challenged by any stakeholders including the Appellant. The order dated 11.03.2024 dismissing IA No.102 of 2020 for approval of the Resolution Plan as infructuous and the Adjudicating Authority having directed for issuance of Form G and the said order having not been challenged, the order dated 11.03.2024 has become final and it is not open for the Appellant to now claim any right on the basis of its earlier Resolution Plan. It further added that Application praying for approval of the Resolution Plan of the Appellant having been dismissed by the Adjudicating Authority and direction was issued for issuance of fresh Form G on 11.03.2024, it was open for the Appellant to participate in the Resolution Process initiated by issuance of Form G. Based on the above, it observed that “the order impugned noticing the statement of Resolution Professional that Appellant can very well participate in the process has rightly observed that the grievance of the Appellant stands addressed and the IA has become meaningless.” The tribunal concluded that “we, thus, do not find any error in the impugned order by which liberty was given to Appellant to participate in the process. We, thus, are of the view that there is no illegality in the order impugned.” Case Title: Adroit...

Resolution Applicant Whose Plan Was Rejected By CoC Can Participate In Freshly Issued Invitation For Expression Of Interest: NCLAT

Mohd Malik Chauhan

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