While Application For Approval Of Resolution Plan Is Pending Before AA, CoC Can’t Convene Meeting To Consider Other Resolution Plans: NCLAT Delhi
Pallavi Mishra
8 Sep 2023 11:45 AM GMT
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member) while adjudicating an appeal filed in Indian Overseas Bank v M/s. Rathi TMT Saria Pvt. Ltd. & Ors., has held that when a Resolution Plan approved by the CoC is pending consideration before the Adjudicating Authority...
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member) while adjudicating an appeal filed in Indian Overseas Bank v M/s. Rathi TMT Saria Pvt. Ltd. & Ors., has held that when a Resolution Plan approved by the CoC is pending consideration before the Adjudicating Authority for approval, the CoC is not permitted to hold any meeting for considering other resolution plans.
Background Facts
Rathi TMT Saria Pvt. Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”). The Successful Resolution Applicant (“SRA”) submitted a Resolution Plan for the Corporate Debtor which was approved with majority votes by the Committee of Creditors (“CoC”) on 07.02.2020. The Resolution Professional filed an application before the Adjudicating Authority (NCLT) under Section 30(6) of IBC seeking approval of the Resolution Plan, which is pending adjudication.
Indian Overseas Bank (“Financial Creditor”) being a CoC Member, filed an application before the NCLT seeking direction to the Resolution Professional to either convene a CoC meeting for implementation of SRA’s Resolution Plan; or to cancel approved resolution plan and call for fresh bids for value realization of the Corporate Debtor.
On 18.07.2023, the NCLT rejected the Application. The Financial Creditor filed an appeal before the NCLAT against the order of rejection.
NCLAT VERDICT
The Bench opined that once a resolution plan has been approved by the CoC and is pending before the NCLT for approval, the CoC is not permitted to hold a meeting for considering other resolution plans.
“When the plan is approved by the CoC and is pending consideration before the Adjudicating Authority, CoC cannot be allowed to hold the meeting for the purpose of considering other plans and no error has been committed by the Adjudicating Authority in rejecting such prayer.”
It was observed that a CoC member can raise issues while the Resolution Plan is under consideration.
“When the plan is under consideration, the Appellant being CoC member, has every right to raise such issue as permissible under law. However, the prayers which were made in the application which stand rejected, cannot be allowed to be raised.”
The Bench upheld the decision of NCLT and dismissed the appeal.
Case title: Indian Overseas Bank v M/s. Rathi TMT Saria Pvt. Ltd. & Ors.
Case No.: Comp. App. (AT) (Ins) No.1134 of 2023
Counsel For Appellant: Mr. Kunal Tandon, Ms. Richa Sandilya, Ms. Bhavna Vijay, Advocates.
Counsel For Respondent: Mr. Abhishek Anand, Mr. Mohak Sharma, Ms. Supriyo Banerjee, Advocates for R1. Mr. Mansumyer Singh, Mr. Shravan Chandrashekhar, Advocates for R2 Mr. P. Nagesh, Mr. Saurabh Kalia, Mr. Akshay, Ms. Aastha Agarwal, Advocates.
