In a recent development which is likely to have widespread ramifications on the issue of withdrawal of Resolution Plans under the Insolvency and Bankruptcy Code, 2016 (IBC), the Supreme Court of India has stayed the operation and effect of the Judgment of the National Company Law Appellate Tribunal, New Delhi (NCLAT) in Kundan Care Products Ltd. v. Amit Gupta & Ors.
The NCLAT in the above case had held that once a Resolution Plan is approved by the Committee of Creditors, the Resolution Applicant cannot be permitted to withdraw the Plan and the NCLT has no jurisdiction to entertain such a plea of withdrawal in such cases. The Appellate Tribunal had followed its earlier decision in Educomp Solutions while holding so.
The Resolution Applicant (Kundan Care Products Limited) challenged the NCLAT's Judgment before the Supreme Court. The appeal was listed before a Bench comprising of Hon'ble Justices D.Y. Chandrachud, Indu Malhotra and Indira Banerjee on November 16, 2020. The Resolution Applicant was represented by Mr. Kapil Sibal, Senior Advocate with Mr. Prithu Garg, Mr. Shailendera Singh, Mr. Siddharth Mehta and Ms. Harimohana N., Advocates (GnS Legal LLP). The Resolution Professional was represented by Ms. Pooja Mahajan, Advocate and the Committee of Creditors was represented by Mr. Ashish Rana, Advocate.
The Supreme Court while issuing notice in the Resolution Applicant's appeal, granted ad-interim stay of the operation and effect of the NCLAT's Judgment till the next date of hearing. In view of this order, the NCLAT's Judgment ceases to have any effect in law and cannot be cited as a precedent in pending cases, at least until the stay is lifted or the appeal is finally disposed of by the Supreme Court. This will have widespread ramifications on the various pleas for withdrawal of plans due to COVID crisis, which are pending before the National Company Law Tribunals across the country.