AA Shall Either Approve Or Reject The Resolution Plan, No Power To Modify It: NCLAT Delhi
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Rakesh Kumar (Judicial Member) and Dr. Ashok Kumar Mishra (Technical Member), while adjudicating an appeal filed in Mathuraprasad C Pandey & Ors. v Partiv Parikh & Anr., has held that when a Resolution Plan is presented before the Adjudicating Authority for approval, it is clear mandate of legislation to either approve or to reject the Resolution Plan. There is no provision under IBC which empowers the Adjudicating Authority for making alteration or modification in the Resolution Plan.
M.V. Omni Projects (India) Ltd. ("Corporate Debtor") was admitted into Corporate Insolvency Resolution Process ("CIRP") the month of August, 2019. The promoters of Corporate Debtor had submitted a Resolution Plan for the Corporate Debtor. The Resolution Professional filed an application before the Adjudicating Authority under Section 31 of Insolvency and Bankruptcy Code, 2016 ("IBC") for approval of the Resolution Plan. The Adjudicating Authority approved the Resolution Plan vide an Order dated 28.01.2021. However, while approving the Resolution Plan the Adjudicating Authority modified the Resolution Plan to the extent that, "if any member of Resolution applicants has entered into or stand as guarantor in the individual capacity, in that event, he shall not be covered with any immunity given under the Resolution Plan."
The Successful Resolution Applicants/Promoters of Corporate Debtor filed an appeal before NCLAT, challenging the modification made by the Adjudicating Authority while approving the Resolution Plan.
Decision Of NCLAT
The Bench opined that if a resolution plan is in compliance with Section 30 and Section 31(1) of IBC, then such resolution plan has to be approved by the Adjudicating Authority. In Section 31 of IBC the word "shall" has been incorporated with proviso that the Adjudicating Authority must be satisfied that the resolution plan has provisions for its effective implementation.
Further, Section 31(2) of IBC empowers the Adjudicating Authority to reject the resolution plan, if he is satisfied that resolution plan is not in conformity with Section 31(1) of IBC. The Bench observed that it is clear that mandate of legislation to either approve or to reject the resolution plan. However, there is no provision for making alteration or modification in the resolution plan.
The Bench held that the Adjudicating Authority to some extent exceeded its jurisdiction in modifying/altering the conditions in the resolution plan. The appeal was allowed and it is held that the modification done in the Order dated 28.01.2021 shall not be looked into or may not be taken note of.
Case Title: Mathuraprasad C Pandey & Ors. v Partiv Parikh & Anr.
Case No.: COMPANY APPEAL (AT)(Ins) No.201/2021
Counsel For Appellant: Mr. Abhijeet Sinha, Mr. Ravi Pahwa and Ms Aastha Mehta, Mr. Aditya Shukla, Ms Prerana Mahapatra, Advocates.
Counsel For Respondent: Mr. Karan Valecha, Mr. Jaimin R. Dave, Advocates for R1. Mr PBA Srinivasan and Mr Parth Tandon, Advocates for R2/CoC. Mr. Abhishek Sharma, Advocate for Yes Bank.