NCLT Can Reject The Resolution Plan Due To Non Serious & Casual Conduct Of Resolution Applicant: NCLAT

The National Company Law Appellate tribunal principal bench comprising of Justice Ashok Bhushan, Justice M Satyanarayana murthy, Mr Barun Mitra held that non serious and casual conduct of a resolution applicant is a sufficient ground to reject the resolution plan filed by such resolution applicant and approved by the committee of creditors of the Corporate Debtor. . Brief Facts The corporate insolvency resolution process (CIRP) of the corporate debtor was initiated by the NCLT and the resolution plan submitted by the Appellant was subsequently approved in the 10th committee of creditors meeting held on 07.11.2018. The resolution professional filed an application for the approval of the resolution plan in November, 2018 and the successful resolution applicant was impleaded as one of the respondents to the plan approval application by the NCLT on 3rd of March 2021. However subsequently the successful resolution applicant did not appear before the NCLT and non bailable warrants were also issued against the successful resolution applicant by the NCLT vide its order dated 03.09.2021. The NCLT dismissed the plan approval application vide its order dated 24.11.2021 and directed the initiation of liquidation of the corporate debtor and also directed the liquidator to take actions against the successful resolution applicant under section 74(3) of the insolvency and Bankruptcy Code, 2016. Contentions of Appellant The successful resolution applicant filed an appeal against the order dated 24.11.2021 and it was contended on behalf of the Appellant that initially the appellant was not a party to the plan approval application and was only made a party to the plan application subsequently. Thereafter the appellant was not able to appear before the NCLT due to certain miscommunication however the Appellant is still ready to abide by the resolution plan and to comply with all the terms and condition of the resolution plan. It was also contended by the appellant that at the time of the submission of the resolution plan there was no requirement of submitting any performance guarantee and therefore no performance guarantee was submitted by the Appellant during the submission of the Resolution Plan. Contentions of resolution professional It was contended on behalf of the resolution professional that the appellant had not Shaun any interest in abiding by the resolution plan and therefore deliberately did not appear before the NCLT and therefore NCLT had o option but to reject application for approval of the resolution plan. Decision/ analysis of NCLAT The NCLAT held that it was rightly contended by the Appellant that there was requirement for submission of performance guarantee at that time of the approval of resolution plan i.e., November, 2018 as the requirement for submitting the performance guarantee was only brought vide notification dated 24.01.2019. The NCLAT further that NCLT rightly dismissed the plan approval application as the Successful Resolution Applicant has not shown any willingness to proceed with the Resolution Plan. It further held that the CIRP is a time bound period and the same cannot be continued for indefinite period. "…Due to non-serious, casual and non-diligent conduct of the Resolution Applicant, the Adjudicating Authority has rightly refused to approve the Resolution Plan. We do not find any error in the order of the Adjudicating Authority in rejecting CA-734 of 2018…" However, the NCLT set aside the direction to file complaint against the Resolution Applicant under Section 74 of the Code on the ground that the said provision only comes into existence after the approval of the Resolution Plan and since, in the present case no resolution plan was approved, there cannot be any contravention of the resolution plan. Case Detail: Cimco Projects v Anup Kumar Counsel for Appellant: Ashish Makhija & Deep Bisht Counsel for Respondent: Abhijeet Sinha, Aditya Shukla, Ms. Shankari Mishra. Click Here To Read/Download Judgment

NCLT Can Reject The Resolution Plan Due To Non Serious & Casual Conduct Of Resolution Applicant: NCLAT

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NCLT Can Reject The Resolution Plan Due To Non Serious & Casual Conduct Of Resolution Applicant: NCLAT

Akshay Sharma

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INR 1099+GST

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