NATIONAL COMPANY LAW APPELLATE TRIBUNAL REFUSES TO ENTERTAIN REVISED RESOLUTION PLAN BEYOND THE STATUTORY PERIOD
In a recent Appeal, a three Member Bench of the National Company Law Appellate Tribunal, New Delhi (NCLAT), comprising of Justice Rakesh Kumar Jain, Mr. Kanthi Narahari and Dr. Alok Srivastava passed a Judgement dated 27.07.2022 in ‘Shrinathji Trading Company v. Sanwaria Consumer Limited, Company Appeal (AT) (Ins.) No. 480 of 2022’ and reiterated that timely completion of resolution process is necessary.
In this case, Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, M/s. Sanwaria Consumer Limited- Respondent on 29.05.2020 before the National Company Law Tribunal (NCLT), Indore. On invitation of Expression of Interest (EOI) for submitting Resolution Plan for insolvency resolution of the Corporate Debtor, the Appellant submitted a Resolution Plan on 22.1.2021, which was revised on 27.3.2021. This revised Resolution Plan was considered in the meeting of the Committee of Creditors (CoC) held on 30.3.2021 and based on the comments received in the meeting, the Appellant again submitted a revised Resolution Plan dated 8.4.2021, which was considered by the CoC and the Appellant was informed vide E-mail dated 23.4.2021 that the Resolution Plan submitted by him was not approved by the CoC. Thereafter, the Appellant filed an Application bearing No. IA No. 133(MP)2021 before the Adjudicating Authority seeking indulgence for consideration of his revised Resolution Plan, and vide Order dated 6.8.2021, the Appellant was permitted to submit the latest revised plan to the Resolution Professional (RP) within 3 days, which was to be thereafter considered by the CoC. Consequently, the Appellant submitted another revised Resolution Plan to the Resolution Professional on 9.8.2021 which was considered by the CoC and was put to vote from 18.8.2021 till 16.9.2021. The Appellant submitted another Resolution Plan on 3.9.2021 in which he improved the financial bid upwards and also reduced the time schedule for payment. The RP forwarded this latest revised Resolution Plan to the CoC on 4.9.2021. After the e-voting, the RP informed the Appellant on 17.9.2021 that his Resolution Plan was not approved by the CoC. The Appellant claimed that according to the information available to him, the latest Resolution Plan submitted by the Appellant on 10.9.2021 was not considered by the CoC and therefore, he preferred IA No. 192/2021 before the Adjudicating Authority praying for direction to the CoC for consideration of his latest Resolution Plan. This Application was rejected by the Adjudicating Authority vide Order dated 09.12.2021 on the ground that the CoC had already considered a Resolution Plan of the Appellant and CIRP period of 330 days was over and application for liquidation is already filed before the Adjudicating Authority. Therefore, the Adjudicating Authority refused to direct the CoC to further consider any Resolution Plan.
The Appellant therefore filed an Appeal before the NCLAT against NCLT Order dated 09.12.2021. The NCLAT observed that as per Section 12 of the Insolvency and Bankruptcy Code, 2016 (IBC) (Time-limit for completion of insolvency resolution process), CIRP process has to be completed within 330 days. However, in this case, 559 days (approximately) had already passed since the initiation of CIRP till the date of Impugned Order dated 09.12.2021 and enough opportunities had already been given to the prospective resolution applicant to submit a resolution plan, but the same was not approved by the COC on multiple occasions.
The NCLAT reiterated that timely completion of resolution process is necessary and hence, the NCLAT dismissed the Appeal and confirmed the Order dated 09.12.2021 passed by the Adjudicating Authority.
The Indian Lawyer & Allied Services
Sushila Ram Varma
Chief Consultant and Editor
The Indian Lawyer & Allied Services