(A) Insolvency and Bankruptcy Code, 2016, Section 13, 21, 22, 24, 29, 31, 32 – Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, Regulation 7, 12, 13, 37 – Insolvency and Bankruptcy – Resolution plan – Judicial review – Commercial wisdom of the COC in approving a resolution plan may not be justiciable in exercise of the power of judicial review, the Adjudicating Authority can always take notice of any shortcoming in the resolution plan in terms of the parameters specified in sub-section (2) of Section 30 of the IBC coupled with Regulations 37 and 38 of the CIRP Regulations 2016 – If any such shortcoming appears in the resolution plan, it may send the resolution plan back to the COC for re-submission after satisfying the parameters so laid down – Likewise, the appellate authority can also interfere upon noticing any shortcoming in the resolution plan while exercising its powers under Section 32. (Para 33)
(B) Insolvency and Bankruptcy Code, 2016, Section 60(5), 31(1) – Companies Act 2013, Section 469 – National Company Law Tribunal Rules, 2016, Rule 11 – Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, Regulation 7, 12, 13, 37 – Insolvency and Bankruptcy – Resolution plan – Challenge as to – (i) Whether in exercise of powers under sub-section (5) of Section 60, the Adjudicating Authority (i.e., NCLT) can recall an order of approval passed under sub-section (1) of Section 31 of the IBC? – Section 60(5)(c) of the IBC, which opens with a non-obstante clause, empowers the NCLT (the Adjudicating Authority) to entertain or dispose of any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under the IBC – Further, Rule 11 of the Rules, 2016 preserves the inherent power of the Tribunal – Therefore, even in absence of a specific provision empowering the Tribunal to recall its order, the Tribunal has power to recall its order – However, such power is to be exercised sparingly, and not as a tool to re-hear the matter – Recall application was filed by claiming that,- (a) the appellant was not informed of the meetings of the COC; (b) the proceedings up to the stage of approval of the resolution plan by the Adjudicating Authority were ex parte; (c) the RP misrepresented that the appellant had submitted no claim when, otherwise, a claim was submitted of an amount higher than what was shown outstanding towards the appellant; and (d) there was gross mistake on part of the Adjudicating Authority in approving the plan which did not fulfil the conditions laid down in sub-section (2) of Section 30 of the IBC – Held that the grounds taken qualify as valid grounds on which a recall of the order of approval dated 04.08.2020 could be sought – Recall application was maintainable notwithstanding that an appeal lay before the NCLAT against the order of approval passed by the Adjudicating Authority. (Para 50 to 52)
(C) Insolvency and Bankruptcy Code, 2016, Section 60(5), 31(1) – Companies Act 2013, Section 469 – National Company Law Tribunal Rules, 2016, Rule 11 – Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, Regulation 7, 12, 13, 37 – Insolvency and Bankruptcy – Limitation – Resolution plan – Recall of order – Whether the application for recall of the order was barred by time? – I.A. No.344/ 2021 was filed on 6.10.2020 upon getting information on 24.09.2020 from the monitoring agency regarding approval of the plan – Likewise, I.A. No.1380/ 2021 was filed on 15.03.2021 immediately when suspension of the period of limitation for any suit, appeal, application or proceeding, between 15.03.2020 and 14.03.2021, was lifted in terms of Apex Court’s order dated 8.03.2021 in RE: Cognizance For Extension of Limitation (supra) – Held that find no substance in the plea that the applications were barred by limitation. (Para 53)
(D) Insolvency and Bankruptcy Code, 2016, Section 30(2) – Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, Regulation 37, 38 – Insolvency and Bankruptcy – Resolution plan – Challenge as to – Whether the resolution plan put forth by the resolution applicant did not meet the requirements of sub-section (2) of Section 30 of the IBC read with Regulations 37 and 38 of the CIRP Regulations, 2016? – Held that the resolution plan fails not only in acknowledging the claim made but also in mentioning the correct figure of the amount due and payable to appellant – Withholding the information adversely affected the interest of the appellant – It affected its right of being served notice of the meeting of the COC, available under Section 24 (3) (c) of the IBC to an operational creditor with aggregate dues of not less than ten percent of the debt – In the proposed plan, outlay for the appellant got reduced, being a percentage of the dues payable -Resolution plan stood vitiated – The resolution plan did not specifically place the appellant in the category of a secured creditor even though, by virtue of Section 13-A of the 1976 Act, in respect of the amount payable to it, a charge was created on the assets of the CD – Non placement of the appellant in the class of secured creditors did affect its interest – On the part of the CD there were defaults in payment of instalments which, allegedly, resulted in raising of demand and issuance of pre-cancellation notice – In these circumstances, whether the resolution plan envisages necessary approvals of the statutory authority is an important aspect on which feasibility of the plan depends – Order of approval does not envisage such approvals- Resolution plan did not meet all the parameters laid down in sub-section (2) of Section 30 of the IBC read with Regulations 37 and 38 of the CIRP Regulations, 2016 – Impugned order dated 24.11.2022 liable to be set aside – The order dated 04.08.2020 passed by the NCLT approving the resolution plan liable to be set aside – The resolution plan shall be sent back to the COC for re-submission after satisfying the parameters set out by the Code as exposited. (Para 54 and 55)
SUPREME COURT OF INDIA
2024 STPL(Web) 92 SC
[2024 INSC 102]
Greater Noida Industrial Development Authority Vs. Prabhjit Singh Soni & Anr.
Civil Appeal Nos. 7590-7591 of 2023 (Arising out of Diary No.3628 of 2023)-Decided on 12-02-2024.
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