Appeal Against NCLAT’s Order Remanding Approved RP to NCLT Rejected as AA Passed Order Violating Sec. 419(3) of Co(s) Act | SC

Case Details: Bank of Baroda v. Suchi Paper Mills Ltd.- [2024] 161 taxmann.com 343 (SC)

Judiciary and Counsel Details

• Dr Dhananjaya Y Chandrachud, CJI., J B Pardiwala & Manoj Misra, JJ.
• Gaurav Agrawal, Sr. Adv., Suresh Dutt Dobhal, Adv. & Nirmal Goenka, AOR for the Appellant.
• R. Venkataramni, AG, Chinmoy Sharma, Sr. Adv., Ms Preeti Goel, Anubhav Goel, Ms Priyanka Dhyani, Ms Nikita Biwal, Advs. & Sunil Kumar Sharma, AOR for the Respondent. 

Facts of the Case

In the instant case, the CIRP was initiated against the corporate debtor by the Adjudicating Authority (NCLT) and the RP was appointed. The CoC of the corporate debtor approved a resolution plan with 77% vote shares.

The RP filed an application before the NCLT seeking approval under section 31 of the IBC and the said application was allowed. The Respondent/unsuccessful resolution applicant filed an appeal before the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

The NCLAT observed that said order was passed by a single member of the NCLT in violation of the provision of section 419(3) of the Companies Act, 2013. Further, the NCLT approved the resolution plan only on the basis of approval given by the CoC without recording its own satisfaction. Thus, the matter was remanded back to the NCLT.

Thereafter, the appellant/financial creditor of the corporate debtor, filed an instant appeal against the order of NCLAT and submitted that substantial steps were taken in pursuance of an order of approval and dues of financial creditors were also settled.

Supreme Court Held

The Supreme Court held that these were matters which would be considered by the NCLT when proceedings would appear before it on remand.

Further, the Supreme Court held that since the impugned order was by way of an order of remand, the instant appeal was not entertained at the instant stage. Keeping open all the rights and contentions of the parties to be urged before the NCLT, an instant appeal was to be disposed of.

List of Cases Reviewed

• Suchi Paper Mills Ltd. v. Ashish Gupta [2024] 161 taxmann.com 342 (NCLAT -New Delhi) [Para 6] reversed [See Annex].