NCLT’s order on RP after deadline & CIRP completion was unjust: NCLAT

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  • Last Updated on 8 February, 2023

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Case Details: Alok Kailash Saksena, Resolution Professional for Associate Décor Ltd. v. Svamitva Landmarks - [2023] 146 taxmann.com 379 (NCLAT-Chennai)

Judiciary and Counsel Details

    • M. Venugopal, Judicial Member & Kanthi Narahari, Technical Member
    • Rajasekar Rao, Sr. Adv for the Appellant.

Facts of the Case

In the instant case, Corporate Insolvency Resolution Process (CIRP) was initiated against the corporate debtor and the appellant was appointed as a Resolution Professional (RP). RP invited expressions of interest and plan of METL-SRA was approved by the Committee of Creditors (CoC) with 100 per cent voting.

The RP filed an application before NCLT for approval of the resolution plan. Subsequently, the respondents as a consortium after completion of CIR process submitted their resolution plan to RP who stated that the last date for submission of the resolution plan had already expired on 7-12-2020 and 330 days period of CIRP had also expired.

Therefore, the plan filed on 27-5-2020 i.e. after a lapse of more than 5 months from the last date could not be considered. Consequently, the Respondents filed an application before NCLT seeking direction to be issued to RP to place their plan for consideration before CoC.

The NCLT by impugned order directed RP to place a plan of respondents along with a resolution plan submitted by METL before CoC for its consideration. Consequently, an appeal was preferred to the appellate tribunal.

NCLAT Held

Hon’ble NCLAT observed that the NCLT had no power to consider the resolution plan of a new applicant, who had submitted its plan after the expiry of the last date for submission and that too after the completion of the CIRP period.

Further, it was held that the NCLT exceeded its jurisdiction in directing RP to place a resolution plan of respondents before CoC as the same amounted to interference with commercial wisdom exercised by the CoC in its commercial decision, more particularly, in the absence of any ‘material irregularity’ and ‘violation of any law’ for the time being in force. Therefore, the impugned order passed by NCLT was to be set aside.

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List of Cases Referred to

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