The bench of Justice Ashok Bhushan, Barun Mitra and Arun Baroka at the National Company Law Appellate Tribunal (NCLAT), New Delhi held that after the approval of a Resolution Plan by the Committee of Creditors, there was no jurisdiction to consider a fresh settlement proposal under Section 12A.
The NCLAT set aside an order of the Adjudicating Authority, ruling that after the approval of a Resolution Plan by the Committee of Creditors (CoC), there was no jurisdiction to consider a fresh settlement proposal under Section 12A.
In the case of M/s. Primrose Infratech Pvt. Ltd., the National Company Law Appellate Tribunal (NCLAT) heard an appeal filed by a Successful Resolution Applicant (SRA) against the order dated 23.01.2024 by the National Company Law Tribunal (NCLT), New Delhi Bench (Court-II) in IA No. 188/2024 filed by Respondent No. 1 - an ex-director. The background of the case involved the Corporate Insolvency Resolution Process (CIRP) of M/s. Primrose Infratech Pvt. Ltd., which commenced on 21.12.2018, and the subsequent approval of the Resolution Plan was submitted by the Appellant on 13.02.2020.
The ex-director filed IA No. 188 of 2024 seeking withdrawal and suspension of the CIRP under Section 12(A) of IBC, 2016, with the Adjudicating Authority passing an order on 23.01.2024, directing the Applicant to deposit Rs. 1 crore and instructing the Resolution Professional (RP) to convene a meeting of the Committee of Creditors (CoC) to examine the proposal. The SRA appealed against this order.
During the hearing in appeal, the Appellant argued that after the CoC approved the Resolution Plan, there was no jurisdiction for the Adjudicating Authority to consider a fresh settlement proposal. The Appellant claimed a violation of natural justice, stating no opportunity was given to respond to the ex-director's application.
The RP and the Appellant's Senior Counsel supported these arguments, asserting that the Adjudicating Authority had no jurisdiction to consider the ex-director's proposal after CoC approval. They also highlighted the Adjudicating Authority's observation that the ex-director had impeded the plan approval process at every stage.
On the other hand, the ex-director's counsel contended that the Adjudicating Authority could direct consideration of Section 12(A) proposal at any stage of the CIRP, emphasizing that the mere approval of the Resolution Plan did not preclude such consideration.
NCLAT set aside the Adjudicating Authority's order dated 23.01.2024, stating that the Adjudicating Authority should have allowed an opportunity for the SRA to respond to the ex-director's application. The NCLAT granted two weeks to the Appellant to file objections to IA No. 188 of 2024. The Adjudicating Authority was allowed to consider both the application and objections. The appeal was disposed of with no order as to costs.