The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra & Arun Baroka (Technical Members) was hearing an appeal and held that the Committee of Creditors (CoC) cannot consider a resolution plan from an applicant whose name is not included in the final list of Prospective Resolution Applicants (PRAs).
NCLAT Bench noted that this principle is derived from Regulation 39(1)(b) of the Insolvency and Bankruptcy Board of India (IBBI) (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Additionally, the CoC has the authority to modify the Invitation for Expression of Interest (EOI) and decide not to proceed with applications from entities not listed as PRAs. The CoC's decision to limit consideration to existing Resolution Applicants listed in the final list of PRAs is legally sound.
The National Company Law Appellate Tribunal (NCLAT) heard two appeals filed by the same appellant challenging orders dated 12.02.2024 and 21.02.2024 passed by the Adjudicating Authority in I.A. No.345 of 2024 and I.A. No.624 of 2024, respectively.
In Company Appeal (AT) (Ins.) No.459 of 2024, the Adjudicating Authority allowed the Committee of Creditors to consider the Resolution Plan of the Applicant, with a condition to allow all Resolution Applicants to revise their bids. The Resolution Professional was directed to seek further extension of time.
In Company Appeal (AT) (Ins.) No.464 of 2024, the Adjudicating Authority directed the Resolution Professional to place the Plan for the Corporate Debtor filed by B-RIGHT REALESTATE LTD and Intervenor MGN Agro Properties Private Limited before the Committee of Creditors, with similar terms and conditions. The CoC was directed not to grant any further opportunity beyond 25.02.2024 for placing Resolution Plans unless considered appropriate to extend, but not beyond 15 days in aggregate beyond 25.02.2024.
The appellant argued that the CoC should not consider the applications of Patanjali Ayurveda Ltd. and the other two applicants, as they were not included in the list of Prospective Resolution Applicants (PRAs). The CoC, however, had accepted Patanjali Ayurdeva Ltd.'s application earlier.
The NCLAT reviewed the CIRP regulations and found that the CoC should not consider a resolution plan from an applicant not listed as a PRA. The CoC had also decided not to consider any additional new entrants, confining their consideration to Resolution Applicants listed in the final list of PRAs dated 07.11.2023.
Based on these findings, the NCLAT allowed both appeals, setting aside the orders dated 12.02.2024 and 21.02.2024.