Consequential IBC Appeal Held Not Maintainable After Withdrawal of Foundational Challenge and Plan Approval
- REEDLAW
- 8 hours ago
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REEDLAW Legal News Network reports: In a decisive ruling reinforcing procedural finality under the Insolvency and Bankruptcy Code, 2016, the Appellate Tribunal held that once a challenge to the foundational order governing the insolvency process had been expressly withdrawn and the resolution plan thereafter stood approved with the appellant’s participation, no subsequent appeal could be maintained against a consequential order arising from the same issue. The Tribunal underscored that the IBC does not permit revival of challenges after acquiescence in the resolution process and approval of the plan.
The National Company Law Appellate Tribunal, Chennai Bench, comprising Justice Sharad Kumar Sharma (Judicial Member) and Mr. Jatindranath Swain (Technical Member), while adjudicating a Company Appeal along with connected interlocutory applications, held that once an appeal challenging the foundational order governing the challenge mechanism was withdrawn and the resolution plan stood approved after the appellant’s participation, a subsequent appeal assailing a consequential order on the same issue was not maintainable. The Tribunal held that no surviving cause of action or vested right subsisted against the exercise of the Committee of Creditors’ commercial wisdom directed towards value maximisation under the IBC.
The Appellate Tribunal dealt with the Company Appeal along with connected interlocutory applications. An application seeking condonation of a delay of thirteen days in filing the appeal was considered, wherein the Appellant had explained that time was consumed in obtaining legal consultation, internal approvals, and coordinating between different jurisdictions. Being satisfied that the delay was sufficiently explained and fell within the permissible period under the proviso to Section 61(2) of the Insolvency and Bankruptcy Code, 2016, the Tribunal condoned the delay. An application seeking permission to place additional documents on record, being documents relating to subsequent events, was also allowed, with liberty to consider the same at the stage of final hearing of the appeal.
The appeal arose from an order passed by the Adjudicating Authority in an interlocutory application filed in the corporate insolvency resolution process of the Corporate Debtor. The Appellant, being a lead member of a consortium and a prospective resolution applicant, had challenged the manner in which the challenge mechanism under the resolution process was conducted. Another application had been filed by a competing resolution applicant seeking closure of the challenge mechanism and restraint on the conduct of a further round of bidding. That application had been partly allowed by the Adjudicating Authority, and the said order had been challenged by the Appellant in a separate appeal, which was subsequently withdrawn by the Appellant.
In the present appeal, the Appellant had assailed the order passed in another interlocutory application seeking the setting aside of the first and second challenge processes, or in the alternative, seeking permission to participate in the third challenge process. The Respondents had opposed the application on the ground that the Appellant, having not participated in the earlier challenge process, had no vested right to question the process, and that the challenge mechanism was aimed at value maximisation of the assets of the Corporate Debtor. It was also contended that no prejudice had been demonstrated by the Appellant.
The Adjudicating Authority had rejected the application by holding that the reliefs sought were substantially similar to those considered in the earlier interlocutory application, and that the directions issued therein would govern the outcome. Since the Appellant had withdrawn the appeal challenging the order passed in the earlier application, the Tribunal held that the Appellant could not be permitted to indirectly agitate the same issues through the present appeal. It was further noted that the resolution plan had already been approved, and that the Appellant had participated in the final round of the process without raising objections.
In view of the withdrawal of the earlier appeal, the binding nature of the directions already issued, and the subsequent approval of the resolution plan after participation by the Appellant, the Tribunal held that no cause survived for consideration in the present appeal. The Company Appeal was accordingly dismissed as devoid of merit, and all pending interlocutory applications were closed.
Ms. Aakanksha Nehra, Advocate, represented the Appellant.
Mr. Krishna Srinivasan, Senior Advocate for Mr. Dwarakesh Prabhakaran, Advocate, appeared for the Respondent No. 1.
Mr. Aditya Mukerjee, Advocate, appeared for the Respondent No. 2.
Mr. Abhijeet Sinha, Senior Advocate for Ms. Shweta Dubey, Ms. Kanishka Prasad and Mr. S. Karthik, Advocates, appeared for the Respondent No. 3.
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