Supreme Court Seeks Central Registrar’s Clarification on Cooperative Society’s Eligibility as Resolution Applicant Under IBC
- REEDLAW
- 28 minutes ago
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REEDLAW Legal News Network reports: In a significant development concerning eligibility norms under the Insolvency and Bankruptcy Code, 2016, the Supreme Court held that where the entitlement of a cooperative society to act as a resolution applicant is questioned, effective adjudication cannot take place without impleading the statutory authority governing such societies. The Court clarified that while insolvency appellate proceedings may continue, no final approval of a resolution plan can be granted until the eligibility issue is conclusively determined.
The Supreme Court Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan, while adjudicating a Civil Appeal and connected Interlocutory Applications, held that where the eligibility of a society to submit a resolution plan under the Insolvency and Bankruptcy Code, 2016, was in question, the Central Registrar of Multi-State Cooperative Societies was required to be impleaded as a necessary party for effective adjudication. The Court further held that although the appellate insolvency proceedings could continue, no final approval of the resolution plan could be granted pending the determination of such eligibility.
The Supreme Court considered an appeal arising out of insolvency proceedings in which a society had questioned issues connected with the resolution process and the approval of a resolution plan. The Court heard the Appellant, the Successful Resolution Applicant, and the Resolution Professional through their respective senior counsel and examined the preliminary issues impacting the adjudication of the matter.
Upon a prima facie assessment, the Court was of the view that effective adjudication required the presence of the Central Registrar of Multi-State Cooperative Societies, as the issues involved necessitated clarity on the legal position governing societies under the applicable statutory framework. Accordingly, the Court directed the Appellant to amend the cause title and implead the Central Registrar as an additional Respondent, and notices were ordered to be issued, with notice being waived by counsel appearing for the existing Respondents.
The Court specifically sought a response from the Central Registrar on the question of whether societies such as the Appellant were, in any manner, barred from submitting a resolution plan for a corporate entity under the provisions of the Insolvency and Bankruptcy Code, 2016. While keeping this issue open for consideration, the Court clarified that the National Company Law Appellate Tribunal could proceed with steps relating to approval of the resolution plan, but restrained it from passing any final order until further directions. The matter was thereafter directed to be listed for further hearing on a subsequent date.
Mr. Mukul Rohatgi and Mr. Rajiv Shakdhar, Senior Advocates, Mr. Pai Amit, AOR, Ms. Honey Satpal, Mr. Roddam Prashant Reddy, Ms. Pankhuri Bhardwaj, Mr. Abhiyudaya Vats, Mr. Anirudh G. Prusothama and Mr. Keshar Sehgal, Advocates, represented the Appellant.
Mr. Rajesh Kumar Gautam, AOR, Mr. Anant Gautam, Mr. Deepanjal Choudhary, Ms. Likivi Jakhalu, Mr. Rishi Chauhan, Mr. Hanu Parashar, Ms. Azal Aekram, Advocates, appeared for the Respondents.
Mr. Krishnan Venugopal, Senior Advocate, Ms. Neha Mehta Satija, AOR, Mr. Jatin Kumar, Mr. Himanshu Satija and Mr. Harshit Khanduja, Mr. Harsh Saxena, Mr. Anshul Rao, Mr. Vasu Pandit, Advocates, appeared for the Respondents.
Mr. Navin Pahwa, Senior Advocate, Mr. Dcosta Ivo Manuel Simon, AOR, Mr. J. Rajesh, Mr. Dhrupad Vaghani, Mr. Yashwardhan Agarwal, Mr. Guruprasad Naik, Mr. Md Arsalan Ahmed and Mr. Gajendra Singh Negi, Advocates, appeared for the Respondents.
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