NCLAT Upholds Exclusivity of CoC-Approved Resolution Plan, Rejects Promoter’s Attempt to Introduce Alternate Plan During Pending Approval
- REEDLAW
- 2 days ago
- 3 min read
The NCLAT upheld the exclusivity of the resolution plan approved by the Committee of Creditors and rejected the promoter’s attempt to introduce an alternate plan while the approval was still pending.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka, held that once a resolution plan has been approved by the Committee of Creditors (CoC) and is pending approval before the Adjudicating Authority, no other resolution plan can be considered, and neither a promoter nor a shareholder has the legal right to submit a new resolution plan or seek its placement before the CoC at that stage.
The National Company Law Appellate Tribunal (NCLAT), New Delhi, dismissed an appeal challenging the order dated 04.12.2024 passed by the National Company Law Tribunal (NCLT), New Delhi, Principal Bench, wherein IA No. 4783/2024 filed by the appellant was rejected. The appellant had prayed for directions to place a resolution plan before the Committee of Creditors (CoC), claiming to be a promoter of the corporate debtor, International Recreation and Amusement Ltd. (IRAL), and seeking to propose a reverse insolvency resolution.
The CIRP of IRAL had commenced on 03.08.2018, and the CoC had already approved a resolution plan submitted by HGAS-Apex JV on 09.05.2019. An application seeking approval of the plan (IA No. 1225 of 2019) had been pending before the NCLT. The appellant filed IA No. 4783/2024, asserting that it had acquired a substantial shareholding in a related entity and thus had promoter status. The appellant contended that the plan it submitted ought to be placed before the CoC. The Adjudicating Authority rejected the application, relying on the Tribunal’s earlier ruling in Dr. Ravi Shankar Vedam v. Tiffins Barytes Asbestos and Paints Limited and Others, REEDLAW 2023 NCLAT Chn 06602, holding that such a submission by a shareholder/promoter could not be entertained once a plan was already approved by the CoC.
The NCLAT held that while the reliance on Dr. Ravi Shankar Vedam v. Tiffins Barytes Asbestos and Paints Limited and Others, REEDLAW 2023 NCLAT Chn 06602 may not be strictly applicable to the present case, the appellant had no right to submit a resolution plan or demand its consideration by the CoC at such a stage. Citing the Supreme Court’s decision in Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited and Another, REEDLAW 2021 SC 09523, the Tribunal reaffirmed that once a resolution plan is approved by the CoC, it becomes binding inter se between the CoC and the successful resolution applicant (SRA), even before approval by the Adjudicating Authority. Hence, no other resolution plan could be entertained thereafter.
The NCLAT concluded that since the plan was already approved by the CoC in 2019 and was pending adjudication, the appellant's request to submit or place a new plan before the CoC could not be accepted. Accordingly, the Tribunal upheld the NCLT’s rejection of the appellant’s application and dismissed the appeal, finding no merit in the challenge.
Mr. Gopal Jain, Sr. Advocate and Mr. Vivek Kohli, Sr. Advocate, with Mr. Gajanand Kirodimal, Mr. Himanshu Goel and Mr. Rohan Jaitley, Advocates, represented the Appellant.
Mr. Arun Kathpalia, Sr. Advocate with Mr. Abhishek Anand, Mr. Karan Kohli, Ms. Palak Kalra, Mr. Aditya and Mr. Keshri Kumar, Advocates, appeared for the Resolution Professional.
Mr. Abhijeet Sinha, Sr. Advocate with Mr. Nilotpal Shyam, Mr. Avishkar Singhvi, Mr. Auritro Mukherjee and Vivek Kumar Singh, Advocates, appeared for the SRA.
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