The Supreme Court held that once a resolution plan is approved by the CoC, it cannot be unilaterally withdrawn or modified by the resolution applicant.
The Supreme Court bench of Justices Sanjiv Khanna and Dipankar Datta was hearing an appeal and noted that once a resolution plan is approved by the Committee of Creditors under the Insolvency and Bankruptcy Code, the resolution applicant cannot unilaterally withdraw or modify it. The Apex Court emphasized that resolution plans are binding and should be submitted after careful evaluation by financial experts.
In the matter concerning cross-appeals under Section 62 of the Insolvency and Bankruptcy Code, 2016, filed by various parties including Deccan Value Investors L.P., DVI PE (Mauritius) Ltd., the Committee of Creditors of Metalyst Forgings Limited, and Dinkar Venkatasubramanian, the Resolution Professional of Metalyst Forgings Limited, the Supreme Court reviewed the impugned judgment of the National Company Law Appellate Tribunal (NCLAT) dated 07.02.2020.
The Supreme Court found the NCLAT's decision upholding the order of the National Company Law Tribunal (NCLT) dated 27.09.2019 legally flawed and unsustainable in light of the precedent established in Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited and Another, REED 2021 SC 09523. The Court reiterated that once a resolution plan is approved by the Committee of Creditors, the resolution applicant cannot unilaterally withdraw or modify it.
The successful resolution applicants had argued that they were handicapped due to a lack of information or fraud on the part of the resolution professional. However, the Court found these grounds insufficient to justify withdrawal, noting that the resolution applicants had access to relevant information before submitting their plans.
Further, the Court emphasized that resolution plans are prepared by financial experts after careful examination of available data, and any ambiguities should have been addressed before acceptance by the Committee of Creditors.
Based on these considerations, the Supreme Court set aside the NCLAT's judgment and upheld the resolution plan submitted by Deccan Value Investors L.P. and DVI PE (Mauritius) Ltd. The parties were directed to appear before the NCLT for further proceedings on 09.04.2024. The appeals were allowed accordingly, and any pending applications were disposed of.