NCLAT dismisses appeal against conditional resolution plan approval citing Ebix Singapore precedent on unenforceable withdrawal conditions

NCLAT Principal Bench dismissed an appeal challenging approval of a conditional resolution plan. The tribunal held that conditions allowing the resolution applicant to seek modifications or withdraw the plan were unenforceable per Supreme Court precedent in Ebix Singapore. The plan had been implemented with all necessary approvals including NHAI consent, which was a condition precedent under the concession agreement. The court found no merit in appellant's arguments that mandatory requirements under Regulation 38(3) were not satisfied, noting the plan adequately detailed causes of default. Since the resolution applicant never sought withdrawal and the plan was successfully implemented, the tribunal found no grounds to interfere with the approval order.

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Issues Involved:
1. Conditionality of the Resolution Plan
2. Viability and Feasibility of the Resolution Plan
3. Allegations of Fraud and Collusion
4. Compliance with Regulation 38(3) of the Regulations, 2016

Summary:

1. Conditionality of the Resolution Plan:
The Appellant argued that the Adjudicating Authority erred in approving a conditional Resolution Plan, citing the judgment in "Ebix Singapore Pvt. Ltd. vs. Committee of Creditors of Educomp Solutions Ltd." The Tribunal noted that the Hon'ble Supreme Court in the "Ebix Singapore" case ruled that a Resolution Plan whose implementation can be withdrawn by the Successful Resolution Applicant is inherently unviable. However, in the present case, the conditions allowing the Resolution Applicant to seek modifications or withdraw the plan are unenforceable due to the Supreme Court's ruling. The Tribunal found that the plan had already been implemented, and all necessary approvals, including from NHAI, had been received. Therefore, the conditionality argument did not furnish grounds to interfere with the impugned order.

2. Viability and Feasibility of the Resolution Plan:
The Appellant contended that the financial proposal by the Successful Resolution Applicant was unviable as it did not infuse any funds of its own. The Tribunal held that the question of viability and feasibility was within the commercial wisdom of the Committee of Creditors (CoC). The CoC's decision on the plan's viability and feasibility is not justiciable, as established by the Supreme Court in "K. Sashidhar vs. Indian Overseas Bank and Ors."

3. Allegations of Fraud and Collusion:
The Appellant alleged fraud and collusion between the Resolution Professional and the Successful Resolution Applicant. The Tribunal dismissed these allegations, stating that fraud and collusion are easy to allege but difficult to prove. No specific pleadings or materials were brought on record to support these claims. The Tribunal viewed the appeal as an attempt to derail the resolution and revival of the Corporate Debtor.

4. Compliance with Regulation 38(3) of the Regulations, 2016:
The Appellant argued that the mandatory requirements under Regulation 38(3) were not fulfilled, particularly the cause of default. The Tribunal referred to Clause 10.3 of the Resolution Plan, which detailed the causes of default, including delays in construction, lapses in annuity payments, and lack of support from the Promoter Group. The Tribunal concluded that the plan met the mandatory requirements under Regulation 38(3).

Conclusion:
The Tribunal found no merit in any of the Appellant's submissions and dismissed the appeal, upholding the approval of the Resolution Plan by the Adjudicating Authority.

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