Section 60(5) application loses maintainability after resolution plan approval, must pursue Section 61(3) appeal rights instead

The NCLAT Chennai dismissed an operational creditor's application seeking payment for services rendered during CIRP period. The appellant filed application under Section 60(5) on 01.06.2019 while resolution plan approval proceedings were ongoing, without seeking stay. The resolution plan was approved on 27.06.2019 and later by SC on 28.02.2020, and has been implemented. The tribunal held that once the resolution plan was approved, the Section 60(5) application lost maintainability as new appeal rights under Section 61(3) became available, which the appellant failed to pursue. Appeal dismissed for lack of merit.

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Issues:
The judgment involves the dismissal of an appeal against the order dated 24.02.2021 regarding the release of payment to an Operational Creditor under section 60(5) of the Insolvency & Bankruptcy Code, 2016.

Details of Judgment:

Issue 1: Application under Section 60(5) of the Code
The appellant filed an application under section 60(5) seeking payment for services rendered during the CIRP period, which was dismissed. The Resolution Professional admitted only a portion of the claim, leading to a dispute regarding the amount owed. The Tribunal noted that the application filed under Section 60(5) became redundant once the Resolution Plan was approved and implemented, as the appellant had the right to appeal under Section 61(3) of the Code. The failure to follow the proper appeal procedure rendered the Section 60(5) application not maintainable.

Issue 2: Rights of the Appellant
The appellant argued that the application under Section 60(5) falls within the power of the Adjudicating Authority, while the Resolution Professional contended that the appellant had the statutory right to appeal under Section 61(3) of the Code. The Tribunal highlighted the relevant provisions of Section 61, emphasizing the grounds on which an appeal against an order approving a resolution plan can be filed. The Tribunal also referenced Section 60, specifically Section 60(5), which outlines the jurisdiction of the National Company Law Tribunal to entertain or dispose of applications or proceedings by or against corporate debtors.

Conclusion:
Considering that the Resolution Plan had been approved and implemented, the Tribunal found the appeal lacking merit and dismissed it. The Tribunal emphasized that the appellant had the opportunity to appeal under Section 61(3) of the Code but failed to pursue this avenue, making the application under Section 60(5) redundant. As a result, the appeal was dismissed without costs.

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