Rehabilitation scheme under repealed SICA can be recognised as a resolution plan and support admission of insolvency petition.

Where a sick company had already pursued rehabilitation under the repealed SICA regime, the tribunal treated the earlier BIFR process as relevant to insolvency proceedings and did not require a fresh revival exercise. It held that a modified draft rehabilitation scheme, substantially implemented and acted upon by creditors, could be recognised as a resolution plan within the Insolvency and Bankruptcy Code framework. On that basis, the section 10 petition was admitted, corporate insolvency resolution process was commenced, and moratorium followed, with appointment of an interim resolution professional.

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Issues: (i) Whether the Section 10 application could be treated as a continuation of the pending BIFR proceedings after repeal of SICA; (ii) Whether the modified draft rehabilitation scheme could be treated as a resolution plan for revival of the corporate applicant; (iii) Whether the petition deserved admission.

Issue (i): Whether the Section 10 application could be treated as a continuation of the pending BIFR proceedings after repeal of SICA?

Analysis: The proceedings before BIFR had abated on repeal of SICA, but the record showed that the corporate applicant had already undergone substantial rehabilitation steps, including submission of draft and modified rehabilitation schemes and settlement of most creditors. The statutory and notification framework under the repeal regime and the removal of difficulties order was read as permitting the pending rehabilitation effort to be carried forward in the insolvency process, rather than requiring the exercise to begin afresh.

Conclusion: Yes. The pending BIFR proceedings and the work already done thereunder were treated as relevant for the insolvency process.

Issue (ii): Whether the modified draft rehabilitation scheme could be treated as a resolution plan for revival of the corporate applicant?

Analysis: The Bench held that the object of the earlier rehabilitation process and the insolvency code were closely aligned, namely restructuring and revival in a time-bound manner. Since the modified scheme had already been acted upon by creditors and substantially implemented, and the statutory notifications contemplated that sanctioned or implemented schemes under SICA would be treated as approved resolution plans, the existing scheme could be recognized within the framework of section 30 of the Code.

Conclusion: Yes. The modified draft rehabilitation scheme was treated as a resolution plan for purposes of the Code.

Issue (iii): Whether the petition deserved admission?

Analysis: The corporate applicant was a corporate debtor with outstanding debt and default. Once the prior rehabilitation material was taken into account, no legal impediment remained to admission of the self-petition under section 10. The admitted petition would trigger commencement of the corporate insolvency resolution process and the consequential moratorium.

Conclusion: Yes. The petition was admitted and CIRP was directed to commence.

Final Conclusion: The application succeeded in full, the earlier rehabilitation efforts were carried into the insolvency framework, and the corporate insolvency resolution process was set in motion with moratorium and appointment of an interim resolution professional.

Ratio Decidendi: Where a sick company's rehabilitation scheme under the repealed regime has been substantially pursued and recognized by creditors, the insolvency tribunal may treat that scheme as an approved resolution plan and proceed with admission of a section 10 application without requiring a wholly fresh revival exercise.

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