Tribunal rules against late rectification in Resolution Plan

The Tribunal held that the Adjudicating Authority lacked jurisdiction to entertain a rectification application for a Resolution Plan after 13 months post the completion of the Corporate Insolvency Resolution Process. It was also determined that altering a Resolution Plan submitted jointly without the consent of both parties was improper. The significant change in shareholding resulting from rectification was not considered a typographical or clerical error. The appeal was allowed, the impugned order was set aside, and no costs were awarded.

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Issues Involved
1. Jurisdiction of the Adjudicating Authority to entertain an application for rectification of the Resolution Plan after 13 months of the completion of CIRP.
2. Jurisdiction of the Adjudicating Authority to alter a Resolution Plan submitted by co-applicants without the consent of one party.
3. Whether substantial rectification of the Resolution Plan resulting in a change in shareholding could be considered a typographical/arithmetic/clerical error.

Detailed Analysis

1. Jurisdiction to Entertain Application for Rectification after 13 Months
The appeal challenges the order dated 20th November 2019 by the National Company Law Tribunal (NCLT), Kolkata Bench, which allowed the rectification of an already approved and implemented Resolution Plan. The Appellant argued that the Adjudicating Authority lacked jurisdiction to entertain such an application after a lapse of 13 months post the completion and conclusion of the Corporate Insolvency Resolution Process (CIRP). The Tribunal noted that the approved Resolution Plan was executed, and shares were allotted as per its terms. The Adjudicating Authority’s interference after such a significant lapse of time was deemed without any basis and jurisdiction.

2. Jurisdiction to Alter Resolution Plan without Consent
The Appellant contended that the Adjudicating Authority had no jurisdiction to alter a Joint Resolution Plan submitted by the Appellant and the Respondent No.1 without the Appellant's consent. The Tribunal highlighted that the Resolution Plan was a joint submission, and any rectification application should have been moved by both parties. The unilateral rectification application by Respondent No.1 was not justified, and the Adjudicating Authority’s decision to allow this application was erroneous and without cogent reasons.

3. Substantial Rectification as Typographical/Clerical Error
The Tribunal examined whether the substantial changes in the shareholding resulting from the rectification could be considered a typographical or clerical error. The original Resolution Plan allocated 51% shares to Respondent No.1 and 34% to the Appellant. The rectification altered these shares to 75% for Respondent No.1 and reduced the Appellant’s share to 10%. The Tribunal found that such a significant change could not be categorized as a mere clerical or typographical error. The Adjudicating Authority’s decision to rectify the Resolution Plan based on this premise was flawed.

Conclusion
The Tribunal concluded that the Adjudicating Authority had no jurisdiction to entertain the rectification application after 13 months of the completion of CIRP. Moreover, any rectification of the Resolution Plan submitted jointly by the Appellant and Respondent No.1 required the consent of both parties. The substantial change in shareholding could not be justified as a typographical or clerical error. The appeal was allowed, and the impugned order dated 20th November 2019 was set aside. No order as to cost was made.

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