2020 (9) TMI 44 - AT - Insolvency and Bankruptcy

Appellate Tribunal upholds Resolution Plan validity under Insolvency & Bankruptcy Code

The Appellate Tribunal dismissed the Appeal challenging the approved Resolution Plan, emphasizing that such challenges based on the Adjudicating ... Implementation of approved Resolution Plan - Section 31 of I&B Code - Appellant contends that the Adjudicating Authority vide the impugned order has failed to grant certain reliefs and concessions as provided in the approved Resolution Plan which is permissible - HELD THAT:- The Resolution Plan can only be challenged before the Appellant Tribunal on very limited groundswhich is specified in sub Clause (3) of Section 61 of the I&B Code. In this case, the Successful Resolution Applicant has challenged the approved Resolution Plan on the ground of the observations made in para 23, 24 and 25 of the impugned order, whereby the Adjudicating Authority hasdeclined to allow reliefs and concessions prayed by the Resolution Applicant. The said grounds of challenge of the approved Resolution Plan under this Appealare beyond the limited scope of Appealas prescribed under sub-Section (3) of Section 61 of the I&B Code, 2016. It has been emphasised by the Adjudicating Authority that the Resolution Applicant has to ensure compliance under all applicable laws for the time being in force. This does not mean that the Adjudicating Authority has changed the terms of the Resolution Plan. It is pertinent to mention that after approval of the Resolution Plan, in every case, the Successful Resolution Applicant has to ensure compliance under applicable laws. Thus, it is clear that successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted. All claims must be submitted to and decided by the resolution professional, so that a prospective Resolution Applicant knows exactly, what has to be paid, in order that it may then take over and run the business of the Corporate Debtor - The Adjudicating Authority has neither varied the terms of the approved Resolution Plan, nor denied any concession. In fact, the Adjudicating Authority has not allowed general waiver from the statutory liabilities and has specified that the Resolution Applicant may apply for such reliefs and concessions to the relevant Authorities who may consider the same as per applicable laws. Instant Appeal against the Approved Resolution Plan is not maintainable under Sec 61(3) of the I&B Code 2016 - Appeal dismissed. Issues:Challenge to the approved Resolution Plan based on observations made by the Adjudicating Authority in para 23, 24, and 25 of the impugned order.Analysis:The Appellant filed an Appeal under Section 61 of the Insolvency & Bankruptcy Code, 2016 against the order passed by the Adjudicating Authority/NCLT Mumbai Bench approving the Resolution Plan with modifications. The Appellant contended that the observations made by the Adjudicating Authority in para 23, 24, and 25 of the impugned order were arbitrary and without basis. The Adjudicating Authority declined to grant certain reliefs and concessions sought under the approved Resolution Plan, leading to the Appellant challenging the order based on the limited grounds specified in Section 61(3) of the I&B Code.The Adjudicating Authority's observations in para 23, 24, and 25 clarified that while certain reliefs and concessions were not allowed in the Resolution Plan, the Resolution Applicant could seek them from relevant regulatory authorities as per applicable laws. The Authority emphasized the Resolution Applicant's responsibility to ensure compliance with all applicable laws upon taking control of the Corporate Debtor, without altering the terms of the approved Resolution Plan.The Appellant argued for the necessity of waivers and concessions to ensure the successful implementation of the Resolution Plan, citing the need for certainty in reviving the company. The Supreme Court's decision highlighted that once a Resolution Plan is approved, it is binding on all stakeholders, emphasizing the importance of clarity on liabilities before the Resolution Applicant takes over the business.Ultimately, the Appellate Tribunal dismissed the Appeal, stating that challenging the approved Resolution Plan based on the Adjudicating Authority's observations was not maintainable under Section 61(3) of the I&B Code. The Tribunal emphasized the limited grounds for Appeal specified in the Code and the need for compliance with applicable laws post-approval of the Resolution Plan.In conclusion, the judgment clarified the scope of challenging an approved Resolution Plan, the responsibilities of the Resolution Applicant, and the binding nature of the Plan on all stakeholders. The decision underscored the importance of adherence to statutory requirements and the limited grounds for Appeal under the I&B Code.