Unsuccessful Resolution Applicant Impleaded for Challenge in Resolution Plan Approval Process: Key Legal Implications

The Adjudicating Authority allowed the unsuccessful Resolution Applicant to be impleaded in IA No. 537/2020, considering them a necessary and proper party for addressing issues related to the approval of the resolution plan and decisions made by the Committee of Creditors. This decision was based on the interpretation that dissatisfied parties could challenge the plan before its approval, in line with a liberal approach advocated by Supreme Court judgments. The impleadment was deemed crucial for a comprehensive adjudication of the matter, allowing the Applicant to participate in the proceedings and shed light on relevant legal points.

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Issues:
Impleadment of unsuccessful Resolution Applicant in IA No. 537/2020 for approval of Resolution Plan.

Analysis:
The unsuccessful Resolution Applicant filed an application under Section 60(5) of the Insolvency & Bankruptcy Code, 2016 to be impleaded into IA No. 537/2020, claiming to be a necessary and proper party for the approval of the Resolution Plan submitted in IA No. 281/2019. The Applicant alleged that their claim was arbitrarily rejected by the Committee of Creditors (CoC), and the Successful Resolution Applicant made changes to the plan with violations, making it essential for the unsuccessful Resolution Applicant to be heard.

The Respondent, Successful Resolution Applicant, contended that the Applicant was not a necessary party as their claim had been rejected previously, and the Appellate Tribunal had clarified that the unsuccessful Resolution Applicant could challenge the plan only after its approval. However, the Adjudicating Authority interpreted the Appellate Tribunal's order differently, allowing dissatisfied parties to move the National Company Law Tribunal (NCLT) before the approval or rejection of the plan, leading to the possibility of impleading the unsuccessful Resolution Applicant.

The Adjudicating Authority emphasized that there was no bar for the unsuccessful Resolution Applicant to be impleaded in IA No. 537/2020, as they would be affected by the Authority's orders and could shed light on issues related to the CoC's approval of the resolution plan. Referring to Supreme Court judgments advocating a liberal approach, the Authority deemed the unsuccessful Resolution Applicant a necessary and proper party for the resolution of the dispute.

Moreover, the Authority expressed doubt regarding whether an Asset Reconstruction Company could be a Resolution Applicant, a legal point that could be clarified by the unsuccessful Resolution Applicant once impleaded. The impleadment of the Applicant was deemed crucial for addressing various issues surrounding the approval of the resolution plan and the CoC's decisions, ensuring a comprehensive adjudication of the matter.

Therefore, the Adjudicating Authority allowed the impleadment of the Applicant as a proper and necessary party in IA No. 537/2020, enabling their participation in the proceedings for a thorough examination of the issues at hand.

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