Adjudicating Authority Cannot Override CoC Approval of Resolution Plan

The National Company Law Appellate Tribunal (NCLAT) held that the Adjudicating Authority cannot direct the Committee of Creditors (CoC) to consider a settlement proposal after the CoC has approved a resolution plan and while awaiting the Adjudicating Authority's approval. The NCLAT emphasized that once a resolution plan is approved by the CoC, negotiations or modifications are not permissible. Additionally, the NCLAT ruled that the Adjudicating Authority lacks jurisdiction to compel the CoC to consider a settlement proposal that does not adhere to the Insolvency and Bankruptcy Code (IBC) or its regulations. The NCLAT set aside previous orders directing consideration of a non-compliant settlement proposal, deeming them beyond the Adjudicating Authority's jurisdiction.

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Issues Involved:
1. Whether the Adjudicating Authority can direct the Committee of Creditors (CoC) to consider a settlement proposal after the CoC has approved a resolution plan and the plan is pending approval by the Adjudicating Authority.
2. Whether the Adjudicating Authority has jurisdiction to compel the CoC to consider a settlement proposal that does not comply with the provisions of the Insolvency and Bankruptcy Code (IBC) or its regulations.

Issue-wise Detailed Analysis:

1. Direction to CoC to Consider Settlement Proposal Post-Approval of Resolution Plan:
The primary issue revolves around whether the Adjudicating Authority can direct the CoC to consider a settlement proposal after the CoC has approved a resolution plan and the plan is pending approval by the Adjudicating Authority. The National Company Law Appellate Tribunal (NCLAT) referred to the Supreme Court's decision in *Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Ltd.* which clarified that once the CoC has approved a resolution plan, there is no scope for further negotiations or modifications. The Supreme Court emphasized that the resolution plan, once approved by the CoC, represents a binding agreement subject to statutory approval by the Adjudicating Authority. The NCLAT concluded that the Adjudicating Authority's direction to consider a new settlement proposal was beyond its jurisdiction and contrary to the established legal framework.

2. Jurisdiction of Adjudicating Authority to Compel CoC:
The second issue concerns whether the Adjudicating Authority can compel the CoC to consider a settlement proposal that does not comply with the IBC or its regulations. The NCLAT highlighted that the Adjudicating Authority's jurisdiction is limited to ensuring compliance with Section 30(2) of the IBC, which outlines the requirements for a resolution plan. The Supreme Court in *Pratap Technocrats (P) Ltd v. Monitoring Committee of Reliance Infratel Ltd.* reiterated that neither the Adjudicating Authority nor the Appellate Authority has an equity-based jurisdiction to interfere with the commercial decisions of the CoC. The NCLAT found that the Adjudicating Authority's direction to consider the second settlement proposal, which did not comply with the IBC or its regulations, was not within its jurisdiction and was thus unsustainable.

Order:
The NCLAT allowed the appeals, setting aside the impugned orders dated May 19, 2021, which directed the Administrator of Dewan Housing Finance Corporation Limited (DHFL) to place the second settlement proposal before the CoC for consideration. The NCLAT concluded that the Adjudicating Authority's direction exceeded its jurisdiction and was contrary to the legal framework established by the IBC and relevant judicial precedents.

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