Committee of Creditors has Final Say on Resolution Applicant Eligibility under Section 29A

The National Company Law Tribunal Allahabad Bench held that the final decision on the eligibility of prospective Resolution Applicants under Section 29A rests with the Committee of Creditors (CoC), not the Resolution Professional (RP). The RP's role is to ensure the completeness of Resolution Plans and provide a prima facie opinion on legal compliance to the CoC. The RP does not have the authority to determine if a plan contravenes legal provisions. The Tribunal directed the RP to present all Resolution Plans to the CoC with their opinion on legal compliance, allowing the CoC to make the final decision.

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Issues:
1. Whether the final decision on the eligibility of the prospective Resolution Applicant U/s 29A lies with the RP or with the CoC.

The judgment delivered by the National Company Law Tribunal Allahabad Bench involved the consideration of an Interlocutory Application (IA) filed by Ms. Upma Jaiswal. The IA sought a direction for the respondent no.1/ RP to present the Resolution Plan submitted by the applicant before the Committee of Creditors (CoC) for their evaluation and voting. The key question for consideration was whether the final decision on the eligibility of the prospective Resolution Applicant under Section 29A should be made by the Resolution Professional (RP) or by the CoC. The Tribunal referred to the judgment of the Hon'ble Supreme Court in Arcelormittal India Private Limited v/s Satish Kumar Gupta, emphasizing that the RP's role is to ensure the completeness of the Resolution Plans before they are placed before the CoC for approval. The RP's responsibility is to confirm whether the Resolution Plan complies with the provisions of the law, including Section 29A, providing a prima facie opinion to the CoC. The RP does not have the authority to determine if the plan contravenes legal provisions. The Tribunal highlighted that the RP acts as a facilitator, not a gatekeeper, and directed the RP to present all Resolution Plans to the CoC along with their opinion on legal compliance, allowing the CoC to make an informed decision.

In conclusion, the Tribunal disposed of IA No.59/2022 by providing directions that the RP should place all Resolution Plans before the CoC, including their opinion on legal compliance, in line with the RP's role as a facilitator and not a decision-maker regarding the eligibility of Resolution Applicants under Section 29A.

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