Supreme Court clarifies interpretation of Regulation 39(1A) The Supreme Court granted permission to file the appeal and affirmed the NCLAT's interpretation of Regulation 39(1A) of the Insolvency and Bankruptcy ...
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Supreme Court clarifies interpretation of Regulation 39(1A)
The Supreme Court granted permission to file the appeal and affirmed the NCLAT's interpretation of Regulation 39(1A) of the Insolvency and Bankruptcy Board of India Regulations. The Court clarified that the term 'or' in the sub-regulation should be construed as 'in addition to' rather than 'to the exclusion of,' allowing for modifications to the resolution plan if included in the original request. This ruling does not bar the Committee of Creditors from challenging the plan, providing room for resolution applicants to improve their proposals. Consequently, the appeal was rejected, and pending applications were resolved.
Issues involved: Interpretation of Regulation 39(1A) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
The Supreme Court granted permission to file the appeal and agreed with the findings of the National Company Law Appellate Tribunal (NCLAT) at Chennai regarding the interpretation of Regulation 39(1A). The Court clarified that the word 'or' in the sub-regulation should be understood as 'in addition to' and not 'to the exclusion of.' This interpretation allows the resolution professional to permit modifications to the resolution plan received, as long as it is envisaged in the request of the resolution plan, albeit only once. Importantly, this ruling does not prevent the Committee of Creditors from challenging the resolution plan, providing an opportunity for resolution applicants to enhance their plans. As a result, the appeal was dismissed, and any pending applications were disposed of accordingly.
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