NCLAT rejects challenge to resolution plan approval citing missed statutory deadline and valid financial creditor status under Section 61(3) IBC

NCLAT dismissed appeal challenging resolution plan approval. Appellant contested sole financial creditor's related party status and alleged undue influence, but failed to challenge CIRP admission order within statutory 30-day period. Tribunal found financial creditor Sunaina Singh resigned as director before Section 7 application filing, establishing non-related party status. CoC approved resolution plan with 100% voting share after due diligence. Appellant failed to establish grounds under Section 61(3) IBC for challenging approved resolution plan. Court held belated challenges to CIRP admission cannot be raised under pretext of contesting resolution plan approval, emphasizing limited judicial review scope over CoC's commercial wisdom.

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Issues Involved:
1. Whether the issue of the sole financial creditor being a related party to the Corporate Debtor can be raised again.
2. Whether the findings of the Hon'ble Delhi High Court regarding undue influence and coercion were not available before the Adjudicating Authority and Appellate Authority.
3. Whether the Appellant can raise issues belatedly at this stage without having challenged the CIRP admission order or the constitution of CoC within the statutory period.
4. Whether cogent grounds have been made out by the Appellant in terms of Section 61(3) of IBC for challenging the order approving the resolution plan.

Summary:

Issue 1: Related Party Allegation
The Tribunal examined whether the issue of the Financial Creditor being a related party to the Corporate Debtor could be raised again. Previous adjudications (IA 344 of 2020, IA 728 of 2020, and CA (AT) (Ins.) 1065 of 2021) had already settled that the Financial Creditor was not a related party. The Tribunal noted that Sunaina Singh resigned as Director of the Corporate Debtor on 25.03.2019, well before the Section 7 application was filed on 25.09.2019 and the CIRP commenced on 07.02.2020. The Tribunal concluded that the issue had attained finality and could not be re-agitated.

Issue 2: Findings of the Hon'ble Delhi High Court
The Appellant argued that the findings of undue influence and coercion by the Hon'ble Delhi High Court in its order dated 29.07.2022 were not available to the Adjudicating Authority and the Appellate Authority. The Tribunal found this contention lacked substance, noting that the Adjudicating Authority had considered the Hon'ble Delhi High Court's findings and concluded that they were inapplicable to the CIRP proceedings. The Tribunal upheld that Sunaina Singh was not a related party of the Corporate Debtor at the relevant times.

Issue 3: Belated Challenge
The Tribunal addressed whether the Appellant could raise issues belatedly without having challenged the CIRP admission order or the constitution of CoC within the statutory period. It was noted that the Appellant had knowledge of the CIRP proceedings and chose not to challenge the CIRP admission order within the statutory 30-day period. The Tribunal emphasized that the statutory scheme of the IBC requires timely resolution and that the Appellant's belated challenge was an attempt to derail the CIRP process.

Issue 4: Cogent Grounds under Section 61(3) of IBC
The Tribunal examined whether the Appellant had made out cogent grounds under Section 61(3) of IBC for challenging the order approving the resolution plan. The Tribunal found that the CoC had approved the resolution plan with 100% voting share after considering its feasibility and viability, and the Adjudicating Authority had found no contravention of law in the resolution plan. The Tribunal reiterated that the commercial wisdom of the CoC is paramount and should not be interfered with unless there is a material irregularity or contravention of law, which was not demonstrated by the Appellant.

Conclusion:
The Tribunal dismissed the appeal, upholding the Adjudicating Authority's orders approving the resolution plan and dismissing the IA seeking rejection of the resolution plan. The Tribunal emphasized the finality of the related party issue, the inapplicability of the Hon'ble Delhi High Court's findings to the CIRP proceedings, the untimeliness of the Appellant's challenges, and the lack of cogent grounds under Section 61(3) of IBC.

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