NCLAT allows appeal finding resolution plan approval cannot be conditioned on Supreme Court clarification regarding unrelated restraint order

NCLAT held that the Adjudicating Authority erred in conditioning approval of a resolution plan on obtaining SC clarification regarding a 2013 restraint order. The tribunal found that the SC's 2013 direction to Sahara Group not to part with properties had no bearing on the CIRP process of the corporate debtor, which was also a Sahara group company. The resolution plan, approved by 100% CoC, could not be fettered by the 2013 order, as clarified by SC in 2016. The appeal was allowed.

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Issues Involved:
1. Approval of the Resolution Plan.
2. Direction to seek clarification from the Supreme Court regarding an order dated 21.11.2013.

Summary:

Approval of the Resolution Plan:
The appeals challenged the order dated 24.11.2023 by the Adjudicating Authority (NCLT, Allahabad Bench) in I.A. No. 243 of 2023 for the approval of the Resolution Plan and I.A. No. 434 of 2023 filed by the Suspended Director of the Corporate Debtor seeking dismissal of I.A. No. 243 of 2023. The Resolution Plan was approved by 100% vote share in the 33rd CoC meeting held on 21.04.2023. The Adjudicating Authority approved the resolution plan submitted by Dalmia Bharat Sugar and Industries Limited but directed the Resolution Professional (RP) and the Committee of Creditors (CoC) to seek clarification from the Supreme Court regarding the order dated 21.11.2013 before implementing the plan.

Direction to Seek Clarification from the Supreme Court:
The main contention was whether the Adjudicating Authority was correct in directing the RP and CoC to obtain clarification from the Supreme Court regarding the order dated 21.11.2013. The Supreme Court's order restrained the Sahara group of companies from parting with any movable and immovable properties. The appellants argued that this order did not impact the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, as it was intended to protect the assets of the Sahara group of companies and not to obstruct the CIRP. The Adjudicating Authority had previously given the Suspended Management the liberty to seek clarification from the Supreme Court, which they did not pursue.

Judgment:
The National Company Law Appellate Tribunal (NCLAT) concluded that the Supreme Court's order dated 21.11.2013 did not fetter the CIRP process or the approval of the resolution plan. The direction to seek clarification from the Supreme Court was deemed unnecessary. Consequently, the appeals were allowed, and the order dated 24.11.2023 was modified to delete the direction for seeking clarification from the Supreme Court. The rest of the Adjudicating Authority's order was affirmed. The parties were directed to bear their own costs.

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