NCLAT upholds restriction on resolution plan submissions to only approved applicants under IBBI Regulations 39(1-B) and 36B(7)

NCLAT dismissed the appeal challenging eligibility to submit a resolution plan for the corporate debtor. The tribunal held that under Regulations 39(1-B) and 36B(7) of IBBI (CIRP) Regulations, 2016, only resolution applicants in the final list of prospective resolution applicants can submit plans. Allowing unsolicited plans from unlisted entities would cause unnecessary delays and make the CIRP process unending. The adjudicating authority correctly restricted consideration to approved applicants to prevent violations of regulatory provisions and maintain process efficiency.

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Issues Involved:
1. Eligibility of the Appellant to submit a Resolution Plan under Regulation 39(1-B) read with Regulation 36-B(7) of the CIRP Regulations.
2. Compliance with the provisions of the Insolvency and Bankruptcy Code (IBC) and CIRP Regulations.
3. Maximization of the value of the Corporate Debtor's assets.

Summary:

1. Eligibility of the Appellant to Submit a Resolution Plan:
The Appellant, Jindal Power Limited (JPL), challenged the orders dated 22.08.2023 and 27.07.2023 passed by the National Company Law Tribunal (NCLT), Mumbai Bench, which held that JPL is ineligible to submit a Resolution Plan for the Corporate Debtor due to the statutory bar under Regulation 39(1-B) read with Regulation 36-B(7) of the CIRP Regulations. The Tribunal emphasized that a resolution plan cannot be received from a person who does not appear in the final list of prospective resolution applicants.

2. Compliance with Provisions of IBC and CIRP Regulations:
The Tribunal noted that the Adjudicating Authority consistently allowed opportunities to resolution applicants as long as they complied with the law. The Adjudicating Authority's orders emphasized compliance with Regulation 39(1-B) and Regulation 36-B(7) of the CIRP Regulations, which restrict the submission of resolution plans to those in the final list of PRAs. The Tribunal reiterated that both the Adjudicating Authority and the Appellate Tribunal are bound by the Code and Regulations, and any deviation would be a violation.

3. Maximization of the Value of the Corporate Debtor's Assets:
The Appellant argued that accepting its resolution plan would maximize the value of the Corporate Debtor's assets, aligning with the primary objective of the IBC. However, the Tribunal held that this justification cannot override the statutory provisions. The Tribunal emphasized that the commercial wisdom of the Committee of Creditors (CoC) is paramount, but it must operate within the bounds of the Code and Regulations. The Tribunal also highlighted that allowing unsolicited plans at any stage would cause unnecessary delays in the CIRP process.

Findings and Conclusion:
The Tribunal concluded that the Adjudicating Authority acted in compliance with the relevant provisions of the CIRP Regulations by disallowing JPL's resolution plan. It was noted that the CIRP process must be conducted in a time-bound manner, and any decision to accept a resolution plan must comply with the existing regulations. The Tribunal dismissed the appeal, stating that allowing it would contravene Regulation 39(1-B) read with Regulation 36-B(7) of the CIRP Regulations. The Tribunal directed the Resolution Professional (RP) and CoC to proceed with the CIRP and decide on the resolution plan available with them.

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