Unsuccessful resolution applicant lacks standing to challenge approved resolution plan under Section 31(1)

NCLAT Chennai dismissed appeal filed by unsuccessful resolution applicant challenging approved resolution plan. Appellant's resolution plan was approved but failed implementation within 90 days despite court-granted extensions. When appellant sought further extension, it was denied, and Supreme Court noted non-compliance. Resolution professional then sought CIRP extension which was granted. NCLAT held unsuccessful resolution applicant lacks locus standi under Section 31(1) of Code to challenge plan post-approval, citing precedent that promoters/shareholders cannot challenge approved plans. Appeal dismissed for lack of merit.

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Issues Involved:
1. Extension of timelines for implementation of the resolution plan.
2. Alleged violation of principles of natural justice.
3. Ordering fresh Corporate Insolvency Resolution Process (CIRP).
4. Exhaustion of legal remedies by the Appellant.

Summary:

1. Extension of Timelines for Implementation of the Resolution Plan:
The Appellant's resolution plan was approved on 01.10.2021 but required implementation within 90 days. The Appellant sought extensions through I.A. No. 77 of 2022 and subsequent appeals, including CA (AT) (Ins) No. 86 of 2022, which granted an additional three months. Despite these extensions, the Appellant failed to comply with the payment schedule. Consequently, the RP filed I.A. No. 283 of 2022 for an extension of the CIRP period, which was allowed on 05.09.2022. The Appellant's appeal against this order (CA (AT) (Ins) No. 340 of 2022) was dismissed, and the decision was upheld by the Hon'ble Supreme Court when the Appellant withdrew Civil Appeal No. 1133 of 2023.

2. Alleged Violation of Principles of Natural Justice:
The Appellant contended that the Adjudicating Authority did not properly consider their I.A. No. 655 of 2022 (Impleadment Application) and I.A. No. 654 of 2022 (Direction Application). The Adjudicating Authority noted these applications as infructuous due to the Appellant's non-compliance with the extended timelines. The Tribunal found no merit in the Appellant's claim of procedural unfairness, noting that the Adjudicating Authority had addressed the relevant issues.

3. Ordering Fresh Corporate Insolvency Resolution Process (CIRP):
The term "afresh CIRP" used in the order dated 05.09.2022 was interpreted as a continuation of the original CIRP initiated on 25.02.2019. The Appellant's failure to implement the resolution plan justified the RP's request for an extension to complete the CIRP. The Tribunal upheld the Adjudicating Authority's decision, emphasizing the importance of timely resolution to preserve the value of the Corporate Debtor's assets.

4. Exhaustion of Legal Remedies by the Appellant:
The Tribunal noted that the Appellant had exhausted all legal remedies, including various interlocutory applications and appeals. The Hon'ble Supreme Court's dismissal of Civil Appeal No. 1133 of 2023, which challenged the Tribunal's order dated 25.11.2022, further confirmed this. The Tribunal concluded that no further relief could be granted to the Appellant under the I&B Code, 2016.

Conclusion:
The Tribunal dismissed the appeal, finding no error in the Adjudicating Authority's orders. The Appellant's failure to comply with the resolution plan timelines, despite multiple extensions, and the subsequent legal proceedings, justified the continuation of the CIRP and the approval of a new resolution plan submitted by Respondent No. 3. The Tribunal also held that the Appellant, having failed to fulfill its obligations, lacked the locus standi to challenge the new resolution plan.

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