Resolution Plan Approved Under Section 30(2) IBC, Compliant with Section 29A and K Sashidhar Precedent

The NCLT Mumbai approved the Resolution Plan submitted by the Resolution Applicant, finding it compliant with section 30(2) of the IBC and relevant regulations. The plan was not in contravention of section 29A and met all mandatory requirements. Following the SC precedent in K Sashidhar, the tribunal emphasized that the Adjudicating Authority's role is limited to verifying compliance with statutory criteria and must respect the commercial wisdom of the CoC. Since the plan satisfied all legal requirements, the tribunal allowed the application and approved the Resolution Plan.

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ISSUES:

Whether the Resolution Plan submitted under Section 30(6) of the Insolvency & Bankruptcy Code, 2016 ("the Code") and Regulation 39(4) of the CIRP Regulations complies with the statutory requirements for approval by the Adjudicating Authority.Whether the Resolution Plan adequately addresses the claims and dues of various classes of creditors, including Workmen, Operational Creditors, Financial Creditors, and Other Creditors, in compliance with the Code and relevant judgments.Whether the Resolution Applicant meets the eligibility criteria under Section 29A and other applicable provisions of the Code.Whether the Resolution Plan provides for effective management, control, and implementation mechanisms as required under the Code and CIRP Regulations.Whether the Resolution Plan's conditional clauses, especially regarding environmental clearances and permissions, are valid and enforceable.Whether the Resolution Plan complies with the requirement of extinguishment of existing shares and allotment of new shares without requiring further consents under the Companies Act, 2013.Whether the Resolution Plan complies with the principle that claims not included in the approved plan stand extinguished as per the Supreme Court's judgment in Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited.

RULINGS / HOLDINGS:

The Resolution Plan submitted under Section 30(6) of the Code and Regulation 39(4) of the CIRP Regulations is approved as it meets the requirements specified in Section 30(2) and is compliant with the law.The Resolution Plan provides for payment to Workmen, Operational Creditors, Financial Creditors, and Other Creditors in a manner that is "not less than what they would have got under as per Section 53 of IBC," including full payment of Provident Fund and Gratuity dues, thus complying with the Jet Airways judgment and relevant statutory provisions.The Resolution Applicant is eligible under Section 29A and has submitted the required affidavit of eligibility; hence, it is qualified to submit and implement the Resolution Plan.The Resolution Plan contains adequate provisions for management and control of the Corporate Debtor, including reconstitution of the Board and supervision by an Interim Committee, ensuring effective implementation and compliance with the Code.The conditional clause requiring clarification/permission from competent authorities regarding the Eco-Sensitive Zone is valid; failure to obtain such permission within 180 days results in termination of the Resolution Plan without liability on the Resolution Applicant, with refund of deposits and costs as specified.The Resolution Plan's provision for extinguishment of existing shares and allotment of new shares to the Resolution Applicant without requiring shareholder consent under the Companies Act, 2013, is valid and binding.In accordance with the Supreme Court's judgment in Ghanshyam Mishra and Sons Private Limited, all claims not included in the approved Resolution Plan stand extinguished, and no further proceedings can be initiated in respect thereof.

RATIONALE:

The Court applied the statutory framework under the Insolvency & Bankruptcy Code, 2016, particularly Sections 7, 16, 25, 29A, 30, 31, 32A, 53, and relevant Regulations under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016.The Court relied on precedent, including the Supreme Court's ruling in K Sashidhar v. Indian Overseas Bank & Others, which mandates that the Adjudicating Authority's role is limited to verifying compliance with Section 30(2) and giving primacy to the commercial wisdom of the Committee of Creditors.The Court considered the Jet Airways judgment to ensure that Workmen's dues, including Provident Fund and Gratuity, are paid in full or at least not less than the minimum entitlement under Section 53 of the Code.The Court examined the detailed compliance certificate (Form H) and found the Resolution Plan compliant with all mandatory requirements, including payment priorities, management control, and eligibility criteria.The Court noted the Resolution Professional's adherence to orders admitting additional claims of Workmen and the Resolution Applicant's commitment not to pay amounts beyond the admitted claims where the proposed payment already exceeds statutory entitlements.The Court addressed the conditional clause concerning environmental clearances as a valid condition precedent to the Resolution Plan's effectiveness, with clear consequences for non-fulfillment, demonstrating a balanced approach to regulatory compliance and commercial certainty.The Court distinguished the Scheme of Arrangement and Amalgamation submitted along with the Resolution Plan, holding that it should be filed and considered separately under the appropriate law, maintaining procedural propriety.The Court emphasized that approval of the Resolution Plan does not absolve the Corporate Debtor or Resolution Applicant from compliance with applicable laws but clarifies non-liability for pre-CIRP offences under Section 32A of the Code.

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