Resolution plan approval upheld as striking off company register cannot eliminate financial liabilities or invalidate insolvency proceedings

NCLAT dismissed appeal challenging resolution plan approval. Corporate debtor was struck off from ROC register but later revived, with NCLAT holding that striking off cannot wash away financial liabilities and CIRP proceedings remain valid. Tribunal rejected appellant's claims filed post-CoC approval of resolution plan as time-barred. Settlement agreements between parties were nullified by financial creditor, maintaining corporate debtor's liability. NCLAT ruled that once Section 7 application is admitted based on debt and default, liability cannot be disputed during plan approval stage. Resolution plan approval upheld.

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Issues Involved:
1. Validity of CIRP proceedings against a struck-off company.
2. Admissibility of claims filed after the approval of the Resolution Plan by the CoC.
3. Impact of Settlement Agreements on the liability of the Corporate Debtor.

Summary:

1. Validity of CIRP proceedings against a struck-off company:
The Corporate Debtor was struck off by the Registrar of Companies on 29.10.2019. The Appellant argued that the CIRP proceedings initiated u/s 7 of the IBC against the Corporate Debtor were void as the company was non-existent. However, the NCLAT noted that the Section 7 application was filed on 19.07.2019, when the company was still in existence. The Adjudicating Authority had already overruled the objection regarding the company being struck off in its order dated 11.02.2022, which was not challenged. The Tribunal also observed that the Resolution Professional had taken steps to restore the company's status to 'active' in the MCA records, thus validating the continuation of CIRP proceedings.

2. Admissibility of claims filed after the approval of the Resolution Plan by the CoC:
The Appellants, Pooja Film Company and Pooja Entertainment and Films Limited, filed their claims in Form C on 10.04.2023, after the Resolution Plan was approved by the CoC on 04.11.2022. The Resolution Professional did not accept these claims. The NCLAT upheld the decision, noting that claims were filed post-approval of the Resolution Plan. Furthermore, an application (I.A. No.4047 of 2023) filed by Pooja Entertainment & Films Ltd. for admitting its claim was rejected by the Adjudicating Authority on 16.08.2023, and this order was not challenged, making it final.

3. Impact of Settlement Agreements on the liability of the Corporate Debtor:
The Appellant argued that under Settlement Agreements dated 18.06.2018 and 21.06.2018, the liability of the Corporate Debtor was to be discharged by Super Cassettes Industries Private Limited. However, the NCLAT found that the Financial Creditor had nullified these agreements in writing on 23.06.2018, stating that the terms were not adhered to by Super Cassettes Industries Private Limited. Thus, the liability of the Corporate Debtor to discharge its financial debt continued. The Tribunal emphasized that the admission of the Section 7 application based on debt and default had become final, and it was not open for the Ex-Director to contest the existence of the debt during the plan approval stage.

Conclusion:
The NCLAT dismissed all three appeals, upholding the order dated 12.10.2023, which approved the Resolution Plan of the Corporate Debtor. The Tribunal reiterated that the commercial wisdom of the Committee of Creditors in approving the Resolution Plan is paramount and cannot be interfered with on the grounds raised by the Appellants.

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