2025 (3) TMI 783 - AT - IBC

NCLAT dismisses appeal challenging tea garden resolution plan approval due to lack of standing

Merico Agro Industries Pvt. Ltd. & Anr. Versus Ram Ratan Modi (RP of Duncans Industries Ltd.) And Nagri Farm Tea Co. Ltd. Versus Ram Ratan Modi, (RP of Duncans Industries Ltd.) & Anr.

NCLAT dismissed appeal challenging resolution plan approval for tea garden corporate debtor. Court held appellant lacked locus standi as only stakeholders ... Approval of Resolution Plan in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - renewal of leases for Tea Gardens - no locus to file the Appeal - HELD THAT:- In view of the approval of the Resolution Plan, the SRA has come into the shoes of the CD and when CD had applied for renewal of the leases, where period of the leases had expired, no exception can be taken to the direction of the Adjudicating Authority permitting the SRA to pursue the renewal application or to file application where renewal application has not been made. The prayers made on behalf of the Appellant to set aside paragraph 18 and Clause 9.2.1 of the sub-paragraph 20 of the order, cannot be accepted. The Adjudicating Authority while approving the Resolution Plan or issuing direction contained in paragraphs 18 and 9.2.1 has to be treated not to have expressed any opinion with regard to renewal of the leases, which is in the domain of State of West Bengal. Only liberty to pursue the application was granted and the question of granting renewal is in the domain of the State Government. The Adjudicating Authority has not made any observation with regard to grant or non-grant of renewal of leases. It is clarified that directions of the Adjudicating Authority has to be treated, limited to right to pursue the renewal application/ make an application for renewal and the Adjudicating Authority has not have expressed any opinion on the merits of renewal application, which is in the domain of State Government. Conclusion - i) Only stakeholders with a direct interest in the CIRP have the standing to challenge the Resolution Plan. ii) It is also clarified that the SRA could pursue lease renewals as a successor to the CD, without affecting the state's authority over lease decisions. Appeal dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the Adjudicating Authority was correct in approving the Resolution Plan submitted by Uniglobal Papers Pvt. Ltd. and the related directions for the renewal of leases for Tea Gardens.Whether the Appellants, Merico Agro Industries Pvt. Ltd. and Nagri Farm Tea Co. Ltd., have the locus standi to challenge the Resolution Plan and the directions regarding lease renewals.The validity of the directions given by the Adjudicating Authority to the Successful Resolution Applicant (SRA) to apply for or pursue renewal of leases for Tea Gardens, which were not considered assets of the Corporate Debtor (CD).2. ISSUE-WISE DETAILED ANALYSISIssue 1: Approval of the Resolution PlanRelevant Legal Framework and Precedents: The approval of a Resolution Plan is governed by the Insolvency and Bankruptcy Code (IBC), particularly focusing on the Committee of Creditors (CoC) approval and the role of the Adjudicating Authority in sanctioning the plan.Court's Interpretation and Reasoning: The Tribunal noted that the Resolution Plan had been approved by a 99.20% vote share of the CoC, indicating substantial support from the stakeholders involved in the CIRP.Key Evidence and Findings: The Tribunal highlighted that the Resolution Plan was submitted by Uniglobal Papers Pvt. Ltd. and approved by the CoC, reflecting compliance with procedural requirements under the IBC.Application of Law to Facts: The Tribunal applied the IBC provisions to affirm the Adjudicating Authority's decision, emphasizing the substantial approval by the CoC and the procedural compliance.Treatment of Competing Arguments: The appellants argued that the plan's approval was prejudicial due to directions on lease renewals, but the Tribunal found no merit in these arguments, focusing on procedural correctness and stakeholder approval.Conclusions: The Tribunal upheld the approval of the Resolution Plan, dismissing the appeals challenging this approval.Issue 2: Locus Standi of the AppellantsRelevant Legal Framework and Precedents: The locus standi in CIRP proceedings typically requires a direct stake or interest in the outcome, often limited to creditors and stakeholders directly involved with the CD.Court's Interpretation and Reasoning: The Tribunal noted that the Appellants, Merico Agro Industries Pvt. Ltd. and Nagri Farm Tea Co. Ltd., were not stakeholders in the CIRP and thus lacked the locus standi to challenge the Resolution Plan.Key Evidence and Findings: The Tribunal referenced the Supreme Court's dismissal of the Appellants' earlier appeals, reinforcing the lack of standing.Application of Law to Facts: The Tribunal applied the principle that only stakeholders with a direct interest in the CIRP could challenge the outcomes, dismissing the Appellants' locus standi.Treatment of Competing Arguments: The Appellants claimed possession and operational rights over certain Tea Gardens, but the Tribunal found these claims insufficient to establish standing in the CIRP context.Conclusions: The Tribunal concluded that the Appellants lacked the necessary standing to challenge the Resolution Plan.Issue 3: Directions on Lease RenewalsRelevant Legal Framework and Precedents: The IBC does not explicitly address lease renewals, leaving such matters to be governed by applicable state laws and lease agreements.Court's Interpretation and Reasoning: The Tribunal clarified that the directions given by the Adjudicating Authority were limited to allowing the SRA to apply for or pursue lease renewals, without expressing any opinion on the merits of such applications.Key Evidence and Findings: The Tribunal noted that the CD had pending applications for lease renewals, which the SRA was entitled to pursue as the successor to the CD.Application of Law to Facts: The Tribunal applied the principle that the SRA, stepping into the shoes of the CD, could pursue pending applications for lease renewals, but the ultimate decision rested with the State of West Bengal.Treatment of Competing Arguments: The Appellants argued that the directions were prejudicial, but the Tribunal clarified that the directions did not predetermine the outcome of renewal applications.Conclusions: The Tribunal upheld the directions, emphasizing that they merely allowed the SRA to pursue applications without influencing the decision-making authority of the state.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'The Adjudicating Authority has not made any observation with regard to grant or non-grant of renewal of leases. We, thus, only clarify that directions of the Adjudicating Authority have to be treated, limited to the right to pursue the renewal application/make an application for renewal and the Adjudicating Authority has not expressed any opinion on the merits of renewal application, which is in the domain of State Government.'Core principles established: The Tribunal reinforced the principle that only stakeholders with a direct interest in the CIRP have the standing to challenge the Resolution Plan. It also clarified that the SRA could pursue lease renewals as a successor to the CD, without affecting the state's authority over lease decisions.Final determinations on each issue: The Tribunal dismissed the appeals, upholding the Resolution Plan's approval and the directions regarding lease renewals, subject to the state's discretion.