2025 (7) TMI 1717 - AT - IBC

NCLAT Upholds Order on CoC's Reconsideration of Resolution Plan Under Insolvency Rules

Om Drishian International Ltd. Versus Rakesh Kumar Gupta Resolution Professional Earth Buildprop Pvt. Ltd. & Anr.

The NCLAT upheld the impugned order, finding no error in the directions issued to the CoC regarding reconsideration of the appellant's resolution plan. ... Approval of Resolution Plan - jurisdiction in the CoC to proceed to invite other plans and approve another resolution plan - HELD THAT:- In so far as direction issued, which was for reconsideration of the plan of the appellant, that part has already been taken care by the CoC and the minutes of the 20th CoC meeting has already been brought on the record by means of an affidavit by the Resolution Professional. In so far as the impugned order is concerned the Adjudicating Authority having given opportunity to the appellant to file an affidavit which has been noticed in para-7 & 8, the directions issued in para-9 are in accordance with law and there is no error in the directions issued in para-9. In so far as submission of the appellant that subsequent approval of plan by the CoC after the 20th CoC meeting is not in accordance with law the said issue need not to be considered in this appeal and ends of justice be served in giving liberty to the appellant to file an objection in the plan approval application IA No. 42 of 2025, it is for the Adjudicating Authority to consider and take appropriate decision. No opinion is expressed on the steps taken by Committee of Creditors after rejection of the plan of the appellant and it is for the Adjudicating Authority to consider all aspects of the matter and take decision in accordance with law. In so far as the submission of the counsel for the appellant regarding order dated 08.05.2025, that order was only interim order permitting the Committee of Creditors to consider the plan of the appellant which cannot be read any expression of any opinion. There is no ground to interfere with the impugned order - appeal disposed off. ISSUES: Whether the Resolution Plan submitted by the appellant complied with the requirements of Section 30(2)(d) of the Insolvency and Bankruptcy Code (IBC), 2016 and the relevant IBBI Regulations, including feasibility, viability, and effective implementation under Regulation 38(3)(b) and 38(3)(c) of the CIRP Regulations, 2016.Whether the Adjudicating Authority was justified in partly allowing the application to withdraw the earlier approval application and remanding the Resolution Plan back to the Committee of Creditors (CoC) for reconsideration.Whether the Committee of Creditors was authorized to consider and approve other resolution plans after rejecting the appellant's revised plan, despite the CIRP timeline having ended and the prior direction to reconsider only the appellant's plan.Whether the appellant was entitled to file an addendum to the resolution plan after the impugned order and whether the CoC was obliged to consider it.What is the appropriate remedy for the appellant if dissatisfied with the approval of another resolution plan by the CoC and the pending plan approval application before the Adjudicating Authority. RULINGS / HOLDINGS: The Resolution Plan did not meet the requirements of Section 30(2)(d) of the IBC, 2016 read with Regulation 38(3)(b) and 38(3)(c) of the CIRP Regulations, 2016, due to 'non-fulfilment of requirements regarding feasibility and viability' and 'non fulfilment of provisions related to its effective implementation.' Accordingly, the plan could not be approved under the proviso to Section 31(1) of the IBC, 2016.The Adjudicating Authority was correct in partly allowing the application and remanding the Resolution Plan to the CoC for reconsideration after addressing the identified shortcomings, as the appellant failed to file the required affidavit despite ample opportunity.The direction in the impugned order was limited to reconsideration of the appellant's plan; however, after the CoC rejected the appellant's revised plan with 100% vote share, the CoC was entitled to consider and approve another resolution plan for the corporate debtor.The appellant was permitted to submit an addendum addressing the shortcomings, which the Resolution Professional was obliged to place before the CoC for reconsideration; this was complied with as per the order dated 08.05.2025.The appellant's remedy against the approval of another resolution plan lies in filing appropriate objections before the Adjudicating Authority in the pending plan approval application; this appeal does not interfere with the steps taken by the CoC post-rejection of the appellant's plan. RATIONALE: The Court applied the statutory framework under the Insolvency and Bankruptcy Code, 2016, specifically Sections 7, 30, and 31, and the Insolvency and Bankruptcy Board of India (IBBI) (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, focusing on Regulation 38(3)(b) and (c) concerning feasibility, viability, and effective implementation of resolution plans.The Court emphasized strict compliance with procedural requirements, including timely filing of affidavits by the Successful Resolution Applicant, and held that failure to comply justifies refusal of plan approval.The Court recognized the limited scope of the Adjudicating Authority's direction for reconsideration of the appellant's plan only but acknowledged the CoC's authority to proceed further after rejection of that plan, consistent with the Code's objectives to resolve insolvency efficiently.The Court declined to express any opinion on the validity of the CoC's subsequent approval of another resolution plan, leaving such matters to be adjudicated by the Adjudicating Authority upon appropriate objections, thereby maintaining judicial restraint and procedural propriety.