TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Resolution plan approval under IBC s.30(6) after settlement boosts creditor payouts and expunges adverse observations; rejection quashed.</h1> The dominant issue was whether the order rejecting a resolution plan placed under s.30(6) IBC (including doubts on s.29A eligibility and adverse ... Rejection of the Resolution Plan which was placed for its approval under Section 30(6) of the I & B Code - satisfaction of eligibility requirement under Section 29A or not - HELD THAT:- In view of the settlement terms, which provides for payment of the cost of the CIRP upto the date of the approval of the Resolution Plan, and increase in the total payout to the secured Financial Creditor, Edelweiss Asset Reconstruction Company Limited from ₹ 38.00 Crores to ₹ 42.00 Crores, and increase in the total payouts to Unsecured Financial Creditor M/s. Premier Chennai Properties Private Limited from ₹ 1.00 Crore to ₹ 8.00 Crores, the parties have unanimously submitted that if this Appellate Tribunal sets aside the Impugned Order, and to approves the Resolution Plan in terms of the affidavit, which has been preferred by the Appellant in the two Appeals, they will not have any grievances as such. In the light of the memorandum of settlement, which has been arrived at between the parties leading to the conclusion as dealt with hereunder, the observations that has been made in the Impugned Order, as against the Appellant of Comp Appeal would too stand expunged, being considered unduly excessive because of the fact that, it is being pointed out, the auditors in their report have not mentioned about any fraudulent transaction and have not raised any specific allegations with regards to the avoidance transaction. Thus, all these Company Appeals would stand allowed and the Impugned Orders in the respective Company Appeals will stand quashed. Issues: (i) Whether the impugned NCLT order rejecting the Resolution Plan submitted by M/s. Sunbeam Structural Pvt. Ltd. should be set aside and the Plan approved (with replacement of the Resolution Applicant by M/s. Winwind Power Energy Pvt. Ltd.) subject to compliance with statutory requirements including Section 29A of the IBC and terms of the parties' settlement; (ii) Whether the adverse observations against the erstwhile Resolution Professional in the impugned order should be expunged in view of the settlement and supporting material.Issue (i): Whether the appeals seeking setting aside of the impugned order rejecting the Resolution Plan and approval of a revised Resolution Plan (with addendum and replacement of the Resolution Applicant) should be allowed subject to conditions.Analysis: The parties executed a memorandum of settlement proposing replacement of the successful resolution applicant and revised payouts to creditors, together with an affidavit from the Resolution Professional and a due-diligence report addressing compliance with Section 29A. The secured and unsecured financial creditors expressed commercial acceptance of the revised payouts and conditions. The settlement included a clear payment condition (remittance within seven days of NCLT approval). The Tribunal directed reconsideration by the Adjudicating Authority in line with precedents permitting approval subject to compliance and directed timelines for reconsideration and consequential orders.Conclusion: The impugned orders rejecting the Resolution Plan are quashed, the appeals are allowed, and the matters are remitted to the Learned NCLT to reconsider and pass consequential orders approving the Resolution Plan in accordance with the settlement terms and statutory compliance; approval is subject to the condition of payment as stipulated in the memorandum of settlement.Issue (ii): Whether the observations made against the erstwhile Resolution Professional in the impugned order should be expunged.Analysis: The settlement and supporting materials indicated no specific auditor findings of fraudulent or avoidance transactions against the Resolution Professional, and the parties agreed that certain observations were unduly excessive. The Tribunal treated those observations in the impugned order as standing expunged in view of the agreed settlement and absence of specific adverse findings in auditors' reports.Conclusion: The adverse observations against the erstwhile Resolution Professional in the impugned order are expunged as excessive in the light of the settlement and the record.Final Conclusion: The appeals are allowed; the impugned orders are quashed; the matters are remitted to the Learned NCLT for reconsideration and for passing consequential orders approving the Resolution Plan in accordance with the settlement and statutory compliance, the Learned NCLT to decide within 30 days and the Plan to be effective upon the payment condition being satisfied within seven days as stipulated.Ratio Decidendi: Where parties execute a binding settlement and statutory compliance (including Section 29A) is demonstrated or directed to be verified, an appellate tribunal may set aside an impugned rejection of a resolution plan and remit the matter for the Adjudicating Authority to approve the plan subject to the settlement terms and timely fulfilment of stipulated payment conditions.
TaxTMI 
TaxTMI 
