2026 (1) TMI 529 - AT - IBC

Late challenge to approved resolution plan's distribution under IBC s.61(2) rejected; appeal dismissed as time-barred.

The dominant issue was maintainability under s.61(2) IBC. The appellate tribunal held the appeal was filed beyond the statutory period, no application for ... Maintainability of appeal - Limitation under Section 61(2) - CIRP - unjustifiable delay on the part of the Appellant - discrimination in payment of the resolution plan - seeking to setting aside of the Resolution Plan, but only seeking to establish that the Adjudicating Authority has failed to discharge the statutory duty enjoined under the Code - Whether the Adjudicating Authority failed to appreciate that Section 30(2)(b)(ii) of the Code only provides for the minimum amount payable, and that the said provision does not permit inequitable, unfair and discriminatory treatment between Assenting Secured Financial Creditors and Dissenting / Abstaining Secured Financial Creditors when it comes to payment/distribution of the resolution amount? - HELD THAT:- We find that sufficient cause for the condonation of delay has not come on record or explained in any hearing. Perusal of record shows that there is no application for condonation of delay. The law as per Section 61(2) of the Code is very clear that the Appeal has to be filed within 30 days and beyond 30 days, basis sufficient cause, the condonation can be allowed up to 15 days. Basis date of issue of the certified copy of the impugned order, which is placed on record, with a date of 14.02.2022, the limitation has been counted and taken within time, but which is against the provisions in the Code. And the Appeal should be dismissed on this ground alone. There is nothing on record to suggest that the Appellants objected to the Resolution plan, post approval by the CoC and pre-approval by the Adjudicating Authority even though they were having full knowledge of contents of the resolution plan. We observe that even though the Appellant claims that it is not challenging the resolution plan and it is just raising a question of discrimination, basis which distribution to the dissenting Financial Creditor is lower than the assenting Financial Creditor and even less than the Operational Creditor, effectively it is challenging the resolution plan. To us this is a case of challenge of resolution plan disguised as the modification in the distribution. We are convinced with the arguments of R5/SBI that IAs filed before the AA were much belated and unjustified and ought not to have been entertained at all. Perusal of the submissions of the SRA and RP and the reliefs sought by the Appellant, which, interalia, include modifying the provisions of the resolution plan which provide for the distribution of amounts payable to assenting and dissenting Financial Creditors, modifying the definitive documents executed pursuant to implementation of the resolution plan and in effect to stay the implementation of the resolution plan, we observe that it is effectively challenging the resolution plan. Such a challenge could have been done as an appeal before the Adjudicating Authority, within the statutory period provided under the Code, but it was not done so. We observe that the Appellant has filed the impugned application on 09.09.2021, only to circumvent the limitation period for filing appeals. The resolution plan was approved vide order dated 27.03.2019 and the order is not under challenge and has never been under challenge by any of the two parties. The Appellants cannot be allowed to challenge the resolution plan in the garb of their IAs being dismissed, when the order dated 27.03.2019, of the Adjudicating Authority approving the resolution plan has attained finality. We note that the resolution plan stands frozen upon its approval. By seeking amounts other than in the resolution plan, the resolution applicant could not be saddled with liabilities which were not foreseen by it. We also observe that the resolution plan had been agitated earlier by one Resolution Applicant Sharad Sanghi and it was settled as per orders of this Appellate Tribunal on 19th March 2019 and Appellant in the present case being a FC, was fully aware of the proceedings. Thus, we observe that it could have intervened or filed an Appeal, which it didn’t do. By allowing the present IA of the Appellant in this case we cannot reopen the approval of the resolution plan. The Appellant is thus estopped from any relief on this Appeal. No appeals were filed against the resolution plan approval order within the statutory period prescribed under the Code and therefore the resolution plan approved attained finality. Being a Financial Creditor of the company, the appellant was at all times aware of all the developments with respect to the resolution plan from the date of the plan approval order till its implementation on 09.11.2021. Despite this, Appellant had chosen to file an application in September 2021, about 30 months after the approval of the resolution plan. There is an unjustifiable delay on the part of the Appellant in challenging the provisions of the resolution plan. The Appellant is effectively seeking to challenge the resolution plan at this belated stage, after the resolution plan has already attained finality. Thus, on the count of limitation under Section 61(2) of the Code, the Appeal is not maintainable. Accordingly, the Appeal doesn’t deserve to be entertained. No intervention is required in the orders of the Adjudicating Authority. We also observe that the Appellants have been wasting the precious time of both NCLT and NCLAT by filing unjustified claims and that too belatedly. Basis above analysis, the appeal is dismissed as not maintainable. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the appeal against dismissal of the application seeking re-distribution/modification of payments under an already approved resolution plan was maintainable, having regard to limitation under Section 61(2) of the Code and absence of any sufficient cause/condonation request. (ii) Whether a secured financial creditor could, by filing a belated application styled as seeking 'equal treatment' in distribution, indirectly reopen or modify the distribution mechanism of a resolution plan that had already been approved and had attained finality. (iii) Whether, upon approval of a resolution plan under Section 31, the plan stood 'frozen' and binding so as to bar subsequent attempts to claim amounts or seek modifications beyond what the plan provided, and whether the principle affirmed in Ghanashyam Mishra applied to such an attempt. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Maintainability and limitation under Section 61(2) of the Code Legal framework (as discussed): The Court applied Section 61(2) of the Code, noting that an appeal must be filed within 30 days, with a further condonable period of up to 15 days only on showing sufficient cause. Interpretation and reasoning: The Court found that the appeal was filed beyond the permissible period. It noted that limitation was incorrectly computed by relying on the date of the certified copy rather than the statutory scheme, and that there was neither a sufficient explanation for delay nor any application for condonation of delay on record. Since the statute restricts condonation beyond the prescribed outer limit, the Court held the appeal could not be entertained. Conclusion: The appeal was held to be belated and barred by limitation under Section 61(2), rendering it not maintainable on this ground alone. Issue (ii): Whether belated 'equal treatment' application was a disguised challenge to an approved plan and could be entertained Interpretation and reasoning: The Court examined the reliefs sought and held that, despite being framed as a request to remove 'discrimination,' the application and the appeal effectively sought: (a) modification of distribution terms of the approved resolution plan, (b) alteration of definitive documents executed pursuant to implementation, and (c) stay of implementation. The Court treated this as a challenge to the resolution plan itself, attempted through an intervention/application route after the statutory appeal window had closed. It further held that the underlying application before the Adjudicating Authority was itself filed after gross and unjustified delay, despite the applicants' knowledge of the plan contents and approval process, amounting to acquiescence. The Court accepted that the Adjudicating Authority lacked jurisdiction to change/modify an already approved plan, and that filing such applications appeared intended to create an appellate route indirectly. Conclusion: The Court held the proceedings were not maintainable because they were a belated, indirect attempt to reopen and modify a plan that had already attained finality; the applicants were estopped by delay and acquiescence from seeking such relief. Issue (iii): Finality and binding nature of an approved resolution plan ('frozen plan'); applicability of Ghanashyam Mishra Legal framework (as applied): The Court applied the binding effect of an approved resolution plan under Section 31, and relied on the proposition that, once approved, the plan becomes binding and the claims as provided stand frozen. Interpretation and reasoning: The Court upheld the reasoning that once the resolution plan had been approved and had attained finality (no timely appeal against the plan approval order), the stakeholders could not seek payments or recoveries in any manner other than what was envisaged under the plan. The Court rejected the contention that Ghanashyam Mishra was inapplicable, holding that the principle of the plan being frozen and binding prevented saddling the resolution applicant with liabilities not foreseen under the approved plan. The Court also found unpersuasive the argument that mere 'readjustment' of distribution within the same overall plan value would not affect the plan, holding that such modification would still upset the plan and introduce uncertainty, particularly after implementation had commenced. Conclusion: The Court held that the approved resolution plan stood frozen and binding; the attempt to alter distribution/payments post-approval was barred. The Court affirmed the applicability of the principle relied upon from Ghanashyam Mishra to reject post-approval modification attempts.