2026 (1) TMI 727 - AT - IBC

Shareholder standing to appeal approval of insolvency resolution plans u/s 61 IBC held lacking; appeals dismissed

Whether shareholders have standing to file appeals under Section 61 of the IBC: relying on the Larger Bench precedent that shareholders possess only ... Condonation of Delay Application - initiate proceedings before the Tribunal or to file an Appeal under Section 61 - Resolution Plan - compliance with the mandatory requirements under Section 30(2) - A) Company Appeal (AT) (CH) (INS) - HELD THAT:- The number of days of delay sought to be condoned falls well within the ambit of the proviso to sub-section (2) of Section 61 of the I & B Code, 2016, the delay stands condoned and IA stands allowed. The shareholders, independently, have no right under law to maintain an Appeal under Section 61 of the Code against an order approving a Resolution Plan. This principle has been propounded by the Larger Bench of this Appellate Tribunal in Park Energy Private Limited v. State Bank of India & Anr [2025 (12) TMI 229 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI] wherein it was observed that shareholders, in their individual capacity, have no independent right under law to initiate proceedings before the Tribunal or to file an Appeal under Section 61 of the Code. Their rights are limited to the extent of their investment in the share capital of the Corporate Debtor, and they have no vested right to challenge the Resolution Plan. Since the Company Appeal at the behest of shareholders is not maintainable, Company Appeal (AT) (CH) (INS) stands dismissed as not maintainable. B) Company Appeal (AT) (CH) (INS) - Primarily, the sole contention of the Appellants was that appropriate action be taken against Respondent No. 2 or any other person under Section 65 of the Code for initiating malicious proceedings before the Ld. Adjudicating Authority. Since the relief sought by the Appellants was in their capacity as shareholders of the Corporate Debtor, and in light of the judgment of the Larger Bench of this Appellate Tribunal referred to above, proceedings at the behest of shareholders are not maintainable. The Appellants have no vested right to independently initiate such proceedings, as their rights are limited under law. Accordingly, applying the ratio of the Larger Bench, Company Appeal (AT) (CH) (INS) also stands dismissed. C) Company Appeal (AT) (CH) (INS) - Since, the Appellants question the impugned order in the capacity of being the shareholders on the ground of alleged theory of fraud because, it was alleged that the Corporate Debtor had colluded and had not contested the proceedings on merits by filing a counter and rather only filed a written submission. This, in itself cannot be inferred to be a collusion to attach fraud to the proceedings and if at all there will be an aggrieved party, it would be the Corporate Debtor and not the Shareholders of the Corporate Debtor because, the Shareholders, as it has been already observed in the Larger Bench’s decision referred to herein above, have got a very restricted right under the I & B Code, 2016, to initiate and contest proceedings under Section 61 of the Code. Since the Appellants being the Shareholders have got no right to sustain the Appeal, the instant Company Appeal (AT) (CH) (INS), would accordingly stand dismissed. All pending connected Interlocutory Applications, if any, would stand closed. Issues: (i) Whether shareholders, in their individual capacity, have a right under Section 61 of the IBC, 2016 to file appeals or seek intervention against approval of a Resolution Plan by the Adjudicating Authority.Analysis: The Appellate Tribunal examined the scope of Section 61 and the role of the Adjudicating Authority in relation to approval of Resolution Plans under Section 30 and related provisions and regulations. The Tribunal considered precedents of the Larger Bench establishing that shareholders' rights under the Code are limited to their investment interest and that they do not possess an independent right to initiate or maintain appeals under Section 61 against approval of a Resolution Plan. The Tribunal also reviewed intervening/impleadment applications and allegations of collusion or fraud by shareholders and noted that any grievance arising from failure to contest proceedings on merits would lie with the Corporate Debtor and not with individual shareholders. The Tribunal applied these principles to the appeals under consideration and found the shareholder-initiated proceedings to be not maintainable.Conclusion: The appeals filed by the shareholders challenging the approval of the Resolution Plan and related orders are not maintainable and are dismissed; decision is against the Appellants and in favour of the Respondent.