2026 (2) TMI 1217 - AT - IBC

Procedural fairness: order set aside and matter remitted for fresh hearing allowing impleadment and a right to reply.

Entitlement to profits accrued during the corporate insolvency resolution process required determination with the successful resolution applicant ... Right to be heard / audi alteram partem - impleadment of necessary party - entitlement to surplus profits earned during CIRP - effect of approved resolution plan on distribution of receivables - remand for fresh consideration - HELD THAT:- The Resolution Plan having approved by the CoC on 24.02.2021 much prior to filing of the application, we are of the view that Appellant was necessary party to be heard before passing any order on the application. We, thus, are of the view that the submission advanced by learned counsel for the Appellant that order has been passed without giving opportunity to the Successful Resolution Applicant has substance and we are of the view that the order impugned need to be set aside and the I.A. be revived before the Adjudicating Authority for fresh consideration. We permit the Appellant to be impleaded as Respondent No.2 in the application and also grant opportunity to the Appellant to file reply to the application within two weeks. Both the parties are given liberty to file an application before the Adjudicating Authority for fixing a date for fresh consideration of the I.A.. We also request the Adjudicating Authority to decide the application expeditiously as early as possible. Appeal is disposed of accordingly. We make it clear that we have not expressed any opinion on the merits of contentions of either of the parties and it is for the Adjudicating Authority to consider the same and take a decision in accordance with law. Issues: Whether the Adjudicating Authority erred in deciding I.A. No.2300 of 2023 concerning entitlement to profits accrued during CIRP without impleading and hearing the Successful Resolution Applicant, and whether the impugned order should be set aside and the I.A. revived for fresh consideration.Analysis: The Resolution Plan in which the appellant was the Successful Resolution Applicant had been approved by the Committee of Creditors and by the Adjudicating Authority prior to the hearing and decision of I.A. No.2300 of 2023. The appeal record shows the application before the Adjudicating Authority was decided without the appellant being impleaded or given an opportunity to file a response, despite the decision having direct potential to affect the appellant's rights under the approved Resolution Plan. The appeal court noted that the issue raised in the application (entitlement to profits accrued during the CIRP) required consideration with the appellant heard, and that procedural fairness and necessity of being a party justified setting aside the impugned order and directing fresh consideration by the Adjudicating Authority.Conclusion: The impugned order dated 11.03.2024 is set aside; I.A. No.2300 of 2023 is revived before the Adjudicating Authority; the Appellant is permitted to be impleaded as Respondent No.2 and to file a reply within two weeks; parties have liberty to apply for fixing a date for fresh consideration and the Adjudicating Authority is requested to decide the application expeditiously. No opinion is expressed on the merits of the contentions of the parties.