The NCLAT, New Delhi expounded that if the plan is not as per the parameters set out in Section 30(2)(e) of the Insolvency and Bankruptcy Code of India, 2016 (hereinafter referred to as “IBC”) then the plan can be sent back to Committee of Creditors (CoC) for review.
In the present case, it was observed that the Resolution Applicant himself consented for the matter to be sent back to CoC and therefore, now the stand cannot be changed. The reconsideration was only sought for the clause dealing with the release of the personal guarantee of the Promoters. It was ruled that it was not a case where the withdrawal of the plan was sought. Therefore, the plan could have been sent back to CoC for review.
Brief Facts:
The present appeal has been preferred by the Successful Resolution Applicant (SRA) against the order of the NCLT vide which the resolution plan was sent back to the CoC for reconsideration.
Brief Background:
The Resolution Plan submitted by the Appellant was approved with 87.22% votes. Respondent No.2 holds an 87.22% voting share and consented to the plan. Thereafter, Respondent No.2 sought permission from NCLT to withdraw consent to clauses 4(b) and 4(iii) of the Resolution Plan that dealt with the relinquishment of rights of the secured creditor to enforce personal guarantees. The NCLT passed an order vide which the plan was remitted back to CoC and hence, the present appeal.
Contentions of the Appellant:
It was argued that once the plan has been approved, it cannot be sent back for reconsideration at the request of the Financial Creditor.
Contentions of the Respondent No.1:
It was argued that the entire plan has not been sent back. Only the clause dealing with the mandatory release of the personal guarantee given by the promoters is being sent back for reconsideration. Further, it was argued that such a clause is violative of Section 128 of the Indian Contract Act.
Contentions of the Respondent No.2:
It was contended that the Appellant would not be affected in any matter if the said clause is withdrawn. Further, the CoC only wanted to delete the clauses and not review the decision of approval of the Resolution Plan.
Observations of the Tribunal:
It was opined that the Resolution Plan once approved is binding between the CoC and the SRA. However, in the present case, the issue was whether the Plan can be sent back for carrying out some changes.
Regarding this, the Bench expounded that if the plan is not as per the parameters set out in Section 30(2)(e) of the IBC then the plan can be sent back to Coc for review.
In the present case, it was observed that the Resolution Applicant himself consented for the matter to be sent back to CoC and therefore, now the stand cannot be changed. The reconsideration was only sought for the clause dealing with the release of the personal guarantee of the Promoters. It was ruled that it was not a case where the withdrawal of the plan was sought.
The decision of the Tribunal:
Based on the aforementioned findings, no ground was made out for setting aside the order, and hence, accordingly, the appeal was disposed of.
Case Title: Noble Marine Metals Co WLL v. Kotak Mahindra Bank & Ors.
Coram: Justice Ashok Bhushan, Shreesha Merla (Technical Member)
Case No: Company Appeal (AT) (Insolvency) No. 653 of 2022
Advocates for Appellant: Advs. Mr. Avinash Bhari, Mr. Aditya Pande, Mr. Prasook Jain, Ms. Kshirja Agarwal
Advocates for Respondents: Advs. Mr. Arvind Nayar, Mr. Amit Mahaliyan, Mr. Akshay Joshi, Mr. Bishwajit Dubey, Ms. Srideepa Bhattacharya, Ms. Aishwarya Gupta, Ms. Shubhangi Agarwal
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