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Resolution Plan approved by CoC cannot be permitted to withdraw its Resolution Plan: NCLAT

Resolution Plan has been approved by the Committee of Creditors by the required majority, the Resolution Applicant cannot be allowed to withdraw the Resolution Plan even if the said Resolution Plan is pending approval from NCLT. The judgment passed by the NCLAT New Delhi (principle bench), in its decision in Kundan Care Products Ltd. vs. Aman Gupta (Company Appeal (AT) (Insolvency) No. 653 of 2020)   by Hon’ble Shri Justice Bansi Lal Bhat and Justice Anant Bijay Singh.

The facts of the case were such that – The Adjudicating Authority,  (NCLT) rejected the interlocutory appeal inter alia, on the ground that it would not be suitable for the Adjudicating Authority to manage an issue that is now sub-judice under the steady gaze of the Hon’ble Apex Court. With the help of this Appeal the Appellant, who has arisen as the Successful Resolution Applicant in Insolvency Resolution Process of M/s Astonfield Solar (Gujarat) Pvt. Ltd./Corporate Debtor attacks the reproved request dismissing its Application for withdrawal of its Resolution Plan and crossing out/disavowal of the Performance Bank Guarantee, on the ground that there is no lawful premise or defense for holding that an application for withdrawal of a Resolution Plan post-endorsement isn’t viable and that the matter forthcoming thought under the watchful eye of Hon’ble Apex Court in Civil Appeal was documented by the Appellant summoning Article 142 of the Constitution of India looking for explicit help in substitute to the alleviation of withdrawal of the Plan and same made little difference to Interlocutory appeal forthcoming before the Adjudicating Authority.

The council on behalf of the appellant submitted that there is no premise or legitimization for the tracking down that the Adjudicating Authority under the Insolvency and Bankruptcy Code has no force or purview to permit withdrawal of a Resolution Plan post endorsement from the Committee of Creditors.

It is additionally presented that I&B Code doesn’t contain any arrangements to urge explicit execution of a Resolution Plan by a reluctant Resolution Applicant and supplication for withdrawal of an arrangement should be acknowledged, if the arrangement is discovered to be unviable, unsuitable for execution, or is either deficient with regards to arrangements for its effective execution or depends on mistaken suspicions. It is additionally presented that the Adjudicating Authority must be fulfilled about the possibility and practicality of the Resolution Plan and in case of these pertinent variables found coming up short on the Adjudicating Authority may dismiss the Resolution Plan endorsed by CoC or dispatch the case to CoC for re-evaluation. It is finally presented that in the moment case the endorsed Resolution Plan has been delivered economically unviable because of postponement in finish of CIRP and the Appellant couldn’t be kept from pulling out something similar.

In the landmark case of “Committee of Creditors of Metalyst Forging Ltd. Vs. Deccan Value Investors LP & Ors.” It was held that –

The company Resolution Plan approved by the Committee of Creditors was found to be violative of Section 30(2)(e) of the I&B Code. It is in the context of such infirmity that this Appellate Tribunal had observed that the Adjudicating Authority could not compel specific performance of a plan by an unwilling Resolution Applicant. Such observations cannot be treated as a ratio to be followed as a precedent. The facts were entirely different and contravention of Section 30(2)(e) was found to have been established in that case. Same has no resemblance or comparison with the facts of the instant case where the Resolution Plan approved by the Committee of Creditors is still awaiting approval of the Adjudicating Authority

Thusly, no dependence can be put on the perceptions made in the previously mentioned running the show. We may likewise add that the supported Resolution Plan in fact doesn’t have an arrangement that could be treated as an agreement of individual help delivering the equivalent unenforceable or of nature in regard to which explicit execution can’t be a proper cure.

Click here to see the Judgment

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