Whether the Order of the Adjudicating Authority directing the Committee of Creditors to consider ineligibility of the Resolution professional under Section 29A(e) of the Insolvency and Bankruptcy Code, 2016, was considered by the NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI, before a bench consisting of Justice M. Venugopal, Member (Judicial) and Kanthi Narahari, Member (Technical), in the matter of Everest Organics Ltd. vs. Leesa Lifesciences Pvt. Ltd. and Ors. [Company Appeal (AT) (CH) (INS) No. 228 of 2021], on 05.01.22.
The present appeal was filed by the appellant against the Impugned Order dated 25.03.21 passed by the ‘Adjudicating Authority’ (NCLT, Hyderabad Bench), whereby the Adjudicating Authority directed the ‘Committee of Creditors’ (COC) to consider ineligibility of 3rd Respondent under Section 29A of the Insolvency and Bankruptcy Code, 2016. The main grievance of the appellant was that the COC has no power to consider the ineligibility of the 3rd Respondent under Section 29A.
After submission of the plans the respondent became aware that the 3rd respondent though an eligible resolution applicant as an independent entity, as a Director on the Board whose actions have been held as illegal by the NCLT for contravention of Provisions of Section 397, 398 of the Companies Act, 1956. After considering and in the light of Provisions of Section 29A and 30 of the Insolvency and Bankruptcy Code, 2016, read with respective rules and regulations made thereunder, the 3rd Respondent was deemed ineligible under Section 29A of the Code to submit resolution plan for resolution of the Insolvency of the Corporate Debtor.
The respondent informed the Members of the COC about the said ineligibility of Respondent No.3 and post 90.98% of the COC voting to reject the submitted Resolution Plan, an application was filed to initiate the liquidation proceedings of the Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016. It was further submitted that the COC has all the powers to ascertain the eligibility/ineligibility if placed before them. As per Section 30 of the Insolvency and Bankruptcy Code, 2016, it was asserted that the COC shall approve the Resolution Plan when the applicant is eligible. The decision of the respondent were argued to be in accordance with law. It was further submitted that the reasoning given by the Resolution Professional was totally devoid of any merit, contrary to law.
This Tribunal in unequivocal terms stated that the order passed by the Adjudicating Authority had no legal infirmity or illegality. Thus, the appeal was held to be devoid of any merit. Accordingly, the appeal was dismissed.
Judgement reviewed by Bhargavi