PINNACLE OF CREDITOR RIGHTS IN GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY CASE: SUPREME COURT
TITLE: GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY V. PRABHJIT SINGH SONI & ANR.
CITATION: CIVIL APPEAL NOS.7590-7591 OF 2023 (ARISING OUT OF DIARY NO.3628 OF 2023)
DECIDED ON: 12 FEBRUARY 2024
CORAM: CHIEF JUSTICE DR. DHANANJAYA Y. CHANDRACHUD, JUSTICE J. B. PARDIWALA, JUSTICE MANOJ MISRA
Facts of the Case
The Greater Noida Industrial Development Authority (Appellant) filed two applications in the National Company Law Tribunal (NCLT), challenging the Resolution Professional’s decision and the approval of a resolution plan. NCLT dismissed the applications, citing untimely claims. Appellant, claiming to be a financial and secured creditor, appealed to the National Company Law Appellate Tribunal (NCLAT). The appellant submitted a claim as a financial creditor with a security interest, but the resolution plan did not acknowledge it. Allegedly, the appellant was not notified of Committee of Creditors (COC) meetings, rendering the resolution plan invalid according to the appellant.
Issues Involved
Whether the appellant should be recognized as a financial and secured creditor. Whether the resolution plan, not acknowledging the appellant’s claim and non-notification of COC meetings, is valid. Whether the recall application by the appellant was timely. Whether NCLT and NCLAT adequately considered the appellant’s claims.
Legal Provisions
The matter involved interpretation of The Insolvency and Bankruptcy Code (IBC), particularly Section 30, outlined the requirements for a resolution plan. Section 60 of the IBC established the Adjudicating Authority, the National Company Law Tribunal (NCLT). Rule 11 of the NCLT Rules, 2016, preserved the tribunal’s inherent power to recall orders.
Court’s Observation and Analysis
The appellant, having submitted a claim as a financial creditor with supporting proof, complied with Regulation 8. However, the resolution plan failed to acknowledge the appellant’s claim and adhere to IBC parameters, potentially rendering it invalid. The non-notification of COC meetings raised questions about the procedural fairness of the resolution process. The requirement of 66% voting share of financial creditors for resolution plan approval was emphasized. The Adjudicating Authority’s limited jurisdiction was noted, but it could send back plans with shortcomings to the COC. The recall application by the appellant was deemed maintainable, and its grounds were considered valid, not barred by time. NCLT and NCLAT oversight regarding the appellant’s claims and procedural irregularities made their orders susceptible to judicial review. The Court concluded by allowing the appellant’s appeals, setting aside the impugned order and resolution plan, and directing resubmission to the COC after meeting necessary parameters.
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Written by- Komal Goswami