Approved Resolution Plan cannot be Withdrawn Unless the Breach of S. 30(2) of IBC: NCLAT [Read Order]

The National Company Law Appellate Tribunal ( NCLAT ) affirmed that the law is well settled that the Resolution Plan which is approved by the CoC cannot be allowed to be withdrawn and any clause which contemplate withdrawal of the plan is unenforceable unless section 30(2) of the IBC is breached. The Appellant challenged the two orders passed by the Adjudicating Authority. The Corporate Debtor- 'Nirmal Lifestyle Realty Private Limited' entered into MoU with Ralliwolf Limited on 01.10.2004 in terms whereof Ralliwolf agreed to sell land admeasuring 20262 sq. mtrs. along with all the structures thereon to the corporate debtor for consideration of Rs.7 Crores on as is where is basis. The amount of Rs.7 Crore was paid by the corporate debtor to Ralliwolf. A registered Development Agreement dated 04.08.2005 was entered between the Ralliwolf Ltd. and the Corporate Debtor. The development agreement provided that in consideration of MOU and in further consideration of an amount of Rs.7 Crores paid by the developers to the owner, the owner gives license authorises and permits the developers to enter upon all that piece and parcel of the land for the purpose of commencing and carrying out the work of development and construction, pending the transfer of the said property by the owner to the developers or their nominees. Get a Copy of Boost Your Earning Potential: Upskill in Tax and Finance, Click here In pursuance of clause 6(ii) of the Development Agreement, a General Power of Attorney dated 06.08.2005 was executed in favour of Mr. Dharmesh Jain and his wife Mrs. Anju Jain by Ralliwolf Limited to enable the Corporate Debtor to undertake the development activities with respect to the property. Corporate Debtor had taken certain deposits and loans and on account of default committed by the corporate debtor proceedings under Section 7 against the corporate debtor commenced vide order dated 06.12.2021 of the Adjudicating Authority. The Appellant who had been suspended Director and shareholder of the corporate debtor filed appeal seeking rejection of the waiver sought by the SRA in clause 7.33 of the Resolution Plan. Adjudicating Authority by the impugned order dated 07.03.2024 has rejected with cost of Rs.1 Lakh. The appellant submitted that it is only the person who has given the PoA is entitled to cancel the PoA. The power to cancel the registered document only lay with the Civil Court and the Adjudicating Authority cannot exercise its jurisdiction to cancel a registered document. Get a Copy of Boost Your Earning Potential: Upskill in Tax and Finance, Click here Per contra, the respondents submitted that the PoA which was executed in favour of the Appellant and his wife were PoA as nominees of the corporate debtor only for the purpose of facilitating the corporate debtor in carrying out the development, making application for approvals and sanction of the plan. The NCLAT at the outset rejected the contention with respect to Power of Attorney being illegally cancelled and observed that it is amply clear that the Appellant in the PoA was nothing but nominee of the corporate debtor and Appellant being suspended director of the corporate debtor was treated as nominee of the corporate debtor for the purpose of facilitating the developers. The tribunal noted that the developers being corporate debtor, PoA was not executed in an individual capacity of the appellant nor gave any right to the subject land. When the Resolution Plan submitted by the SRA is approved and the corporate debtor is being taken over by the SRA, the development of property and all other steps as per the Resolution Plan has to be taken by the SRA. Get a Copy of Boost Your Earning Potential: Upskill in Tax and Finance, Click here The tribunal observed that the Resolution Plan declare the PoA which was given in favour of the Appellant as nominee of the corporate debtor as cancelled, the said clause of the Resolution Plan cannot be allowed to be challenged by the Appellant nor Appellant was given any rights in the subject property so as to assert any right. The endeavour of the Appellant is nothing but creating obstacles in revival of the corporate debtor in which he was suspended director. The Bench of Justices Ashok Bhushan, Barun Mitra and Arun Baroka concluded that the plea of the appellant that the Resolution Plan as un-implementable and conditional cannot be accepted. Present is not a case where any violation of Section 30(2) has been even alleged by the Appellant. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Approved Resolution Plan cannot be Withdrawn Unless the Breach of S. 30(2) of IBC: NCLAT [Read Order]

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Approved Resolution Plan cannot be Withdrawn Unless the Breach of S. 30(2) of IBC: NCLAT [Read Order]

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