CoC has Authority to Modify Resolution Plan inorder to Comply Supreme Court’s Direction: NCLAT [Read Order]
The tribunal held that in view of the Order of the Supreme Court, the CoC has to take a final call with regard to Resolution Plan or modification therein or to take such steps as has been directed by the Supreme Court
NCLAT – Corporate Insolvency Resolution Plan – NCLAT Resolution Plan – taxscan
NCLAT – Corporate Insolvency Resolution Plan – NCLAT Resolution Plan – taxscan
The National Company Law Appellate Tribunal ( NCLAT ) has ruled that the CoC is empowered to modify the resolution plan in order to comply with the directions issued by the Supreme Court.
While resolution plan was pending before the Adjudicating Authority, the Supreme Court passed its decision in State Tax Officer in which it was held that the debts owed to a secured creditor are to rank equally with other specified debts including debts on account of workman's dues for a period of 24 months preceding the liquidation commencement date.
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Meenakshi and Kushal Goyal, the Successful Resolution Applicant (SRA) challenged the Order passed by the Resolution Professional (RP). The Adjudicating Authority allowed Prayer (c) of the Application, aggrieved by which Order, this Appeal has been filed.
The Corporate Debtor, Mastana Foods Private Limited came to be admitted in Corporate Insolvency Resolution Process (CIRP) by Order dated 18.09.2019.In response to `Form-G' issued by the RP, Resolution Plan was submitted and in the 10th Committee of Creditors (CoC) Meeting held on 07.11.2020, Resolution Plan of the Appellant along with the Addendum dated 12.10.2020 was duly approved by 100% CoC.
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The Supreme Court delivered its Judgment in the matter of `State Tax Officer' Vs. `Rainbow Papers Limited', (2022) .The appellant submitted that the Resolution Plan of the Appellant has been approved by the CoC with 100% votes and after the Judgment of the Supreme Court, Appellant has filed an Affidavit on 18.03.2024, where it offered to undertake the entire liability of Excise & Taxation Officer, Officer-Cum-Assessing Authority.
It was stated that when Appellant has agreed to accept the entire liability of Excise & Taxation Officer, Officer-Cum-Assessing Authority, no further steps were required except to consider the Plan approval Application which is pending before the Adjudicating Authority and that Supreme Court only intended that Order of the Supreme Court in be complied with, no direction was issued to start the CIRP Process denovo.
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The RP submitted that it is the CoC which is empowered to take all decision regarding CIRP Process and CIRP Process is conducted under the CoC. Hence it is for the CoC to take a call with regard to further steps.
The bench of Justice Ashok Bhushan, Chairperson and Arun Baroka, Member (Technical) viewed that ends of justice be served in disposing the Appeal permitting the RP to place an agenda before the CoC with regard to necessary steps which are required to be taken in the CIRP of the Corporate Debtor in pursuance of the directions of the Hon’ble Supreme Court dated 22.01.2024 in Civil Appeal No. 7514–7515/2022. It is the CoC which is in overall control of the entire CIRP Process to take such steps as required by law.
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The tribunal held that in view of the Order of the Supreme Court, the CoC has to take a final call with regard to Resolution Plan or modification therein or to take such steps as has been directed by the Supreme Court.
To Read the full text of the Order CLICK HERE
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