The New Delhi bench of the National Company Law Tribunal (NCLT) held that settlement proposal under section 12A of the Insolvency and Bankruptcy Code (IBC) cannot be considered after the approval of resolution plan. The Tribunal further held that multiple such proposals had already been proposed on previous occasions and all of them were rejected by Committee of creditors (CoC).
The erstwhile management of the Primrose Infratech Pvt. Ltd. , corporate debtor filed an application under section 12A of the IBC read with regulation 30A of the CIRP regulations, 2016 in which a settlement was proposed before the committee of creditors (CoC) and withdrawal of a petition admitted under section 9 of the IBC was sought. Earlier, the CoC had approved the resolution plan.
The applicant claimed that their offer to the tune of Rs. 20 crores was way better than the offer given by the successful resolution applicant (SRA) of Rs. 15 crores with only 1 lakh as equity. The applicant argued that an application under section 12A of the IBC can be filed at any stage even after the approval of resolution plan.
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Per Contra, the respondent resolution professional submitted that the resolution plan had already been approved by the CoC therefore the settlement plan could not be placed before it at this stage. It was further contended that multiple applications under section 12A of the IBC had previously been filed by the applicants and all of them were rejected by the CoC or the tribunal.
The Tribunal agreed with the contention of the respondent and held that ex management of the corporate debtor filed various applications under section 12A of the IBC which were not approved therefore they cannot be allowed to file the same application now. The CoC had already rejected their applications on previous occasions in which settlement was proposed. The tribunal further noted that the applicants did not show genuine interest in the settlement proposal. It was a tactic on their part to delay the approval of resolution plan by filing such applications.
The NCLT bench comprising Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri Subrata Kumar Dash (Technical Member), concluded that at this stage when resolution plan had already been approved, a new application under section 12A of the IBC cannot be entertained therefore the application is liable to be rejected.
