The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that the extension of time in payment not modification of resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC).
The Appellant sent a letter to the Chairman of Monitoring Committee, highlighting the efforts for recovery of litigation of Corporate Debtor and to make the balance payment. In the letter it was informed that under the Arbitration Award in the arbitration proceedings against M/s Lloyd Steel Industries, the arbitrator has awarded an amount of approx. Rs.102 lakhs in favour of the Corporate Debtor against the projected amount of Rs.50 lakhs in the Resolution Plan.
Pankaj Jain, the Counsel for the Appellant challenging the impugned order ordering for liquidation submits that present was not a case where Adjudicating Authority ought to have directed for liquidation. The Appellant has made payment of three tranches within time. The total amount required to be paid by the Appellant before 16.04.2024 and for payment of fourth tranche the amount was available, which request was made to SBI to utilize the amount, which the SBI did not accept.
It was submitted that the appellant has given sufficient reason for extension of timeline for making the payment of balance amount under the Resolution Plan, which Application has been rejected on the erroneous ground that CoC has not agreed for extension.
Harshit Khare, the Counsel appearing for SBI refuting the submissions of the Counsel for the Appellant submitted that Appellant had not made the payment of fourth tranche which was due on 15.04.2023, hence the Bank had filed application for liquidation. It was submitted that subsequent request received from the Appellant to utilize the amount lying in different accounts, which included the utilization of Performance Guarantee of Rs.40 lakhs was duly replied by the Bank.
A Two-Member Bench comprising Justice Ashok Bhushan, Chairperson and Arun Baroka, Member Technical observed that “The Adjudicating Authority committed error in rejecting IA No.483 of 2023 filed by the Appellant seeking extension of time for payment, on the wrong premise that since the CoC has not approved the extension, the extension cannot be granted. The extension of time in payment is not the modification of the Plan. We, thus, are of the view that order passed by the Adjudicating Authority rejecting the application filed by the Appellant is unsustainable and is set aside” the Tribunal concluded.
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