NCLAT allows Resolution Applicant whose Plan once Rejected by CoC to Participate in Freshly Issued Invitation for Expression of Interest [Read Order]

The Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that a fresh plan can be submitted by the same resolution applicant in a freshly issued invitation to expression of interest even if the resolution plan is disapproved by the CoC.

The appeal has been filed challenging an order passed by the NCLT by which the application of the appellant was dismissed. The corporate debtor was admitted into insolvency after which Interim Resolution Professional invited expression of interest. In pursuance of the invitation, the appellant submitted its Resolution Plan. The Resolution plan submitted by the appellant was approved by the CoC. In pursuance of which an IA was filed before the Adjudicating Authority seeking approval of the plan. Meanwhile, an unsecured financial creditor also filed an IA in which directions were sought to send the plan back to the CoC for reconsideration.

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This IA was allowed by the AA and directed the RP to engage a valuer for assessing the value of intangible assets of the corporate debtor and put the same before the CoC. The AA further directed the CoC to vote again on the plan submitted by the appellant after valuation report is submitted.

Resolution Professional brought into the notice of the CoC that Appellant has sent communication on 05.03.2024 that it shall increase offer by Rs.125 lakhs to overall plan value. CoC decided not to accept revised offer of the Appellant. Consequently, plan stood rejected. The Adjudicating Authority after noting that the plan submitted by the appellant was rejected, dismissed the IA pending for approval of the plan.

Thereafter, an IA was filed by the appellant seeking directions to submit a revised plan. However, the application was dismissed on the ground that the appellant is disqualified from submitting a plan in a freshly issued form G as clarified by RP.The appellant submitted that there was gross material irregularity in the conduct of the CIRP. Fresh valuation of intangible assets after approval of the plan was impermissible under law. IRP did not amend the Information Memorandum even after fresh valuation.

It was also argued that Under Section 30(2), the Adjudicating Authority is entitled to examine the validity of the Resolution Plan and cannot direct the CoC to further negotiate with the Successful Resolution Applicant. Adjudicating Authority travelled beyond its scope while issuing direction on 04.08.2023 and by directing reissuance of Form G, there is no consideration of substantially revised financial proposals given by the Appellant.

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The tribunal observed that none of the parties, including the appellant, had contested the order dated 11.03.2024. Since the Adjudicating Authority ordered the issuance of Form G and dismissed IA No.102 of 2020 for approval of the Resolution Plan as infructuous, the order dated 11.03.2024 has become final and the appellant is no longer able to assert any rights based on its previous Resolution Plan. However, the order has not been challenged.

A two member bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) viewed that Application praying for approval of the Resolution Plan of the Appellant having been dismissed by the Adjudicating Authority and direction was issued for issuance of fresh Form G on 11.03.2024, it was open for the Appellant to participate in the Resolution Process initiated by issuance of Form G.

The Tribunal found that there is no error in the impugned order by which liberty was given to Appellant to participate in the process and there is no illegality in the order impugned.

To Read the full text of the Order CLICK HERE

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