No Modification/Alteration can be Called under IBC after Approval of Resolution Plan of CoC and Before Approval by Adjudicating Authority: NCLAT [Read Order]
No Modification – Alteration can be Called under IBC after Approval of Resolution Plan – Adjudicating Authority – NCLAT – TAXSCAN
No Modification – Alteration can be Called under IBC after Approval of Resolution Plan – Adjudicating Authority – NCLAT – TAXSCAN
The National Company Law Appellate Tribunal(NCLAT) has held that no modification/alteration can be called under the Insolvency and Bankruptcy Code (IBC), 2016 after approval of the resolution plan of the Committee of Creditors. (CoC) and before approval by adjudicating authority
Dr Ravi Shankar Vedam, the appellant sought a forensic audit of the ‘Books of Accounts’ of the Corporate Debtor, and not to approve the Resolution Plan till the disposal of the Application. Further, the Adjudicating Authority has also dismissed the Miscellance Application challenging the approval of the Resolution Plan.
The Adjudicating Authority while dismissing the Application has noted that the application was filed by the Resolution Professional seeking the approval of the Resolution Plan and ‘Embassy Property Developments Private Limited’ (“EPDPL”) was voted as SRA. The Resolution Plan was approved vide Order dated 12/06/2019.
It was contended by the Counsel that the Adjudicating Authority has not discussed the various submissions made by the Appellant, and only passed a non-speaking Order. It was submitted that the MoU was entered into between the Company and Udhyaman, keeping in view, the mutual interest of both the parties. It was consented that the Company would pay to Udhyaman, a sum of Rs.11,50,00,000/- with interest of 18% p.a. as recorded in the ‘Joint Memo of Compromise’, before the Learned Judicial Magistrate, Bellari in CC No. 1687/2014.
The Appellant has strenuously argued that had the Transaction Audit has been carried out, the Resolution Plan would not have been approved. It is not in dispute that the Appellant is one of the largest shareholders of the Corporate Debtor and not having raised these issues earlier, at the later stage, contends that other shareholders and Directors have indulged in ‘Fraudulent Transactions’.
the IBC was introduced to overhaul the insolvency and bankruptcy regime in India. As such, it is a carefully considered and well-thought-out piece of legislation which sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience.
It was submitted that Mr Sriram Vedam, the Applicant’s brother died intestate on 21/05/2018 and then, the Corporate Debtor was in moratorium under IBC, vide Order dated 12/03/2018. As the Board was suspended during that time, the Shares would not have been transferred and therefore, this Applicant is not a shareholder and has no locus to file this Application.
There is no ‘material irregularity’ in the approval of the Resolution Plan and Section 30(2) of the Code and Regulations 37, 38 (1) (A), and 39 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 was adhered to and there is no contravention to Section 29A or any other Provisions of the Law, for the time being in force.
The Apex Court, in the matter of ‘Ebix Singapore Pvt. Ltd. & Ors. v. Committee of Creditors of Educomp Solutions Private Limited’, has laid down that after the approval of the Resolution Plan of the CoC and before the approval by the Adjudicating Authority, no modifications/alterations can be called for as IBC is a time-bound process.
A two-member bench comprising Justice M. Venugopal, Member (Judicial) and Ms Shreesha Merla, Member (Technical) upheld the ‘Order of the Learned Adjudicating Authority’ in the ‘Approval of the Plan’ or the rejection of Miscellaneous Application.
To Read the full text of the Order CLICK HERE
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