Resolution Applicant must fulfil Obligation under Resolution Plan while Lender Discharges their Obligations: NCLAT dismisses appeal of SBI
The Principal Bench of the National Company Law Appellate Tribunal(NCLAT) has held that the resolution applicant must fulfil an obligation under the resolution plan while the lender discharges their obligations and dismissed the appeal of State Bank of India (SBI).
State Bank of India, the appellant one of the Members of the erstwhile Committee of Creditors (CoC) of M/s MBL Infrastructures Limited has filed a challenge to the order passed by National Company Law Tribunal, Kolkata Bench, Kolkata filed by Respondent wherein the Adjudicating Authority has issued certain directions to the Appellant for implementation of the approved Resolution Plan.
M/S MBL Infrastructures Ltd. was set up by one Mr A. K. Lakhotia. Certain financial facilities were extended to M/S MBL Infrastructures Ltd. in which default was committed, initiating proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016. On 30.03.2017, the Section 7 Application was admitted and Corporate Insolvency Resolution Process (CIRP) began.
After the submission of the Plan, Section 29A was introduced in the Code with effect from 23.11.2017. The Adjudicating Authority declared the Resolution Applicant eligible vide order dated 18.12.2017, which was challenged by Punjab National Bank by way of an Appeal, where an interim order was passed that without prior approval of the Appellate Tribunal, no Plan shall be accepted.
The Appellate Tribunal permitted the Appeals to be withdrawn on 23.03.2018. Thereafter, Resolution Plan was approved by 75.80% voting share. By an order dated 18.04.2018, the Adjudicating Authority approved the Resolution Plan and also excluded the period of 106 days.
The State Bank of India, IDBI Bank, Bank of Baroda and Bank of India filed four separate Appeals, challenging the order dated 18.04.2018 passed by the Adjudicating Authority, before the Appellate Tribunal. The main ground of challenge in the Appeal was that Resolution Applicant was ineligible given Section 29A.
In the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, under Regulation 39, sub-regulation (9), a creditor is allowed to apply to Adjudicating Authority for direction in case there is any non-implementation of the Resolution Plan. It was found that the Appellant had not made an application praying for any direction to the Resolution Applicant towards implementation of the Plan alleging any non-implementation.
A two-member bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical) observed that the Resolution Applicant applied for contempt against the Bank shall also carry out its obligation under Resolution Plan promptly, while the Lenders will discharge their obligations in the Plan and as per directions issued in the impugned order by the Adjudicating Authority.
While upholding the impugned order also directed the Resolution Applicant to carry out its obligations in the Resolution Plan along with carrying out all the obligations by the Lenders.
To Read the full text of the Order CLICK HERE
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