Resolution applicant participated in CIRP has locus to object application for approval of Resolution Plan: NCLAT [Read Order]

The Principal bench of the National Company Law Appellate Tribunal ( NCLAT ) has held that the resolution applicant who participated in the Corporate Insolvency Resolution Process ( CIRP ) has the locus to object application for approval of the resolution plan.

PRIO S A, the appellant challenged the order passed by the National Company Law Tribunal, Mumbai Bench, Court-II by which the order filed by the Appellant was rejected.

The applicant is one of the prospective resolution applicants ( "PRIO/ Applicant" ). The corporate insolvency resolution process ( "CIRP" ) was commenced against the Corporate Debtor vide Tribunal's Order. After the commencement of CIRP, the interim resolution professional ( "IRP" ) was substituted with the resolution professional ( "RP" ), who published, in Form G, an invitation for submission of expression of interest ( "EOI" ). Pursuant thereto the Applicant submitted an EOI on May 7, 2020.

As per the EOI, the Applicant submitted an offer ( "First Offer" ) for the acquisition of the entire participating interest ( "PI" ) held by VEBL ( a step-down subsidiary of the Corporate Debtor, incorporated in the British Virgin Islands, through which the Corporate Debtor holds Quota/ shares in IBV ) indirectly through IBV Brasil Petr61eo Lda. ( "IBV" ) for the amount of US$32,500,000.

It was submitted that the Appellant having submitted three offers after issuance of Form-G and RFRP issued by RP, the Appellant was asked to revise/ improve its offer after negotiation with RP and CoC.  The Appellant has sufficient interest in the proceedings to resist the Application filed by RP for approval of the offer of Respondent No.2.  It was submitted that the Adjudicating Authority committed an error in holding that the Appellant has no locus to file the Intervention Application.  It was further submitted that the Adjudicating Authority without permitting the Appellant to intervene in the matter and to file any affidavit in opposition to IA 2787 of 2023 has proceeded to examine the various contentions on merits, which was uncalled for

The Adjudicating Authority proceeded to examine the objections on merits and thereafter saying that the Appellant has no locus is a contradiction in itself. The Appellant, who participated in the process cannot be said to be a person having no locus to object to the Application filed by the RP for approval of the offer submitted by Respondent No.2.

The Coram comprising of Justice Ashok Bhushan, Chairperson, Mr Barun Mitra, Member ( Technical ) and Mr Arun Baroka, Member ( Technical ) held that the Appellant has locus in the matter and the Intervention Application filed by the Appellant, ought not to have been rejected.

The Tribunal directed the Appellant to file the Application along with a copy of the order before the Adjudicating Authority within a week from today. 

To Read the full text of the Order CLICK HERE

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