The New Delhi Bench of the National Company Law Appellate Tribunal ( NCLAT ) held that the Successful Resolution Applicant ( SRA ) cannot seek substitution with another resolution applicant when resolution plan is approved by the Committee of Creditors ( CoC ) and National Company Law Tribunal ( NCLT ).
The appeal has been filed against order of the same date 27.12.2023 passed by the Adjudicating Authority ( NCLT ), Mumbai Bench, by which two I.As. filed by the Appellant for substituting another entity namely UV Stressed Assets Management Private Limited has been rejected.
The Appellant filed an application praying for substitution of Resolution Applicant with another entity, which has been rejected by the Adjudicating Authority by the impugned order.
The counsel for the Appellant submitted that in view of the circular issued by the Reserve Bank of India, Asset Reconstruction Companies cannot be Resolution Applicant unless they have achieved certain net worth which the present Appellant has not. Reserved Bank of India has also issued show cause notice against the Appellant which matter has been taken before the Delhi High Court which is pending consideration.
The counsel for the Appellant further argued that the Appellant cannot be Resolution Applicant in view of the clouds on the eligibility of the Appellant, hence, he has prayed for substituting another Resolution Applicant.
A Three Member Bench comprising Justice Ashok Bhushan, Chairperson, Barun Mitra, Member ( Technical ) and Indevar Pandey, Member ( Technical ) observed that “The present Appeal has been filed against the order by which application filed by the Appellant has been rejected and we fully agree with the reasons given by the Adjudicating Authority for rejecting the application filed by the Appellant for substituting another Resolution Applicant in place of the Appellant. When plan of the Appellant as Resolution Applicant was approved, the Adjudicating Authority rightly refused to substitute another Resolution Applicant, in which order no infirmity is found.”
“In so far as submission of the Appellant that some way forward has to be looked into. It is always open for the Monitoring Committee as well as the Appellant to make appropriate application before the Adjudicating Authority to find out a way forward and to proceed further and it is for the Adjudicating Authority to take call on said applications and decide the same in accordance with law” the Tribunal noted.
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