In a recent ruling, the National Company Law Appellate Tribunal (NCLAT), Chennai bench, held that once a resolution plan has been approved and implemented, a challenge by an operational creditor against such approval becomes infructuous, especially when the same plan has already been upheld in connected appeals

The Western Coalfields Limited, appellant, operational creditor, who had challenged the order dated 17 October 2019 passed by the National Company Law Tribunal (NCLT), Hyderabad Bench, approving the Resolution Plan under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016 (IBC).

The appellant, Western Coalfields Limited, argued that the resolution professional had wrongly treated its claim as a contingent claim, even though the Insolvency and Bankruptcy Code (IBC) does not recognise such classification. It contended that the Resolution Plan was arbitrary in prescribing a 24-month limit for crystallisation of claims, especially when such crystallisation depended on outcomes of proceedings beyond the creditor’s control.

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Respondent submitted that the resolution plan had already been fully implemented and that multiple connected appeals challenging the same plan had already been dismissed by the Principal Bench of the NCLAT on 11 March 2022, notably in Balaji Associates v. V. Venkatachalam & Ors.

The NCLT held that the IBC does not recognise the concept of “contingent claims “and directed the Resolution Professional to treat the appellant’s claim as an ordinary claim, subject to the outcome of pending litigations. Thereafter, the resolution plan submitted by one of the respondentswas approved by the committee of creditors(CoC) with 75.91% voting share and subsequently sanctioned by the NCLT.

The Appellate Tribunal noted that the very same Resolution Plan had already been upheld in earlier appeals and that no relief now survived for consideration. The Tribunal observed that once a Resolution Plan has been approved and implemented, reopening the process at the instance of an operational creditor would defeat the finality envisaged under the IBC.

The Bench, Justice Sharad Kumar Sharma (Member Judicial) and Jatindranath Swain (Member Technical), accordingly dismissed the appeal, and all pending interlocutory applications were closed.

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