Kerala HC Rules NCLT’s Rejection of Resolution Plan Appealable Under Section 61 of IBC [Read Order]
The Court directed parties to approach the National Company Law Appellate Tribunal.
The Kerala High Court held that an order passed by the National Company Law Tribunal (NCLT) rejecting a resolution plan is appealable under Section 61 ofthe Insolvency and Bankruptcy Code, 2016 (IBC), and that the availability of such a statutory remedy bars the invocation of writ jurisdiction.
The dispute arose when MMS Steel & Power Private Limited, a member of the Committee of Creditors holding 80.11% voting share, and K. Sunil Kumar, a personal guarantor to the corporate debtor, challenged an order passed by the Kochi Bench NCLT, during the Corporate Insolvency Resolution Process (CIRP) of Kasargod Power Corporation Limited.
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The NCLT had rejected the resolution plan submitted through the resolution professional and proposed to grant further opportunity to the stakeholders before proceeding further. Aggrieved by the rejection, the petitioners approached the High Court contending that the IBC, 2016 does not provide for an appeal against an order rejecting a resolution plan, thereby compelling them to seek relief under writ jurisdiction.
The core cause behind the case was the interpretation of the appellate framework under the IBC, 2016, particularly whether Section 61 permits an appeal only against approval of a resolution plan or also against its rejection.
The respondents opposed the petitions by contending that Section 61 of the IBC, 2016 provides a comprehensive appellate remedy against any order of the Adjudicating Authority, including rejection of a resolution plan, and that Section 32 only prescribes the grounds applicable when the appeal is against approval of a resolution plan.
The Division Bench comprising Justice Viju Abraham held that Section 31 expressly empowers the Adjudicating Authority to either approve or reject a resolution plan by passing an order. The Court observed that Section 61 permits any person aggrieved by an order of the Adjudicating Authority to file an appeal before the National Company Law Appellate Tribunal, and that Section 32 merely regulates the manner and grounds of appeal when the order challenged is one approving a resolution plan.
Reading the provisions harmoniously, the Court expounded that the appellate remedy under Section 61 extends to orders both approving and rejecting resolution plans. Accordingly, the High Court declined to adjudicate the merits of the dispute, disposed of the writ petitions.
Further, granted liberty to the petitioners to approach the National Company Law Appellate Tribunal, subsequently, directed exclusion of the period spent before the High Court for the purpose of limitation, and continued the interim protection earlier granted for one month to facilitate filing of the appeal.
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