NCLAT Upholds Liquidation Proceedings as SRA Fails to Secure Regulatory Approvals Within Stipulated Timeline [Read Order]

The Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has upheld the liquidation proceedings, noting that Taguda Pte Ltd, the Successful Resolution Applicant (SRA) failed to obtain the requisite regulatory approvals within the stipulated timeline.

Coming to the facts of the present case, the Corporate Insolvency Resolution Process (CIRP) was initiated against Ushdev International Limited on 17-5-2018, following an application by the State Bank of India (SBI). Taguda Pte Ltd submitted a revised resolution plan on 22-06-2021, which was approved by the Committee of Creditors (CoC) with a 91.06% vote share and subsequently sanctioned by the National Company Law Tribunal (NCLT) on 3 February 2022.

The plan proposed a payment of Rs. 227 crore, with Rs. 225.14 crore earmarked for financial creditors. However, the implementation stalled due to pending approvals from the Reserve Bank of India (RBI) for certain transactions, including the assignment of debt to foreign financial creditors.

The SBI filed an application before the NCLT on 28-4-2023, seeking directions for the SRA to implement the plan. The NCLT, in its order dated 8 December 2023, partially allowed the application, directing Taguda to execute the plan within two months. Despite this, the SRA failed to comply, leading the lenders to invoke the Performance Bank Guarantee (PBG) and file for liquidation. The appellant appealed the NCLT's order, arguing that the delay was due to pending RBI approvals, a condition precedent under the resolution plan.

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The NCLAT noted that the SRA was solely responsible for obtaining regulatory approvals within one year of the plan's approval, as per Section 31(4) of the Insolvency and Bankruptcy Code (IBC). The tribunal noted that over three years had elapsed since the plan's approval, and the SRA had not demonstrated sufficient progress in securing the required clearances.

The NCLAT dismissed the appeal, affirming the NCLT's order and urging the adjudicating authority to expedite the pending liquidation application. The ruling highlights the strict adherence to timelines under the IBC and the consequences for resolution applicants who fail to meet their obligations, ultimately paving the way for the corporate debtor's liquidation.

In conclusion, the NCLAT upheld the liquidation proceedings, citing the SRA's failure to secure necessary regulatory approvals within the stipulated timeline, as mandated under the IBC 2016.

The tribunal comprising Justice Ashok Bhushan (Chairperson), Arun Baroka (Technical Member), and Barun Mittal (Technical Member) also dismissed the appeal.

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