NCLT Upholds CoC Decision, dismisses Applications Challenging Unijules Resolution Plan [Read Order]
The Tribunal directed that the moratorium under Section 14 of the IBC shall cease to have effect and that the plan shall be implemented under the supervision of an Implementation and Monitoring Committee.
The National Company Law Tribunal (NCLT), Mumbai Bench, has upheld the decision of the Committee of Creditors (CoC) and dismissed applications filed by an unsuccessful resolution applicant and a dissenting financial creditor that challenged the approval of a resolution plan for Unijules Life Sciences Limited.
The Corporate Insolvency Resolution Process (CIRP) against the pharmaceutical company was initiated in 2019 by Punjab National Bank. The Resolution Professional, Amit Chandrashekhar Poddar, filed an application seeking approval of a resolution plan submitted by S.S. Fabricators & Manufacturers Private Limited ("SRA"), which had been approved by the CoC with an overwhelming 98.54% voting share.
This approval was contested by the Consortium of Shantech International Pvt Ltd. and Worldfa Exports Pvt Ltd. (an unsuccessful resolution applicant) and Satsai Finlease Private Limited (a dissenting financial creditor), who alleged numerous procedural irregularities and sought to have the plan rejected and a fresh challenge mechanism initiated.
The objectors raised several key contentions, arguing that the evaluation process was fundamentally flawed. They alleged that the evaluation matrix used by the CoC was incomplete and misleading as it omitted material factors like unpaid CIRP costs and statutory EPF liabilities, which directly impacted the Net Present Value (NPV) and ranking of the plans.
They further contended that post-evaluation modifications were permitted to the SRA's plan, materially altering its financial parameters. The objectors also pointed to alleged procedural impropriety, including selective and private communications between certain CoC members and the SRA, and accused the Resolution Professional of a lack of independence and neutrality in facilitating the process.
A division bench of Justice Prabhat Kumar and Justice S. Sushil Mahadeorao Kochey, in its detailed order, rejected these contentions and upheld the CoC's commercial wisdom. The Tribunal emphasized that its jurisdiction is limited and circumscribed by Section 31 of the Insolvency and Bankruptcy Code, and it cannot interfere with the commercial decision of the CoC unless the plan fails to meet the mandatory requirements of Section 30(2) of the Code.
Citing Supreme Court precedents, the bench reiterated that it cannot re-evaluate the merits of the plan or the commercial wisdom of the CoC, which is deemed to be a well-considered decision made by financial creditors with a direct interest in the outcome. The Tribunal found no material evidence to support the allegations of procedural lapses or post-submission modifications, concluding that the evaluation was conducted fairly and in accordance with the regulations.
Accordingly, the NCLT dismissed the applications challenging the resolution plan and approved the plan submitted by S.S. Fabricators & Manufacturers Private Limited. The approved plan, involving a total payout of Rs. 65.26 crore to creditors, is declared binding on the corporate debtor and all stakeholders.
The Tribunal directed that the moratorium under Section 14 of the IBC shall cease to have effect and that the plan shall be implemented under the supervision of an Implementation and Monitoring Committee. The order also granted the SRA various reliefs and concessions as per the principles laid down in landmark judgments, ensuring a smooth transition and revival of the corporate debtor.
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