No Grounds made out to Interfere with Impugned Order: NCLAT Upholds Rejection of Resolution Plan Valued at ₹74 Lakh [Read Order]

The National Company Law Appellate Tribunal (NCLAT) Principal Bench at New Delhi, has declined to interfere with an order rejecting a resolution plan on the ground of inconsistencies in the valuation of assets and lack of disclosure in the financial statements of the corporate debtor. The tribunal held that the resolution process did not comply with the requirements of the Insolvency and Bankruptcy Code, 2016.

The appeal was filed by the Resolution Professional challenging an order of the NCLT rejecting the resolution plan and ordering liquidation of the corporate debtor. The balance sheet reflected total assets exceeding ₹137 crore, but the valuation reports treated the entire assets as nil. The proposed resolution plan value was only ₹74 lakh.

A Bench comprising Justice Ashok Bhushan, Chairperson, and Barun Mitra (Technical Member) found that the financial statements were prepared without revealing details of current assets. The tribunal noted that no satisfactory explanation was offered as to how a resolution plan of such a low value could be approved when the corporate debtor’s balance sheet disclosed huge assets and statutory liabilities.

The appellate tribunal rejected the contention that approval of the resolution plan by the Committee of Creditors was sufficient. It reiterated that the adjudicating authority is not bound to approve a plan that is not compliant with the Code or is based on an unreliable valuation process.

Taking note of the fact that liquidation proceedings had already commenced pursuant to the impugned order, the tribunal held that no grounds were made out to interfere with the rejection of the resolution plan.

Accordingly, the NCLAT dismissed the appeal.

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