Stakeholder Objections Cannot Obstruct Insolvency Resolution Once Resolution Plan Secures Requisite CoC Approval: NCLT [Read Order]

The National Company LawTribunal [NCLT] Mumbai Bench has held that stakeholder objections including those raised by homebuyers, promoters and third-party claimants cannot frustrate the insolvency resolution process once a resolution plan has secured the requisite approval of the Committee of Creditors (CoC) under the Insolvency and Bankruptcy Code, 2016.

The CIRP was initiated through an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 made by Beacon Trusteeship Limited. In the course of resolution proceedings three potential resolution applicants put forward their resolutions and of these, the one proposed by Mantra Properties secured the maximum votes.

But in the first voting process the creditors were split with one voting for the resolution and another in favor of an alternative resolution thus falling short of the requisite 66% statutory majority.

In accordance with Regulation 39(3B) of the CIRP Regulations, the plan was put to vote again as the highest-voted plan. While one CoC member reaffirmed its approval the other initially abstained and later objected to the voting process seeking reconsideration and extension of time. The unsuccessful resolution applicant also challenged the decision to treat the plan as approved.

The Tribunal further recorded that the Committee of Creditors ultimately approved the resolution plan with 100% voting share after initial deadlock and subsequent reconsideration under Regulation 39(3B) of the CIRP Regulations. Upholding the commercial wisdom of the CoC the NCLT approved the resolution plan, bringing the CIRP to a close and paving the way for revival of the corporate debtor.

The Bench comprising Lakshmi Gurung (Judicial Member) and Hariharan Neelakanta Iyer (Technical Member) approved the resolution plan submitted by Mantra Properties and Developers Private Limited in the Corporate Insolvency Resolution Process (CIRP) of Nirmal Lifestyle (Mulund) Private Limited emphasizing the primacy of CoC’s commercial wisdom in insolvency proceedings.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates