IBC IBC case law - SC, NCLT & NCLAT Rulings on Resolution Plans

IBC case law - SC, NCLT & NCLAT Rulings on Resolution Plans

IBC case law - SC, NCLT & NCLAT Rulings on Resolution Plans

Supreme Court, NCLT & NCLAT Rulings/Findings relating to Resolution Plans under IBC Code

Under article also cover the contains of numerous rulings & observation in relation to resolution plans, also included, duties of various stakeholders, how Resolution Plans is approved etc, as per the orders of the Adjudicating Authorities or NCLT or NCLAT Court,

Supreme Court Findings or Rulings relating to Resolution Plans

Swiss Ribbons Pvt. Ltd. &  Anr. v. UOI & others (Order dated on 25.01.2019)

  • Since the FCs are in the business of money lending, they are best equipped to assess viability and feasibility of the business of the corporate debtor, Even at the time of granting loans, they undertake a detailed market study which includes a techno- economic valuation report, evaluation of business, financial projection, etc. They are in a good position to evaluate the contents of a resolution plan.

Arcelor Mittal India Pvt. Ltd. vs Satish Kumar Gupta and others (Order dated on 04.10.2018)

  • Insolvency professional is not empowered to ‘decide’ whether resolution plan contravenes any provisions of the law.

Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & others (Order dated on 15.11.2019)

  • Plan submitted by the prospective bidder or resolution applicant must provide for measures as may be necessary for the insolvency resolution of the corporate debtor for maximization of the value of its assets, which may include transfer or sale of assets or part thereof, whether subject to security interests or not.
  • resolution plan may provide for either satisfaction or modification of any security interest of a secured creditor and may also provide for reduction in the amount payable to different classes of creditors

NCLT Findings or Rulings relating to Resolution Plans

BrajBhushan Das & Others v. Mr. Vijay Kumar V Iyer (Resolution professional) (Order dated on 02.05.2018)

  • Insolvency professional has to comply with the provisions of the Insolvency and Bankruptcy Code, 2016 in submitting the resolution plan before Committee of Creditors.

SBI Vs ARGL Ltd.  (Order dated on 05.12.2018)

  • The bidder (resolution applicant) cannot drag its feet and backtrack after getting its resolution plan approved by the Committee of Creditors.

PNB v. Mintri Tea Company Pvt. Ltd.  (Order dated on 03.08.2018)

  • After approval of resolution plan by the Committee of Creditors, the Insolvency professional cannot file an application for withdrawal as per Section 12A of the Insolvency and Bankruptcy Code, 2016.

Sunrise Polyfilms Pvt. Ltd. v. PNB (Order dated on 04.05.2018)

  • Insolvency professional cannot file for liquidation before inviting applications for resolution plans.

In the matter of Gupta Energy Pvt. Ltd.  (Order dated on 20.02.2018)

  • Adjudicating Authorities neither has the jurisdiction to question the actions of the Committee of Creditors nor any discretion to examine the resolution plan

NCLAT Findings or Rulings relating to Resolution Plans

Rashid bhai Ismail  Tharadra & Others. v. Raj Oil Mills Ltd. &Anr.(Order dated on 08.08.2018)

  • Resolution plans, fulfilling the criteria laid down under Sections 30(2) & 29A, IBC can be approved by Committee of Creditors and the Adjudicating Authority cannot sit in appeal over the financial implications of such a Resolution Plan.

Vijay Kumar Jain v. Standard Chartered Bank Ltd. & Others. (Order dated on 09.08.2018)

  • Resolution Plans are confidential. Hence, cannot be handed over to (suspended) Board of Directors or Operational Creditors or the competitor Resolution Applicants.
  • Note: The members of the erstwhile Board of Directors, being vitally interested in Resolution Plans that may be discussed at meetings of the committee of creditors, they must be given a copy of such plans as part of “documents” that have to be furnished along with the notice of such meetings.

Madhya Gujrat Vij Company Ltd. v. Kalptaru Alloys Pvt. Ltd. & Others. (Order dated on 24.09.2018)

  • There is no requirement to issue notice to the Operational Creditors if a Resolution Plan is already approved by the Committee of Creditors. Resolution Plan is binding on the, Financial Creditors, Corporate Debtors, Operational Creditors, & other stakeholders, including guarantors.

Quantum Ltd. v. Indus Finance Corporation Ltd. (Order dated on 15.11.2019)

  • It is the duty of the Adjudicating Authorities to find out whether a suitable resolution plan is there to be approved instead of going for liquidation.

Rajputana Properties Pvt. Ltd. v. Ultra Tech Cement Ltd. & Others. (Order dated on 15.05.2018)

  • Insolvency professional cannot hold or decide as to who is ineligible U/s 29A to submit a Resolution Plan.
  • A Resolution Plan filed by one or other Resolution Applicant, being confidential, cannot be disclosed to any competitor Resolution Applicant. Committee Of Creditors should have transparency while accepting or rejecting resolution plans

Binani Industries Ltd. v. BOB and Anr. (Order dated on 14.11.2018)

  • The approval of the Resolution Plan is in the domain of the Committee of Creditors & not of the Insolvency professional.
  • If the Resolution Plan is approved by the Committee of Creditors and does not provide for full satisfaction of claims of operational creditors in absence of any power of the Insolvency professional to reject such resolution plan, the Insolvency professional cannot be blamed for the same.

Tata Steel Ltd. v. Liberty House Group Pte. Ltd. & Others.  (Order dated on 04.02.2019)

  • A Resolution Applicant has no vested right or fundamental right to have its Resolution Plan considered or approved.

JM Financial Asset Reconstruction Company Ltd. v. Well- Do Holdings and Exports Pvt. Ltd. & Others (Order dated on 08.04.2019)

  • Persons who are ineligible to file a Resolution Plan U/s 29A, IBC and those Resolution Applicants who did not move the NCLT or NCLAT before last date of submission of resolution plan, have no right to raise their grievance with regard to the expression of interest and that too after approval of the Resolution Plan by the CoC

Mr. Sharad Sanghi v. Ms. Vardana Garg & Others (Order dated on 19.03.2019)

  • Once Committee of Creditors votes in favour of a Resolution Plan, it cannot change its view subsequently.

Prakash Chand Jain v. PNB and Others (Order dated on 24.04.2019)

  • The Resolution Plan, which is more suitable, feasible and viable amongst all the Resolution Plans should be the Successful Resolution Plan.

Industrial Services v. Burn Standard Company Ltd. & Anr. (Order dated on 13.05.2019)

  • The resolution plan should not relate to the closure of the Corporate Debtor as it is against the scope and intent of the Insolvency and Bankruptcy Code, 2016 which is in violation of Section 30(2)(e), IBC.

Jagmeet Singh Sabharwal & Others v. Rubber Products Ltd. &  Others  (Order dated on 11.06.2019)

  • Resolution Applicant should provide the same treatment in its Resolution Plan to all Operational Creditors which are similarly situated

Standard Chartered Bank v.   Satish   Kumar   Gupta, R.P. of Essar Steel Ltd. & Others. (Order dated on 04.07.2019)

  • Insolvency and Bankruptcy Code does not permit the Committee of Creditors to form a Sub- Committee or a Core Committee or to even delegate its power to a Sub-Committee or Core Committee for negotiating with the Resolution Applicant(s).

Kautilya Industries Pvt. Ltd. v. Parasrampuriya Synthetic Ltd. & Anr.  (Order dated on 31.07.2019)

  • Liquidator can accept the resolution plans which were not accepted in Corporate Insolvency Resolution Process as schemes or arrangements in liquidation process.

Milind Dixit &Anr v. Elecon Engineering Company Ltd & Others (Order dated on 03.07.2019)

  • On receipt of rejected resolution plan, NCLT is not expected to do anything more but is obligated to initiate liquidation process.

Shaji Purushothaman v. UBI& Others (Order dated on 06.09.2019)

  • Committee of Creditors is required to decide whether the proposal given for settlement in terms of Section 12A of Insolvency and Bankruptcy Code is better than the Resolution Plan or not.

Sreeram E. Techno School Pvt. Ltd. v. Beans and More Hospitality Pvt. Ltd. (Order dated on 11.09.2019)

  • Committee of Creditors to look at the viability, feasibility and other conditions of the resolution plan in respect of corporate debtor under Corporate Insolvency Resolution Process
  • Adjudicating Authorities is not required to check the viability, feasibility and other conditions of the resolution plan in respect of corporate debtor under Corporate Insolvency Resolution Process.

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