The National Company Law Appellate Tribunal in the case Mathuraprasad C Pandey & Ors. v Partiv Parikh & Anr, the principal bench comprising of Judicial Member, Justice Rakesh Kumar and the Technical Member, Dr. Ashok Kumar Mishra observed while adjudicating an appeal and has held that when a Resolution Plan is presented before the Adjudicating Authority for approval, it is clear mandate of legislation to either approve or to either reject the Resolution Plan. No provision is provided under IBC which empowers the Adjudicating Authority for making alteration or modification in the Resolution Plan.
Background of the Case:
The Corporate Debtor, M.V. Omni Projects (India) Ltd was admitted into the Corporate Insolvency Resolution Process for the month of August, 2019. A resolution plan is submitted by the promoters of Corporate Debtor for the Corporate Debtor. Thus, an application was filed by the Resolution Professional before the Adjudicating Authority under Section 31 of Insolvency and Bankruptcy Code, 2016 for the approval of the Resolution Plan. The Resolution plan was approved by the Adjudicating Authority vide order dated January 28, 2021. The Adjudicating Authority while approving the Resolution Plan modified the Resolution Plan to the extent that, “if any member of Resolution applicants has entered into or stand as guarantor in the individual capacity, in that event, that person shall not be covered with any immunity given under the Resolution Plan.”
An appeal was filed before NCLT by the Successful Resolution Applicants/Promoters of Corporate Debtor, wherein challenging the modification made by the Adjudicating Authority while approving the Resolution Plan.
NCLAT Decision:
It has been opined by the bench that if a resolution plan is in compliance with Section 30 and Section 31(1) of IBC, then such resolution plan has to be approved by the Adjudicating Authority. As stated under Section 31 of IBC the word “shall” has been incorporated with proviso that the Adjudicating Authority must be satisfied that the resolution plan has provisions for its effective implementation.
The bench further stated that the section 31(2) of IBC empowers the Adjudicating Authority to reject the resolution plan and if he is satisfied that resolution plan is not in conformity with Section 31(1) of IBC. Therefore, the bench observed that it is being clear that mandate of legislation to either approve or to reject the resolution plan. There being no provision for making modification or alteration in the resolution plan.
Accordingly, the bench held that to some extent the Adjudicating Authority exceeded its jurisdiction in modifying/altering the conditions in the resolution plan. The bench allowed the appeal and it is held that the modification done in the Order dated January 28, 2021 shall not be looked into or may not be taken note of.
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