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2020 (7) TMI 534 - AT - Insolvency and BankruptcyRectification in the approved Resolution Plan, after 13 months of the completion and conclusion of the CIRP - allotment and transfer of shares by the approved plan - HELD THAT - Since rectification of the resolution Plan does not involve the question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code, therefore it is not Code, therefore it is not permitted to modify the Resolution Plan under the guise of inherent powers of the Tribunal. Thus we are of the considered opinion that the Adjudicating Authority had no jurisdiction to entertain an application for rectification of Resolution Plan and making substantial changes in the Plan, after a lapse of 13 months of the completion of CIRP, even after the approval and implementation of the Resolution Plan on the pretext of rectification of clerical or typographical error in the order. Since the Appellant and Respondent, No 1 was the joint Resolution Applicant. Therefore, any application for rectification of the Resolution Plan could have been moved by both the Resolution Applicants. Thus the Adjudicating Authority had no jurisdiction to allow amendment in the Resolution Plan, submitted by the appellant and the Respondent No.1 as co-applicants in the Resolution Process, without there being any consent on the part of the Appellant. Appeal allowed.
Issues Involved
1. Jurisdiction of the Adjudicating Authority to entertain an application for rectification of the Resolution Plan after 13 months of the completion of CIRP. 2. Jurisdiction of the Adjudicating Authority to alter a Resolution Plan submitted by co-applicants without the consent of one party. 3. Whether substantial rectification of the Resolution Plan resulting in a change in shareholding could be considered a typographical/arithmetic/clerical error. Detailed Analysis 1. Jurisdiction to Entertain Application for Rectification after 13 Months The appeal challenges the order dated 20th November 2019 by the National Company Law Tribunal (NCLT), Kolkata Bench, which allowed the rectification of an already approved and implemented Resolution Plan. The Appellant argued that the Adjudicating Authority lacked jurisdiction to entertain such an application after a lapse of 13 months post the completion and conclusion of the Corporate Insolvency Resolution Process (CIRP). The Tribunal noted that the approved Resolution Plan was executed, and shares were allotted as per its terms. The Adjudicating Authority’s interference after such a significant lapse of time was deemed without any basis and jurisdiction. 2. Jurisdiction to Alter Resolution Plan without Consent The Appellant contended that the Adjudicating Authority had no jurisdiction to alter a Joint Resolution Plan submitted by the Appellant and the Respondent No.1 without the Appellant's consent. The Tribunal highlighted that the Resolution Plan was a joint submission, and any rectification application should have been moved by both parties. The unilateral rectification application by Respondent No.1 was not justified, and the Adjudicating Authority’s decision to allow this application was erroneous and without cogent reasons. 3. Substantial Rectification as Typographical/Clerical Error The Tribunal examined whether the substantial changes in the shareholding resulting from the rectification could be considered a typographical or clerical error. The original Resolution Plan allocated 51% shares to Respondent No.1 and 34% to the Appellant. The rectification altered these shares to 75% for Respondent No.1 and reduced the Appellant’s share to 10%. The Tribunal found that such a significant change could not be categorized as a mere clerical or typographical error. The Adjudicating Authority’s decision to rectify the Resolution Plan based on this premise was flawed. Conclusion The Tribunal concluded that the Adjudicating Authority had no jurisdiction to entertain the rectification application after 13 months of the completion of CIRP. Moreover, any rectification of the Resolution Plan submitted jointly by the Appellant and Respondent No.1 required the consent of both parties. The substantial change in shareholding could not be justified as a typographical or clerical error. The appeal was allowed, and the impugned order dated 20th November 2019 was set aside. No order as to cost was made.
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