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2021 (7) TMI 557 - Tri - Insolvency and BankruptcySeeking intervention in support of application filed by Ex Resolution Professional under section 66 read with section 43 of IBC, 2016 - seeking to allow the applicants access to all the reports, findings and other documents - HELD THAT - The judgment of the Hon'ble High Court of Delhi in M/S. VENUS RECRUITERS PRIVATE LIMITED VERSUS UNION OF INDIA AND ORS. 2020 (11) TMI 850 - DELHI HIGH COURT , wherein the Hon'ble High Court decided the question of whether an application filed under Section 43 of the Code, for avoidance of preferential transactions, can be adjudicated upon by the National Company Law Tribunal (NCLT), after the approval of a resolution plan and conclusion of CIRP. It is clearly evident from the aforesaid judgment that once the Resolution plan of a Resolution Applicant is approved it cannot file an avoidance application under section 43 of IBC, 2016. It is pertinent to mention that the case in hand where the applicant No. 1 is the successful resolution applicant seeking to intervene in the Avoidance application filed by the erstwhile Resolution professional prior to the approval of resolution plan is not maintainable and no direction prayed in the present application can be granted to the applicants. Application dismissed.
Issues Involved:
1. Maintainability of the application by the Successful Resolution Applicant and Monitoring Committee under section 60(5) read with Rule 11 of NCLT Rules, 2016. 2. Jurisdiction of NCLT to adjudicate avoidance applications post-approval of the Resolution Plan. 3. Role and scope of the Monitoring Committee post-approval of the Resolution Plan. 4. Applicability and interpretation of the judgment in "Venus Recruiters Pvt. Ltd. vs. Union of India & Ors.". Issue-wise Detailed Analysis: 1. Maintainability of the Application: The applicants, Successful Resolution Applicant and Monitoring Committee, filed an application under section 60(5) read with Rule 11 of NCLT Rules, 2016, seeking intervention in support of C.A. (IB) No. 785/ND/2019 filed by the Ex-Resolution Professional under section 66 read with section 43 of IBC, 2016. They requested access to all reports, findings, and documents related to C.A. (IB) No. 785/ND/2019. The applicants argued that the Resolution Professional ceased to exist upon the approval of the Resolution Plan as per section 23 of the Code and became functus officio. Consequently, they claimed a vested interest in the prosecution and intervention of the application. 2. Jurisdiction of NCLT Post-Approval of Resolution Plan: The Respondent No. 1 contended that the application was not maintainable as it sought intervention in an avoidance application that cannot be adjudicated post-approval of the Resolution Plan. They cited the judgment in "Venus Recruiters Pvt. Ltd. vs. Union of India & Ors." where the Hon'ble Delhi High Court decided that NCLT cannot exercise jurisdiction over avoidance applications after the approval of a Resolution Plan. The judgment emphasized that avoidance applications relating to preferential transactions are meant for the benefit of the creditors of the Corporate Debtor before the approval of the Resolution Plan, and not for the Corporate Debtor in its new avatar. 3. Role and Scope of the Monitoring Committee: Respondent No. 1 argued that the Monitoring Committee, being not a corporate person as per section 3(7) of the Code, exceeded its scope and overstepped its responsibilities under the Plan. Clause 12.2 of the Plan stated that the Monitoring Committee would monitor, supervise, and implement the Plan, but pursuing an application filed by the Resolution Professional during the CIRP period was not within its defined scope. The Monitoring Committee's role was administrative and not adjudicatory. 4. Applicability and Interpretation of "Venus Recruiters Pvt. Ltd. vs. Union of India & Ors.": The judgment in "Venus Recruiters Pvt. Ltd. vs. Union of India & Ors." was pivotal in this case. It clarified that avoidance applications for preferential transactions must be adjudicated before the approval of the Resolution Plan. The role of the Resolution Professional is finite and cannot continue beyond the approval of the Resolution Plan unless explicitly stated otherwise in the Plan. The judgment also highlighted that the benefit from avoidance applications is meant for the Corporate Debtor and the CoC prior to the submission of bids, not after. Conclusion: The Tribunal concluded that the application by the Successful Resolution Applicant and Monitoring Committee was not maintainable. The intervention in the avoidance application filed by the erstwhile Resolution Professional before the approval of the Resolution Plan was not legally tenable. The Tribunal dismissed the application, emphasizing that once the Resolution Plan is approved, the Resolution Applicant cannot file or intervene in avoidance applications under section 43 of IBC, 2016. The judgment in "Venus Recruiters Pvt. Ltd. vs. Union of India & Ors." was upheld, reinforcing that the adjudication of avoidance applications must occur before the approval of the Resolution Plan for the benefit of the Corporate Debtor and the CoC.
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