2024 (3) TMI 23 - AT - Insolvency and Bankruptcy

CIRP - Jurisdiction of the Adjudicating Authority to direct consideration of a settlement proposal after approval of a Resolution Plan. - Appellant (Successful Resolution Applicant - SRA) submits that after approval of Resolution Plan of the Appellant by the CoC, there was no occasion for directing consideration of fresh settlement proposal submitted by Ex. Directors to be placed before the CoC - HELD THAT - The Adjudicating Authority, ought to have allowed opportunity to SRA to respond to the Application (IA No.188 of 2024 filed by Respondent Nos.1 and 2), whose Resolution Plan has been approved by the CoC and which is pending consideration before the Adjudicating Authority. Without giving an opportunity to the Appellant, direction to the CoC to consider the Plan, cannot be sustained. The Application for approval of Resolution Plan being pending consideration, it shall be open for the Adjudicating Authority to consider IA No.188 of 2024 along with its objection. The impugned order set aside - appeal disposed off.

Summary

Issues involved:
The judgment involves the consideration of an appeal by a Successful Resolution Applicant against an order passed by the National Company Law Tribunal, New Delhi Bench, regarding the approval of a Resolution Plan and the subsequent filing of an application by an Ex. Director seeking withdrawal of the Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency and Bankruptcy Code, 2016.

Issue 1: Approval of Resolution Plan and Consideration of Fresh Settlement Proposal
The Appellant challenged the order directing consideration of a fresh settlement proposal submitted by Ex. Directors after the Resolution Plan was approved by the Committee of Creditors (CoC). The Appellant argued that there was no jurisdiction for the Adjudicating Authority to consider any application under Section 12A after the approval of the Resolution Plan. The Adjudicating Authority's order was based on a previous judgment but failed to give the Appellant an opportunity to respond to the application, violating principles of natural justice.

Issue 2: Jurisdiction of Adjudicating Authority
The Resolution Professional and Respondent Nos.1 and 2 supported the Appellant's arguments, stating that the approval of the Resolution Plan by the CoC should have precluded the consideration of the Ex. Directors' settlement proposal. They emphasized that the Adjudicating Authority's direction to place the application before the CoC was unwarranted after the Resolution Plan was already approved. They cited relevant judgments to support their position.

Judgment:
The Appellate Tribunal set aside the Adjudicating Authority's order, granting the Appellant two weeks to file objections to the Ex. Directors' application. The Tribunal emphasized that the Adjudicating Authority should have allowed the Appellant to respond to the application before directing the CoC to consider the plan. The decision aimed to prevent further delays in the matter and instructed the Adjudicating Authority to consider the application along with the Appellant's objections in accordance with the law. The Appeal was disposed of without any costs being awarded.