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Violation of principles of natural justice, wherein the ...


Lack of repayment plan leads to insolvency resolution termination despite no hearing opportunity.

Case Laws     IBC

November 8, 2024

Violation of principles of natural justice, wherein the appellant was not provided an opportunity for a hearing before terminating the insolvency resolution process of the personal guarantor and discharging the resolution professional (RP). The key points are: Section 106 requires the RP to submit a report on the repayment plan within 21 days from the last date of submission of claims u/s 102. Section 105 mandates the debtor to prepare the repayment plan in consultation with the RP. However, the debtor failed to prepare or submit any repayment plan, and there was no communication from the appellant after August 24, 2022. Consequently, no meeting of creditors could be convened. The adjudicating authority rightly concluded that in the absence of a repayment plan, the consequence of rejection u/s 115 must ensue. The RP's application and prayers were in accordance with the statutory scheme. The appellant consistently challenged every action unsuccessfully but never submitted a repayment plan. The appellant remained silent for years and raised grievances about not being heard only after the consequential order u/s 115 was passed. Regulation 19, concerning the filing of the repayment plan by the RP, is inapplicable as no plan was submitted or finalized. The appellant failed to demonstrate substantial grounds for interference with the imp.

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