Approved Resolution Plan Cannot Be Indefinitely Deferred: NCLT Orders Liquidation

Punjab National Bank Vs Splendid Metal Products Ltd (NCLT Hyderabad)

Summary: The common order concerns five interconnected applications arising from implementation of the Approved Resolution Plan of Splendid Metal Products Limited, approved by the NCLT on 08.04.2021, under which Rs.4,47,10,60,000 was payable to Financial Creditors in seven instalments commencing from the Effective Date of 18.06.2021. The first instalment of Rs.60 crore was paid on 30.09.2021, while the second instalment of Rs.50 crore, due on 18.06.2022, was paid only on 31.05.2024 with delayed interest and the third instalment of Rs.50 crore, due on 18.06.2023, was paid only on 21.11.2024 with delayed interest; the fourth to seventh instalments remained unpaid.

The original Resolution Applicants were Antanium Holdings Private Limited and Invent Assets Securitisation and Reconstruction Private Limited, and Puissant Global Private Limited was subsequently substituted as Successful Resolution Applicant by order dated 31.10.2023 upon an undertaking to comply with the Approved Resolution Plan. The Financial Creditors alleged repeated non-compliance and sought penal action under Section 74(3) of the Insolvency and Bankruptcy Code, while the Successful Resolution Applicant contended that implementation involved reciprocal obligations, particularly phased release of securities corresponding to instalment payments.

The Tribunal held that the approved Resolution Plan was binding under Section 31 and that its payment schedule could not be unilaterally varied or indefinitely postponed. It recognised that the Financial Creditors had accepted delayed instalments with interest, had not invoked the Performance Bank Guarantee and had delayed release of securities relating to the third tranche, which were ultimately released on 30.03.2025. However, those circumstances did not justify continued withholding of the fourth instalment after the securities had been released.