Reasoned order is to be passed by NCLT for non-approval of resolution plan

Ramkrishna Forgings Limited Vs Ravindra Loonkar (Supreme Court of India)

Supreme Court that the Adjudicating Authority (NCLT) has jurisdiction only u/s. 31(2) of the Code, which gives power not to approve only when the Resolution Plan does not meet the requirement laid down u/s. 31(1) of the Code, for which a reasoned order is required to be passed.

Facts-

ACIL is a manufacturer of precision engineering and automobile components, namely crankshafts for tractors, HCVs, LCVs as well as two-wheelers, as also connecting rods, steering knuckles and hubs. It was the subject-matter of a Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) which was initiated on an application filed by IDBI Bank Ltd.

In terms of the Resolution Plan, for which approval was being sought, ACIL would be allowed the benefit of carrying forward its losses in terms of Section 796 of the Income Tax Act, 1961. This ultimately resulted in the order dated 01.09.2021, by which the approval of the Resolution Plan was kept in abeyance and the OL was directed to provide exact figures/value of assets. The same was carried in appeal u/s. 61 of the Code by the present appellant before the NCLAT which passed the Impugned Judgment on 19.01.2022, dismissing the appeal, thereby upholding the order of the NCLT, which is impugned herein.

Please become a Premium member. If you are already a Premium member, login here to access the full content.