Prio S.A. Vs Pravin R. Navandar (NCLAT Delhi)
In a landmark judgment, the National Company Law Appellate Tribunal (NCLAT) in Delhi has clarified the rights of resolution applicants in the corporate insolvency resolution process (CIRP). The case in question, Prio S.A. vs. Pravin R. Navandar, revolves around the locus of a resolution applicant to object to the application for the approval of a Resolution Plan. This case underscores the participatory rights of resolution applicants in the CIRP, marking a significant moment in insolvency law jurisprudence.
Background: The appeal was filed against an order by the National Company Law Tribunal (NCLT), Mumbai Bench, which rejected Prio S.A.’s application for intervention in a resolution plan approval process. Prio S.A., a prospective resolution applicant, submitted multiple offers to acquire assets during the CIRP but was not selected. Upon learning that the resolution professional (RP) filed an application for the approval of another offer, Prio S.A. sought to intervene, arguing that as a participant in the CIRP, they had a right to object.
NCLAT’s Decision: The NCLAT overturned the NCLT’s decision, establishing that resolution applicants who have participated in the CIRP process indeed have the locus to object to the approval of a resolution plan. The appellate tribunal emphasized the importance of allowing applicants to voice objections, ensuring a fair and transparent resolution process. This decision was based on the premise that participation in the CIRP and negotiation with the committee of creditors (CoC) grants applicants a stake in the outcome, thus affording them the right to object.
Implications: This ruling has several implications for future insolvency cases:
