Sagar Stone Industries Vs Sajjan Kumar Dokania & Ors. (NCLAT Delhi)
The National Company Law Appellate Tribunal (NCLAT) in Delhi has dismissed appeals filed by a Resolution Applicant, Sagar Stone Industries, challenging an order of the Adjudicating Authority. The Adjudicating Authority had rejected Sagar Stone Industries’ applications seeking the rejection of the approved resolution plan of another applicant and an inquiry against the Resolution Professional in the corporate insolvency resolution process (CIRP) of Jabalpur MSW Pvt. Ltd. Sagar Stone Industries argued that their resolution plan was unfairly rejected and that the Committee of Creditors (CoC) had improperly revised the successful resolution plan multiple times.
NCLAT, after considering the arguments, upheld the Adjudicating Authority’s decision. Regarding the alleged lack of communication about the rejection of Sagar Stone Industries’ plan, NCLAT noted the Resolution Professional’s contention that the appellant was informed telephonically. The Tribunal stated that the absence of a written rejection would not invalidate the CoC’s decision to approve another plan, emphasizing that the commercial wisdom of the CoC in selecting a resolution plan is generally not subject to interference at the behest of an unsuccessful applicant. On the crucial point of multiple revisions to the resolution plan, NCLAT clarified that Regulation 39(1A) of the CIRP Regulations, which restricts the Resolution Professional from permitting plan modifications more than once, does not bind the CoC. The CoC retains the unrestricted right to request revisions or negotiate with resolution applicants multiple times. Furthermore, NCLAT stated that the ‘challenge mechanism’ is an optional tool for the CoC to maximize value and its absence cannot be a valid ground to question the approval of a resolution plan. Consequently, finding no merit in the appeals, NCLAT dismissed both of Sagar Stone Industries’ challenges.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
