M.K. Rajagopalan Vs. Dr. Periasamy Palani Gounder (Supreme Court of India)
The Modified Resolution Plan cannot be directly presented to the National Company Law Tribunal (NCLT) without receiving final approval from the Committee of Creditors (COC).
Facts of the Case
- The Tourism Finance Corporation of India Limited has filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), for initiation of Corporate Insolvency Resolution Process (“CIRP”) against Appu Hotels Limited (“Corporate Debtor”).
- The National Company Law Tribunal (“NCLT”) admitted the Corporate Debtor into CIRP on May 5, 2020.
- M.K. Rajagopalan (“Successful Resolution Applicant/SRA”) submitted a resolution plan for the Corporate Debtor. In the ninth meeting of the Committee of Creditors (“CoC”) held on January 22, 2021, the resolution plan submitted by the SRA was conditionally approved with 87.39% votes. However, the SRA was instructed to send back the plan to the creditors for further revision. Consequently, the allocation for the unsecured dissenting financial creditors was revised from Rs. 29 crores to Rs. 49.13 crore in the modified plan.
- On January 25, 2021, the SRA submitted the revised resolution plan to the Resolution Professional, but the latter failed to present the revised plan before the CoC. Instead, the revised plan was directly submitted to the Adjudicating Authority (NCLT) for approval. The NCLT granted approval to the resolution plan.
- The approval of the Resolution Plan was challenged before the National Company Law Appellate Tribunal (“NCLAT”) on various grounds. On February 17, 2022, the NCLAT rejected the resolution plan approved by the NCLT, noting that it was approved without being presented to the CoC for final approval.
- The matter was sent back to the CoC, with instructions for the Resolution Professional to proceed with the CIRP from the stage of publishing Form ‘G’, while inviting fresh Expression of Interest in accordance with the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”).
- Furthermore, the Successful Resolution Applicant was deemed ineligible under Section 88 of the Indian Trusts Act, 1882, and disqualified under Section 164(2)(b) of the Companies Act, 2013. The Successful Resolution Applicant (“Appellant/SRA”) has appealed the NCLAT’s decision before the Supreme Court.
Issues Involved
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