National Company Law Appellate Tribunal Allows Extension Of Time For Resolution Plan
The Appellate Tribunal opined that orders of liquidation should not be passed without considering the Resolution Plan already approved by the CoC
The National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed by the Appellant praying for restraining the Respondents from giving any effect or acting in terms of the Resolution Plan and to pass a liquidation order.
The Principal Bench of the National Company Law Appellate Tribunal at New Delhi, comprising of Justice A.I.S. Cheema and Dr Alok Srivastava heard the matter titled West Bengal Financial Corporation v Bijoy Murmuria And Ors.
The Corporate Insolvency Resolution Process (CIRP) in this matter was with regards to the Corporate Debtor – Dimension Steel & Alloys Pvt Ltd, which had moved towards liquidation but at that time, the Resolution Plan was proposed by one of the Respondents and the same was accordingly filed before the National Company Law Tribunal (NCLT).
The National Company Law Tribunal (NCLT) gave time to the Committee of Creditors (CoC) to consider the proposed Resolution Plan and to take a decision on or before 22 March 2021. However, the CoC gave further time to the Resolution Applicant for modification of the plan and thus, did not follow the time frame. The Appellant contended that u/S 33 of Insolvency and Bankruptcy Code, 2016 (IBC) if in the given time frame as per Section 12 of IBC the CIRP was not completed, the only consequence which could follow was to pass the order of liquidation.
The National Company Law Tribunal (NCLT) had declined to pass an order of liquidation as voting on the Resolution Plan had already taken place.
The bench noted that the Resolution Plan had been approved by the CoC since the voting process had already been completed and an application before the National Company Law Tribunal for approval of the Resolution Plan was currently pending.
The Appellate Tribunal opined that orders of liquidation should not be passed without considering the Resolution Plan already approved by the CoC in view of the main objective of the Insolvency and Bankruptcy Code that all efforts should be made for the resolution of the Corporate Debtor.
The bench made the following observation regarding the extension of the time frame:
"Although the CoC did not strictly follow the time frame given by the Adjudicating Authority and displeasure was expressed, when Adjudicating Authority exercised discretion not to pass order of liquidation and wait, we will not interfere in the discretion. When the Resolution Plan is on the verge of being accepted or rejected by the CoC it would not make much difference if little time is extended."
Therefore, the appeal was not admitted by the Appellate Tribunal.