NCLAT Chennai: Unsuccessful Resolution Applicant has No Locus Standi to Challenge the Approved Resolution Plan
The National Company Appellate Tribunal (NCLAT), Chennai by its division member bench of Justice M. Venugopal (Judicial Member) and Shreesha Merla (Technical Member) has observed that an Unsuccessful Resolution Applicant, cannot be considered a ‘Stakeholder,’ pertaining to the ‘Corporate Debtor,’ hence, Unsuccessful Resolution Applicant has no Locus Standi to assail an approved Resolution Plan or its implementation since it is not a stakeholder as per Section 31(1) of Insolvency and Bankruptcy Code, 2016, (IBC).
The factual matrix of the case is that the Vasan Health Care Private Limited (Corporate Debtor), was admitted into Corporate Insolvency Resolution Process (“CIRP”). ASG Hospital Private Ltd. (“Successful Resolution Applicant/SRA”) submitted a Resolution Plan for the Corporate Debtor which was approved by the Committee of Creditors (“CoC”). Subsequently, the Resolution Plan was approved by the Adjudicating Authority on 3 February, 2023 and the plan was implemented by the SRA.
Mr. M.K. Rajagopalan- petitioner, being an ‘Unsuccessful Resolution Applicant’, whose plan could not be approved, filed an appeal before the NCLAT against the order dated 3 February, 2023.
It was his contention that he had suffered at the behest of the resolution process and has a vested interest in pursuing the appeal.
The Respondent/Resolution Professional submitted that the Appellant/Petitioner has no ‘Locus Standi’ to question the Approval, granted by the Adjudicating Authority (Tribunal) on 3 February, 2023 and further, the Appellant, was not a ‘Stakeholder’, within the meaning of Section 31 (1) of the IBC, and hence, he is not an `Aggrieved Party’, in respect of the `impugned order’, in approving the Resolution Plan.
The SRA argued that the Appellant subjected himself to the very process of revision of the Resolution Plan and had participated in the process. Therefore, he could not have taken a contrary stand later to claim that the process of selection of Resolution Plan was unfair.
The NCLAT, observed that the Petitioner / Appellant, was not a `Stakeholder,’ coming within the ambit of Section 31 (1) of the IBC, 2016, and further that an `Unsuccessful Resolution Applicant’, cannot be considered a `Stakeholder’, pertaining to the `Corporate Debtor.’
The NCLAT noted that the Adjudicating Authority, passed an impugned order, approving the `Resolution Plan,’ for the `Corporate Debtor,’ after it was approved by the `Committee of Creditors,’ in exercise of their `Commercial Wisdom.’
In this regard, the NCLAT observed that, “the Petitioner / Appellant, is not a Privy, to the Resolution Plan, and hence, according to the 1st Respondent, he is not an Aggrieved Person, in respect of the impugned order, passed by the Adjudicating Authority (Tribunal). Therefore, the Petitioner / Appellant, was not entitled to prefer the instant Appeal.”
With respect to the issue of locus standi, the NCLAT observed that:
“On a careful consideration of the respective contentions advanced on either side, this `Tribunal’, keeping in mind of a vital fact that the `Petitioner/ Appellant’, being an `Unsuccessful Resolution Applicant’, has no `Locus’, to `assail’ a `Resolution Plan’ or its `implementation’, coupled with a candid fact that he is not a `Stakeholder’, as per Section 31 (1) of the I & B Code, 2016, in relation to the `Corporate Debtor’, this `Tribunal’, without an `haziness’, holds that the `Petitioner / Appellant’, is not an `Aggrieved Person’, coming within the ambit of Section 61 (1) of the I & B Code, 2016, especially, when he is not a `Privy’, to the Resolution Plan.”
Thus, the NCLAT held that the Unsuccessful Resolution Applicant has no locus standi to assail a Resolution Plan or its implementation since it is not a stakeholder as per Section 31(1) of IBC and hence not an aggrieved party.