NCLAT: Once Resolution Plan Is Approved by CoC; Adjudication Authority Can't Direct Invitation of Fresh Bids
The National Company Law Appellate Tribunal (NCLAT), Chennai bench, in the case titled Renganayaki Agencies (Appellant) v. Sreenivasa Rao Ravinuthala (Respondent) has ruled that after approval of a resolution by the Committee of Creditors (CoC), the Adjudicating Authority (National Company Law Tribunal - NCLT) cannot direct invitation of fresh bids from resolution applicants on account of scope for further improvement.
The NCLAT bench comprising of Justice Venugopal M (Judicial Member) and VP Singh (Technical Member) directed that the 'Adjudicating Authority' to approve the 'Resolution Plan' approved by the "Committee of Creditors' with 100 per cent voting in favour of 'KALS Group'.
In the instant matter, the appeal was preferred by the successful resolution applicant (appellant) against an order passed by the NCLT, Hyderabad bench. The Tribunal opined that there was scope for further improvement of the resolution amount to be payable by the resolution applicants.
An appeal was filed against the said order of the Tribunal and the appellant contended that the NCLT could not trespass the commercial wisdom of CoC which approved its plan with 100 per cent votes.
It was further stated that the Tribunal upon satisfaction that the 'Sanctioned Plan' was compliant with the requirements of section 30(2) of the I & B Code, 2016, was duty-bound to sanction the 'Resolution Plan' and it had exceeded its jurisdiction by issuing directions in the 'impugned order' to 'rebid'.
The Tribunal has erred in holding that the 'Unsuccessful Resolution Applicants' cannot modify their plans and propose additional plan amounts after the voting was concluded by the Committee of Creditors, NCLAT observed.
The Appellate Tribunal placed reliance on the judgment of the Apex Court in the case titled Kalpraj Dharamshi & Anr. v. Kotak Investment Advisors Ltd. & Anr. wherein the Supreme Court had held that the commercial wisdom of CoC was not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 IBC.
The NCLAT concluded that the order of the Tribunal was unsustainable and it could not surpass the decision of the CoC by asking it to consider the fresh invitation of bids by the resolution professionals presuming that there was a scope of improvement.