Approved Resolution Plan Cannot Be Reopened Or Remanded By CoC: NCLAT Sets Aside NCLT Order [Read Order]

The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) has held that after the approval of the Resolution Plan by the Committee of Creditors (CoC), it cannot be reopened or remanded for reconsideration on the basis of the CoC’s request.

The Tribunal has set aside the order of the Adjudicating Authority, which had allowed the remand of the already approved plan for reconsideration on the basis of the request of the CoC in the CIRP of Mehar Bhoomi Bhawan Pvt. Ltd.

In the corporate insolvency resolution process, the CoC had approved the Resolution Plan with the majority required under Section 30(4) of the Insolvency and Bankruptcy Code 2016 (IBC).

The plan was later presented to the Adjudicating Authority for approval under Section 31 of the IBC. However, later events triggered a request for reconsideration of some commercial matters, which were allowed by NCLT by remanding the plan to the CoC.

The Successful Resolution Applicant (SRA) argued that once the Resolution Plan is approved by the CoC and placed before the Adjudicating Authority under Section 31 then the CoC ceases to have any further authority over the matter. It was further submitted that allowing a reconsideration application would destroy the time bound mechanism of the IBC and result in a lack of certainty in the resolution process.

On the other hand, the respondents submitted that the CoC retains its commercial dominance and should be allowed to reconsider its decision before the final judicial approval.

Allowing the appeal the NCLAT held that the IBC does not contemplate any authority in the CoC to reopen or alter the approved Resolution Plan after it has been voted on and presented to the Adjudicating Authority.

The Tribunal clarified that the jurisdiction of the NCLT under Sections 30 and 31 is confined to reviewing the statutory compliance and cannot be invoked to facilitate a new round of commercial negotiations.

The Bench headed by Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) set aside the order of the NCLT and restored the sanctity and finality of the approved Resolution Plan.

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