Allegation That IRP/RP Did Not Conduct CIRP As Per Law, Not A Ground To Challenge Resolution Plan: NCLAT Delhi
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in Brijesh Singh Bhadauriya v Pinakin Shah, has held that the order approving the Resolution Plan cannot be interfered with on a mere allegation that the IRP or the Resolution...
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in Brijesh Singh Bhadauriya v Pinakin Shah, has held that the order approving the Resolution Plan cannot be interfered with on a mere allegation that the IRP or the Resolution Professional has not conducted the CIRP in accordance with law.
Background Facts
Sintex Industries Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the Adjudicating Authority and an Interim Resolution Professional (“IRP”) was appointed. On 10.02.2023 the Adjudicating Authority approved a Resolution Plan for the Corporate Debtor.
Mr. Brijesh Singh Bhadauriya (“Appellant”) being shareholder of the Corporate Debtor, challenged the order of resolution plan approval before the NCLAT. It was alleged that the CIRP was not conducted in accordance with the Insolvency and Bankruptcy Code, 2016 (“IBC”) by the IRP and several illegalities were committed. Further, the Committee of Creditors had earlier considered to replace the IRP, however, subsequently they reverted back to the existing IRP.
NCLAT Verdict
The Bench observed that the Appellant being a shareholder was not a part of the CIRP process, but the Suspended Directors formed part of the CIRP and were present in the meetings. It has been held that the order approving the Resolution Plan cannot be interfered with on a mere allegation that the IRP or the Resolution Professional has not conducted the CIRP in accordance with law. Specially, when no specific grounds or reasons were given to substantiate the allegation that CIRP was conducted in breach of IBC or its Regulations.
The Bench observed as under:
“Any aggrieved persons may approach the CoC for removal of the RP/IRP or to approach the Adjudicating Authority. IRP has conducted the entire process with the approval of the CoC. Resolution Plan has been placed before the Adjudicating Authority, the Plan having been approved by the Adjudicating Authority, commercial wisdom of the COC is not easily to be interfered with in exercise of jurisdiction by the Adjudicating Authority or by this Tribunal. Mere allegations that IRP/RP has not conducted the CIRP in accordance with law, the order approving the Plan cannot be interfered with.”
The appeal has been dismissed.
Case Title: Brijesh Singh Bhadauriya v Pinakin Shah
Case No.: Company Appeal (AT) (Insolvency) No. 456 of 2023
Counsel For Appellant: Advocate Manisha T Karia, Adarsh Kumar, Nidhi Nagpal, Aditya Kesav, Rohan Trivedi.