NCLAT Delhi: Adjudicating Authority Can Extend Payment Timelines Under Resolution Plan Without Express Concurrence Of CoC

Background Facts:

State Bank of India ('SBI') as the sole member of the Committee of Creditors ('CoC') having a 100% voting share approved the Resolution Plan submitted by Ashok Dattatray Atre and Ors. (Appellants) for the revival of Transparent Energy Systems Pvt. Ltd. (Corporate Debtor). On 16.04.2021, the said Resolution Plan was approved by NCLT Mumbai.

The total amount had to be paid in six installments as per the Resolution Plan. The Appellants were not able to pay the first three tranches the fourth tranche due on 15.04.2023 and and fifth tranche was due in October 2023. The Resolution Plan was to be implemented within three years from from 16.04.2021 to 16.04.2023.

An interlocutory application was filed by the Appellant praying for an extension of time to make the payment. Subsequently, an interlocutory application was filed by SBI to pass a liquidation order against the Corporate Debtor due to default in payments by the SRA which was duly opposed by the SRA.

The Appellant has filed the appeal against NCLT Mumbai's order allowing SBI's application to liquidate the Corporate Debtor and dismissing its application for an extension of time. NCLT Mumbai also observed that the Tribunal should refrain from modifying the terms of the approved Resolution Plan unless the same is concurred by the CoC.

NCLAT Verdict:

The NCLAT New Delhi allowed the appeal and held that the Adjudicating Authority can extend payment timelines under the Resolution Plan without the express concurrence of the CoC.

The Appellate Tribunal emphasized that the Adjudicating Authority holds the jurisdiction to grant extensions of payment timelines in a Resolution Plan.

It further observed that the concurrence of the CoC is not mandatory for the Adjudicating Authority to exercise this jurisdiction and the said jurisdiction can be exercised independently. in suitable cases. Granting extensions for payment timelines as outlined in the Resolution Plan falls within the Adjudicating Authority's purview to issue appropriate orders.

NCLAT noted that for granting an extension of time in payment as per the Resolution Plan for implementation of the Resolution Plan, the appropriate jurisdiction is always vested with the Adjudicating Authority to pass the appropriate order.

In conclusion, NCLAT set aside NCLT Mumbai's Order of liquidation against the Corporate Debtor and Order rejecting the Appellant's application for an extension of time on the ground of non-approval by CoC as unsustainable.

Case Title: Ashok Dattatray Atre and Ors. vs. State Bank of India and Ors.

Case No.: Company Appeal (AT) (Insolvency) Nos. 221 and 222 of 2024

Counsel for Appellants: Mr. Pankaj Jain and Mr. Sarthak Dugar, Advocates

Counsel for Respondent: Mr. Harshit Khare and Mr. Prafful Saini, Advocates for R-1. Ms. Udita Singh, Advocate for R-2

Click here to Read/Download Order