NCLAT New Delhi: Resolution Plan Cannot Go Back And Forth Making CIRP An Endless Process, Even If NCLT Has Not Approved The Plan
The National Company Law Appellate Tribunal (‘NCLAT’), Principal Bench, New Delhi comprising of Justice Rakesh Kumar Jain (Judicial Member) and Arun Baroka (Technical Member), dismissed an appeal filed in IDBI Bank Ltd. vs. Jalesh Kumar Grover RP of GPI Textiles Ltd. by IDBI Bank Ltd. (Appellant) against Jalesh Kumar Grover, Resolution Professional (‘RP’) for GPI Textiles...
The National Company Law Appellate Tribunal (‘NCLAT’), Principal Bench, New Delhi comprising of Justice Rakesh Kumar Jain (Judicial Member) and Arun Baroka (Technical Member), dismissed an appeal filed in IDBI Bank Ltd. vs. Jalesh Kumar Grover RP of GPI Textiles Ltd. by IDBI Bank Ltd. (Appellant) against Jalesh Kumar Grover, Resolution Professional (‘RP’) for GPI Textiles Ltd. (Corporate Debtor) challenging the NCLT Chandigarh’s order dated 27.04.2023 dismissing the Appellant’s application for submission of its claim before the RP.
The Tribunal held that as per the principle established by the Supreme Court even if the NCLT Chandigarh has not approved a Resolution Plan, it should not lead to a situation where the Plan can go back and forth making the CIRP an indefinite and never-ending process.
Background Facts:
The Corporate Insolvency Resolution Process (‘CIRP’) against the Corporate Debtor was initiated on 06.07.2018 and claims were invited by the RP until 26.07.2018 which the Appellant failed within the prescribed time, and the 90-day period also expired as per Regulation 12(2) of the IBBI (CIRP) Regulation, 2016. The Committee of Creditors (CoC) approved the resolution plan on 27.03.2019. Subsequently, on 20.11.2019, the Appellant submitted their claim to the RP after a delay of 502 days.
The RP rejected the claim, leading the Appellant to file an application with NCLT Chandigarh to challenge the rejection due to the delay. NCLT Chandigarh dismissed the application citing delay and was not appealed by the Appellant, making it a final decision.
During this time, the Supreme Court decided on an ongoing dispute involving the Successful Resolution Applicant (‘SRA’) and held that considering higher offers made to the CoC, they were allowed to proceed based on fresh Expressions of Interest (EoIs) with the appellants permitted to submit a resolution plan and EoI to the CoC within 30 days. The timeline for completing the process was extended by 60 days and RP was instructed to file a fresh application for the approval of the resolution plan before the NCLT.
Post this, the Appellant again submitted its claim for admission which was rejected by RP due to delay. It argued that the Appellant made a fresh claim due to the reopening of the litigation by the Supreme Court.
The RP contended that once a claim has been declared delayed and rejected by NCLT Chandigarh, the Appellant cannot revive the same claim, citing the recent Supreme Court judgment in RPS Infrastructure Ltd. vs. Mukul Kumar & Anr.
NCLAT Verdict:
The NCLAT Principal Bench, New Delhi dismissed the appeal and relied upon the Supreme Court ruling of RPS Infrastructure Ltd. vs. Mukul Kumar & Anr. and held that as per the principle established by the Supreme Court even if the NCLT Chandigarh has not approved a Resolution Plan, it should not lead to a situation where the Plan can go back and forth making the CIRP an indefinite and never-ending process.
The Tribunal concluded that such a scenario could potentially reopen the entire matter, especially considering the possibility of other similar parties getting involved in the process.
Case Title: IDBI Bank Ltd. vs. Jalesh Kumar Grover RP of GPI Textiles Ltd.
Case No.: Company App. (AT) (Ins) No. 799 of 2023
Counsel For Appellant: Adv. Praful Jindal
Counsel for RP: Mr. Abhishek Anand & Karan Kohli, Adv.