Third Party Not For Copy Of Resolution Plan Pending Approval By AA: NCLAT Delhi
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Dr. Alok Srivastava (Technical Member), while adjudicating an appeal filed in Rupinder Singh Gill v Three C Universal Developers Pvt., has held that a party who is not a Claimant, Creditor or a participant in the CIRP of the Corporate Debtor, is not entitled...
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Dr. Alok Srivastava (Technical Member), while adjudicating an appeal filed in Rupinder Singh Gill v Three C Universal Developers Pvt., has held that a party who is not a Claimant, Creditor or a participant in the CIRP of the Corporate Debtor, is not entitled to be given a copy of the Resolution Plan which is pending approval or rejection before the Adjudicating Authority. The IBC also does not contain any such provision.
BACKGROUND FACTS
In 2018, Rupinder Singh Gill (“Appellant”) entered into an Agreement to sell with Three C Universal Developers Pvt. Ltd. (“Corporate Debtor”), to purchase the entire shareholding two private companies. Subsequently, the Corporate Debtor initiated proceedings against the Appellant under Section 241-242 of the Companies Act, 2013, in which the Adjudicating Authority (“NCLT”) granted ‘status quo’ on shareholding.
On 17.12.2019, the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (“CIRP”) under the IBC. M/s. Ace Infracity Developers (“Resolution Applicant”) submitted a resolution plan which was duly approved by the Committee of Creditors.
The Resolution Professional filed an application under Section 31 of IBC before the NCLT, seeking approval of the said Resolution Plan. During the pendency of the application, the Appellant filed an intervention in the same, requesting a copy of the Resolution Plan which was yet to be approved or rejected by the NCLT. The Appellant has not filed any claim in the CIRP of the Corporate Debtor.
The NCLT rejected the Appellant’s intervention application on the ground that the Appellant did not have any locus standi. The copy of the resolution plan cannot be provided on the sole ground that there is litigation between the Appellant and the Suspended board of Directors of the Corporate Debtor.
The Appellant filed an appeal before the NCLAT against the NCLT order. It was argued that the Appellant has an interest in the shareholding of the Corporate Debtor by virtue of Agreement to Sell. Therefore, the Appellant is entitled to a copy of the Resolution Plan.
ISSUE
Whether a copy of the Resolution Plan, which has been approved by the CoC but awaits the approval of the Adjudicating authority, can be given to a party who not a Claimant, Creditor or participant? Does IBC contain any such provision?
NCLAT VERDICT
The Bench placed reliance on the NCLAT judgment in Association of aggrieved workmen of Jet Airways (India) Limited Vs. Jet Airways (India) Ltd., 2022 SCC online NCLAT 36, wherein it was held that:
“The above scheme of the Code also indicates that after Resolution Plan is submitted to the Adjudicating Authority and it is approved by the Adjudicating Authority, it no longer remains a confidential document, so as to preclude Regulator and other persons from access the said document….We thus do not accept the submission of learned Counsel for Respondent No.4 that Resolution Plan even after approval, is a confidential document and cannot be disclosed to a claimant.”
Further reliance was placed on the Supreme Court judgment in Vijay Kumar Jain Vs. Standard Chartered Bank & Ors., Civil Appeal No. 8430 of 2018
“Last but not least, a resolution plan which has been approved or rejected by an order of the Adjudicating Authority, has to be sent to “participants” which would include members of the erstwhile Board of Directors – vide Regulation 39(5) of the CIRP Regulations. Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan, and may, as persons aggrieved, file an appeal from the Adjudicating Authority’s order to the Appellate Tribunal under Section 61 of the Code. Quite apart from this, Section 60(5)(c) is also very wide, and a member of the erstwhile Board of Directors also has an independent right to approach the Adjudicating Authority, which must then hear such person before it is satisfied that such resolution plan can pass muster under Section 31 of the Code.”
Based on the precedents, the Bench opined that neither the Tribunal nor the Supreme Court has held that the copy of the Resolution Plan, which is still in the process of approval or rejection by the Adjudicating Authority, is be given to a party who is neither a Claimant nor a Creditor or a participant. The Order of NCLT rejecting the Appellant’s request has been upheld by the Bench.
The appeal has been dismissed.
Case Title: Rupinder Singh Gill v Three C Universal Developers Pvt. Ltd.
Case No.: Comp. App. (AT) (Ins) No. 729 of 2021
Counsel For Appellants: Mr. Krishnendu Datta, Sr. Advocate, Ms. Prachi Johri, Mr. Rahul Gutpa, Advs.
Counsel For Respondent: Mr. Abhishek Anand, Mr. Mohak Sharma, Mr. Vaibhav M. Adv for R1.