NCLT can’t rely on residuary powers to allow withdrawal of resolution plan on plea of Successful Resolution Applicant

Case Details: Committee of Creditors of Wind World (India) Ltd. v. Suraksha Asset Reconstruction Ltd. - [2021] 132 taxmann.com 287 (NCLAT- New Delhi)

Judiciary and Counsel Details

• • Justice A.I.S. Cheema, Chairperson and Dr. Alok Srivastava, Technical Member
  • Arun Kathpalia, Sr. Adv, Siddhant Kant, Ms. Charu Bansal, Prabh Simran Kaur, Anoop Rawat and Ms. Diksha Gupta, Advs. for the Appellant. 
  • Abhinav Vashisht, Sr. Adv., Chitranshul A. Sinha, Ms. Priya Singh, Jaskaran Singh Bhatia, Sumant Batra, Sanjeev Sambasivan and Ms. Neha Naik, Advocates for the Respondent.

Facts of the Case

In the instant case, the Corporate Insolvency Resolution process was initiated against corporate debtor and pursuant to that Resolution Plan was approved by the committee of creditors and later was placed before the Adjudicating Authority.

Meanwhile the Successful Resolution Applicant comprised of (i) Suraksha Asset Reconstruction Ltd., (ii) Lakshdeep Investment and Finance (P.) Ltd. and (iii) Suraksha Reality Ltd. filed an application to the Adjudicating Authority to withdraw the Resolution Plan post approval by the CoC.

Claiming that due to various applications filed time got consumed in completion of pleadings in various litigations and the application for approval of the Resolution Plan could not be heard. It further claimed that more than 600 days had lapsed and the Resolution Plan has lost its relevance.

The Adjudicating Authority by impugned order permitted the Successful Resolution Applicant to withdraw Resolution Plan and also directed the Resolution Professional to return the performance security given by the Resolution Applicant by way of Bank Guarantee.

On appeal, CoC stated that it was extensively negotiated and considered by the CoC on parameters of feasibility and viability and it was approved by 93.63 per cent of the members of the CoC and it created a binding contract between CoC and SRA.

NCLT Held

The Appellate Tribunal held that adjudicating authority had no jurisdiction to rely on residuary powers of section 60(5)(c) to entertain application of successful resolution applicants for withdrawal of resolution plan.

The Tribunal observed that once resolution plan had been approved by CoC, successful resolution applicants could not be allowed to withdraw Resolution Plan.

Case Review

• • Suraksha Asset Reconstruction Ltd. v. Shailen Shah RP for Wind World (India) Ltd. [2020] 119 taxmann.com 446 (NCLT – Ahd.) (para 29) set aside.
  • Ebix Singapore (P.) Ltd. v. Committee of Creditors of Educomp Solutions Ltd. [2021] 130 taxmann.com 208 (SC) (para 27) followed.

List of Cases Referred to

• • Committee of Creditors of Essar Steel (India) Ltd. v. Satish Kumar Gupta [2019] 111 taxmann.com 234 (SC) (para 8)
  • Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta [2018] 98 taxmann.com 99/150 SCL 354 (SC) (para 11)
  • K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312 (SC) (para 14)
  • Ebix Singapore (P.) Ltd. v. Committee of Creditors of Educomp Solutions Ltd. [2021] 130 taxmann.com 208 (SC) (para 19).