Resolution Applicant Who Was Declared Willful Defaulter Before Submission of Plan Wasn’t Eligible to Submit RP | NCLAT

Case Details: Namdev Hindurao Patil v. Virendra Kumar Jain, Liquidator, Warana Dairy and Agro Industries Ltd. - [2024] 162 taxmann.com 248 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Rakesh Kumar Jain, Judicial Member, Naresh Salecha & Indevar Pandey, Technical Member
  • Krishnendu Datta, Sr. Adv. Ms Neha Agarwal & Nipun Gautam for the Appellant.
  • Udita Singh, Abhishek Sharma, Kritya Sinha, Shawaiz Nisar & Mithilesh Kumar Pandey for the Respondent.

Facts of the Case

In the instant case, the CIRP was initiated against the corporate debtor and, RP published an expression of interest (EoI), wherein the last date of submission of EoI was 23.01.2022. Thereafter, the resolution plan submitted by the parties was approved with a 66.37% voting share.

However, the CoC did not vote on the resolution plan of the appellant and declared them an ineligible resolution applicant due to his wilful defaulter status. Aggrieved by CoC’s action, the appellant, a suspended director and one of the resolution applicants of the corporate debtor filed an application before the NCLT on the ground that CoC wrongly declared him as a wilful defaulter on 19.07.2021 and on 04.10.2021, which the appellant challenged before the appropriate Court.

Further, the RP permitted the appellant to submit a resolution plan subject to the outcome of the challenge by the appellant. The NCLT, vide the impugned order, discarded the appellant’s pleadings on the ground that the appellant was declared a wilful defaulter way back on 19.07.2021 and 04.10.2021 by respondent No. 2 bank. In contrast, the appellant submitted its resolution plan on 12.05.2022.

Thus, as per section 29A of the IBC on the date of submission of the resolution plan, the appellant was clearly ineligible to submit the resolution plan. Thereafter, an appeal was made before the National Company Law Appellate Tribunal (NCLAT).

NCLAT Held

The NCLAT noted that the relevant date was the date of submission of the Resolution Plan, and the appellant was not eligible to submit a resolution plan on 12.05.2022 since he had already been declared as a wilful defaulter on 17.07.2021 and 4.10.2021. i.e., much before his submission of the Respondent Plan.

The NCLAT held that since no judicial stay existed in favour of the appellant on 12-5-2022 regarding its status as a wilful defaulter hence, the appellant was not eligible to submit a resolution plan and, therefore, the impugned passed by the NCLT was justified.

List of Cases Reviewed

• • Vivek Murlidhar Dabhade, In re [2024] 162 taxmann.com 247 (NCLT -Mum.) (para 81) affirmed See Annex.