NCLAT reiterated that a Successful Resolution Applicant cannot unilaterally withdraw or modify their approved Resolution Plan.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka ( Technical Member) was hearing an appeal and upheld the approval of the Resolution Plan submitted by the Successful Resolution Applicant (SRA) for the Corporate Debtor. It reiterated that under the IBC, a Successful Resolution Applicant cannot unilaterally withdraw or modify their approved plan. The decision reaffirmed the binding nature of a Resolution Plan on the Resolution Applicant and emphasized the CoC's commercial wisdom in assessing feasibility and viability. Consequently, the appeal was dismissed, highlighting the importance of adhering to the IBC's statutory framework in insolvency resolution.
In the appeal before the National Company Law Appellate Tribunal (NCLAT), the Successful Resolution Applicant (SRA) contested the order passed by the Adjudicating Authority approving their own Resolution Plan for Educomp Solutions Limited. The appeal stemmed from the Adjudicating Authority's decision on 09.10.2023, endorsing the Resolution Plan submitted by the SRA.
The SRA's arguments primarily revolved around the implementability of the Resolution Plan and the purported deterioration of Educomp's financials, which they claimed rendered the plan unfeasible. Additionally, concerns were raised regarding the delay in approving the plan.
However, the Resolution Professional (RP) and the Committee of Creditors (CoC) countered these arguments, citing the Supreme Court's Ebix Singapore judgment, which established that withdrawal of a Resolution Plan by a Successful Resolution Applicant under the Insolvency and Bankruptcy Code (IBC) is impermissible. They contended that the issues raised had been previously addressed and rejected by the Supreme Court.
The NCLAT, in its judgment, referenced the Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited and Another, REEDLAW 2021 SC 09523 judgment and analyzed the statutory framework of the IBC. It concluded that there were no provisions allowing the withdrawal of a Resolution Plan by a Successful Resolution Applicant. Therefore, it upheld the decision of the Adjudicating Authority to approve the Resolution Plan submitted by the SRA.
The NCLAT emphasized the importance of adherence to the legislative intent of the IBC and underscored the limitations on the Adjudicating Authority's powers. It rejected the SRA's arguments regarding the Corporate Debtor's financial status and the delays in approving the Resolution Plan, highlighting that the feasibility and viability of the plan fall within the CoC's purview.
In conclusion, the NCLAT dismissed the appeal, affirming the decision of the Adjudicating Authority to approve the Resolution Plan. The judgment reiterated the significance of following the statutory framework of the IBC in insolvency resolution processes.
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