Supreme Court held that the approval of the Resolution Plan by a Single Member of the NCLT violates Section 419(3) of the Companies Act 2013.
The Three-Judge Bench of the Supreme Court comprising Chief Justice Dr Dhananjaya Y Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra was hearing an appeal and observed that the approval of the Resolution Plan by a Single Member of the NCLT violated Section 419(3) of the Companies Act 2013. The Supreme Court Bench further noted that required considerations under Section 30(2) of the Insolvency and Bankruptcy Code 2016 were not addressed, thereby justifying the NCLAT's remand of the case for reconsideration by the NCLT.
On 16 October 2023, the National Company Law Appellate Tribunal (NCLAT) set aside the National Company Law Tribunal (NCLT) order dated 1 April 2020, which had approved the Resolution Plan. The NCLAT remanded the proceedings without addressing the merits of the case. The rationale for this decision was that the Resolution Plan was approved by a Single Member of the NCLT, violating Section 419(3) of the Companies Act 2013. Furthermore, the NCLAT observed that the necessary considerations under Section 30(2) of the Insolvency and Bankruptcy Code 2016 were not taken into account by the Single Member of the NCLT.
During the Supreme Court hearing, senior counsel Mr. Gaurav Agarwal appeared on behalf of the appellant, while Attorney General Mr. R Venkataramani represented the fourth respondent, Kendriya Bhandar, who is the successful Resolution Applicant. It was submitted that substantial steps had been taken following the approval order, including settling the dues of the financial creditors. The Supreme Court noted that these matters would be considered by the NCLT when the proceedings appear before it on remand.
Given that the NCLAT's order was one of remand, the Supreme Court decided not to entertain the appeal at this stage. The Court emphasized that all parties' rights and contentions remain open to be argued before the NCLT. The parties were allowed to approach the NCLT at an early date to ensure that orders could be passed in accordance with the directions provided.
The appeal was accordingly disposed of, along with any pending applications.
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