NCLAT held that once a Resolution Plan is approved by the Committee of Creditors(CoC), subsequent settlement proposals from the Appellant, even if higher, are impermissible and cannot override the approved plan.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) observed that once a Resolution Plan is approved by the Committee of Creditors (CoC), subsequent settlement proposals from the Appellant, even if higher, are impermissible and cannot override the approved plan, affirming the NCLT's dismissal of IA No.2594 of 2023 as justified and in line with insolvency law.
In the appeal filed by the Shareholder and Promoter of Nimitaya Hotel & Resorts Pvt. Ltd., the challenge was against the National Company Law Appellate Tribunal’s (NCLAT) decision upholding the National Company Law Tribunal’s (NCLT) order dated July 3, 2024. The NCLT had rejected the Appellant's application IA No.2594 of 2023. The issue originated from the Corporate Debtor’s insolvency proceedings initiated following an application under Section 7 of the Insolvency and Bankruptcy Code filed by Indian Bank, which was admitted on December 24, 2021.
Initially, the Appellant contested this admission but was permitted by the NCLAT on July 4, 2022, to submit a fresh settlement proposal exceeding Rs.81 crores. Despite presenting several revised offers, including one of Rs.100 crores in November 2022 and another of Rs.118.25 crores in March 2023, these were consistently rejected by the Committee of Creditors (CoC). The CoC favoured the Resolution Plan from the Successful Resolution Applicant (SRA), which received unanimous approval on January 8, 2023.
The NCLT’s decision to dismiss IA No.2594 of 2023 was based on the conclusion that the Appellant’s settlement proposals had been thoroughly considered but were not favoured over the SRA’s plan. The Tribunal had provided the Appellant with opportunities to negotiate and submit revised offers, but these were declined as the Resolution Plan had already been approved. The NCLAT, upon review, confirmed that the CoC’s decision to reject the settlement offers was made with proper consideration and was not arbitrary.
The Appellant's contention that their higher settlement offer should have been accepted was deemed unfounded by the NCLAT. It was noted that once the Resolution Plan was approved, further proposals from the Appellant were impermissible. The NCLAT’s judgment upheld the NCLT's order, affirming that the rejection of IA No.2594 of 2023 was justified and in accordance with the legal framework governing insolvency resolution. The appeal was dismissed, with no additional costs ordered.
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