The NCLAT clarified that the CoC holds the authority to evaluate resolution plans and settlement proposals, emphasizing that the Supreme Court had not imposed a stay on the CIRP.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench led by Justice Ashok Bhushan (Chairperson) and Technical Member Mr. Barun Mitra reviewed a bunch of two appeals and held that the CoC, exercising its commercial wisdom, must simultaneously consider the resolution plans and the revised settlement proposal, clarifying that the NCLT's stay on the CIRP was unjustified as no such stay was granted by the Supreme Court.
The appeals challenged two orders dated 24.05.2024 and 01.07.2024 issued by the NCLT, Kolkata, concerning the CIRP of Hiranmaye Energy Ltd. The CIRP had commenced on 02.01.2024, but the respondent, a promoter of the corporate debtor, contested the initiation. Although the NCLAT dismissed the promoter’s appeal on 25.01.2024, the matter was further appealed to the Supreme Court, which granted the respondent permission on 03.05.2024 to submit a settlement proposal to the Resolution Professional (RP) for consideration by the CoC.
Following the Supreme Court’s order, the respondent submitted a proposal that the CoC rejected in its meeting on 07.06.2024. Subsequently, the respondent filed another application with the NCLT, which, on 01.07.2024, directed the CoC to reconsider the proposal with any necessary modifications. It also mandated that the respondent receive an opportunity to revise the offer and lead evidence. The appellant CoC, aggrieved by the NCLT’s order, argued that the stay on the CIRP was unwarranted since the Supreme Court had not stayed the process.
During the NCLAT proceedings, the respondent submitted a revised proposal on 09.08.2024, arguing that it offered a better recovery and aligned with the objective of reviving the corporate debtor. The CoC maintained that it had received several resolution plans that were under evaluation, and the commercial wisdom of the CoC should prevail in determining the most viable course for the corporate debtor’s revival.
The NCLAT concluded that the CoC must consider both the resolution plans and the revised settlement proposal simultaneously, exercising its commercial wisdom. It held that it was unnecessary for the CoC to hear the respondent unless it deemed it necessary for negotiations. Furthermore, the NCLAT clarified that the NCLT’s stay on the CIRP was unjustified, as no such stay had been granted by the Supreme Court. Accordingly, the NCLAT modified the NCLT’s order and directed that the CoC proceed with its evaluation process. It dismissed one of the appeals as infructuous and resolved the other with the modified directions.
Mr. Abhinav Vasisht Sr. Advocates a/w Mr. Vaijayant Paliwal, Mr. Saurav Panda, Ms. Charu Bansal, Ms. Mohana Nijhawan, Ms. Kirti Gupta, Ms. Anushri and Ms. Priya Sen, Advocates represented the Appellant.
Mr. Joy Saha, Mr. Krishnendu Datta and Mr. Abhijeet Sinha Sr. Advocates with Mr. Pranjit Bhattacharya, Mr. Raj Sarit Khare and Ms. Kriti Gera, Advocates appeared for the Respondent.
Mr. Arvind Nayyar Sr. Advocate with Mr. Madhav Kanoria, Ms. Srideepa Bhattacharya, Ms. Neha Shivhare and Mr. Akshay Joshi, Advocates represented Respondent No. 2.
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