The NCLAT dismissed the appeal against the approved Resolution Plan, affirming the Commercial Wisdom of the CoC and finding no substantial irregularities.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice M. Venugopal and Ms. Shreesha Merla was hearing an appeal on Wednesday and held that the Resolution Plan met relevant legal requirements and wasn't in violation of Section 29A of the Code. The NCLAT Bench dismissed the appeal against the approved Resolution Plan, affirming the Commercial Wisdom of the CoC and finding no substantial irregularities.
The National Company Law Appellate Tribunal (NCLAT) passed an order on a challenge to the Impugned Order dated 13/08/2020. This order was passed in response to IA 1094/2020 in CP(IB)153/07/HDB/2019 by the Hyderabad Bench of NCLAT. The order allowed Application 1094/2020 filed by the Resolution Professional of the Corporate Debtor Company, seeking approval of the Resolution Plan presented by 'M/s Renganayaki Agencies'.
The appellant contested the Resolution Plan's approval based on the argument that the Corporate Debtor owed Rs. 22,60,32,948/- due to non-payment of Central Excise Duty, interest, and penalties as per Central Excise Returns. The Resolution Plan allocated only 0.13%
towards Government dues, while Financial Creditors were to receive 44.5%, and other Operational Creditors 0.51%, which was deemed unfair.
The Appellant's legal representative asserted that the Corporate Debtor could be considered a 'Secured Creditor' due to a property attachment. The Resolution Plan stated a total sum of Rs.4,73,42,602/-, and if the Appellant's application under SABHKA VISWA SCHEME were rejected, the Claim would be Rs. 22,60,32,948/-. The Appellant argued that the Corporate Debtor agreed to pay Rs. 4,73,42,602/- during the CIRP Period, but the amount wasn't paid, leading to the current claim. The Appellant referred to a letter from the Successful Resolution Applicant indicating Government dues of Rs. 1,38,00,000/- and submitted Rs. 2,93,843/- under protest.
The Respondent's Senior Counsel contended that the Appellant challenged an approved Plan (dated 13/08/2021) that was implemented on 08/02/2022, involving an expenditure of Rs.68,98,00,000/- by the Successful Resolution Applicant. The Respondent argued the absence of Appellant objections when the Claim amount was communicated.
The National Company Law Appellate Tribunal (NCLAT) noted that the CoC approved the Resolution Plan on 16/09/2020 with 100% majority votes. The NCLAT upheld the approval in its Impugned Order, asserting that the Resolution Plan met relevant legal requirements and wasn't in violation of Section 29A of the Code.
Regarding the Appellant's claim to be a 'Secured Creditor,' the NCLAT highlighted differences
between Section 11E of the Central Excise Act, 1944, and the 'GVAT Act, 2003', concluding the
The appellant didn't qualify as a 'Secured Creditor.'
The NCLAT referenced judgments, including Kalpraj Dharamshi and Another v. Kotak Investment Advisors Limited and Another, REED 2021 SC 03545, emphasizing that the Commercial Wisdom of the CoC is non-justiciable unless it contravenes Section 30(2) of the Code.
The NCLAT concluded that no substantial irregularities were found in the Resolution Plan under Section 30(2) of the Code. Considering the Plan's implementation and the time elapsed, the Appellate Tribunal dismissed the appeal.
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