NCLAT upheld the continuation of the Corporate Insolvency Resolution Process under the authority of the Committee of Creditors, aligning with the Supreme Court's directives in the Rainbow Papers case.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench led by Justice Ashok Bhushan (Chairperson) and Technical Member Mr. Arun Baroka reviewed an appeal and held that the Committee of Creditors (CoC), as the controlling body of the Corporate Insolvency Resolution Process (CIRP), must take all necessary steps to comply with the Hon’ble Supreme Court's directions, including considering and deciding upon the Resolution Professional's agenda, to ensure the CIRP is completed within the stipulated timeframe. The NCLAT clarified that no interference with the Adjudicating Authority’s order was warranted as it aligned with the Supreme Court's directives in State Tax Officer (1) v. Rainbow Papers Limited, REEDLAW 2022 SC 09519.
The appeal filed by the Successful Resolution Applicant (SRA) challenged the order dated May 1, 2024, passed by the Adjudicating Authority in I.A. 961/2024. This order allowed the Resolution Professional's (RP) prayer to conduct the ongoing Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, Mastana Foods Private Limited. The Corporate Debtor had been admitted into CIRP on September 18, 2019, and the appellant's Resolution Plan, along with an addendum, was approved by the Committee of Creditors (CoC) with a 100% vote on November 7, 2020. However, disputes arose regarding claims filed by the Excise & Taxation Officer, Officer-Cum-Assessing Authority, leading to multiple legal proceedings.
Earlier orders of the Adjudicating Authority allowing the tax claims were set aside by the NCLAT in 2022, but this decision was overturned by the Hon’ble Supreme Court on January 22, 2024, in light of its judgment in State Tax Officer (1) v. Rainbow Papers Limited, REEDLAW 2022 SC 09519. The Supreme Court granted 90 days for the substituted RP to complete the CIRP, emphasizing compliance with its earlier directions. Following this, the RP filed I.A. 961/2024, seeking directions to conduct the CIRP, leading to the impugned order.
The appellant contended that their approved Resolution Plan, with provisions to address the statutory liabilities, was sufficient to meet the Supreme Court's directives, and restarting the CIRP de novo was unnecessary. However, opposing counsels argued that the CoC was bound to act in accordance with the Supreme Court's judgment, necessitating further steps in the CIRP. The RP indicated that while an agenda for CoC deliberation was prepared, its presentation was stalled due to the pending appeal.
After reviewing the facts and submissions, the NCLAT held that the CoC, being in control of the CIRP, must decide on the next steps in compliance with the Supreme Court's directions. The appellate tribunal permitted the RP to place the agenda before the CoC to facilitate the CIRP's completion as required by law. Accordingly, the appeal was disposed of, affirming the necessity of CoC deliberations to progress the CIRP of the Corporate Debtor.
Mr. Sumesh Dhawan, Ms. Vatsala Kak, Mr. Raghav Dembla, Mr. Shaurya Shyam and Mr. Ashish Dhaka, Advocates represented the Appellant.
Mr. Pankaj Agarwal and Mr. Shashwat Srivastava, Advocates appeared for Respondent No. 1.
Mr. Amit Agarwal, Advocate represented the RP.
Mr. Ankur Mittal and Ms. Preety Choudhary, Advocates appeared for Respondent No. 2/CoC.
Mr. Virender Ganda Sr. Advocate with Ms. Akansha Mathur and Mr. Asraf Belal, Advocates appeared for Respondent No. 4/ Objector.
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