The NCLT reaffirmed the CoC's commercial supremacy and the limited scope of judicial review in the approval of the Resolution Plan.
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Ms. Reeta Kohli (Judicial Member) and Ms. Madhu Sinha (Technical Member), observed that its scope of review is limited to ensuring compliance with Section 30(2) of the Insolvency and Bankruptcy Code. The Tribunal emphasized the supremacy of the Committee of Creditors' (CoC) commercial wisdom in approving a Resolution Plan and the binding nature of such plans on all stakeholders, including statutory authorities.
The Corporate Insolvency Resolution Process (CIRP) of Mundra Estate Developers Limited commenced on January 12, 2023, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Resolution Professional (RP) filed an application under Sections 30(6) and 31 of the Code, seeking approval of the Resolution Plan submitted by Jagjit Estate and Development Company Private Limited. The Resolution Plan was approved by the Committee of Creditors (CoC) on March 28, 2024, with 100% voting shares, following extensive evaluations and compliance checks.
The CIRP involved meticulous assessment, including the determination of fair and liquidation values of the Corporate Debtor’s assets, public invitations for expressions of interest, and multiple submissions of resolution plans. Despite initial withdrawals, Jagjit Estate emerged as the successful resolution applicant. Its plan proposed a recovery framework amounting to ₹10.75 crore, addressing the claims of financial creditors and CIRP costs. Other creditors, including operational creditors, were not allocated any amounts under the plan due to the absence of admitted claims. Contingent liabilities and claims arising from breaches of applicable laws were similarly assigned no payments.
The Resolution Plan adhered to the requirements of Section 30(2) of the IBC and relevant regulations, including Regulations 37, 38, and 39(4). It confirmed the applicant’s eligibility under Section 29A of the Code, addressed statutory compliance issues, and outlined a viable implementation framework supervised by a Monitoring Committee. The RP issued a compliance certificate affirming conformity with statutory obligations, including the prioritization of creditors and fair distribution of recovery amounts.
The Adjudicating Authority emphasized its limited scope of judicial review, as reiterated in precedents like K. Sashidhar v. Indian Overseas Bank and Others, REEDLAW 2019 SC 02502 and India Resurgence Arc Private Limited v. Amit Metaliks Limited and Others, REEDLAW 2021 SC 05523. The Tribunal’s role was confined to ensuring compliance with Section 30(2) of the Code, respecting the commercial wisdom of the CoC in approving the plan. Drawing from the Supreme Court's ruling in Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited and Others, REEDLAW 2021 SC 04534, the Tribunal underscored the binding nature of the approved plan, which extinguished all pre-CIRP claims not forming part of the plan, including statutory dues.
The Tribunal approved the Resolution Plan, effective immediately, and directed necessary amendments to the Corporate Debtor's constitutional documents and the cessation of the moratorium under Section 14 of the Code. A Monitoring Committee was established to oversee the plan's implementation, with periodic reports to the Tribunal. The Resolution Professional was discharged, save for duties related to implementing the approved plan. The order reaffirms the legislative intent of the IBC to prioritize the CoC’s commercial decisions while limiting judicial intervention to statutory compliance.
Mr. Govind Javeri (PH), Advocate represented the Applicant/Resolution Professional.
Ms. Sheba Abraham (VC), Advocate appeared for the Income Tax Department.
Ms. Uttara Jhaveri (VC), Advocate appeared for the Financial Creditor.
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REEDLAW 2024 NCLT Mum 10556
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