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NCLT Validates CoC's Decision and Clears Path for Corporate Revival under IBC Framework

The NCLT validated the CoC's decision and cleared the path for corporate revival under the IBC framework.


The National Company Law Tribunal (NCLT), New Delhi Bench, comprising Mr. Mahendra Khandelwal (Judicial Member) and Mr. Rahul Bhatnagar (Technical Member), approved the resolution plan for the Corporate Debtor M.B. Malls Private Limited. The Tribunal held that its role in approving a resolution plan is limited to ensuring compliance with Sections 30(2) and 31 of the IBC. It emphasized the sanctity of the Committee of Creditors’ (CoC) commercial wisdom, which is beyond judicial interference, provided the plan adheres to statutory requirements and does not contravene applicable laws.


The Resolution Professional (RP) of M/s M.B. Malls Pvt. Ltd. filed an application under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (IBC), along with Regulation 39(4) of the CIRP Regulations, seeking approval of the resolution plan submitted by a consortium comprising Mr. Pradeep Kumar Agrawalla and Mr. Mukesh Kumar Agarwal. This plan, unanimously approved by the Committee of Creditors (CoC) with a 100% voting share, marked a significant step towards reviving the corporate debtor, which was engaged in constructing a business tower and a 5-star hotel in Faridabad, Haryana before the project remained incomplete.


The insolvency process commenced on 03.08.2022 upon an application by the Bank of Baroda under Section 7 of the IBC, leading to the initiation of the Corporate Insolvency Resolution Process (CIRP). The RP, after calling for Expressions of Interest (EOIs) and multiple CoC meetings, recommended the resolution plan of the consortium. The plan provided for the payment of ₹72 crores to secured creditors within three months, delivery of units to real estate buyers within nine months, and upfront payments to operational creditors. A contingency fund of ₹6 crores was also established for unforeseen liabilities. The plan included capital restructuring, where existing equity shares would be cancelled, and 60 lakh new shares issued within 60 days from the effective date.


The NCLT noted the resolution plan’s compliance with Section 30(2) and Section 31 of the IBC, confirming that insolvency costs, debts to operational creditors, and the management structure were adequately addressed. It emphasized the commercial wisdom of the CoC, relying on the Supreme Court's decisions in K. Sashidhar v. Indian Overseas Bank and Others, REEDLAW 2019 SC 02502 and Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC {India) Limited and Others, REEDLAW 2021 SC 03527 to affirm that the Tribunal cannot interfere with the CoC’s decisions unless the plan contravenes statutory provisions. The RP verified that the plan aligned with all regulatory requirements, including Regulation 38 of the CIRP Regulations.


The Tribunal dismissed various interlocutory applications, finding the objections raised within to be effectively addressed by the resolution plan. It further clarified, citing Embassy Property Development Private Limited v. State of Karnataka and Others, REEDLAW 2019 SC 12501, that any waivers or statutory approvals sought under the plan must be pursued before the appropriate authorities and cannot be adjudicated by the NCLT under Section 60(5) of the IBC.


Upon approval, the Tribunal directed the RP to hand over the assets and records to the successful resolution applicant (SRA) to ensure smooth implementation of the plan. It also instructed the SRA to obtain statutory approvals and amend the Memorandum and Articles of Association of the corporate debtor accordingly. The moratorium under Section 14 of the IBC was lifted as of the date of the order, and the resolution plan was declared effective immediately. The NCLT’s decision reinforced the principle that the CoC's commercial judgment is paramount and final unless it violates the provisions of the Code or other relevant laws.


Mr. Ankur Mittal, Advocate, Ms. Yashika Sharma, Advocate, Ms. Muskan Jain, Advocate along with Abhimanyu Mittal, Advocate R.P. represented the Applicant.


Ms. Alisha K. Shail, Advocate appeared in IA/4587/2023.


Ms. Saumya Garg, Advocate represented the Financial Creditor.


Mr. Abhishek Anand, Mr. Karan Kholi and Ms. Palak Kalra, Advocates appeared for SRA.


 

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