NCLAT overrules NCLT: Univastu's resolution plan for Setubandhan gets reconsideration
This decision came on the appeals filed by both the Resolution Professional and Univastu India Limited, the Successful Resolution Applicant.
The appellate tribunal, led by Justice Ashok Bhushan along with technical members Barun Mitra and Arun Baroka, said that the NCLT went beyond its powers by questioning the commercial decision made by the Committee of Creditors (CoC), which had approved the plan with a strong majority of 98.57 per cent.
The NCLT had earlier rejected the plan, citing procedural issues, questions about the value of the plan, and the way dissenting creditors were being treated. However, the NCLAT said that these issues were either clarified during proceedings or were allowed under the Insolvency and Bankruptcy Code (IBC). It also pointed out that some of the objections raised by the NCLT had not been part of the original concerns brought up during the review process.
The NCLAT found that the resolution plan had been properly presented to the CoC, that creditor treatment was within legal rules, and that the Resolution Professional had made reasonable efforts to list assets and disclose properties under dispute. It also ruled that there was no need to refer the Resolution Professional's conduct to the Insolvency and Bankruptcy Board of India.
In its final remarks, the NCLAT stated that courts should not interfere with decisions made by the CoC unless there is a clear legal issue, and upheld the importance of respecting the CoC's commercial judgment.
The appeals have been found to have sufficient merit, and accordingly, the impugned order has been set aside. The Adjudicating Authority is directed to forward the resolution plan submitted by the Successful Resolution Applicant (SRA) to the Committee of Creditors (CoC) for reconsideration, taking into account the queries previously raised on December 17 and 19, 2024.
To facilitate this process, the Corporate Insolvency Resolution Process (CIRP) period is extended by 90 days. Additionally, the observations made by the Adjudicating Authority regarding the conduct of the Resolution Professional (RP) are expunged, and no grounds have been found to refer the RP's conduct to the Insolvency and Bankruptcy Board of India (IBBI), NCLAT ordered. (ANI)
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