Case Note & Summary
This appeal arose under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC), challenging the judgment dated 4 January 2021 of the National Company Law Appellate Tribunal (NCLAT) which upheld the approval of a resolution plan by the National Company Law Tribunal (NCLT) for Reliance Infratel Limited, the corporate debtor. The appellants, operational creditors, contended that they were not adequately informed about the Corporate Insolvency Resolution Process (CIRP) and that their claims were not treated equitably. The CIRP was initiated on 15 May 2018, with an interim resolution professional appointed shortly thereafter. The NCLT approved the resolution plan on 3 December 2020, which was subsequently upheld by the NCLAT. The appellants argued that the resolution plan favored financial creditors disproportionately and that their claims were significantly reduced. The NCLAT found that operational creditors received a higher percentage of the upfront payment compared to financial creditors, and that the resolution plan complied with the IBC. The Supreme Court analyzed the jurisdiction of the NCLT in approving the resolution plan, emphasizing that the NCLT's role is to ensure compliance with statutory requirements rather than to engage in equitable considerations. The court concluded that the resolution plan was validly approved and binding on all stakeholders, including the appellants. The appeal was dismissed, affirming the NCLAT's decision.
Headnote
A) Insolvency Law - Approval of Resolution Plan - Jurisdiction of NCLT - Compliance with IBC - The NCLT approved the resolution plan as it met the requirements under Section 30(2) of the IBC, confirming that the plan was binding on all stakeholders. The court held that the NCLT's jurisdiction is limited to determining compliance with statutory requirements and does not extend to equity-based considerations (Paras 22-27).
Issue of Consideration
Whether the approval of the resolution plan by the NCLT was justified under the Insolvency and Bankruptcy Code, 2016.
Final Decision
The Supreme Court dismissed the appeal, affirming the NCLAT's decision that the resolution plan was validly approved by the NCLT and binding on all stakeholders.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Corporate Insolvency Resolution Process
- Approval of Resolution Plan
- Jurisdiction of NCLT
- Equitable Treatment of Creditors
