Case Note & Summary
The Supreme Court addressed a series of civil appeals concerning the Corporate Insolvency Resolution Process (CIRP) initiated against Appu Hotels Limited. The CIRP was initiated on 05.05.2020 following an application by Tourism Finance Corporation of India Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The National Company Law Tribunal (NCLT) approved a resolution plan on 15.07.2021, which was subsequently challenged by various parties before the National Company Law Appellate Tribunal (NCLAT). The NCLAT, in its judgment dated 17.02.2022, rejected the resolution plan, citing the ineligibility of the resolution applicant under the Companies Act and the Trusts Act, and remanded the matter for fresh consideration. The resolution applicant and the resolution professional contested this decision, arguing that the NCLAT overstepped its jurisdiction and that procedural irregularities did not warrant rejection of the plan. The Supreme Court, while reviewing the appeals, noted the procedural history and the various objections raised during the CIRP. It emphasized the importance of compliance with statutory provisions and the necessity for the committee of creditors to approve any settlement proposal by a significant majority. The court ultimately upheld the NCLAT's decision, reinforcing the need for adherence to the IBC's requirements and the procedural integrity of the CIRP process.
Headnote
A) Corporate Insolvency - Eligibility of Resolution Applicant - Disqualification under Companies Act - The Appellate Tribunal declared the resolution applicant ineligible under Section 164(2)(b) of the Companies Act, 2013, and rejected the resolution plan on grounds of non-compliance with statutory provisions. The court upheld the Tribunal's findings regarding the applicant's ineligibility and the necessity for fresh expressions of interest (Paras 1-2). B) Corporate Insolvency - Procedural Compliance - Publication of Form G - The Appellate Tribunal found that the non-publication of Form G constituted a procedural irregularity that warranted rejection of the resolution plan. The court emphasized the importance of adhering to procedural requirements in the CIRP process (Paras 1-2). C) Corporate Insolvency - Voting Share Requirements - The Appellate Tribunal mandated that any settlement proposal by the promoter must receive approval from 90% of the committee of creditors, highlighting the significance of voting thresholds in the CIRP (Paras 1-2).
Issue of Consideration
Whether the Appellate Tribunal correctly rejected the resolution plan and remanded the matter to the committee of creditors for fresh consideration.
Final Decision
The Supreme Court upheld the NCLAT's decision to reject the resolution plan and remand the matter to the committee of creditors for fresh consideration, emphasizing the importance of compliance with statutory provisions and procedural integrity.
Law Points
- Corporate Insolvency Resolution Process
- eligibility of resolution applicant
- procedural irregularities
- voting share requirements
- disqualification under Companies Act
- Trusts Act
