Case Note & Summary
The appeal was filed against an order by the National Company Law Tribunal (NCLT) dismissing applications related to a resolution plan for Laxmi Precision Screws Limited. The Corporate Insolvency Resolution Process (CIRP) commenced on 18.07.2018, with Mr. Deepak Thakur appointed as the Interim Resolution Professional. The appellant submitted a resolution plan on 12.04.2019, which was approved by the Committee of Creditors (CoC) on 10.04.2019. However, the plan was challenged by workmen due to non-compliance with statutory dues under the Insolvency and Bankruptcy Code (IBC). The NCLT directed the appellant to address these dues, leading to a revised plan that was ultimately rejected by the CoC on 28.12.2022 for failing to increase its value. The appellant's subsequent applications to set aside this rejection were dismissed by the NCLT on 13.05.2024, which also ordered liquidation of the corporate debtor. The appellant contended that the CoC's rejection was illegal as the resolution plan had been previously approved and argued that the CoC could not change its decision based on subsequent legal developments regarding statutory dues. The court found that the CoC acted within its rights and that the NCLT's dismissal of the applications was justified, emphasizing the non-justiciable nature of the CoC's commercial decisions. The appeal was dismissed, and the order for liquidation was upheld.
Headnote
A) Insolvency Law - Committee of Creditors' Authority - Rejection of Resolution Plan - Insolvency and Bankruptcy Code, 2016, Section 33 - The CoC has the authority to reject a resolution plan even after approval if it deems necessary based on commercial wisdom and changes in law. The court upheld the CoC's decision to reject the plan due to non-compliance with statutory dues, emphasizing the binding nature of the CoC's decisions (Paras 33-41).
Issue of Consideration
Whether the Committee of Creditors (CoC) could reject the approved resolution plan based on changes in statutory requirements and whether the Adjudicating Authority erred in dismissing the applications.
Final Decision
The appeal was dismissed, and the order for liquidation was upheld. The NCLT's decision to reject the resolution plan was found to be justified based on the CoC's commercial wisdom and statutory compliance requirements.
Law Points
- Insolvency Resolution Process
- Corporate Debtor Liquidation
- Commercial Wisdom of CoC
- Binding Nature of Approved Resolution Plans
- Statutory Dues Compliance
