Case Note & Summary
The National Company Law Appellate Tribunal dealt with two appeals concerning the approval of a Resolution Plan for Satellite Cables Pvt. Ltd. by the NCLT. The appellants, Vinay Gupta and Niharika Goel, both suspended directors of the Corporate Debtor, challenged the approval of the Resolution Plan on multiple grounds, primarily alleging violations of natural justice and procedural irregularities during the Corporate Insolvency Resolution Process (CIRP). The appeals arose from an order dated 23 April 2024, which approved the Resolution Plan submitted by Suraj Garg, a practicing Chartered Accountant. The appellants contended that they were not provided with the Resolution Plan or an opportunity to object before the NCLT, which they argued constituted a breach of their rights as suspended directors. They also raised concerns regarding the eligibility of Suraj Garg to submit a Resolution Plan, citing provisions of the Chartered Accountants Act, 1949. The respondents, including the Resolution Professional, defended the approval process, asserting that the appellants had no locus standi to challenge the Resolution Plan and that the process was conducted in compliance with the law. The Tribunal found that the suspended directors were indeed entitled to be informed and participate in the approval process, thus violating principles of natural justice. The Tribunal also addressed the eligibility of the Resolution Applicant and the issue of government dues not being accounted for in the Resolution Plan. Ultimately, the Tribunal held that the approval of the Resolution Plan was liable to be set aside due to these violations, emphasizing the importance of transparency and adherence to statutory requirements in the insolvency process.
Headnote
A) Insolvency Law - Natural Justice - Right to be Heard - Insolvency and Bankruptcy Code, 2016, Section 30 - The suspended directors of the Corporate Debtor were not provided with a copy of the Resolution Plan prior to the approval hearing, violating principles of natural justice. The court held that suspended directors are entitled to be informed and participate in the process, thus necessitating the setting aside of the approval of the Resolution Plan (Paras 57-58). B) Insolvency Law - Eligibility of Resolution Applicant - Insolvency and Bankruptcy Code, 2016, Section 29A - The eligibility of a practicing Chartered Accountant to submit a Resolution Plan was questioned. The court found no explicit provision barring such participation, thus upholding the eligibility of the applicant (Paras 57-58). C) Insolvency Law - Government Dues - Insolvency and Bankruptcy Code, 2016, Section 30(2) - The Resolution Plan did not provide for government dues, which is contrary to the provisions of the Code. The court emphasized that a plan ignoring statutory dues is liable to be rejected (Paras 57-58).
Issue of Consideration
Whether the approval of the Resolution Plan is liable to be set aside on the ground that the suspended director was not supplied a copy of the Resolution Plan before the plan-approval hearing?
Final Decision
The Tribunal set aside the approval of the Resolution Plan due to violations of natural justice, emphasizing the need for transparency and adherence to statutory requirements in the insolvency process.
Law Points
- Insolvency Resolution Process
- Corporate Debtor
- Resolution Plan Approval
- Natural Justice
- Eligibility of Resolution Applicant
