Case Note & Summary
The appeals arose from the rejection of a Resolution Plan submitted by Micro Capitals Private Limited, the majority financial creditor of KSS Limited, during the Corporate Insolvency Resolution Process (CIRP). The National Company Law Tribunal (NCLT) had rejected the plan on 24.03.2025, citing several deficiencies including lack of genuine fund infusion and non-compliance with statutory requirements. The Appellant contended that the plan was approved by the Committee of Creditors (CoC) with requisite majority and that the NCLT's rejection was based on extraneous grounds. The Respondents, including the Commissioner of Income Tax and the Principal Chief Commissioner of Customs, argued that the plan unfairly treated statutory dues and was vitiated by conflict of interest, as the Appellant was both the Resolution Applicant and a dominant creditor. The court analyzed the submissions, emphasizing the need for compliance with the Insolvency and Bankruptcy Code, 2016, particularly regarding the treatment of operational creditors and the feasibility of the plan. Ultimately, the court upheld the NCLT's decision, affirming that the rejection was warranted due to the plan's failure to meet legal standards and protect the interests of all stakeholders involved.
Headnote
A) Insolvency Law - Resolution Plan Approval - Grounds for Rejection - Insolvency and Bankruptcy Code, 2016, Section 30 - The Adjudicating Authority rejected the Resolution Plan on grounds including absence of genuine fund infusion and conflict of interest, which were deemed valid as they contravened statutory requirements and fairness principles. Held that the rejection was justified (Paras 4-6).
Issue of Consideration
Whether the rejection of the Resolution Plan by the Adjudicating Authority was justified under the Insolvency and Bankruptcy Code, 2016.
Final Decision
The National Company Law Appellate Tribunal upheld the rejection of the Resolution Plan, affirming that it did not comply with the requirements of the Insolvency and Bankruptcy Code, 2016, particularly regarding the treatment of statutory creditors and the feasibility of the plan.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Corporate Insolvency Resolution Process
- Resolution Plan approval
- Committee of Creditors
- conflict of interest
- statutory dues treatment
