Case Note & Summary
The case involved an appeal against an order from the National Company Law Tribunal, which dismissed a resolution plan due to concerns over the genuineness of a Performance Bank Guarantee. The appellant, NSR - KBA Infrastructure Consortium, argued that the guarantee was arranged through a director of a financial services company and was fraudulent, leading to a police complaint against the individual involved. The Committee of Creditors (CoC) had expressed continued support for the resolution plan despite the dismissal, citing the deposit of the required Performance Security and the absence of financial prejudice to creditors. The CoC believed that the resolution plan would yield better outcomes than liquidation. The Appellate Tribunal, after considering the submissions and the police report against the individual who arranged the guarantee, set aside the impugned order and directed the Adjudicating Authority to reconsider the resolution plan. The Tribunal requested that the matter be disposed of within two months. The appeal was thus allowed, and several interim applications were also disposed of.
Headnote
A) Insolvency Law - Resolution Plan Approval - Dismissal of Resolution Plan - Insolvency and Bankruptcy Code, 2016, Section Not mentioned - The Adjudicating Authority dismissed the resolution plan on grounds of a fraudulent Performance Bank Guarantee, which was deemed not genuine. The Appellate Tribunal set aside this order, noting the subsequent deposit of the required Performance Security and the support of the Committee of Creditors for the plan's implementation. Held that the matter should be reconsidered by the Adjudicating Authority (Paras 6-7).
Issue of Consideration
Whether the dismissal of the resolution plan due to the alleged fraudulent Performance Bank Guarantee was justified.
Final Decision
The Appellate Tribunal set aside the impugned order and directed the Adjudicating Authority to reconsider the resolution plan, requesting disposal within two months.
Law Points
- Insolvency proceedings
- Resolution Plan approval
- Performance Bank Guarantee
- Committee of Creditors
- Corporate Debtor preservation
