This case brings us to the important issue of the involvement of adjudicating authority in the finalization of the resolution plan.
Where once a resolution plan has been approved by the committee of creditors, the statutory mandate on Adjudicating Authority under section 31(1) is to ascertain that a resolution plan meets 37 requirements of sub-sections (2) and (4) of section 30 thereof and there is no provision in Code or Regulations that the bid of any resolution applicant has to match liquidation value. The order approving the resolution plan of the applicant was appealed against by one of the promoters of the corporate debtor as well as the financial creditor on the ground that the amount offered under the resolution plan was less than the liquidation value of the corporate debtor.
The NCLAT allowed appeals and directed the appellant to increase upfront payment accordingly and held that failure to deposit the enhanced amount with an escrow account within thirty days would lead to setting aside of the resolution plan. On appeal, the appellant submitted that the NCLAT had exceeded its jurisdiction in directing matching of liquidation value in the resolution plan.
Held that there is no provision in the Code or Regulations under which bid of any Resolution Applicant has to match the liquidation value arrived at in manner provided in regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. For the final approval of a resolution plan, the Adjudicating Authority has to be satisfied that the requirement of sub-section (2) of section 30 has been complied with.
Once a resolution plan has been approved by the committee of creditors' statutory mandate on the Adjudicating Authority under section 31(1) is to ascertain that a resolution plan meets the requirement of sub-section (2) and (4) of section 30 thereof. Where no breach of said provisions in order of the Adjudicating Authority in approving the resolution plan had been found, the Appellate Authority could not have interfered with the order of the Adjudicating Authority.
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