NCLT approves Resolution Plan; says any transactions between the related parties cannot be equated to transactions with outsiders on an arm’s length basis as there is bound to be discrimination.
Resolution Professional of Sushant Aneja & Anr. (Applicant/Corporate Debtor) has filed the present application for approval of the Resolution Plan filed under section 30(6) and section 31 read with section 60(5) of the Insolvency & Bankruptcy Code, 2016 (IBC ,2016) and the Attendant regulation being Regulation 39 of IBBI (CIRP Regulations, 2016). The Interim Resolution Professional constituted the Committee of Creditors (CoC) who approved final the Resolution Plan after multiple meetings and discussions between the Resolution Applicant and CoC. The dissenting Financial Creditors object to the approval of the Resolution Plan and seek its rejection on the ground of it being discriminatory, irrational and inconsiderate to the rights and interests of the Applicant.
NCLT finds that the applicability of Limitation Act to the IBC 2016, non-admission for the claim of interest by RP is justified since the claim related to interest is beyond the three years period. NCLT peruses the relevant documents filed by the RP and finds that Oriental Bank of Commerce is the only Financial Creditor who is not related to the Corporate Debtor and who has 100% voting strength. NCLT finds that the dissenting FC has no say in the decision of the CoC as they are related party Financial Creditors. NCLT observes that the RP has adhered to all the timelines of the instant CIRP. NCLT further finds that the NPA accounts have not be declared as wilful defaulters and observes that the conditions laid down by the CoC in relation to the minimum requirements for filing the resolution plan u/s 25(2)(h)has been complied by the resolution applicant. NCLT observes that the CoC has taken a commercial decision in favour of the resolution plan and finds no force in the opposition of the resolution plan as all related parties under the resolution plan and their repayment are categorised under one umbrella and the repayments are required to take place accordingly under the resolution plan.
NCLT further notes that in relation to related parties IBC 2016 does not permit the related parties being Financial Creditors to participate in CoC for obvious reasons, as any transactions between the related parties cannot be equated to that transactions with outsiders on an arm’s length basis and hence there is bound to be a differential treatment as between a related party being a related party to a Corporate Debtor whether it be secured or unsecured. NCLT further finds that the non-consideration of the claim of interest in the resolution plan by RP in light of non submission of the related documents by the applicants/Financial Creditors is justified. NCLT opines that it shall not interfere with the final Resolution Plan as submitted by the resolution applicant reflecting the loan amount as admitted by the RP.
In relation to the transactions contemplated under the provisions of sections 43, 45, 50 and 66, NCLT notes that the RP had not been too vigilant in pressing for an order to be passed as it is required to notice that under Section 29A(g) a person will not be eligible to be a resolution applicant who has been a promoter or in the management or in control of a CD in which a preferential transaction, undervalued transaction, extortionate credit transactions or fraudulent transaction has taken place and in respect of which an order has been made by the adjudicating authority under the code; and no such order has been passed.
NCLT further notes that the CoC has approved the resolution plan even though an appeal was pending before the NCLAT in relation to the default by the promoters of the Corporate Debtor. NCLT approves the Resolution Plan in consideration of the overall benefit of the stakeholders of the Corporate Debtor and issues directions.