Mathuraprasad C Pandey Vs. Partiv Parikh
Company Appeal (AT)(Ins) No.201 and 266/2021
Facts:
1.Appellant in the capacity of operational creditor filed the application under Section 9 of the IBC Code which was admitted in the month of August, 20196 and Interim Resolution Professional namely Mr. Parthiv Parikh (Hereinafter referred to as IRP) was appointed as IRP and subsequently as the RP.
2.After number of meetings of Committee of Creditors (hereinafter referred to as CoC) on 7.9.2020 in 14th CoC Meeting Resolution Plan was discussed with clarificatory addendum dated 01.09.2020 which was submitted by the appellant Mr Mathura Prasad Pandey and others, Resolution Plan as per evaluation matrix.
3.Appellant M/s Mathuraprasad and another communicated revised resolution plan which was put on e-voting before the CoC on 19.11.2020 and e-voting concluded on 21.11.2020. In the said e-voting the plan submitted by the appellant M/s Mathura Prasad was approved by 97.79% of CoC. RP filed an application under Section 31 of the IBC before the Learned Adjudicating Authority.
4.While approving the Resolution Plan the learned Adjudicating Authority modified the Resolution Plan to the extent that “if any member of Resolution applicants has entered into or stand as guarantor in the individual capacity, in that event, he shall not be covered with any immunity given under the Resolution Plan. Appellant is challenging the order of AA to the extent of modification.
Issue: Whether the AA has the power to modify the Resolution Plan?
Arguments:
For Appellants:
1.Counsel for appellant submits that by making modification in Resolution Plan which was finally approved by more than 97% of majority of CoC, the Learned Adjudicating Authority has committed error. It was argued that time without number it has been held that the approval of the Resolution Plan by the Coc is within commercial wisdom of the CoC and as such the Adjudicating Authority was not having any jurisdiction to modify or alter any of the condition of the Resolution Plan.
2.He submits that once Resolution Plan approved by the majority of CoC in its commercial wisdom was submitted before the Adjudicating Authority for his approval, the Adjudicating Authority was only required to examine whether the resolution plan was to be approved or rejected. However, the Adjudicating Authority was not justified in putting any modification or alter any condition in the resolution plan.
Decision: AA has no power to modify the resolution plan.
Rationale:
1.NCLAT noted that there is no doubt that if a resolution plan is submitted before the Adjudicating Authority which is in compliance with sub-section (1) of Section 31 as well as in consonance with the provisions of Section 30 of the Code such resolution plan has to be approved by the Adjudicating Authority since in Section 31 word “shall” has been incorporated with proviso that the Adjudicating Authority must be satisfied that the resolution plan has provisions for its effective implementation. Sub-section (2) of Section 31 of the IBC further empowers the Adjudicating Authority to reject the resolution plan, if he is satisfied that resolution plan is not in conformity with the requirements as referred to in sub-section (1) of Section 31 of the IBC. It is clear that mandate of legislation is either to approve the resolution plan or to reject.
Order:
