Case Note & Summary
The appeal arose under Section 62 of the Insolvency and Bankruptcy Code, 2016, against a judgment dated 4 January 2021 of the National Company Law Appellate Tribunal, which upheld the NCLT's order dated 3 December 2020 approving a resolution plan for Reliance Infratel Limited, the corporate debtor. The appellants were operational creditors. The Corporate Insolvency Resolution Process was initiated on 15 May 2018, with an interim resolution professional appointed and public announcements made. After a stay and subsequent vacation, the process resumed, leading to the constitution of the Committee of Creditors and the appointment of a resolution professional. Expressions of interest were invited, and resolution plans were submitted, with the plan from Reliance Digital Platform and Project Services Limited being selected as preferred based on feasibility, viability, and implementability, and approved unanimously by the CoC. The NCLT approved the plan under Section 30(6), noting compliance with Section 30(2) and other regulations, and addressed pending applications by Doha Bank challenging creditor claims, clarifying that distribution would be subject to future orders. The NCLAT upheld this decision. The Supreme Court analyzed the jurisdiction to approve resolution plans, the exercise of such jurisdiction, and the binding nature of the plan on stakeholders. The court concluded that the NCLT and NCLAT correctly approved the plan, as it met legal requirements, was unanimously approved by the CoC, and pending applications did not impede approval, with the moratorium under Section 14 ceasing upon approval. The appeal was thus dismissed, upholding the lower tribunals' orders.
Headnote
A) Insolvency Law - Corporate Insolvency Resolution Process - Approval of Resolution Plan - Insolvency and Bankruptcy Code, 2016, Sections 30(2), 29A, 14 - The NCLT approved a resolution plan for Reliance Infratel Limited, finding it compliant with Section 30(2) and not contravening Section 29A, and binding on all stakeholders including creditors and guarantors. The plan was unanimously approved by the Committee of Creditors with 100% voting share, and the court upheld the approval, noting that pending applications challenging creditor claims did not impede approval, with distribution subject to future orders. Held that the plan met legal requirements and was validly approved. (Paras 7-12) B) Insolvency Law - Corporate Insolvency Resolution Process - Jurisdiction and Procedural Extensions - Insolvency and Bankruptcy Code, 2016, Sections 12, 14 - The CIRP was initiated on 15 May 2018, with extensions granted excluding periods of stay and litigation delays, extending the process to 330 days expiring on 10 March 2020. The NCLT clarified that the RP and CoC could complete the CIRP within this timeframe, and the moratorium under Section 14 ceased upon plan approval. Held that the procedural timeline was properly managed under the IBC provisions. (Paras 2-6) C) Insolvency Law - Corporate Insolvency Resolution Process - Committee of Creditors' Role - Insolvency and Bankruptcy Code, 2016, Sections 21, 30 - The CoC was constituted on 24 May 2019, engaged with resolution applicants, and selected a plan based on feasibility, viability, and implementability after due verification under Section 29A. The resolution plan was approved with 100% voting share, and the NCLT and NCLAT upheld this decision, emphasizing the CoC's authority in plan approval. Held that the CoC's unanimous approval supported the plan's validity. (Paras 3-5)
Issue of Consideration
Whether the NCLT and NCLAT correctly approved the resolution plan under the Insolvency and Bankruptcy Code, 2016, despite pending applications challenging creditor claims
Final Decision
The Supreme Court upheld the judgment of the NCLAT dated 4 January 2021, thereby affirming the NCLT's order dated 3 December 2020 approving the resolution plan for Reliance Infratel Limited. The court found the plan compliant with Section 30(2) of the IBC, not contravening Section 29A, and binding on all stakeholders, with distribution subject to pending applications and the moratorium under Section 14 ceasing upon approval.
Law Points
- Jurisdiction of NCLT to approve resolution plans
- compliance with Section 30(2) of IBC
- binding nature of resolution plan on stakeholders
- treatment of pending applications
- moratorium cessation under Section 14
