ADJUDICATING AUTHORITY CANNOT DIRECT INVITATION OF FRESH BIDS FROM RESOLUTION APPLICANT AFTER APPROVAL OF A RESOLUTION BY TH COC

23rd April 2021

An NCLAT bench of Chennai has ruled that Adjudicating Authority cannot direct invitation of fresh bids from resolution applicant after approval of a resolution by the Committee of creditors.

The ‘Appellant’ /Successful Resolution Applicant has filed the present ‘Appeal’ being dissatisfied with the order passed by the Adjudicating Authority (NCLT, Hyderabad Bench). NCLT held that there is scope for further improvement of the resolution amount therefore accordingly directed the COC to take fresh bids and submit a fresh resolution plan for consideration.

APPELLANT’S CONTENTIONS

Counsel for the Appellant contended that an ‘Adjudicating Authority could not trespass into the ‘Commercial Wisdom’ of the COC. Referring to the decision in Shrawan Kumar Agarwal Consortium & others V Rituraj Steel Private Limited wherein a question arose ‘whether the Adjudicating Authority has exceeded it is jurisdiction in passing orders rebidding, despite the approval of the Resolution Plan by the Coc with a vote share of 84.70%. It was held that a direction for rebidding, despite approval of a Resolution Plan by the Coc, was not valid in Law. The Appellant's grievance is that its plan was approved with an overwhelming 100% of votes, and there was no reason commercially for rejection of its plan by the ‘Adjudicating Authority’.

DECISION

The bench held that The ‘Adjudicating Authority’ (NCLT Hyderabad) is to approve the ‘Resolution Plan’ approved by the “Committee of Creditors’ with 100% voting in favour of ‘KALS Group’

Author: Papiha Ghosha

Pc - centrik