Tribunal Upholds Larger Bench Precedent, Denies Shareholder's "Aggrieved Person" Status Under IBC
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, dismissed an appeal by Prateek Jain, a shareholder of a corporate debtor, challenging the approval of a modified resolution plan by the National Company Law Tribunal (NCLT), New Delhi. The appeal questioned the validity of the resolution plan approved by the NCLT on June 11, 2024, concerning M/s. Red Apple Buyers Welfare Association, arguing that a subsequent memorandum of understanding introduced material changes not reviewed by the Committee of Creditors (CoC).
The bench, comprising Mr. Justice Sharad Kumar Sharma and Mr. Indevar Pandey, reiterated the principle that a shareholder in individual capacity does not qualify as an "aggrieved person" under Section 61 of the Insolvency and Bankruptcy Code (IBC), 2016, thereby making the appeal non-maintainable. This decision aligns with the precedent set by the larger bench in the Park Energy Pvt. Ltd. case, affirmed by the Supreme Court, which emphasized that shareholders cannot challenge resolution plans solely based on allegations of fraud or collusion without substantial proof.
Prateek Jain's appeal was based on claims of fraud and collusion between the successful resolution applicant, the resolution professional, and a third party, Windsor Paradise Heights Pvt. Ltd. However, the tribunal emphasized that such allegations cannot confer the locus standi required to maintain an appeal under the IBC. The ruling underscored that the interests of shareholders are adequately protected by the Resolution Professional or liquidator appointed under the law, and allowing individual shareholders to challenge resolution plans would contradict the IBC's objective of facilitating time-bound insolvency resolutions.
The tribunal also addressed the indirect challenge posed by other homebuyers supporting the shareholder's appeal, stating that legal proceedings cannot be subverted by supporting an appeal barred by limitation. The court noted that what cannot be done directly under the law should not be permissible indirectly.
This judgment reinforces the NCLAT's commitment to adhering to legal precedents and the IBC's mandate for timely resolution of insolvency cases, ensuring that the process remains efficient and free from procedural abuse.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Appeal against approval of resolution plan - Shareholder in individual capacity is not an "aggrieved person" under Section 61 and cannot maintain appeal challenging approval of resolution plan - Allegations of fraud/collusion do not by themselves confer maintainability when raised by shareholder - Earlier larger Bench decision in Park Energy, affirmed by Supreme Court, held binding and prevailing over contrary later regular Bench view.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 30(6), 31, 61
Prateek Jain v. Anurag Nirbhaya, (NCLAT)(Principal Bench, New Delhi) : Law Finder Doc id # 2991185
