Tribunal Upholds CoC's Resolution Plan, Suspended Directors Lack Locus Standi
In a significant decision, the National Company Law Tribunal (NCLT), New Delhi, dismissed multiple applications filed by suspended directors of M/s. Nimitiya Hotel and Resorts Limited seeking the removal of the Resolution Professional (RP) and other reliefs. The tribunal found that the suspended directors lacked the necessary legal standing (locus standi) to challenge the actions of the RP, particularly after the resolution plan had already been approved by the Committee of Creditors (CoC).
The case, titled "Indian Bank v. M/s. Nimitiya Hotel And Resorts Limited," involved a series of interlocutory applications filed by the suspended directors, challenging the conduct of the RP and seeking various interventions. The tribunal, comprising Member (Judicial) Jyotsna Sharma and Member (Technical) Ms. Reena Sinha Puri, emphasized that specific provisions under the Insolvency and Bankruptcy Code (IBC), 2016, must be adhered to, rather than relying on general provisions of the NCLT rules.
The tribunal dismissed the applications primarily on the grounds of lack of locus standi and non-disclosure of relevant facts by the applicants. Costs were imposed on the applicants for filing frivolous and repetitive applications. The bench highlighted that the CoC's decision to approve the resolution plan is paramount, and the tribunal cannot entertain applications for the replacement of the RP once the plan has been approved.
The NCLT also noted the absence of any substantial evidence from the applicants to support their claims of misconduct or arbitrary conduct by the RP. The tribunal reiterated the importance of adhering to the procedural framework established under the IBC and cautioned against the misuse of judicial processes through repeated and baseless litigation.
The decision underscores the tribunal's commitment to upholding the sanctity of the insolvency resolution process and ensuring that it is not derailed by unwarranted challenges. The tribunal's order is expected to reinforce the authority of CoC decisions and streamline the resolution process under the IBC framework.
Bottom line:-
Insolvency and Bankruptcy Code - Locus standi of Suspended Directors to challenge the Resolution Professional's actions - Applications filed by Suspended Directors for removal of RP and other reliefs were dismissed due to lack of locus standi.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 22, 27, 60(5), 218; National Company Law Tribunal Rules, 2016 Rule 11
