Chandigarh Bench dismisses objections by suspended director, emphasizes limited scope of judicial review under IBC.
The National Company Law Tribunal (NCLT) Chandigarh Bench, comprising Member (Judicial) Khetrabasi Biswal and Member (Technical) Shishir Agarwal, has dismissed an application challenging the approval of a resolution plan for Hygiene Feeds and Farms Pvt. Ltd. The application was filed by Robin Dahiya, a suspended director of the corporate debtor, under Section 60(5) of the Insolvency and Bankruptcy Code (IBC), 2016.
The tribunal underscored the limited scope of judicial review concerning resolution plans, emphasizing that the adjudicating authority's jurisdiction is confined to ensuring compliance with Sections 30(2) and 31 of the IBC. The tribunal reiterated that the commercial decisions of the Committee of Creditors (CoC) are not open to judicial interference.
The application sought rejection of the resolution plan approved by the CoC, citing alleged procedural irregularities, non-compliance with statutory provisions, and inappropriate treatment of personal guarantees. However, the tribunal found no merit in these allegations.
In its detailed order, the tribunal noted that the CoC had duly deliberated on the feasibility and viability of the resolution plan, as required under Regulation 39(3)(b) of the CIRP Regulations. The tribunal further observed that no statutory claims were lodged by relevant authorities regarding provident fund dues, and the resolution plan made adequate contingent provisions for potential liabilities.
Addressing the issue of personal guarantees, the tribunal concluded that the CoC had consciously deliberated on the matter, and the resolution plan's provisions were consistent with legal precedents. The tribunal also highlighted that the applicant, despite participating in the corporate insolvency resolution process (CIRP), raised objections only after the CoC's unanimous approval of the plan.
The NCLT's decision affirms the principle that the commercial wisdom of the CoC, as the decision-making body under the IBC, should be respected, provided the resolution plan complies with the statutory framework. The dismissal of the application aligns with the objective of the IBC to facilitate a time-bound resolution of insolvency, thereby protecting the interests of creditors and stakeholders.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Scope of judicial review of approved resolution plan is limited to examining compliance with Sections 30(2) and 31 of the Code - Commercial decisions of the Committee of Creditors (CoC) are not amenable to judicial interference.
Statutory provision(s): Sections 30(2), 31, 36(4)(a)(iii), 60(5) of the Insolvency and Bankruptcy Code, 2016; Regulation 39(3)(b) of the CIRP Regulations.
Robin Dahiya v. Mr. Abhimanyu Mittal, (NCLT)(Chandigarh Bench) : Law Finder Doc id # 2946761
