Resolution Plan approved by CoC is binding on CoC and it cannot have reviewed its own decision or pray for review of its opinion | Resolution Plan cannot be remitted/sent back by Adjudicating Authority to CoC for re-consideration except when there is violation of Section 30(2) of IBC – Nivaya Resources Pvt. Ltd. v. Asset Reconstruction Company (India) Ltd. and Anr. – NCLAT New Delhi
In this landmark judgment, Hon’ble NCLAT has settled the issue on send back the Resolution Plan to CoC for re-consideration.
The Hon’ble Bench comprising of Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) has held that the Resolution Plan approved by the CoC is binding on the CoC and it cannot have reviewed its own decision or pray for review of its opinion. Even prior to the approval of the Adjudicating Authority, Resolution Plan is binding inter se between the CoC and the Successful Resolution Applicant.
However, the Bench referring Hon’ble Supreme Court judgment in K. Sashidhar v. Indian Overseas Bank and Ors. [2019] ibclaw.in 08 SC and giving paramount status to the commercial wisdom of the CoC held that the law is well settled that the Adjudicating Authority has ample power to remit the Resolution Plan for reconsideration by the CoC when there is violation of Section 30(2).
The Bench concludes that there can be no quarrel to the proposition that if the Resolution Plan submitted by the Resolution Applicant is not in accord with Section 30(2), it can be sent back to the CoC.
The Bench has also added other circumstances under which Resolution Plan can be remitted by the Adjudicating Authority, where the Resolution Applicant acquires any ineligibility subsequent to the approval of the Resolution Plan or there is breach of any condition of the Resolution Plan which make Resolution Applicant does not entitle to implement the plan.