Whether an Asset Reconstruction Company (ARC) is required prior approval of RBI for participating as a Resolution Co-Applicant under the IBC – Puissant Towers India Pvt. Ltd. Vs. Neueon Towers Ltd. – NCLAT Chennai

In this case, the Adjudicating Authority held that M/s Invent Assets Securitisation & Reconstruction Pvt. Ltd. cannot submit resolution plan a s co-Applicant along with M/s Longview Resources (HK) Ltd. Hong Kong, without the prior approval of RBI under Section 10(2) of SARFAESI Act. NCLAT held that (i) it is significant to mention that Section 238 of the Code, will prevail over any of the provisions of the SARFAESI Act, 2002, if it is inconsistent with any of the Provisions of the Code, 2016 and therefore the Adjudicating Authority ought not to have placed reliance on Section 10(2) of the SARFAESI Act, 2002. (ii) Keeping in view, the clarification given by the Counsel for RBI that the prior permission is not required, this Tribunal is of the considered view that the Adjudicating Authority ought not to have rejected the Resolution Plan, more so, when the principal objective of the Code is that ‘revival of the Corporate Debtor and Resolution’. Liquidation ought to be the last resort, keeping in view the scope and spirit of the Code.

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If any Public depositor applies showing due of the debt claiming itself as operational creditor and the Resolution Professional or the Tribunal do not accept the claim on the ground that they are not financial creditor, we allow the appellant to raise the question before the Tribunal and if any adverse decision is given by the Tribunal, it will be open to the appellant to raise the issue before NCLAT- Hind Motors India Ltd. Vs. Adjudicating Authority NCLT, Chandigarh – NCLAT New Delhi

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