Status as on- 13/02/2020
The resolution plan can be challenged by an aggrieved person as per the grounds mentioned in Sub-Section (3) of Section 61 of the Code.
The provisions of the IBC show that the scheme envisaged in the IBC is that a process for the corporate insolvency resolution can be initiated under Section 7,8/9 of the said Code by an Operational creditor or financial creditor. Thereafter, all creditors including operational creditors can apply as per prescribed form to raise their claim against the corporate debtor. Pursuant to which a resolution professional is appointed, who takes over the management of affairs of the corporate debtor and resolution professional submit an application in order to revive the corporate debtor into continuing its operations, while at the same time providing for a plan to repay the debts of creditors. Now, the resolution plan is required to be approved by the committee of creditors and then it is to be submitted before the Adjudicating Authority i.e. National Company Law Tribunal for approval. The Adjudicating Authority, upon being satisfied that the resolution plan meets the requirements under Section 30(2), approves the resolution plan and if any person is aggrieved by the said order, it can file an appeal before the National Company Law Appellate Tribunal under Section 32 read with section 61 of the IBC.
An appeal against an order approving a resolution plan may be filed on the following grounds when:
- The approved resolution plan is in contravention of the provisions of any law
- There has been a material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period
- The debts owed to operational creditors of the corporate debtor have not been provided properly in the resolution plan
- The insolvency resolution process costs have not been provided for repayment in priority to all other debts
- The resolution plan does not comply with any other criteria specified by the Board.
Upon the resolution plan being approved by the Adjudicating Authority under section 31 of the IBC, the moratorium order passed by the Adjudicating Authority under section 14 of the IBC ceases to have its effect. The said moratorium is initiated on the date when the application under section 7 or section 8/9 of the IBC for initiation of the insolvency process is admitted. During this period, the institution of fresh suits or proceedings is prohibited and continuance of already instituted suits and proceedings is also suspended. Upon the resolution plan being finally approved or modified by the Appellate Authority, it is to be implemented. Once such a resolution plan had attained finality, by virtue of Section 63 read with section 238 of the IBC, the Civil Court or any other court will have no jurisdiction to entertain any issue related to recovery.
Disclaimer– The above article is based on the personal interpretation of related laws, which may differ from person to person. The readers are expected to take expert opinion before relying on this article. For more clarification, the readers can be expected at shriya@centrik.in or support@centrik.in
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