Status as on- 08/01/2023
The NCLAT, Principal Bench, New Delhi opined that when a Resolution Plan is approved by the Committee of Creditor (hereinafter referred to as “CoC”) in its commercial wisdom, it must be presumed that the approval was given to a viable and feasible plan. Once approved, the Tribunal cannot interfere with the commercial wisdom.
Brief Facts:
The present Appeal has been preferred against the order of NCLT vide which the application of home buyers was rejected. The home buyers in the prayer sought the replacement of the Resolution Professional in the Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) and an order for rejecting the resolution plan.
Contention of Appellants
It was contended that the Authorized Representative who voted on behalf of the home buyers for the resolution plan did not obtain instructions and approval from the home buyers. Several items were deferred without obtaining any opinion, so the entire process has been vitiated.
Observations of the Tribunal:
It was observed that the Authorized Representative participates in the CoC meetings to represent the interest of the CoC and therefore, he has to obtain instructions to vote for the majority for any agenda item. When there is no voting concerning an agenda, the representative’s opinion can be taken note of and considered in the said meeting.
Moreover, the tribunal opined that when a Resolution Plan is approved by the CoC in its commercial wisdom, it has to be presumed that the approval was given to a viable and feasible plan. Once approved, the Tribunal cannot interfere with the commercial wisdom.
The decision of the Tribunal/ RATIO:
Based on the above-mentioned reasons, the Appellate Authority rejected the Appeal, and accordingly, it was dismissed.
Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinions before relying upon the article. For more information, please contact us at rera@centrik.in & ibc@centrik.in
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