By Diksha Mehta-
A three-Judge Bench of National Company Law Appellate Tribunal (NCLAT) comprising Justice Bansi Lal Bhat- Acting Chairperson, Anant B Singh and Alok K Mishra, held that once an applicant whose resolution has been approved for a debt-ridden company by the Committee of Creditors (CoC), cannot withdraw its offer subsequently.
The Bench dismissed the plea made by Kundan Care Products, the successful bidder of Astonfield Solar (Gujarat) Pvt. Ltd., an insolvent company.
The Appellant firm had moved a Bench in the Adjudicating Authority seeking revocation/ cancellation of its resolution plan but it was dismissed for not having any appropriate legal grounds for withdrawal and it would frustrate the entire resolution process.
Stating that it had no jurisdiction to permit withdrawal of a Resolution Plan which had been duly approved by the CoC, and that the matter was sub-judice in the Apex Court, the appeal was dismissed by the authority.
Subsequently, aggrieved by the decision, the appellate firm moved to the NCLAT. The appellant contended that due to delay in conclusion of the Corporate Insolvency Resolution Process (CIRP), its resolution plan had been rendered unviable and it cannot be barred from withdrawing its plan.
In contradiction, reliance was placed by the Respondents on the recent decision of Committee of Creditors of Educomp Solutions Ltd. v. EBIX Singapore Pte Ltd. and Anr. (2020), where an appeal was filed against a similar order of the Adjudicating Authority.
The Appellate Tribunal rejected the plea holding that the Adjudicating Authority cannot enter into the arena of the majority decision of the CoC and once the Resolution is accepted, it was not open to the applicant to make a U-turn and wriggle out of its liabilities.
The Tribunal further explained that the CIRP process involves a rigorous procedure and approval of a Resolution Plan eliminates all the other bidders from the arena. Such an approved plan would be binding on the Corporate Debtor and he cannot rescind it at a later stage thereby sabotaging the entire Resolution process.
He cannot be allowed to alter his position subsequently at the detriment of the other stake holders.
Dismissing the appeal, the NCLAT iterated that there is no provision in the Insolvency and Bankruptcy Code to allow such withdrawal at a later stage after being approved by the CoC.
