Summary
The Court restored approval of a resolution plan after finding NCLAT’s remand unjustified. The creditors and successful applicant had consciously considered the disputed ethanol machinery and business contingencies; the tribunal could not replace their commercial assessment. Matching liquidation figures did not establish leakage on this record, and an isolated date error did not prove late submission. The invitation had to be judged under the regulation then in force, rather than a later newspaper-publication requirement.
Issues
- Whether NCLAT could reopen the creditors’ informed viability and feasibility decision.
- Whether matching liquidation values and a date discrepancy established confidentiality breach or collusion.
- Whether the invitation violated the applicable historical regulation.
Provisions considered
- Regulation 36A, before 4 July 2018 amendment, Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016Applied the version governing the March invitation; it did not require newspaper publication in Form G. (¶¶ 41, 42, 43, 44, 45, 46)
Held
- Review of an approved resolution plan remains within statutory limits and cannot trespass on the creditors’ commercial wisdom. Where relevant viability factors are disclosed and consciously considered, the adjudicating authority cannot substitute its business assessment. (¶¶ 12, 13, 14, 15, 16, 17)
- The disputed availability of ethanol machinery was known to the resolution professional, creditors and successful applicant, which had alternative capacity and provision for a new facility. It did not show that feasibility had been overlooked or the plan depended fatally on that machinery. (¶¶ 14, 15, 16, 40)
- The plan’s cover date and contemporaneous email showed submission and scrutiny before the deadline. The tribunal improperly rejected explanatory emails responding to an argument first raised during hearing; the isolated self-declaration date was a typographical error on the record. (¶¶ 28, 29, 30, 31, 32, 33, 34, 35, 39)
- Matching liquidation values did not establish unlawful leakage on these facts. The proposed payout greatly exceeded liquidation value, and the record did not show a benefit from the alleged disclosure. NCLAT’s adverse finding was unsustainable. (¶¶ 32, 35, 36, 37, 38, 39)
- The promoter had participated without objecting to the draft invitation or subsequent meetings. More importantly, the March 2018 invitation was governed by the earlier Regulation 36A; the July amendment’s newspaper-publication requirement could not be retrospectively used to invalidate it. (¶¶ 41, 42, 43, 44, 45, 46)
Result
Appeals allowed; NCLAT’s remand order set aside and NCLT Mumbai’s 1 August 2019 approval restored. No order as to costs.