Summary
The Court directed expeditious tribunal consideration of a homebuyers’ resolution plan while declining immediate attachment of promoters’ personal properties based on that unapproved plan. The corporate debtor remained protected by the Section 14 moratorium, but that protection did not prevent proceedings against its promoters to enforce settlements reached before the Court. Plan objections belonged before the adjudicating authority, and further lawful remedies were preserved subject to its approval decision. The petitions and appeals were disposed of.
Issues
- Whether the Court should attach promoters’ personal properties based on a creditors-approved plan still awaiting tribunal approval.
- Whether the corporate debtor’s moratorium prevented proceedings against promoters concerning settlements reached before the Court.
Provisions considered
- Section 14(1)(a), Insolvency and Bankruptcy Code, 2016The ongoing moratorium barred institution or continuation of the relevant proceedings against the corporate debtor, but did not extend that protection to promoters personally. (¶¶ 14, 15)
- Section 31(1), Insolvency and Bankruptcy Code, 2016Plan objections were for the adjudicating authority, and attachment could not presently be ordered merely on the basis of the still-unapproved plan. (¶¶ 12, 13, 15, 16)
Held
- The homebuyers had participated in the insolvency process and the creditors’ committee approved a consortium plan which awaited tribunal approval. Their objections to that plan were to be submitted to the adjudicating authority. The Court directed expeditious disposal of the approval application, preferably within six weeks of receipt of a certified copy of its order. (¶¶ 8, 9, 12, 13)
- The plan’s proposed preservation of former management liabilities did not justify immediate Supreme Court attachment of promoters’ personal properties before adjudicating-authority approval. Consequences under Section 31 would follow approval, and further remedies remained subject to the approval decision and its effects. (¶¶ 11, 13, 15, 16)
- Section 14 protected the corporate debtor during the moratorium, rather than its directors or promoters personally. The homebuyers were not prevented by that moratorium from initiating proceedings against the promoters concerning honouring settlements reached before the Supreme Court. This clarification did not itself grant attachment or adjudicate the personal enforcement claim. (¶¶ 14, 15)
- The special leave petitions and civil appeals were disposed of with these directions and liberty to take available legal remedies after the tribunal’s decision, subject to its consequences. (¶¶ 16, 17)
Result
Petitions and civil appeals disposed of with directions for expeditious plan adjudication and the stated liberties; immediate attachment based on the unapproved plan declined.