In a recent judicial scrutiny, the Supreme Court delved into the intricacies of resolution plans under the Insolvency and Bankruptcy Code (IBC), especially when they involve assets owned by statutory authorities. The case in question pertained to the Greater Noida Industrial Development Authority, a statutory body, whose land formed a crucial part of the resolution plan.
The crux of the matter lay in the usage of land not directly owned by the Corporate Debtor but by a third party, which added layers of complexity due to statutory regulations governing its utilization. The Court, comprising Chief Justice DY Chandrachud, J.B. Pardiwala, and Manoj Misra, emphasized that while the commercial wisdom of the Committee of Creditors (CoC) typically determines plan feasibility, special attention is warranted when statutory authorities are involved.
The resolution applicant, seeking approval for their plan, faced hurdles as they were initially denied their claim as a Financial Creditor, ultimately being categorized as an Operational Creditor. Despite the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) endorsing the plan, the Supreme Court intervened to reassess its viability.
Justice Manoj Misra, in his judgment, underscored the need for resolution plans to demonstrate feasibility, especially when they involve assets owned by statutory bodies. The failure to address necessary approvals from such authorities cast doubts on the plan’s viability. Moreover, the Court criticized the lower adjudicating authorities for overlooking crucial aspects, including defaults in payment and necessary approvals.
Citing regulatory provisions under the IBC and CIRP Regulations, the Court concluded that the resolution plan failed to meet essential parameters, warranting a reevaluation. Consequently, the appeals lodged by the Resolution Applicant were upheld, mandating a re-submission of the plan after addressing the outlined concerns.
This ruling underscores the critical importance of considering statutory regulations and approvals in resolution plans, especially concerning assets held by third-party entities. The decision sets a precedent for meticulous scrutiny, ensuring the integrity and feasibility of resolution processes under the IBC.
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