Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect: NCLAT

Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect: NCLAT

An appeal filed by the Resolution Applicant seeking permission to withdraw its resolution plan has been dismissed by the National Company Law Appellate Tribunal (NCLAT) and it was held that allowing withdrawal of a resolution plan will have serious disastrous effect on the whole purpose of the Insolvency & Bankruptcy Code, 2016 (IBC/Code).

The appeal was filed against the order dated 21.07.2022 passed by NCLT Indore which relying upon the judgment of Supreme Court in Ebix v. Educomp dismissed the application filed by Appellant seeking withdrawal of the resolution plan.

It was contended by the Appellant that the judgement of Ebix is not applicable as the same deals with the cases where the Corporate Debtor has undergone changes but in the present case, the Appellant is seeking withdrawal due to the financial difficulty being faced by the Appellant.

The Bench rejected the argument of the Appellant and held that even if the Appellant is allowed to withdraw from the plan due to financial difficulty, the same will amount to go back from the commitment made in the resolution plan which is not permissible.

"The IBC is process consists of different steps with a ultimate object of reviving the Corporate Debtor. Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC."

Accordingly, NCLAT dismissed the appeal filed by the Appellant and upheld the order of NCLT, Indore.