NCLAT dismisses Appeal filed by Hindustan Oil Exploration Co. against NCLT order

NCLAT dismisses Appeal filed by Hindustan Oil Exploration Co. against NCLT order

The Appellate Tribunal was of the opinion that the Appellant had no locus to question the implementation of the approved Resolution Plan of the Successful Resolution Applicant and as such, dismissed the appeal against approval of the Resolution Plan of the Successful Resolution Applicant

The Hon'ble National Company Law Appellate Tribunal (NCLAT) has dismissed the Appeal filed by the Appellant (Hindustan Oil Exploration Company) assailing the impugned order passed by the Adjudicating Authority (National Company Law Tribunal), Allahabad Bench.

Herein, the Appellant was the Unsuccessful Resolution Applicant whose Resolution Plan was rejected by the Committee of Creditors. The Adjudicating Authority while declining to accede to the prayer for reversal of money to the Successful Resolution Applicant in the event of dismissal order from the Hon'ble Apex Court, directed implementation of the approved Resolution Plan on or before the extended date i.e. 30 September, 2020.

This impugned order had been assailed on the grounds that the erstwhile Committee of Creditors of the Corporate Debtor, in connivance with the Successful Resolution Applicant, accepted a re-negotiated fresh Resolution Plan and the application of the Committee of Creditors under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (I&B Code) filed before the Adjudicating Authority was not maintainable and should not have been entertained by the Adjudicating Authority for the Committee of Creditors had become functus officio after approval of the Resolution Plan.

It was submitted that the Adjudicating Authority had approved the Resolution Plan on 4 February, 2020 and in terms of the approved Resolution Plan, the Successful Resolution Applicant had to bring in Rs.123 Cr. for Resolution within 30 days of approval of the plan which expired on 5 March, 2020.

However, the Successful Resolution Applicant did not implement the Resolution Plan and the erstwhile Committee of Creditors of the Corporate Debtor, in connivance with the Successful Resolution Applicant, accepted a fresh resolution plan to the detriment of the legal rights of the Appellant whose Resolution Plan was rejected on the grounds that it could not provide for the lump sum time-bound payment within 30 days of the approval of its Resolution Plan.

The Appellate Tribunal was of the opinion that the Appellant had no locus to question the implementation of the approved Resolution Plan of the Successful Resolution Applicant. Admittedly, the appeal preferred against approval of the Resolution Plan of the Successful Resolution Applicant stood dismissed by this Appellate Tribunal.

It was also held that the direction given in terms of the impugned order on the application filed under Section 60(5) of the I&B Code to the Successful Resolution Applicant follows as a necessary corollary to the dismissal of appeal filed against approval of Resolution Plan of the Successful Resolution Applicant to implement the approved Resolution Plan on or before the extended date of 30 September, 2020.

Once the Appellant is out of the fray, it has neither locus to call in question any action of any of the stakeholders qua implementation of the approved Resolution Plan nor can it claim any prejudice on the pretext that any of the actions post approval of the Resolution Plan of the Successful Resolution Applicant in regard to its implementation has affected its prospects of being a Successful Resolution Applicant.

If the terms of the approved Resolution Plan of the Successful Resolution Applicant have been varied or time extended to facilitate its implementation and the creditors have not claimed any prejudice on that count and the Committee of Creditors comprising the creditors as stakeholders has not objected to the same rather been privy to it on account of hardship due to prevailing circumstances, the Appellant cannot be permitted to cry foul.

According to the Appellate Tribunal, it was not a case of alleged material irregularity in the Corporate Insolvency Resolution Process which is in the final stages with the approved Resolution Plan being under implementation.

The outbreak of the COVID-19 pandemic has slowed down the economic activity and operations have been adversely impacted. Viewed in that context, some necessary changes in the agreed terms and extension of time for implementation would not be uncalled for.

Be that as it may, it was opined that the Appellant had no locus to maintain that the change in terms of the approved Resolution Plan in regard to extension of time for induction of upfront amount as also implementation of the Resolution Plan has jeopardized its legal rights qua consideration of its Resolution Plan which has been rejected.