Successful Resolution Applicant entitled to know liability of Corporate Debtor before submission of Prospective Resolution Plan

Successful Resolution Applicant entitled to know liability of Corporate Debtor before submission of Prospective Resolution Plan

The NCLAT observed that not only had the Appellant filed the claim at a highly belated stage but also after approval of the Resolution Plan and that the NCLT was right in rejecting the application as being non-maintainable

The National Company Law Appellate Tribunal (NCLAT) has dismissed the Appeal filed by the Deputy Commissioner of Customs DEEC (Monitoring Cell) O/o the Commissioner of Customs (Export), New Custom House, Mumbai (Appellant).

Herein, the Appellant was aggrieved of rejection of its application for condo nation of delay of 1111 days in submitting proof of claim against the Corporate Debtor-M/s Jyoti Structures Ltd., to accept and admit the claim of the Appellant and also recall the order dated 27th March, 2019 passed by the Adjudicating Authority (National Company Law Tribunal/NCLT), Court-I, Mumbai Bench on the grounds that the Resolution Professional failed to check/consider the Book of Accounts vis-à-vis the Appellant while making the Resolution Plan and the Adjudicating Authority failed to appreciate the important issue.

The Hon'ble NCLAT has elucidated that the Resolution Plan in the Corporate Insolvency Resolution Process against the Corporate Debtor had been approved by the Committee of Creditors as also by the Adjudicating Authority.

That being the admitted position, Section 31 (1) of the I&B Code would come into play which provides that the Resolution Plan approved by the Committee of Creditors shall be binding on all stakeholders. After approval of the Resolution Plan by the Adjudicating Authority, the Successful Resolution Applicant could not be allowed to be faced with claims filed or admitted after the Resolution Plan was submitted by such Successful Resolution Applicant.

According to the Hon'ble NCLAT, the Successful Resolution Applicant, before submission of the Prospective Resolution Plan, is entitled to know the liability of the Corporate Debtor so that he can tailor his Prospective Resolution Plan accordingly and make provision for satisfaction of claims and making payments in terms of the approved Resolution Plan.

The dictum of the Hon'ble Apex Court in the matter of the Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta &Ors. has also been relied upon wherein it was observed that a successful resolution Applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution Applicant who successfully takes over the business of the corporate debtor.

In the aforementioned Judgment, it was also opined that all claims must be submitted to and decided by the resolution professional so that a prospective resolution Applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution Applicant does on a fresh slate.

The Appellate Tribunal in this matter has observed that it was not disputed that the claim has been filed by the Appellant not only at a highly belated stage but also after approval of the Resolution Plan. In these circumstances, the Adjudicating Authority was right in rejecting the application as being non maintainable.