NCLAT rules against RP's confidentiality after approval

NCLAT rules against RP's confidentiality after approval

The aggrieved workforce of Jet Airways had filed an appeal

The National Company Law Appellate Tribunal (NCLAT) has held that a Resolution Plan (RP) is not a confidential document once the Adjudicating Authority (AA) approves it.

A bench of NCLAT Chairperson, Justice Ashok Bhushan and Dr Ashok Kumar Mishra said that even though the RP was not confidential after its approval, it could not be made available to anyone without a genuine claim or interest in the resolution process. The access to the same, therefore, could be denied in cases.

The NCLAT was dealing with an appeal filed by the aggrieved workforce of Jet Airways. The operational creditors had filed the claim before the Resolution Professional. The AA offered them an amount of Rs.52 crores. However, they challenged the order of the AA.

The inquiry was whether the appellants were entitled to get a copy of the RP or any part of the proceedings whose approval they had challenged. And if after being approved by the AA, the RP continued to be a confidential document, so as to deny access to any of the claimants.

After considering the arguments, the NCLAT held that the RP was a confidential document during the Corporate Insolvency Resolution Process (CIRP). Therefore, entitlement to its copy during the process was only for the participants. But the documents ceased to be confidential once the AA had approved the plan.

Referring to the NCLT Rules, 2016 (which deals with inspection of records), the NCLAT said, "When the RP is submitted to the AA with an application to accept it, the application, as well as the plan, is put on record. The right to inspection is granted statutorily. We do not accept the submission of the counsel for the respondents that the RP remains a confidential document once made a part of the record."

"The NCLT Rules deal with the 'mode of inspection.' The Rules provide that note of any record can also be taken in pencil by a person inspecting the record," it added.

It also referred to the fact that once the plan was approved, the records of the plan were sent to the Insolvency and Bankruptcy Board of India (IBBI) to be recorded in its database. The sections and clauses under the Insolvency and Bankruptcy Code (IBC) empowered it to call for any information and records from the agencies, professionals and information utilities. This indicated that the plan was no longer confidential.

It asked how an appellant would satisfy the appellate court that the grounds enumerated in the IBC were made out if they were not even aware of the contents of the RP.

However, the NCLAT noted that in the present case there were over 20,000 operational creditors. Several applicants had approached the AA for a copy of the RP, which was rejected by the February 2021 order.

The bench said that though the entire RP could not be supplied to the appellants, they were entitled to the party of the plan, which related to the workforce and the employees. It directed the respondent to provide the relevant portion of the plan to the appellants within three weeks.

The petitioners were represented by senior advocate Nikhil Nayyar, along with advocates S Manjula Devi and KS Ravichandran (CS).

Senior advocate Arun Kathpalia, along with advocates Malhar Zatakia, Nishant Upadhyay, Madhur Arora, Dhiraj Kumar Totala and Tanya Chib, represented others.