GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY  [APPELLANT]  Vs. PRABHJIT SINGH SONI & ANR.   [RESPONDENTS]

CIVIL Appeal NOS.7590-7591 OF 2023

(3JB, Dr. DY Chandrachud, J. B. Pardiwala and Manoj Misra JJ., delivered by MANOJ MISRA, J.)

Facts: These appeals under Section 62 of the Insolvency and Bankruptcy Code, 2016 are directed against the judgment and order of the National Company Law Appellate Tribunal, Principal Bench, New Delhi passed in Company Appeal (AT) (Ins.) No. 867 of 2021 and I.A. No. 2315 of 2021, whereby the appellant’s appeal against the order of the National Company Law Tribunal, New Delhi dated 05.04.2021 has been dismissed.

Issue: Whether NCLT has power to recall order approving Resolution plan which is not as per IBC?

Arguments on behalf of counsel for appellant:

The learned counsel for the appellant, inter alia, submitted:

(a) There is no dispute that appellant had submitted its claim with proof on 30.01.2020 as a financial creditor having security interest over the assets of the CD. Even if the appellant was not a financial creditor, the resolution plan ought to have noticed its claim as a secured creditor whereas the order of approval dated 4.8.2020 describes the appellant as one who did not submit its claim.

(b) The meetings of the COC were not notified to the appellant to enable its participation. In absence thereof, the resolution plan stood vitiated.

(c) At the time of approving the resolution plan, the adjudicating authority failed to consider whether the plan had made provisions commensurate to appellant’s claim, and the statutory charge which the appellant enjoyed over the assets of the CD. Not only that, it overlooked the ownership and statutory rights of the appellant over the land and thereby failed to consider whether the plan was feasible and viable. In absence of such consideration, the order of approval stood vitiated.

(d) The finding that there had been a delay on part of the appellant in pursuing its remedies is misconceived, particularly when it was established on record that I.A. No.344/ 2021 was filed promptly on 6.10.2020 upon getting information on 24.09.2020 from the monitoring agency regarding approval of the plan. Likewise, I.A. No.1380/ 2021 was filed immediately on 15.03.2021 when suspension of the period of limitation for any suit, appeal, application or proceeding, imposed between 15.03.2020 and 14.03.2021, was lifted in terms of this Court’s order dated 8.03.2021 in RE: Cognizance For Extension of Limitation.

Arguments on behalf of counsel for respondents:

Dr. Abhishek Manu Singhvi, leading the arguments on behalf of the respondents, submitted that the issue as to whether dues payable to an Industrial Area Development Authority, like the appellant, towards lease/ allotment premium / rental, would be a financial debt or not is no longer res integra, as it stands settled by a decision of this Court in Anand Sonbhadra (supra), wherein it has been held that it is not a financial debt. Therefore, the appellant had no voting right in the COC. And since the appellant pressed its case only on the ground that it is a financial creditor, its challenge to the order of approval had no basis. More so, when the commercial wisdom of the COC is not justiciable. Further, once the resolution plan, which makes a provision for the appellant, is approved by the Adjudicating Authority, it cannot be questioned through a recall application.

Held: The court allowed the present appeal and held that, “we are of the considered view that the appeals of the appellant are entitled to be allowed and are accordingly allowed. The impugned order dated 24.11.2022 is set aside. The order dated 04.08.2020 passed by the NCLT approving the resolution plan is set aside. The resolution plan shall be sent back to the COC for re-submission after satisfying the parameters set out by the Code as exposited above. There shall be no order as to costs.”