NCLT cannot direct invitation of fresh bids from resolution applicants after approval of a resolution plan by CoC: NCLAT

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, has ruled that after approval of a resolution by the Committee of Creditors (CoC), the Adjudicating Authority cannot direct invitation of fresh bids from resolution applicants on account of "scope for further improvement". (Renganayaki Agencies vs Sreenivasa Rao Ravinuthala).The judgement was passed by a Bench of Justice Venugopal M, Member(Judicial) and VP Singh, Member(Technical)..The appeal was preferred by the successful resolution applicant (appellant) against an order passed by the National Company Law Tribunal (NCLT), Hyderabad directing the CoC to call for fresh plans in view of the very meagre difference between both the two submitted plans..The NCLT i.e the Adjudicating Authority had opined that there was scope for further improvement of the resolution amount to be payable by the resolution applicants. .The appellant stated that an Adjudicating Authority cannot trespass the commercial wisdom of CoC which approved its plan with 100 percent votes. .It was pointed out that in the present case, the NCLT had not rendered any finding with respect to the sanctioned plan being in violation of Section 30(2) IBC, and was thus statutorily obligated to sanction of the ‘Scheme of Appellant’..The Resolution Professional contended that the Adjudicating Authority completely lost sight of the fact that the other unsuccessful resolution applicants had secured only 55.58 percent of the total voting share of the financial creditors. .To arrive at its decision, the NCLAT considered the Supreme Court's decision in Kalpraj Dharamshi & Anr. V. Kotak Investment Advisors Ltd. & Anr. .In the judgement, the Supreme Court had held that the commercial wisdom of CoC was not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 IBC..In view of the same, the NCLAT concluded that the NCLT order was "clearly unsustainable".."In fine, the instant Comp App (AT) (CH) (INS) No. 23/2021 is allowed. No costs. The ‘Adjudicating Authority’ (National Company Law Tribunal, Bench-I, Hyderabad) is to approve the ‘Resolution Plan’ approved by the “Committee of Creditors’ with 100% voting in favour of ‘KALS Group’," the NCLAT ordered..Advocate R Vidhya Shankar appeared for the appellant. Resolution Professional was represented by advocate Aneesh V, Shabbeer Ahmed of Induslaw..[Read Order]