Supreme Court flags delays by NCLT in approving resolution plans, seeks nationwide data on pending plans

The Supreme Court on April 16 took strong exception to the delays by the National Company Law Tribunal (NCLT) in approving resolution plans of companies under insolvency [AVJ Heights Vs IFFL]..A Bench of Justices JB Pardiwala and KV Viswanathan termed the situation "very unfortunate" and proceeded to pass directions seeking nationwide data on pendency of resolutions plans before NCLT."It is very unfortunate that there is no adjudication on the approval past approximately two years," the Court observed..The Court also recorded that many such approval applications are pending before the NCLT's principal bench and other benches for several years. .Hence, it directed the NCLT's principal bench at New Delhi to furnish the following details:1) How many applications for approval of resolution plans are pending?2) For how long are such applications pending?3) Reasons, why the approval applications have not been adjudicated upon till date.The Court added the Insolvency and Bankruptcy Board of India (IBBI) as a party to the case and directed it to provide nationwide figures and statistics on the pendency of such applications..The Court was hearing a case relating to insolvency proceedings against AVJ Developers (India) Private Limited.The resolution professional had on January 24, 2020 rejected a claim of about ₹85 crore submitted by IIFL Finance Limited on the ground that it could not be verified from the corporate debtor’s records.IIFL challenged this rejection before the NCLT which allowed the claim. The National Company Law Appellate Tribunal (NCLAT), by its judgment dated January 2, 2023, upheld the NCLT’s decision.AVJ Heights Apartment Owners Association and a suspended director of the corporate debtor then approached the Supreme Court in appeal. They contended that the claim was “sham and bogus.”During the hearing, the Court was also taken through an arbitral award dated July 3, 2024 concerning the same claim, which is currently under challenge before the Delhi High Court.The Bench noted that the Committee of Creditors (CoC) had approved the resolution plan on July 4, 2024, and an application seeking its approval was filed before the NCLT on July 12, 2024.However, the NCLT has not yet adjudicated that approval application even after nearly two years, the Court noted."We take a very serious note of the matter that the plan as approved by the CoC is awaiting approval of the adjudicating authority past almost two years," the Court said..Hence, it proceeded to seek details of resolutions plans pending before NCLTs..Pertinently, Senior Advocates Gopal Jain and Navin Pahwa were requested to assist the Court as amici curiae. The reports are to be filed within two weeks..The matter will be heard next on April 29..AVJ Heights Apartment Owners Association was represented by advocates Udita Singh and Shashank Agarwal and Zeeshan Diwan..The Respondents, including IIFL Finance Limited, were represented by Senior Advocates Neeraj Kishan Kaul and Nakul Dewan and advocates Nikhil Mehndiratta, Toyesh Tewari, Agastya Sen, Nidhisha Chokshi, Danya Krishnan, Dhanya Krishnan and Mani Gupta..[Read Order]