In Securities and Exchange Board of India v. Assam Company India Limited and Others (decided on August 29, 2019), the National Company Law Appellate Tribunal ("NCLAT") held that a resolution plan requiring the delisting of the corporate debtor's shares against which the Securities Appellate Tribunal ("SAT") had passed an interim order would be valid.
In the instant case titled Securities and Exchange Board of India v. Assam Company India Limited and Others the issue raised for clarification before the NCLAT was:
Should the NCLT Guwahati order that approved the Corporate Debtor's resolution plan be overturned?
With regard to this issue, Regarding the delisting of the Corporate Debtor's shares, NCLAT cited the pertinent sections of the resolution plan provided by the Successful Resolution Applicant. Additionally, it made reference to IBC Sections 30(2)(e) and 32 read in conjunction with Section 61, which deal with resolution plan approvals and appeals from orders approving the resolution plan. If a resolution plan violates any provisions of a law that is currently in effect, it is one of the grounds for reviewing the resolution plan and for filing an appeal against an order approving the resolution plan. SEBI argued that the resolution plan violated the SAT's temporary injunction. According to NCLAT, the purported infringement of the interim order issued by SEBI cannot be interpreted as going against "any existing legal requirement." As a result, the appeal against the NCLT, Guwahati order cannot be maintained.
However, NCLAT said that its order would not prevent SEBI or any other competent authority from pursuing action against the Corporate Debtor's former promoters, directors, or executives if any or all of them had broken any laws or the terms of the SEBI Act or the rules made under it. The NCLAT dismissed the appeal brought by SEBI and maintained the NCLT's Guwahati decision approving the resolution plan provided by the Successful Resolution Applicant.
The NCLAT categorically stated that,
“For the reason aforesaid, we are not inclined to interfere with the impugned order of approval dated 20th September, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Guwahati Bench. However, the order passed by the Adjudicating Authority or this Appellate Tribunal will not come in the way of the SEBI or any competent authority to take steps against erstwhile Promoters, Directors or Officers or others, if any or all of them had violated any of the provisions under SEBI Act or rule framed thereunder or any other law as may be taken against such person of listed company. The appeal is dismissed but with aforesaid observation and liberty. No costs.”