The appeal was filed against a common impugned order dated 15.07.2021, passed by Adjudicating Authority/National Company Law Tribunal, Chennai Bench, Chennai, in whereby the Adjudicating Authority has approved the Resolution Plan for the revival of the Corporate Debtor, i.e. Appu Hotels Limited.
In the case titled Dr Periasamy Palani Gounder v. Mr Radhakrishnan Dharmarajan & Ors the issue that was raised before the NCLAT was:
Whether statutory requirements in regulating a matter of practice and procedure are mandatory?
Whether the resolution plan approved by adjudicating authority is in contravention of section 30 (2) of the Code?
With regard to the first issue, NCLAT held that a statutory provision regulating a matter of practice or procedure will generally be read as a directory and not mandatory. Thus, even though the objectors to the Resolution Plan have alleged many procedural irregularities in relation to the conduct of the proceedings in relation to the CoC; however those objectors have miserably failed to establish what prejudice has been caused to them in respect of the same.
Thus, the objections as raised by the objectors in relation to the procedural irregularities in relation to the conduct of the Corporate Insolvency Resolution Process are not so grave in order to defeat the Resolution Plan as filed by the Resolution Professional.
With regard to the second issue, it was held that submission of the Resolution Plan for approval before the Adjudicating Authority violates the statutory provision of Section 30(2) &(3) of the Code and has vitiated the entire CIRP and makes the Resolution Plan void ab initio. 36(2) of CIRP Regulations provides the mandatory condition for publication of ‘Form-G’ on the Corporate Debtors website and the website designated by the Board for the purpose. Non-publication of notices of Form G is a material irregularity in the exercise of the powers by Resolution Professional during the CIRP period.
The court categorically held that:
“A statutory provision regulating a matter of practice or procedure will generally be read as a directory and not mandatory is erroneous. Compliance with statutory requirements in regulating a matter of practice and procedure is mandatory. The Tribunal is a creature of statute, and by interpretation, it cannot dilute the statutory compliances”.
Hence, it was held that the Resolution Plan is in contravention of Section 30 (2) of the Insolvency and Bankruptcy Code 2016, which contravenes the provision of law.