In its ruling issued on January 27, 2022, in the case of Union Bank of India v. Kapil Wadhawan and Others, the Hon. National Company Law Appellate Tribunal, New Delhi ("NCLAT") ruled that: The Insolvency and Bankruptcy Code, 2016, or "IBC," states that once the resolution plan has been approved by the Committee of Creditors ("CoC"), the adjudicating authority's authority is limited by the provisions of Section 31(1) of the IBC to determining whether the requirements of Section 30(2) of the IBC have been met in the plan as approved by the CoC.
In the instant case titled Union Bank of India v. Kapil Wadhawan and Others the issue raised for clarification before the NCLAT was:
Whether the NCLT can instruct the CoC to call a meeting and put the Second Settlement Proposal as offered up for review, decision, and voting if the CoC approves the resolution plan as submitted by the Piramal Group ("Resolution Plan"), and awaiting approval of the NCLT?
With regard to this issue, When the Resolution Plan following approval from the CoC was undergoing adjudication under Section 31 (Approval of Resolution Plan) of the IBC, the NCLT had directed the COC by the Impugned Order to consider the Second Settlement Proposal of Respondent No. 1. The CoC claims that neither the RFRP nor Section 12A of the IBC and relevant rules was followed when the Second Settlement Proposal was presented. Despite the fact that the CoC of the corporate debtor had overwhelmingly adopted the Resolution Plan, the NCLT nonetheless made this decision. The plan approval application had previously been submitted by the administrator, and the learned NCLT heard it and reserved it for orders. When the Resolution Plan following approval from the CoC was undergoing adjudication under Section 31 (Approval of Resolution Plan) of the IBC, the NCLT had directed the COC by the Impugned Order to consider the Second Settlement Proposal of Respondent No. 1. The CoC claims that neither the RFRP nor Section 12A of the IBC and relevant rules was followed when the Second Settlement Proposal was presented. Despite the fact that the CoC of the corporate debtor had overwhelmingly adopted the Resolution Plan, the NCLT nonetheless made this decision. The plan approval application had previously been submitted by the administrator, and the learned NCLT heard it and reserved it for orders.
The NCLT's jurisdiction was limited by the provisions of Section 31(1) of the IBC to determining whether the requirements of Section 30(2) of the IBC have been met in the plan as approved by the CoC once the Resolution Plan had been approved by a 100% voting share of the CoC, the NCLAT observed in the current case based on the law established in the cases previously mentioned. The NCLT and the NCLAT are obligated to follow the legislative provisions' discipline once the IBC's prerequisites have been met. In terms of equity, neither the NCLT nor the NCLAT has uncharted authority. The jurisdiction is created by and results from a legal framework.
In the present instance, the NCLAT noted that following the CoC's approval of the Resolution Plan, the application for NCLT approval of the Resolution Plan was still pending under Section 31 of the IBC. During this time, the NCLT instructed the CoC to consider the Second Settlement Proposal within 10 days and make the appropriate decision. The NCLAT came to the conclusion that the Impugned Order might be overturned. The NCLAT threw aside the Impugned Order, considering it to be unsustainable, basing its decision on the ratio of the Ebix Judgement, which specifically stated that there was no room for talks between the parties after the CoC had adopted the resolution plan.
The NCLAT categorically stated that,
"There was no scope for negotiations between the parties once the CoC had approved the Resolution Plan. Thus, contractual principles and common law remedies, which do not find a tether in the wording or the intent of the IBC, cannot be imported in the intervening period between the acceptance of the CoC and the Approval by the Adjudicating Authority.”