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Case Number
Disposition

dismissed

Attorney(S)
  • MRINAL HARSH VARDHAN
Judges
  • Hon'ble Justice Jarat Kumar Jain (Member(Judicial)) Hon'ble Dr. Alok Srivastava (Member (Technical)) Justice Ashok Bhushan (Chairperson)
Acts
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Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition

dismissed

Attorney(S)
  • MRINAL HARSH VARDHAN
Judges
  • Hon'ble Justice Jarat Kumar Jain (Member(Judicial)) Hon'ble Dr. Alok Srivastava (Member (Technical)) Justice Ashok Bhushan (Chairperson)
Acts
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Smart Summary

Factual and Procedural Background

The appellant, Rajat Metaal Polychem Pvt. Ltd., filed an application (I.A. No.4040 of 2021) before the National Company Law Tribunal (NCLT), New Delhi, challenging the Resolution Professional's rejection of the appellant's claim, specifically the discrediting of interest amount. The NCLT rejected the application on 23rd September 2021. The appellant then filed the present appeal against the NCLT's order. At the time of the appeal, the Resolution Plan had been approved by the Committee of Creditors (CoC) but was still pending approval by the Adjudicating Authority.

Legal Issues Presented

  1. Whether the Adjudicating Authority can interfere with or direct the Resolution Professional to accept or consider the appellant's claim after the approval of the Resolution Plan by the Committee of Creditors.
  2. Whether the appellant has a right to appeal or seek redressal against the rejection of his claim by the Resolution Professional under the Insolvency and Bankruptcy Code, 2016.
  3. The scope of the Adjudicating Authority's jurisdiction to consider objections to the Resolution Plan pending its approval.

Arguments of the Parties

Appellant's Arguments

  • The Resolution Professional did not accept the appellant's claim in full, specifically discrediting the interest amount.
  • The appellant contended that, based on a Supreme Court decision, the limitation period for filing the application should be extended or considered not applicable.
  • The appellant had also filed objections to the Resolution Plan pending before the Adjudicating Authority.

Respondent's Arguments

  • The Resolution Plan has already been approved by the Committee of Creditors and is pending approval by the Adjudicating Authority.
  • The rejection of the appellant's claim by the Resolution Professional cannot be appealed against, as there is no provision for such appeal under the Insolvency and Bankruptcy Code analogous to liquidation proceedings.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court noted that the rejection of the appellant's claim towards interest had been communicated more than a year prior to the filing of the application. However, the court clarified that the issue of limitation was not the central question because there is no statutory provision for an appeal against the Resolution Professional's rejection of claims, unlike in liquidation cases.

The main legal principle applied was that after the approval of the Resolution Plan by the Committee of Creditors, the Adjudicating Authority generally does not interfere with the commercial wisdom exercised by the CoC.

Nonetheless, since the Resolution Plan was still pending approval by the Adjudicating Authority, the court held that the Adjudicating Authority retains jurisdiction to consider objections and grievances regarding claims before approving the plan.

The court further observed that the Adjudicating Authority should have examined the appellant's objections on merits rather than dismissing the application solely on procedural grounds.

Holding and Implications

The appeal is allowed and the order of the Adjudicating Authority rejecting I.A. No.4040 of 2021 is set aside.

The Adjudicating Authority is directed to consider the appellant's objections to the Resolution Plan on merits while deciding on the approval of the Resolution Plan. The court expressly refrained from expressing any opinion on the merits of the objections themselves. No new precedent was established; the decision primarily ensures that procedural fairness is observed before the approval of a Resolution Plan.

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    RAJAT MEETAL POLYCHEM PVT.LTD. v. Neeraj Bhatia

    NATIONAL COMPANY LAW APPELLATE TRIBUNAL

    PRINCIPAL BENCH, NEW DELHI

    Company Appeal (AT) (Ins) No.979 of 2021

    IN THE MATTER OF:

    Rajat Metaal Polychem Pvt. Ltd. …Appellant Versus

    Resolution Professional …Respondent

    For Appellant: Mr. Mrinal Harsh Vardhan and Mr. Shantanu Dubey, Advocates

    For Respondent: Mr Ashutosh Kumar, Advocate for RP

    O R D E R

    (Virtual Mode) 02.12.2021 Heard learned Counsel for the Appellant as well learned Counsel appearing for the Resolution Professional. With the consent of learned Counsel for the parties, the Appeal is disposed at the admission stage itself.

    This Appeal has been filed against the Order dated 23rdSeptember, 2021 passed by National Company Law Tribunal, New Delhi, Court - V in I.A. No.4040 of 2021 in IB-1295(ND)/2019, by which the Application filed by the Appellant had been rejected. The I.A. No.4040 of 2021 was filed by the Appellant raising the grievance that the Resolution Professional has not accepted his claim in full and has discredited the interest amount. Being aggrieved by the decision of the Resolution Professional, he has filed I.A. No.4040 of 2021. The Adjudicating Authority has rejected the Application making following observation:-

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    "Considering the submissions, it is admitted facts that the rejection of claim of the applicant towards interest has been communicated to the applicant on 02.09.2020 through email, which the applicant has enclosed at page 51 of the application and it is also admitted fact that the present application is filed on 09.09.2021, after the approval of the Resolution Plan by the CoC.

    The contention of the Ld. Counsel for the applicant, in view of the decision of Hon'ble Supreme Court, the period for filing the application is extended and so, there is no limitation.

    Herein the case in hand, it is not a question whether the application is filed after the prescribed period because so far the rejection of the claim by the RP is concerned, there is no provision to file an appeal like the rejection of claim by the liquidator, where there is a provision for appeal.

    So, the period of limitation is not a question in this matter. The question for consideration is whether after the approval of Resolution Plan this Adjudicating Authority can direct that Resolution Professional to accept or consider the claim of the applicant or not. Now, it is a settled principle of law that after the approval of Resolution Plan by the CoC, the Adjudicating Authority will not interfere with the decision taken by the CoC because it is a commercial wisdom of the CoC."

    Learned Counsel for the Resolution Professional submits that the Resolution Plan has already been approved by Committee of Creditors and is

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    pending consideration before the Adjudicating Authority for approval. Learned Counsel for the Appellant also submits that he has already filed objection to the Resolution Plan. The reasons given by the Adjudicating Authority in the Impugned Order in IA No.4040 of 2021 are as under:-

    "Herein the case in hand, it is not a question whether the application is filed after the prescribed period because so far the rejection of the claim by the RP is concerned, there is no provision to file an appeal, like the rejection of claim by the liquidator, where there is a provision for appeal.

    So, the period of limitation is not a question in this matter. The question for consideration is whether after the approval of Resolution Plan this Adjudicating Authority can direct the Resolution Professional to accept or consider the claim of the applicant or not. Now, it is a settled principle of law that after the approval of Resolution Plan by the CoC, the Adjudicating Authority will not interfere with the decision taken by the CoC because it is a commercial wisdom of the CoC."

    The Adjudicating Authority took a view that against the rejection of the claim of RP, there is no provision to file an Appeal, hence, the claim of the Appellant cannot be considered. Further observations made by the Adjudicating Authority are that after approval of the Resolution Plan, the Adjudicating Authority cannot direct the RP to accept or consider the claim of the Applicant. In the present case, the Resolution Plan has not yet received approval by the Adjudicating Authority which has been submitted by the RP.

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    The same is under consideration before the Adjudicating Authority for approval.

    The Application which was filed by the Appellant being I.A.No.4040 of 2021 is referable to Section 30(5) of the Insolvency and Bankruptcy Code, 2016 (IBC, in short). The view of the Adjudicating Authority that against the rejection of the claim of RP, there is no provision to file an Appeal, suffice it to say that, even if there is no right of Appeal given to claimant, he is entitled to make grievances regarding any claim made against the Corporate Debtor by virtue of Section 60(5)(b) of IBC, 2016. Thus, the rejection of Application I.A. No.4040 of 2021 by the Adjudicating Authority on the aforesaid ground, cannot be sustained. The Adjudicating Authority ought to have applied its mind on the merits raised in the above Application.

    The Resolution Plan is already under consideration before the Adjudicating Authority for approval against which an objection has already been filed by the Appellant. The rejection of the claim of the Appellant could have been examined on merits and appropriate directions could be issued by the Adjudicating Authority in the said regard. When the Resolution Plan was submitted and pending consideration, the Adjudicating Authority is not deprived of its jurisdiction to issue suitable direction in the above regard. We are of the view that in the facts of the present case, justice be served in disposing this Appeal with observation that Adjudicating Authority while considering the approval of Resolution Plan, shall also consider the objections which have been raised by the Appellant to the Resolution Plan. We make it

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    clear that we are not expressing any opinion on the merits of objection filed by the Appellant and it is for the Adjudicating Authority to consider and take appropriate decision in accordance with law.

    In view of the above, we set aside the Order of Adjudicating Authority passed in I.A. No.4040 of 2021. The Appeal is disposed off with observation that Adjudicating Authority while considering the approval of Resolution Plan, shall also consider the objection of the Appellant in accordance with law. [Justice Ashok Bhushan]

    Chairperson

    [Justice Jarat Kumar Jain]

    Member (Judicial)

    [Dr. Alok Srivastava]

    Member (Technical)

    rs/nn

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    RAJAT MEETAL POLYCHEM PVT.LTD. v. Neeraj Bhatia
    (Dec 2, 2021)