The NCLT Kolkata Bench has held that an unsuccessful resolution applicant has no locus standi to challenge the approval of a resolution plan by the Committee of Creditors (CoC).
Ganga Construction (Consortium) filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, against Anil Kumar Mittal, the Resolution Professional (RP) of Varutha Developers Pvt. Ltd., and others. The corporate debtor was admitted into insolvency following an ex parte order due to default on a ₹300 crore loan sanctioned by SREI Equipment under a Loan Agreement dated July 26, 2019.
Ganga Construction submitted a resolution plan with a ₹200 crore financial proposal and a ₹6 crore bank guarantee, later increased to ₹250 crore. The applicant claimed that the Information Memorandum disclosed only tangible assets and omitted critical information about the property’s possession, title, and encumbrances, depriving the Prospective Resolution Applicants (PRAs) and the CoC of full clarity. The applicant also alleged that the RP and CoC colluded to favor Manglam Multiplex Pvt. Ltd., linked to M3M India, through fraudulent conduct and suppression of material facts.
The respondents argued that the applicant, being an unsuccessful resolution applicant, lacked the legal standing to challenge the CoC's unanimously approved resolution plan. They maintained that allegations regarding the eligibility of the Successful Resolution Applicant (SRA) under Section 29A were baseless and unsupported by evidence. The counsel for the SRA clarified that no control or shareholding was transferred to M3M India, and the collaboration agreement with the corporate debtor did not transfer control but only granted development rights.
The tribunal referred to the precedent set in M. K. Rajagopalan v. S. Rajendran Resolution Professional VHCPL (2023), which held that an unsuccessful resolution applicant has no standing to contest an approved resolution plan, as they are not stakeholders under Section 31(1) of the IBC. It reiterated that the CoC’s commercial wisdom cannot be interfered with unless there is a material irregularity under Section 30(2) of the Code.
Dismissing the application, the tribunal approved and sanctioned the resolution plan submitted by Manglam Multiplex Pvt. Ltd. on August 23, 2024, along with its amendments dated November 21 and 26, 2024.
SREI Equipment Finance Limited vs. Varutha Developers Private Limited
I.A. (IB) No. 2409/KB/2024 and I.A. (IB) (Plan) No. 21/KB/2024 in Company Petition (IB) No. 26/KB/2023
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