New Delhi: The National Company Law Appellate Tribunal (NCLAT) has set aside the NCLT order and directed it to consider Eagle Fashion's new bid for debt-ridden Sumeet Industries.
On April 5, 2024, the Ahmedabad bench of NCLT had rejected the application filed by RP of Sumeet Industries seeking approval of Eagle Fashion's bid, which was selected by the committee of creditors with 74 per cent votes.
The NCLT order was challenged by Resolution Professional (RP) and Eagle Fashions by filing two petitions before the appellate tribunal NCLAT.
Setting aside the NCLT order, a three-member bench directed the RP of Sumi Industries to file the minutes and documents of the meeting, which were not made available earlier.
Following the appellate tribunal's order, the National Company Law Tribunal (NCLT) will have to take a fresh look at the approval of Eagle Fashion's resolution plan related to debt-ridden Sumeet Industries.“We are of the view that the minutes and documents which have not been filed in the RP… may be presented before the NCLT along with an additional affidavit within two weeks from today.
"The adjudicating authority (NCLT) may take a fresh consideration of the impugned order after receipt of the documents and minutes noted by the adjudicating authority and take a decision thereon in accordance with law," it said.
Corporate insolvency resolution proceedings were initiated on December 20, 2022, against the Surat-based firm engaged in the business of manufacturing and exporting polyester yarn.
The resolution plan of Eagle Fashion was approved by 74.9 per cent of the voting shares of the Committee of Creditors (CoC) and based on that, a letter of intent (LoI) was issued to Eagle Fashion by RP on November 20, 2023, without Condition accepted it.
The NCLT, while rejecting the resolution plan, had observed that the RP had not submitted the information memorandum, request for resolution plan, valuation report, receipt of performance security and a copy of the minutes of the CoC meeting.
While challenging this in NCLAT, RP had argued that NCLT should have allowed the production of these necessary documents.Rejection on the ground that RP had not submitted any documents was not justified.
On this, the Appellate Tribunal said that NCLT can reject the resolution plan only if it is not in compliance with Section 30(2) of the Insolvency and Bankruptcy Code.
However, it also said: "From the observations made by the NCLT in the impugned order, it is clear that apart from the mere observation that the scheme does not ratify section 30(2), no reason or material reason has been given for the same. How can this scheme be said to be non-compliant with Section 30(2)?”
It is always open to the NCLT to examine the documents relating to the RP and reject the scheme on the grounds that the RP has no information memorandum, RFRP filed and the minutes of the CoC are "manifestly unnecessary" .
It said, “We allow both the appeals, set aside the impugned order dated April 5, 2024 passed by the NCLT and revive (the application) before the NCLT for fresh consideration in accordance with law ."
On April 5, 2024, the Ahmedabad bench of NCLT had rejected the application filed by RP of Sumeet Industries seeking approval of Eagle Fashion's bid, which was selected by the committee of creditors with 74 per cent votes.
The NCLT order was challenged by Resolution Professional (RP) and Eagle Fashions by filing two petitions before the appellate tribunal NCLAT.
Setting aside the NCLT order, a three-member bench directed the RP of Sumi Industries to file the minutes and documents of the meeting, which were not made available earlier.
Following the appellate tribunal's order, the National Company Law Tribunal (NCLT) will have to take a fresh look at the approval of Eagle Fashion's resolution plan related to debt-ridden Sumeet Industries.“We are of the view that the minutes and documents which have not been filed in the RP… may be presented before the NCLT along with an additional affidavit within two weeks from today.
"The adjudicating authority (NCLT) may take a fresh consideration of the impugned order after receipt of the documents and minutes noted by the adjudicating authority and take a decision thereon in accordance with law," it said.
Corporate insolvency resolution proceedings were initiated on December 20, 2022, against the Surat-based firm engaged in the business of manufacturing and exporting polyester yarn.
The resolution plan of Eagle Fashion was approved by 74.9 per cent of the voting shares of the Committee of Creditors (CoC) and based on that, a letter of intent (LoI) was issued to Eagle Fashion by RP on November 20, 2023, without Condition accepted it.
The NCLT, while rejecting the resolution plan, had observed that the RP had not submitted the information memorandum, request for resolution plan, valuation report, receipt of performance security and a copy of the minutes of the CoC meeting.
While challenging this in NCLAT, RP had argued that NCLT should have allowed the production of these necessary documents.Rejection on the ground that RP had not submitted any documents was not justified.
On this, the Appellate Tribunal said that NCLT can reject the resolution plan only if it is not in compliance with Section 30(2) of the Insolvency and Bankruptcy Code.
However, it also said: "From the observations made by the NCLT in the impugned order, it is clear that apart from the mere observation that the scheme does not ratify section 30(2), no reason or material reason has been given for the same. How can this scheme be said to be non-compliant with Section 30(2)?”
It is always open to the NCLT to examine the documents relating to the RP and reject the scheme on the grounds that the RP has no information memorandum, RFRP filed and the minutes of the CoC are "manifestly unnecessary" .
It said, “We allow both the appeals, set aside the impugned order dated April 5, 2024 passed by the NCLT and revive (the application) before the NCLT for fresh consideration in accordance with law ."
