In a major judgement, the National Company Law Appellate Tribunal (NCLAT) has held that a resolution applicant whose plan has been approved by the Committee of Creditors (CoC) of the corporate debtor cannot withdraw the resolution plan subsequently.
The observation was made by a three-member bench headed by Justice Bansi Lal Bhat, the Acting Chairperson of the appellate tribunal, as the bench dismissed a plea filed by Delhi-based firm Kundan Care Products, the successful bidder for the insolvent Astonfield Solar (Gujarat) Pvt Ltd.
According to Kundan Care, due to delay in conclusion of the Corporate Insolvency Resolution Process (CIRP), its plan has been rendered commercially unviable and the appellant could not be prevented from withdrawing its offer.
The applicant had moved the Delhi bench of the National Company Law Tribunal (NCLT), which declined to pass any order on the ground that it would not be appropriate for it to deal with an issue which is already sub judice before the Supreme Court.
Following this, the resolution applicant moved the NCLAT.
Dismissing the plea, the bench, in its judgement, said: "We are of the considered opinion that the sanctity of resolution process has to be maintained and the 'Resolution Applicant' whose 'Resolution Plan' has been approved by 'Committee of Creditors' cannot be permitted to withdraw its 'Resolution Plan'."
It noted that there is no provision in the IBC allowing a successful resolution applicant to stage a 'U-turn' and frustrate the entire exercise of the CIRP.
