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NCLAT’s order quashing resolution plan on ground of feasibility and viability was to be set aside: SC

September 5, 2020[2020] 119 taxmann.com 46 (SC)
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IBC: Where NCLAT set aside order of NCLT approving resolution plan on ground that it suffered from feasibility and viability, however viability and feasibility of resolution plan had been examined in proper perspective, order of NCLAT being flawed was to be set aside

• Main ground on which NCLAT interfered with decision of NCLT to approve Resolution Plan was that ethanol plant, owned by a third party was part and parcel of assets of corporate debtor and hence, examination of viability and feasibility on basis of such wrong notion stood vitiated. However, records very clearly showed that Successful Resolution Applicant, Resolution Professional and financial creditor were fully aware of said issue and had taken a conscious decision to go ahead with Resolution Plan, hence, it could not be said that question of viability and feasibility was not examined in proper perspective. Further, Resolution Plan does not give an indication anywhere that without this plant and machinery whole resolution plan would fail. Hence, said ground would be untenable, misconceived and unjustified.

• Further NCLAT held that advertisement issued by Resolution Professional was not in conformity with Regulation and as per Form G of Schedule. However, regulation 36A, as it stood during period from 6-2-2018 to 4-7-2018, did not mandate publication of invitation of Resolution Plans, either in Form G or otherwise, in newspapers. It was only amended Regulation 36A, which came into effect from 4-7-2018, that required publication of Form G in newspapers. Therefore, publication in newspapers made by Resolution Professional on 30-3-2018, was something that was statutorily not required of him and hence Promoter/Director of corporate debtor could not take advantage of amendment that came later, to attack advertisement.

• [Swwapnil Bhingardevay v. Khandoba Prasanna Sakharkar Khana Ltd. [2020] 118 taxmann.com 341 (NCL-AT) – Set aside]

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