NEW DELHI: The Supreme Court on Monday held that adjudicating authorities cannot permit modifications or withdrawals of CoC-approved resolution plans, at the behest of the successful resolution applicant, once the plan has been submitted to it.
A bench comprising Justices DY Chandrachud and MR Shah also said that the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) has to be completed within the 330-day deadline.
Supreme Court held that the 330 days outer limit of the resolution process, including judicial proceedings, can be extended only in exceptional circumstances.
“This open-ended process for further negotiations or a withdrawal would have a deleterious impact on the corporate debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time,” said the court.
The apex court said that the NCLT and the NCLAT should endeavor, on a best effort basis, to strictly adhere to the timelines stipulated under the IBC.
“Judicial delay was one of the major reasons for the failure of the insolvency regime that was in effect prior to the IBC. We cannot let the present insolvency regime meet the same fate,” the judgment said while disposing of an appeal against NCLAT judgment that denied Ebix Singapore from withdrawing its resolution plan for Educomp Solutions.
Varghese Thomas, partner in law firm J Sagar Associates, said: “It reiterates the urgent need for a time bound resolution of corporate insolvency resolution plan and urges the NCLT and NCLAT to expedite the approval of plans.”