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Synopsis

The National Company Law Appellate Tribunal (NCLAT) held that the Doctrine of Estoppel cannot be applied to a resolution plan that has been approved by the Committee of Creditors (CoC) in their commercial wisdom.

“We, thus, are of the view that submission of the Appellant based on the doctrine of promissory estoppel cannot be pressed into service in reference to the Resolution Plan, which has been submitted by a Resolution Applicant and approved by the CoC in its commercial wisdom. We, thus, do not find any merit in the submissions of learned Counsel for the Appellant on the basis of promissory estoppel,” the order reads.

The NCLAT bench, consisting of Chairperson Justice Ashok Bhushan, Technical Member Barun Mitra, and Technical Member Arun Baroka was hearing an appeal challenging the NCLT's rejection of objections raised against the resolution plan.

The resolution professional initially rejected the appellant's claim due to the absence of a No Objection Certificate (NOC). However, in a subsequent meeting, the claim was reinstated as part of a class of financial creditors.

The Resolution Plan differentiated between affected homebuyers and unaffected homebuyers based on whether they had obtained a No Objection Certificate (NOC) from LICHFL (LIC Housing Finance Limited).

The appellant argued that treating the admitted claim differently from other homebuyers violated the principle of equality among creditors.

Furthermore, the appellant invoked the principle of promissory estoppel, asserting that the respondents were bound by their earlier admission of the claim by the resolution professional.

The tribunal, in rejecting the appeal, stated that the principle of promissory estoppel could not be invoked against the resolution applicant, who formulated the resolution plan based on the information memorandum.

The tribunal emphasized that the Doctrine of Estoppel cannot be applied to a resolution plan that has been approved by the Committee of Creditors in their commercial wisdom.

“Subsequent steps in the IBC including the preparation of Resolution Plan are based on the list of creditors, admitted claims of the creditors etc. as per the scheme of the IBC, but the principle of promissory estoppel cannot be pressed against the Resolution Applicant, who submits Resolution Plan on the basis of relying on the Information Memorandum, the list of creditors and other aspect of the matter. The Resolution Applicant has not extended any promise to the Financial Creditors of the Corporate Debtor that the claim submitted by Financial Creditor or any other creditor shall be accepted in toto,” the order reads.

Case title: Fervent Industries Ltd vs Manish Jaju