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Synopsis

The National Company Law Tribunal Mumbai has held that an operational creditor cannot object to approval of the resolution plan and only a financial creditor is eligible to receive the resolution plan.

“As regards prayer for supply of copy of Resolution Plan Application, it is trite law that the Resolution Plan is a confidential document till it is approved by this Tribunal and only the financial creditors are eligible to receive copy of such plan. There is no doubt on this legal proposition. Further, the applicant being an operational creditor whose claim has been admitted by the Resolution professional can not be made a Respondent and given opportunity to object to the approval of the plan,” the order reads.

The NCLT bench in Mumbai, consisting of Judicial Member VG Bisht and Technical Member Prabhat Kumar, was hearing an application from an operational creditor who sought to set aside the advertisement inviting claims and the rejection of the approved resolution plan by the Committee of Creditors (CoC).

The Corporate Insolvency Resolution Process of Reliance Communication Ltd. was initiated on May 21, 2018, but it was stayed by the NCLAT through an order, which was later vacated on April 30, 2019.

The Interim Resolution Professional issued an advertisement seeking fresh claims and resolution plans after the stay was vacated.

The operational creditor argued that this shift in the insolvency commencement date would result in a substantial increase, approximately 15-20%, in the claims of various creditors, including secured, unsecured, and financial creditors, due to the application of additional interest for the extended period.

It was submitted that it could significantly impact the overall claims amounting to several thousand crores.

The resolution professional argued that the operational creditor's application lacked merit and was misconceived, and therefore, it should be dismissed with substantial costs.

He explained that fresh claims were solicited due to the altered financial position of the corporate debtor during the period when the CIRP was stayed. This change was a consequence of the stay order affecting the insolvency resolution process.

The NCLT agreed with the contentions of the resolution professional and dismissed the application while imposing a cost of Rs. 50000.

Advocate Priyanka Dadpe appeared for the operational creditor.

Advocate Rishabh Jaisani and Kriti Kalyani appeared for the Resolution Professional.

Case title: The Best Towers Private Limited & Anr vs Reliance Communication Ltd