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NCLT can’t allow tweaks in a successful resolution plan: SC

  • IASbaba
  • September 15, 2021
  • 0
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NCLT can’t allow tweaks in a successful resolution plan: SC

Part of: Prelims and GS II – Important statutory bodies.

Context The Supreme Court on Monday held that the National Company Law Tribunal (NCLT) cannot permit withdrawals or modifications of a successful resolution plan, once it has been submitted to it after due compliance with the procedural requirements and timelines.

  • Such an open-ended process for further negotiations, would have a negative impact on the corporate debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time.

Background 

  • The judgment relates to the NCLT’s decision to allow Ebix Singapore Private Limited to withdraw its resolution plan submitted for Educomp Solutions.
  • The NCLAT had, however, reversed the NCLT order, saying the latter did not have jurisdiction to permit such withdrawal.
  • The correctness of the NCLAT decision had come up on appeal before the Supreme Court.

What is NCLAT?

What is NCLT?

  • National Company Law Tribunal is a quasi-judicial body in India that adjudicates issues relating to companies in India.
  • Established on 1st June, 2016 (Companies Act, 2013).
  • Formed based on the recommendations of the Justice Eradi Committee.
  • It deals with matters mainly related to companies law and the insolvency law.
  • Term of members: Appointments will be for five years from the date of assumption of charge or till attaining the age of 65 or until further orders.

News source: TH 

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