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.
- 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?
- National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013.
- NCLAT is the Appellate Tribunal for hearing appeals against the orders passed by –
- National Company Law Tribunal(s) (NCLT) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC)
- Insolvency and Bankruptcy Board of India (IBBI) under Section 202 and Section 211 of IBC.
- Competition Commission of India (CCI) – as per the amendment brought to Section 410 of the Companies Act, 2013.
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