NCLT Dismisses Application Seeking Structural Audit and Retrofitting for Shubhkamna Buildtech Project

Tribunal Upholds Finality of Approved Resolution Plan, Denies Modification Requests

In a significant ruling, the National Company Law Tribunal (NCLT), New Delhi Bench, has dismissed an application filed by Surender Kumar Singhal and others seeking structural audit and retrofitting of the Shubhkamna Buildtech Pvt. Ltd. project. The application, filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, was deemed beyond the permissible scope by the tribunal, which emphasized that such requests would disturb the finality of an already approved Resolution Plan.

The applicants, successful resolution applicants in the corporate insolvency resolution process of Shubhkamna Buildtech Pvt. Ltd., sought directions for structural audit and retrofitting works, citing severe structural damage due to sewage pipeline leakage. They argued that these measures were necessary to preserve the viability of the project and ensure effective implementation of the Resolution Plan once the "Effective Date" arrives. The Greater Noida Industrial Development Authority (GNIDA) had previously objected to the Resolution Plan but was overruled by the NCLT in its order dated September 12, 2022.

The tribunal, comprising Member (Judicial) Shri Manni Sankariah Shanmuga Sundaram and Member (Technical) Shri Atul Chaturvedi, ruled that once a Resolution Plan is approved under Section 31 of the Insolvency and Bankruptcy Code, it attains finality and is binding on all stakeholders, including creditors and the corporate debtor. The NCLT highlighted that any relief that results in financial or structural modifications to the approved plan cannot be entertained under Section 60(5) of the Code.

Citing the Supreme Court’s decision in Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited, the tribunal reiterated that permitting any post-approval modification would defeat the sanctity and finality of the resolution process. The tribunal noted that the reliefs sought by the applicants, though framed as requests for protective directions and structural audit, would essentially amount to modification of the approved Resolution Plan.

Moreover, the tribunal pointed out that the resolution plan approval order is currently under challenge before the National Company Law Appellate Tribunal (NCLAT), further restricting its authority to entertain fresh directions related to implementation or financial obligations.

The tribunal's decision underscores the importance of adhering to the finality of approved resolution plans under the Insolvency and Bankruptcy Code, ensuring predictability and stability in insolvency proceedings.

No order as to costs was made by the tribunal.

Bottom Line:

Insolvency and Bankruptcy Code - Reliefs sought for structural audit and retrofitting of Corporate Debtor's project are beyond the permissible scope of Section 60(5) of the Code and cannot be granted without disturbing the finality of the Resolution Plan approved under Section 31 of the Code.

Statutory provision(s): Section 60(5), Section 31 of the Insolvency and Bankruptcy Code, 2016

Surender Kumar Singhal v. Anand Sonbhadra, (NCLT)(New Delhi Bench) : Law Finder Doc Id # 2810702