NCLT Mumbai Clarifies Role of Monitoring Committee in Say India Jewellers Insolvency Case

Tribunal Affirms Union Bank of India's Appointment of New Monitoring Committee Chairman to Ensure Smooth Transition

In a significant ruling by the National Company Law Tribunal (NCLT) Mumbai Bench, the procedural aspects surrounding the handover of Say India Jewellers Pvt Ltd to the Successful Resolution Applicant (SRA) have been clarified, with the Tribunal emphasizing adherence to the approved Resolution Plan without additional financial burdens. The Tribunal, presided over by Members Prabhat Kumar and Sushil Mahadeorao Kochey, addressed the complexities arising in the wake of the untimely demise of the erstwhile Monitoring Committee Chairman.

The Tribunal addressed the application filed by Mr. Rohit Motawat, the Successful Resolution Applicant, which sought to regularize the appointment of Mr. Rakesh Kumar Jindal as the new Resolution Professional. This appointment was necessitated after the previous Monitoring Committee Chairman passed away without completing the handover of the Corporate Debtor. Union Bank of India, a member of the Committee of Creditors (CoC), had engaged Mr. Jindal to ensure continuity in the process.

The judgment underscored that the Insolvency and Bankruptcy Code, 2016, or the Corporate Insolvency Resolution Process (CIRP) Regulations do not require the Tribunal's approval for appointing a Monitoring Committee Chairman. The Tribunal's role is to ensure that a Monitoring Committee is constituted for implementing the approved Resolution Plan. Thus, Mr. Jindal's appointment was deemed appropriate, and the Tribunal directed the team of the deceased Chairman to cooperate fully with Union Bank of India's directives to facilitate the handover process.

The Tribunal further highlighted issues faced by the SRA concerning additional costs imposed that were not stipulated in the approved Resolution Plan. The Tribunal insisted on adherence to the approved terms and directed the completion of the handover of the Corporate Debtor's assets and management control without creating obstructions.

This ruling comes as a relief to the SRA, who had faced delays and additional financial demands post-approval of the Resolution Plan, including increased interest rates and fees. The Tribunal confirmed that all dues were cleared and that the Monitoring Committee should expedite the handover, as previously directed.

The decision reiterates the Tribunal's commitment to ensuring that insolvency resolutions are carried out in a manner that respects the terms of approved plans and prevents unwarranted financial or procedural burdens on the parties involved.

Bottom Line:

Insolvency and Bankruptcy Code - Regularization of appointment of Resolution Professional and handover of Corporate Debtor to Successful Resolution Applicant - Monitoring Committee's obligations and Tribunal's directions clarified.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Section 60(5), Corporate Insolvency Resolution Process (CIRP) Regulations

D. Chhaganlal & Co. v. Say India Jewellers Pvt Ltd., (NCLT)(Mumbai Bench) : Law Finder Doc Id # 2822068