The NCLAT has overturned a decision of the NCLT Guwahati Bench which directed the resolution professional/committee of creditors to reconsider the eligibility criterion laid down for resolution applicants..Insolvency resolution process against the corporate debtor, Assam Company India Ltd was triggered in October 2017. As a part of the eligibility criteria in the Expression of Interest (EOI), the RP/CoC laid down that prospective applicants must have a minimum net worth of Rs. 400 crores. M.K Shah Exports Ltd, one such prospective resolution applicant, challenged this decision of the RP/CoC at the NCLT on several grounds..The NCLT found merit in arguments raised by M.K Shah Exports Ltd. and found the net worth requirements to be ‘illogical and unrealistic’ and the criteria specifying this requirement as ‘arbitrary and unreasonable’. The NCLT also took advantage of the language in the EOI which left scope for modifications and extension of time and ordered the RP/CoC to reconsider the minimum net worth requirement..An appeal against the NCLT order was filed by the RP. The NCLAT held a view, which is in line with the spirit of the Insolvency and Bankruptcy Code. The NCLAT held that it is not NCLT’s job to entertain applications which request for interference in commercial matters of the corporate debtor. It ruled,.“Prima facie we are of the view that it is not in the domain of the Adjudicating Authority to decide the requirement of the minimum tangible net worth of one or other category of eligible Resolution Applicant, which is a matter for experts like Committee of Creditors to decide”.The NCLAT further held that the NCLT has no jurisdiction to sit in appeal over the decision of expert bodies relating to eligibility criteria “till it is not shown that the same is perverse or against any of the provisions of I&B Code or existing law.”.Accordingly, the NCLT order directing the RP/CoC to revise its minimum net worth requirements was set aside and it was held that,.“It is expected that all the steps will be taken to ensure that the Resolution Process is successful within the prescribed period”.Rishav Banerjee appeared on behalf of the resolution professional briefed by Khaitan & Co. Saumya Mehrotra appeared for M.K. Shah Exports, briefed by Argus Partners..(Read the order)
The NCLAT has overturned a decision of the NCLT Guwahati Bench which directed the resolution professional/committee of creditors to reconsider the eligibility criterion laid down for resolution applicants..Insolvency resolution process against the corporate debtor, Assam Company India Ltd was triggered in October 2017. As a part of the eligibility criteria in the Expression of Interest (EOI), the RP/CoC laid down that prospective applicants must have a minimum net worth of Rs. 400 crores. M.K Shah Exports Ltd, one such prospective resolution applicant, challenged this decision of the RP/CoC at the NCLT on several grounds..The NCLT found merit in arguments raised by M.K Shah Exports Ltd. and found the net worth requirements to be ‘illogical and unrealistic’ and the criteria specifying this requirement as ‘arbitrary and unreasonable’. The NCLT also took advantage of the language in the EOI which left scope for modifications and extension of time and ordered the RP/CoC to reconsider the minimum net worth requirement..An appeal against the NCLT order was filed by the RP. The NCLAT held a view, which is in line with the spirit of the Insolvency and Bankruptcy Code. The NCLAT held that it is not NCLT’s job to entertain applications which request for interference in commercial matters of the corporate debtor. It ruled,.“Prima facie we are of the view that it is not in the domain of the Adjudicating Authority to decide the requirement of the minimum tangible net worth of one or other category of eligible Resolution Applicant, which is a matter for experts like Committee of Creditors to decide”.The NCLAT further held that the NCLT has no jurisdiction to sit in appeal over the decision of expert bodies relating to eligibility criteria “till it is not shown that the same is perverse or against any of the provisions of I&B Code or existing law.”.Accordingly, the NCLT order directing the RP/CoC to revise its minimum net worth requirements was set aside and it was held that,.“It is expected that all the steps will be taken to ensure that the Resolution Process is successful within the prescribed period”.Rishav Banerjee appeared on behalf of the resolution professional briefed by Khaitan & Co. Saumya Mehrotra appeared for M.K. Shah Exports, briefed by Argus Partners..(Read the order)