Findings of the Hon’ble Supreme Court:
The Hon’ble Supreme Court reiterated that timeline stipulated under Regulation 12
of IBBI (Insolvency Resolution process for Corporate Persons) Regulations, 2016
for submission of claims is directory and not mandatory, and thereby rejected the
view of the Hon’ble NCLT and NCLAT and held that such a rejection on mere
delay was unsustainable in law.
After perusal of Sections 30(2), 31(1) and 61(3) of the IBC and by relying on
Ghanshyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd, and
Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions
Limited and Anr., the Hon’ble Supreme Court established that the mandatory
requirement under Section 30(2) of the IBC, is a condition precedent for approval
of a Resolution Plan. As such, a Resolution Plan which is not in conformity with
Section 30(2) cannot be approved and may be rejected using discretionary powers
of the Adjudicating Authority derived from Section 31(2) after conscious
application of mind to facts and circumstances at hand. The Hon’ble Supreme
Court, threw light on the well settled principle of interpretation of statues and
reiterated that the expression “may”, if circumstances so demand can be construed
as “shall”.
The Hon’ble Supreme Court vehemently condemned a Resolution Plan that does
not take into consideration statutory dues payable to the State or any legal authority
by stating that:
“52. If the Resolution Plan ignores the statutory demands payable to any
State Government or a Legal authority, altogether, the Adjudicating
Authority is bound to reject the Resolution Plan.
…54. In our considered view, the Committee of Creditors, which might
include financial institutions and other financial creditors, cannot secure
their own dues at the cost of statutory dues owed to any Government or