M. K. RAJAGOPALAN versus DR. PERIASAMY PALANI GOUNDER & ANR

M. K. RAJAGOPALAN versus DR. PERIASAMY PALANI GOUNDER & ANR

The Court upheld the NCLAT decision to disapprove the approved resolution plan insofar as the plan could not be lawfully approved because (i) the successful resolution applicant was acting in a manner caught by s.88 of the Indian Trusts Act (seeking to act as alter ego of an ineligible charitable trust) and additionally gave rise to conflicts under s.166 Companies Act, and (ii) the final revised resolution plan (after the 9th CoC meeting) was not placed before the CoC for its final approval prior to filing for sanction under s.30(6) IBC, which constituted a material irregularity that vitiated the approval; other NCLAT findings concerning valuation, publication of Form G and certain...

Parties
Resolution Applicant / Appellant: M. K. Rajagopalan; Promoter and Erstwhile Director / Respondent: Dr. Periasamy Palani Gounder; Resolution Professional / Appellant (in Some Appeals): Radhakrishnan Dharmarajan
Jurisdiction
India
Judgment Date
03 May 2023
Procedural Posture
Civil Appeal Nos.1682 1683 of 2022 / Appeal Against NCLAT Judgment Dated 17.02.2022 Arising From NCLT Order Dated 15.07.2021
Outcome
Appeals disposed of: NCLAT order of 17.02.2022 upheld insofar as it disapproved the resolution plan for the reasons affirmed by this Court (ineligibility under Trusts Act and conflict/Companies Act and material irregularity for not placing the revised plan before the CoC); other findings of NCLAT (valuation, Form G...
Legal Topics
Corporate Insolvency Resolution Process (cirp), Resolution Plan Approval Under S.30 IBC, Eligibility of Resolution Applicants (s.29 A), Valuation (regulation 35, Regulation 27), Publication of Form G (regulation 36 A), Withdrawal Under S.12 a IBC, Related Party Issues (section 21, Phoenix Principles)
Insolvency and Bankruptcy Company Law Trusts Law Corporate Insolvency Resolution Process (cirp) Resolution Plan Approval Under S.30 IBC Eligibility of Resolution Applicants (s.29 A) Valuation (regulation 35, Regulation 27) Publication of Form G (regulation 36 A) +2 more

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Parties

M. K. Rajagopalan

Resolution Applicant / Appellant

Dr. Periasamy Palani Gounder

Promoter and Erstwhile Director / Respondent

Radhakrishnan Dharmarajan

Resolution Professional / Appellant (in Some Appeals)

Procedural Posture

Civil Appeal Nos.1682 1683 of 2022 / Appeal Against NCLAT Judgment Dated 17.02.2022 Arising From NCLT Order Dated 15.07.2021

Legal Issues

  1. 1 Whether valuation process violated Regulations 27 and 35 of the CIRP Regulations and thereby contravened ss.30(2) and 61(3) of the IBC
  2. 2 Whether Regulation 36A(2)(iii) was breached by non-publication of Form G on the designated website and whether that was a material irregularity
  3. 3 Whether the resolution applicant was ineligible under s.29A(e) of the IBC by reason of disqualification under s.164(2)(b) Companies Act

Ratio Decidendi

The Court upheld the NCLAT decision to disapprove the approved resolution plan insofar as the plan could not be lawfully approved because (i) the successful resolution applicant was acting in a manner caught by s.88 of the Indian Trusts Act (seeking to act as alter ego of an ineligible charitable trust) and additionally gave rise to conflicts under s.166 Companies Act, and (ii) the final revised resolution plan (after the 9th CoC meeting) was not placed before the CoC for its final approval prior to filing for sanction under s.30(6) IBC, which constituted a material irregularity that vitiated the approval; other NCLAT findings concerning valuation, publication of Form G and certain...

Court Disposition

Appeals disposed of: NCLAT order of 17.02.2022 upheld insofar as it disapproved the resolution plan for the reasons affirmed by this Court (ineligibility under Trusts Act and conflict/Companies Act and material irregularity for not placing the revised plan before the CoC); other findings of NCLAT (valuation, Form G...

Orders

  • Impugned NCLAT judgment dated 17.02.2022 is not interfered with insofar as it disapproved the resolution plan for the reasons affirmed by this Court (points C2, C3 and D1); other findings and directions of NCLAT are set aside
  • All aspects relating to the subsequent resolution (including the promoter's later s.12-A settlement approval by CoC and fresh EOIs) are left open for consideration by the Adjudicating Authority in accordance with law; the Adjudicating Authority to await decision/orders of this Court as appropriate