NCLT Ahmedabad Slaps ₹1 Lakh Costs On Sintex-BAPL Creditor, Upholds Finality Of Resolution Plan

On 9 February, the National Company Law Tribunal Ahmedabad, (NCLT) dismissed an operational creditor's request for full payment after the resolution plan for Sintex-BAPL Limited, a plastic products maker, was approved.

A Bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma, imposed exemplary costs of Rs. 1,00,000 on the applicant, Ganesh Electricals, for pursuing litigation against settled law, holding that a concluded Corporate Insolvency Resolution Process (CIRP) cannot be reopened simply because a creditor took a haircut under the plan.

It observed that “the relief sought by the Applicant, if granted, would amount to reopening the Resolution Plan and disturbing the finality attached to it, which is contrary to the scheme and object of the Code.”

Ganesh Electricals had supplied electrical materials and services to Sintex-BAPL. During the CIRP, its claim of Rs. 40.81 lakh was admitted. However, on 17 March 2023, under the resolution plan approved by the Committee of Creditors and the NCLT, it received Rs. 2.16 lakh as operational creditors were paid proportionately.

A year later, it filed an interlocutory application asking for full payment. It argued that Regulation 39(9) of the CIRP Regulations allowed the Tribunal to ensure the resolution plan was properly implemented and claimed that statutory dues paid on behalf of the corporate debtor were not reimbursed.

It also alleged that the plan did not comply with Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016 (IBC), which requires a resolution plan to provide for repayment of all debts, including statutory dues.

The erstwhile Resolution Professional and the Successful Resolution Applicant opposed the plea, relying on the “clean slate” doctrine and Section 31(1) of the IBC, which makes an NCLT-approved resolution plan binding on the corporate debtor, creditors and all stakeholders.

The Tribunal rejected the application by Ganesh Electricals, holding that granting the relief sought would disturb the finality of the approved resolution plan. It clarified that Regulation 39(9) enables the Adjudicating Authority to ensure implementation of the plan, not modify it. If the distribution mechanism were revisited, it would "amount to a substantive modification of the Resolution Plan.”

The Tribunal also reiterated the settled position that the commercial wisdom of the CoC is non-justiciable and that an approved resolution plan is binding on all stakeholders. It further noted that “despite having received payment strictly in accordance with the approved Resolution Plan, the Applicant has persisted with the present Application seeking reliefs contrary to Section 31(1) of the Code.”

Accordingly, holding that the application “resulted in avoidable litigation and unnecessary burden upon the Respondents,” the Tribunal directed Ganesh Electricals to pay exemplary costs of Rs. 1 lakh to the erstwhile Resolution Professional and the Successful Resolution Applicant within 15 days.

For Applicant: Advocates R. Natarajan and Dheeraj Kumar

For Respondents: Advocates Raheel Patel and Yash Dadhich for RP; Advocate Ananya Pratap Singh for Sintex and SRA