NCLT Ahmedabad Rejects Machino Polymers' Plea To Revise Claim In Sintex-BAPL Ltd Insolvency Case

The Ahmedabad National Company Law Tribunal (NCLT) on 2 July held that an approved Resolution Plan cannot be modified to revise admitted claims after the conclusion of the Corporate Insolvency Resolution Process (CIRP), as it attains finality and binds all stakeholders.

A Bench comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma dismissed an application filed by Machino Polymers Limited seeking revision of its admitted claim against Sintex-BAPL Ltd., holding that no direction could be issued to the Resolution Professional to alter admitted claims or records after approval of the Resolution Plan. It observed:

“Upon approval of the Resolution Plan, Respondent No.1 ceased to discharge the functions of Resolution Professional and the management of the Corporate Debtor vested in the Successful Resolution Applicant. Consequently, no direction can be issued to Respondent No.1 to revise the admitted claim or alter the books of account of the Corporate Debtor.”

Machino Polymers, an operational creditor supplying polypropylene compounds, had raised invoices for raw materials supplied to Sintex-BAPL Ltd. before commencement of insolvency proceedings. The company claimed that it had fulfilled its obligations, but the Corporate Debtor failed to make payments against the invoices. Subsequently, CIRP was initiated against Sintex-BAPL Ltd.

During the CIRP, Machino Polymers submitted its claim. The Interim Resolution Professional (IRP) initially admitted part of the claim, following which the Resolution Professional (RP) admitted Rs. 8.62 crore out of the total claim of Rs. 10.49 crore. Challenging the partial admission, Machino Polymers filed interlocutory applications seeking recognition of the entire amount claimed.

While the applications remained pending, the Committee of Creditors approved a Resolution Plan, which was sanctioned by the NCLT on 17 March 2023. The Resolution Plan was thereafter implemented, and payments were made to operational creditors, including Machino Polymers, on a proportionate basis.

Machino Polymers contended that reconciliation of accounts showed its actual pre-CIRP principal dues at Rs. 4.41 crore, with interest of Rs. 2.04 crore already admitted. It argued that it was only seeking correction of records and not reopening of the approved Resolution Plan. It further submitted that such revision would not prejudice other creditors and undertook to refund any excess amount received under the Plan.

The RP opposed the application, arguing that the admitted claim had already been settled under the approved Resolution Plan and that any subsequent revision would be contrary to the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC).

It submitted that claim verification and approval of the Resolution Plan are separate stages of the CIRP and that disputes regarding claim admission cannot affect the finality of an approved plan. Further, the RP argued that upon approval of the Resolution Plan, he became functus officio and no longer had authority to modify claims or alter the records of the Corporate Debtor.

The Tribunal noted that Section 31 of the IBC (which provides that an approved Resolution Plan is binding on all stakeholders) gives statutory finality to the approved plan. It observed:

“The object of the provision is to provide certainty and finality to the resolution process and to facilitate implementation of the approved Resolution Plan.”

It held that verification and collation of claims are functions performed by the RP during the CIRP and that the RP ceases to exercise such statutory functions once the Resolution Plan is approved. It further observed that the liberty granted earlier to Machino Polymers to re-agitate its claim could not expand the jurisdiction of the Tribunal or permit modification of an approved Resolution Plan.

The Bench also held that Regulation 14 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which permits estimation or revision of claims, applies only during the CIRP and not after its completion. It further held that the inherent powers under Rule 11 of the NCLT Rules cannot be exercised contrary to the express provisions of the IBC.

Accordingly, the NCLT dismissed the application filed by Machino Polymers Limited.

For Applicants: Advocates Jeet J. Bhatt and Abhinay Sharma

For Respondents: Advocate Yash Dadhich