NCLT Indore Rejects Suspended Management Plea To Join GEI Power Resolution Plan Approval Proceedings

The Indore Bench of the National Company Law Tribunal (NCLT) has rejected a plea by the suspended management of GEI Power Ltd. seeking to take part in the proceedings where the Tribunal is considering approval of the company's resolution plan, holding that former management cannot intervene at this stage after the lenders have already approved the plan.

Refusing the request, the tribunal said that allowing such participation would go against the limited role of the court at the plan approval stage, observing that, “Impleading the Applicant at this stage would have the practical effect of inviting commercial objections to a plan that has already been approved by the CoC with the requisite voting share, which would directly impinge upon the commercial wisdom of the CoC and would be contrary to the settled law on the subject."

The order was passed by a bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta.

The application was filed by Carnet Elias Fernandes, part of the suspended management of GEI Power Ltd., asking the tribunal to allow him to be heard in the proceedings relating to approval of the resolution plan.

GEI Power Ltd. entered insolvency proceedings on January 22, 2025. Jagdish Kumar Parulkar was first appointed as Interim Resolution Professional and was later confirmed as Resolution Professional by the Committee of Creditors. The Committee of Creditors approved a resolution plan, which is now pending before the Tribunal for final approval.

Fernandes argued that the resolution plan would affect his rights and that he should be given an opportunity to raise objections before the Tribunal. He said that deciding the matter without hearing him would violate principles of natural justice. He also relied on the Supreme Court judgment in Vijay Kumar Jain v. Standard Chartered Bank (2019) to argue that former directors are entitled to receive resolution plans and participate in the process.

The Resolution Professional opposed the plea, saying that once insolvency proceedings begin, the powers of the company's directors stand suspended and control of the company vests in the Resolution Professional. It was argued that when the Tribunal considers approval of a plan, it only checks whether the legal requirements are met and does not reopen commercial decisions taken by the lenders. He also said the plea was an attempt to delay the insolvency process.

The tribunal agreed with this view and held that the Supreme Court ruling cited by Fernandes applies to meetings of the Committee of Creditors and to remedies after a plan is approved, but does not give suspended directors the right to participate when the Tribunal is deciding whether to approve the plan.

The tribunal also noted that Fernandes had earlier been declared ineligible under Section 29A of the Insolvency and Bankruptcy Code by a previous order of the tribunal and said allowing him to take part now would effectively bypass that disqualification.

Holding that the plea could delay the resolution process and interfere with the lenders' commercial decision, the Tribunal dismissed the application.