The insolvency appellate tribunal NCLAT has upheld an NCLT order directing liquidation of debt-ridden Sintex Plastics Technology.
A two-member bench of the National Company Law Appellate Tribunal (NCLAT) also rejected the submission of an unsuccessful bidder that NCLT passed an order for liquidation even though its lone CoC member had abstained from voting. RBL Bank was the sole member of the Committee of Creditors (CoC) of Sintex, owning 100 per cent votes.
Subhlaxmi Investment Advisory, one of the resolution applicants, had contended before the NCLAT that the sole member of the CoC abstained from voting, therefore, technically, the resolution plan submitted by it was not rejected.
However, rejecting it, the NCLAT said”... The very fact that the sole member of the CoC did not vote in favour of the resolution plan submitted by the appellant (Subhlaxmi Investment), therefore, it had exercised its commercial wisdom and chose to abstain from voting.”
This has been held by the Supreme Court in the case of K Sashidhar that commercial wisdom of the CoC is paramount, therefore, the reason cannot be questioned by the appellant, said NCLAT.
“...So far as the application for liquidation, having been filed without consent of the CoC is concerned, the argument of the appellant is not tenable because in the 6th CoC meeting, there was discussion regarding the possibility of the liquidation and in the course of said discussion, the CoC sought recommendation for the nomination of liquidator,” said NCLAT in its order passed on April 4, 2025.
In this regard, erstwhile resolution professional (RP) sent an e-mail to the CoC seeking its consent to file the liquidation application and the nomination of a liquidator, to which the sole member of the CoC gave consent by returning the e-mail on the same.
Moreover, after three extensions, CIRP (Corporate Insolvency Resolution Process) had expired on March 30, 2024, therefore, the RP had to file an application for liquidation under Section 33(1) of the Insolvency & Bankruptcy Code.
The application for the liquidation of Sintex Plastics was filed on April 12, 2024, and the National Company Law Tribunal (NCLT) allowed it on May 3, 2024, which was challenged before NCLAT.
“Keeping in view the aforesaid facts and circumstances which have also been noticed by the Tribunal, we do not find any error in the impugned order for the purpose of interference, therefore, the present appeal is found to be without any merit and the same is hereby dismissed though without any order as to costs,” said NCLT.
Section 12 (1) of IBC mandates a CIRP to be completed within a time frame of 180 days from the date of admission of the application; however, under the request of the RP, NCLT can extend the duration for another 90 days.
It should be mandatorily completed within 330 days, including any extension and the time taken in legal proceedings.
