NCLT allows new management to complete statutory compliances prior to resolution
The Mumbai bench of the National Company Law Tribunal (NCLT) has in an important judgement allowed the successful resolution applicant to fulfil statutory compliances (required for implementation of the resolution plan) for period prior to approval of the resolution plan.
The NCLT ordered this after the successful resolution applicant informed the tribunal that the ex-promoter was not providing with necessary documents required for statutory compliances making it difficult for it to implement the resolution plan.
The tribunal noted that the resolution applicant was taking all possible steps in right earnest to get the resolution Plan implemented, but due to technical reasons (which are not her faults) has not been able to implement the same.
“It is settled that when the technical considerations are pitted against the substantial justice, cause of substantial justice would be preferred. Therefore, interest of justice requires that the Applicant shall have to be provided with all the support for getting the statutory compliances done,” the court said in its order.
Facts of the case
The corporate debtor — Metallica Industries Limited — was involved in the development of a real estate project namely the Industrial Gala Complex admeasuring in Kandivali (West), Mumbai.
Kamla Industrial Park Limited, which was along with the allottees of Gala Complex also the financial creditor to the project, emerged as the successful resolution applicant supported by the allottees of Gala.
In its efforts to bring about early resolution of the Corporate Debtor, the resolution applicant has been facing difficulty in implementation of the resolution plan as it faced difficulties in getting the regulatory compliances accomplished.
The resolution applicant was facing problems mainly on account of fraudulent actions of the former promoters and due to the complications and lockdown resulting by the Covid-19 Pandemic. The applicant accordingly has not been able to adhere to the timelines set out in the resolution plan. Because of the negligence of the former promoters, annual returns and balance sheets after 31 March 2013 have not been filed.
The applicant has also not been able to lay its hands on the relevant documents prior to 16 October 2019, when the NCLT approved the resolution plan. According to petition filed by the resolution applicant, as no authentic data had been submitted by the disqualified directors, the present directors were not able to sign any anterior document.
It was further submitted by the applicant that that the resolution plan was to be implemented within a period of 10-12 months from the date of approval i.e. 16 October 2019. But because of onset of the Covid-19 Pandemic from March 2020 and resultant dislocation/disruption all around, the applicant had not been able to complete the implementation within time.
Considering the ‘genuine’ difficulties faced by the applicant in implementing the resolution plan, the tribunal not only allowed the present management of the corporate debtor to approve all the filings prior to approval of the resolution plan but also extended the date for implementation of the resolution plan to 31 March 2022.
The tribunal also reiterated that the present management of the corporate debtor should not in any manner be held accountable for the default committed by the corporate debtor or its promoters/directors prior to 16 October 2019.
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