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NCLAT Sets Aside NCLT Orders Approving Resolution Plan for Ricoh Limited

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The National Company Law Appellate Tribunal (NCLAT), Principal Bench, passed judgment on 05/08/2020, allowed an appeal filed by Kotak Investment Advisors Limited (KIAL) challenging two impugned orders passed by the Adjudicating Authority/National Company Law Tribunal, Mumbai Bench. The Adjudicating Authority approved the resolution plan submitted by a consortium of Kalpraj Dharamshi and Rekha Jhunjunwala. Wherein, KIAL was one of the bidders for Ricoh India Limited.

Brief Facts of the Case 

M/s Kotak Investment Advisors Limited (KIAL), filed an application dated on 14th March 2019, seeking rejection of the approved Resolution Plan submitted by a consortium of Kalpraj Dharamshi and Rekha Jhunjunwala, which was based on the illegalities committed in the conduct of Corporate Insolvency Resolution Process. Since the Adjudicating Authority passed the two orders at the same time, and facts being the same, both these appeals come together. In the invitation of Resolution plan, issued by the Resolution professional, the last date for submission of the Resolution, the plan was 8th January, 019. Accordingly, Phoenix Asset Reconstruction Company Limited, an Associate of the Appellant, submitted a Resolution Plan on 08th January 2019. However, Resolution Applicant Karvy Group tendered its Resolution Plan without furnishing guarantee of Rs.10 Crore. On 10th January 2019, the Committee the Creditors (CoC) had opened both the Resolution Plans. The Resolution Plans were discussed on 15th January 2019. Furthermore, a consortium of Kalpraj Dharamshi & Rekha Jhunjunwala submitted their resolution plan on 28th January 2019.

Petitioner’s Arguments

Illegalities and fraud committed by the Resolution Professional

The Petitioner questioned the RP over the acceptance of two Resolution Plans after the expiry of the deadline for submission of Resolution Plan, without obtaining any CoC resolution to extend the deadline for a resolution plan, in contravention of the provision of IBC.

Violation of principles of natural justice

The Petitioner claimed that only a single-member bench of NCLT had heard the arguments and reserved its order on a resolution plan. However, the final order was passed by the two-member bench. The salutary principle applicable, in this case, was that of a maxim: “One who hears the matter must decide”.

The Resolution plan submitted by the Appellant was opened on 09th January 2019, and the offers made by the Appellant were disclosed to all the participants, including the Resolution Professional. After this, no further fresh bid or offer was accepted. But, the RP illegally and unlawfully received EOI from Kalpraj Dharamshi & Rekha Jhunjunwala on 27th January 2019.

No immunity to Resolution Professional

There is no immunity to RP to examinee resolution plan with the approval of the CoC at any stage, as mentioned in Clause 10.4 of the process memorandum.

Regulation 36A of the CIRP Regulations 2016

The Petitioner argued that the Regulation 36A was amended on 4th July 2018. The CIRP started on 14th May 2018. Therefore, the amendment will not be applicable in this case.

Respondents’ Arguments

  • No illegality in accepting the resolution plan- The respondents contended that the Resolution Plan submitted by a consortium Dharamshi and Jhunjunwala was accepted by the CoC, for maximization of value. The process of memorandum authorizes the resolution plan.
  • Respondent No. 1 contended that Coc approved both the resolution plans by 84.36% voting share.
  • The Respondent Resolution Professional contended that as per the terms of the process memorandum guiding the resolution process of the Corporate Debtor, the CoC had the sole discretion to adopt the negotiation process.
  • The Respondent argued that the Petitioner has no right to object to the consideration of the Resolution Plans on 8th January 2019, under the Process of Memorandum.
  • The Respondent argued that the acceptance of the Resolution Plan is under the exercise of commercial wisdom of CoC, which is non-justiciable.


The order of NCLAT is a big blow on the nexus of resolution professionals who want to exploit the provisions of IBC for their vested personal interest.

The case has dealt with Sections 30(2) of Insolvency and Bankruptcy Code, 2016.

The Petitioner referred the case of Essar Steel India Limited v. Satish Kumar Gupta and Others, wherein, the Supreme Court of India has dealt with the power of the Adjudicating Authority and the Appellate Tribunal for exercising limited jurisdiction for approval of the Resolution Plan.

The Respondent referred to the case of K. Sashidhar v. Indian Overseas Bank, wherein the Petitioner has no vested right that its Resolution Plan should be approved.

Court’s Observation

Based on the aforesaid facts, The National Company Law Appellate Tribunal (NCLAT), Principal Bench, observed that the Resolution Professional accepted the resolution plan after the expiry of the deadline of submission, is a blatant misuse of the authority invested in the Resolution Professional to conduct CIRP. The CoC should have done so by publishing a fresh notice in Form ‘G’ under Regulation 36A of the CIRP Regulations. The Resolution Plan can be challenged before the Adjudicating Authority on limited grounds referred to in Section 30(2) or the Appellate Authority on the ground of material irregularity in exercise of the powers by the Resolution Professional during the Corporate Insolvency Resolution period. The Adjudicating Authority has also failed to appreciate the illegalities and irregularities pointed out by the Appellant.

Court’s Decision

The NCLAT directed The CoC to take a decision afresh in the light for consideration on the Resolution Plans already submitted within ten days. If no decision is communicated to the Adjudicating Authority and the timeline for completion of CIRP has already expired, then the Adjudicating Authority is to pass an order for liquidation of the corporate debtor. There shall be no order as to costs. is now on Telegram. Follow us for regular legal updates and judgments from the court. Follow us on Google News, InstagramLinkedInFacebook & Twitter. You can also subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.

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