"Disapproval Of Resolution Plan By NCLAT Not To Be Interfered With"- SC While Setting Aside MK Rajagopalan's Bid For Appu Hotels
A Supreme Court Bench of Justice Dinesh Maheshwari and Justice Vikram Nath has upheld an order passed by the National Company Law Appellate Tribunal through which the approval given to Mr MK Rajagopalan, the MD of MGM Healthcare, to make an Rs. 423 crore bid to take over Appu Hotels Ltd. has been set aside. Appu Hotels Ltd. owns and operates Le Meredian in Coimbatore and Chennai.
Senior Counsel Dr Abhishek M Singhvi and Senior Counsel C Aryama Sundaram appeared for the resolution applicant. Senior Counsel Vijay Narayan appeared for the resolution professional. Senior Counsel Mukul Rohatgi, Senior Counsel KV Vishwanathan, and Senior Counsel Dhruv Mehta appeared for the respective contesting parties. Senior Counsel Rakesh Dwivedi appeared for Edelweiss & Associates. Solicitor General Tushar Mehta appeared for the SBI.
In this case, an appeal had been filed by Mr Periasamy Palani Gounder, the promoter and erstwhile director of Appu Hotels Ltd., against the approval given to Mr Rajagopalan's bid to take over Appu Hotels. Subsequently, NCLAT set aside the approval.
Mr Rajagopalan moved to the Apex Court against the order of the NCLAT. A number of other petitions were also filed regarding the same.
Holding that the order of the NCLAT was not to be interfered with, the Apex Court observed that the Adjudicating Authority could not have approved the resolution plan in question for two major reasons, which were,
1) for the ineligibility of the resolution applicant,
2) for not placing of the revised resolution plan in the CoC (Code of Conduct) before seeking approval from the Adjudicating Authority.
In that context, it was said that "we are clearly of the view that even while respecting the commercial wisdom of CoC, in the present case, the resolution plan in question could not have been approved by the Adjudicating Authority for two major reasons: one, for the ineligibility of the resolution applicant; and second, for not placing of the revised resolution plan in the CoC before seeking approval from the Adjudicating Authority".
Notably, the Court set aside the NCLAT's observations made in the context of the treatment of the related party in the resolution plan and the settlement offer of the promoter.
Subsequently, the question of dealing with the fresh settlement proposal of the promoter was left open for the consideration of the Adjudicating Authority.
In light of the same, the Court held that the impugned order would not be interfered with only insofar as the Appellate Tribunal has not approved the resolution plan in question. Other findings, observations, and directions of the Appellate Tribunal were set aside.
Cause Title: MK Rajagopalan v. Dr Periasamy Palani Gounder & Anr.
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