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Judgment
O R D E R
27.08.2024 : Heard Learned Counsel for the Appellant as well as Learned Counsel appearing for the Resolution Professional.
This Appeal has been filed challenging only part of the order, where it rejects the merger proposed in the resolution plan of the Appellant between the Appellant No.2 and the Corporate Debtor. The Adjudicating Authority by the impugned Order has approved the resolution plan. However, while approving the resolution plan, the prayer for request for merger of the Corporate Debtor with the Resolution Applicant Axis Solutions Pvt. Ltd. were not allowed. Paragraph 8(VI) and sub-para XX of the impugned order are as follows:
“…..
VI. The proposal included in the RP for merger of the corporate debtor with the Resolution applicant Axis Solutions Pvt Ltd is not allowed as the Adjudicating Authority has considered the application filed under section 30 of the IBC, 2016. Such a proposal, if any, to be considered can only be adjudicated after successful implementation of the resolution plan and obtaining the necessary no objection from the monitoring committee of the CoC. Further, any such approval to be considered would be in terms of the relevant provisions of the companies act for which the resolution applicant can take steps after compliance to the orders passed in this plan submitted to take over the assets and liabilities of the corporate debtor and discharge the liabilities according to the plan approved.
XX No approval is given at this stage regarding to merger of the CD with SRA. It has to file a separate application with Audited Financial Statements of both Companies.”
Learned Counsel for the Appellant submits that the Resolution Plan is defined in Section 5(26) which include a provision for the restructuring of the Corporate Debtor including by way of merger, amalgamation and demerger. Section 5(26) is as follows:
“5.Definitions. - In this Part, unless the context otherwise requires, -
(26)resolution plan means a plan proposed by [resolution applicant] for insolvency resolution of the corporate debtor as a going concern in accordance with Part II;”
Learned Counsel for the RP submits that the resolution plan was placed by the RP, which contained the provision merger which was in accordance with the provisions of the IBC. Learned Counsel for the RP also support the submissions of the Appellant that the Adjudicating Authority ought to have allowed the merger as prayed in the resolution plan.
After having heard the Learned Counsel for the parties, we are of the view that Adjudicating Authority by approving the resolution plan ought not to have been rejected the merger which was part of the resolution plan as contemplated by Section 5(26) of the IBC.
We thus, are of the view that Appeal as prayed deserves to be allowed. Paragraph 8(VI) and direction XX are set aside. The resolution plan having already been approved by the Adjudicating Authority the same shall be implemented in accordance with law.
Appeal disposed of.