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‘’ Status Does Not Confer Right To Challenge : NCLT Chandigarh
The has delivered a significant ruling on the limits of a creditor’s standing to challenge a under the . The Tribunal held that merely being classified as an "" does not confer an unrestricted right to assail a , particularly when the challenge does not arise from the creditor’s own admitted claim or any legally enforceable right under the Code.
Judicial Member Khetrabasi Biswal and Technical Member Shishir Agarwal dismissed an application filed by Pradeep Kumar Goel under read with . Goel, categorized as an "" after his claim for status was rejected, sought rejection of the submitted for .
The Dispute: Who Can Challenge a Plan?
Goel had earlier moved the NCLT seeking recognition as a . By an order dated , the Tribunal classified him as an "" and held that he was not a . Goel challenged this classification before the . In the present application, he argued that despite the classification, he remained a creditor and stakeholder of the corporate debtor and was therefore entitled to question the legality of the .
He contended that an "" has no statutory mechanism to raise objections, as opposed to homebuyers or other creditors who have an authorized representative. He relied on decisions in , , and to assert that any "" whose rights are affected has to challenge a .
The RP's Objection: Abuse of Process
The , , opposed the , arguing that the application sought to reopen issues already concluded by earlier orders or pending in separate proceedings. He pointed out that the plan had been approved by the with a 99.21% voting share in its 15th meeting on . The present application was filed more than fifteen months later and was a belated attempt to obstruct the process.
The RP also submitted that Goel was never a member of the CoC and could not question the of the creditors, which is under the ’s decision in .
Tribunal’s Analysis: Limits of an “”
The NCLT confined its examination to the preliminary issue of . It observed that the applicant’s status as an “” did not by itself confer a right to challenge the . The Tribunal noted that Goel was not seeking adjudication of any right flowing from his own claim. Instead, his application sought to reopen the entire resolution process by challenging third-party claims, the constitution of the CoC, the eligibility of the Resolution Applicant under , the conduct of the RP, and the legality of the plan itself.
“The statutory scheme of the Code envisages distinct rights and remedies for different categories of stakeholders, and an ‘’ cannot, in the absence of a specific statutory entitlement, maintain an application seeking reconsideration of the on grounds extending beyond the protection of his own legally enforceable rights,” the Bench held.
The Tribunal further noted that many of the issues raised had already been adjudicated or were sub judice. The admission of claims of and had been dealt with in earlier proceedings, and the claims of were pending before another forum.
Key Observations
The Tribunal emphasized that the CoC’s is . Relying on K. Sashidhar , it stated:
“Neither the Adjudicating Authority nor the Appellate Authority has been endowed with the jurisdiction to reverse the of the and that too on the specious ground that it is only an opinion of the minority financial creditors.”
The Bench clarified that its ruling should not be construed as expressing any opinion on the merits of Goel’s allegations, nor would it preclude him from pursuing any other remedy available in law.
Decision: Application Dismissed as Not Maintainable
The NCLT concluded that entertaining Goel’s application would amount to permitting a to the outside the statutory framework. The application was dismissed as not maintainable. The Tribunal clarified that Goel could pursue any other remedy before the competent forum, but the present challenge could not be sustained.
The ruling reinforces the principle that only creditors with a direct statutory interest – typically those sitting on the CoC – can challenge a . Other creditors must show that their own legal rights are directly affected to establish , and cannot use the process to reopen settled issues or question the of the majority.
