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's Plan For Mangomeadows Can't Face Harsher Standard; NCLT Kochi Orders Reconsideration
The has delivered a significant ruling, holding that a submitted by a cannot be subjected to a harsher or more onerous standard than plans from other applicants. The Tribunal directed the of to reconsider the revised plan of N.K. Kurian within 15 days, emphasizing that fair and objective evaluation is paramount under the Insolvency and Bankruptcy Code (IBC).
A for Suspended Directors
The bench, comprising Judicial Member Vinay Goel and Technical Member Ravichandran Ramasamy, was hearing two interconnected applications: one by Kurian challenging the conduct of the and the rejection of his revised plan, and another by K. Easwara Pillai seeking liquidation of Mangomeadows.
Kurian’s plan had been rejected by the CoC in its 16th meeting, with observations regarding lack of feasibility, inadequate performance security, and conditional payment of CIRP costs. The 17th CoC meeting subsequently resolved to liquidate the company. Kurian alleged procedural irregularities, including continuation of CIRP beyond the statutory period without valid extension, and collusion between the and the sole financial creditor, .
NCLT Rejects Unequal Treatment
The NCLT, however, declined to examine the specific allegations against the , focusing instead on whether its earlier order dated —which had granted Kurian a final opportunity to submit a revised plan—had been implemented in its true spirit.
The Tribunal observed that the earlier order was not merely a procedural direction but a conscious effort to ensure fair consideration. It noted that “the emphasis was not on extending any special privilege to the but on ensuring that a potentially better proposal, if otherwise compliant with law, was not rejected merely because it originated from the Suspended Management.”
In a clear statement against discrimination, the NCLT held: “The mere fact that the Applicant is the shall not, by itself, be treated as a disqualification or a ground to apply a different or more onerous standard, if he is otherwise eligible under the provisions of the .”
Revival Over Liquidation: The Core Ethos
The judgment reaffirmed the primary objective of the IBC as resolution and revival, with . “The entire scheme of the Code, beginning from admission of the insolvency application till approval of a , demonstrates the legislative preference for preserving the Corporate Debtor as a rather than bringing its existence to an end,” the bench observed.
The Tribunal emphasized that every genuine opportunity for revival deserves meaningful consideration. It directed the CoC to reconsider Kurian’s revised plan “in the true letter and spirit” of its March 6 order, ensuring that if the plan is substantially on par with or better than the earlier approved plan, it must be treated on an equal footing.
Decision and Implications
The NCLT disposed of both applications without expressing any opinion on the commercial merits of Kurian’s proposal. It directed the to place the revised plan before the CoC forthwith, with the CoC to complete the reconsideration within 15 days. The Tribunal also clarified that it was not deciding the dispute over the expiry or extension of the CIRP period, and that its directions arose solely from the need to give full effect to its earlier judicial order.
This ruling sets an important precedent under the IBC, ensuring that suspended directors are not unfairly penalized for their status when presenting viable resolution plans. It reinforces the principle that must be exercised objectively, without bias or prejudice, and that the ultimate goal of the insolvency framework is to preserve and revive stressed businesses.
