In an attempt to ensure that the proceedings of the Insolvency and Bankruptcy Code function without a glitch, the Supreme Court took strict measures to prevent lengthy proceedings.
The Supreme Court reiterated that the sanctity of the 270 deadline to arrive at a resolution plan will be upheld irrespective. A bench of Justices which included R F Nariman and Indu Malhotra stated that protecting the rights of the lenders and employees was a must. The bench further stated that if a resolution plan cannot be concluded in 270 days, the debt ridden company will be liquidated in an effort to protect and safeguards the rights of employees and creditors alike.
To help streamline the process even further, the bench has laid down an intricate timeline during the interim stage of IBC proceedings which includes rejection or acceptance of a bidder’s resolution plan and has declared that the Resolution Professional can’t accept or reject the submitted plan. The RP can also ensure that the plan is submitted within the stipulated time period. The power to accept or reject (in the initial stage) lies with the CoC in an effort to save the debt ridden company.
Further the SC also clarified that the CoC can only analyse the viability of the resolution plan, whereas the final power lies with the National Company Law Tribunal. Considering the current scenario where litigation is initiated at the interim stage, first to the NCLT and then NCLAT and finally to the Supreme Court. The bench concluded that only the final decision of NCLT would be challenged in NCLAT and then in SC though it did mention that the time taken by NCLT, NCLAT and SC would not be part of the 270 day deadline for finalizing the resolution plan.