The Supreme Court on Wednesday upheld the National Company Law Appellate Tribunal (NCLAT) verdict setting aside the approval given to MGM Healthcare managing director M.K. Rajagopalan for making a ₹423-crore bid to take over Appu Hotels Ltd, which owns and operates Le Meridien in Chennai and Coimbatore.
In 2020, the National Company Law Tribunal (NCLT) Chennai had admitted an insolvency petition against Appu Hotels in a case filed by the Tourism Finance Corporation of India Ltd.
Later, it approved Mr. Rajagopalan’s bid to take over Appu Hotels. Based on an appeal filed by Periasamy Palani Gounder (promoter and erstwhile director) of Appu Hotels Ltd, NCLAT had set aside the nod given for the plan.
Mr. Rajagopalan had moved the apex court against the NCLAT order. A slew of other cases were also filed on the issue.
Justice Dinesh Maheshwari and Vikram Nath of the Supreme Court said the resolution plan in question could not have been approved by the adjudicating authority (NCLT) for two major reasons — one, for the ineligibility of the resolution applicant and second for not placing the revised resolution plan in the Committee of Creditors before seeking approval from the adjudicating authority.
Two resolution plans were submitted by Mr. Rajagopalan — one in his individual capacity and another as managing director of Sri Balaji Vidyapeeth.
The Appellate Tribunal has rightly noticed that this filing of two Expression of Interests by the resolution applicant has a material bearing on the competence of the resolution plan of the appellant, for being directly hit by Section 88 of the Trusts Act, the apex court said.
However, the Supreme Court set aside NCLAT’s observations and directions with regards to the treatment of related party in the resolution plan and regarding the settlement offer of the promoter.
The Supreme Court said the question of dealing with a fresh settlement proposal of the promoter, as approved by the Committee of Creditors in its 19th meeting of October 12, after receiving fresh resolution plans, is left open for consideration of the adjudicating authority.
