The resolution plans should be given to the board of directors as they can provide better information to the committee of creditors regarding their debts. In spite of, Section 60(5) of the Code, board of directors have a right to challenge the terms of a proposed resolution plan before the Tribunal under section 61 of the code which will increase the court cases and burden on courts, providing of resolution plans before passing them to adjudicating authority will save the time.
The reason for differentiating between financial debts, which are secured, and operational debts, which are unsecured, is in the relative importance of the two types of debts when it comes to the object sought to be achieved by the Insolvency Code. Repayment of financial debts infuses capital into the economy inasmuch as banks and financial institutions are able, with the money that has been paid back, to further lend such money to other entrepreneurs for their businesses.
The approval of the adjudicating authority is not a mere requirement, even the adjudicating authority is not permitted to change the terms of the plan. The ultimate authority to approve or reject a plan rely with the adjudicating authority and it must comply with the provisions of the code that whether the resolution plan is according to Section 30(2) of the IBC, 2016.
A non-obstante clause must also be distinguished from the phrase ‘without prejudice’. A provision enacted ‘without prejudice’ to another provision has not the effect of affecting the operation of the other provision and any action taken under it must not be inconsistent with such other provision.
In this the Court has stated that Regulation 30A of Insolvency and Bankruptcy Code 2016 is not mandatory instead it is directory for the simple reason that it will be based on the facts of a given case, an application for withdrawal shall be allowed in exceptional cases even after issue of invitation of interest under Regulation 36A.
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