The Mumbai Bench of the National Company Law Tribunal (NCLT) has upheld the unanimously approved plan but declined blanket statutory waivers, holding that plan approval does not dispense with the applicable merger procedure for MetaX or approvals within other authorities’ jurisdiction. Essentially, the NCLT approved the resolution plan for Arch Pharmalabs Limited under Section 31(1) of the IBC, with the CoC voting unanimously in favour.
The Tribunal confirmed compliance with Section 30(2) and Regulations 37, 38, 38(1A) and 39(4) of the CIRP Regulations, and reiterated that the adjudicating authority’s role is limited to verifying statutory compliance, but it cannot substitute the CoC’s commercial wisdom. However, the Tribunal refused to sanction the merger of MetaX Life Sciences into the corporate debtor within the plan-approval order, holding that it does not exercise jurisdiction over the transferor company (MetaX) in the present application.
Emphasising that the merger must follow the procedure prescribed under the Companies Act, 2013, the Tribunal also declined to grant GST and income-tax procedural waivers, stamp duty exemptions, and registration-charge exemptions, stating that these fall within the jurisdiction of the relevant statutory authorities. On the clean-slate principle, the NCLT reiterated that approval bars proceedings on pre-approval claim not forming part of the plan, but does not waive future statutory obligations or extend Section 32A protection to post-approval non-compliance or directors associated before the plan-approval date.
Briefly, NCLT Mumbai considered an application filed by the resolution professional seeking approval of the resolution plan for Arch Pharmalabs Limited, submitted by a consortium of Ashish Kumar and MetaX Life Sciences Limited. The plan was initially approved with 98.03% voting share of the Committee of Creditors (CoC), which subsequently increased to 100% after additional creditors recorded their assent.
The proposed plan amount was Rs. 577.24 crores, including estimated CIRP costs, with payments proposed within 75 days of plan approval. It included Rs. 450 crores towards financial creditors and Rs. 108 crores as consideration for assigning debt and associated rights to MetaX. The plan also proposed the merger of MetaX into the corporate debtor. The debt assignment covered security interests, personal and corporate guarantees, and rights to recoveries from avoidance applications.
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The Division Bench comprising Ashish Kalia (Judicial Member) and Anil Raj Chellan (Technical Member) noted that the CoC had considered the plan’s feasibility and viability and unanimously approved it. It found that the plan complied with Section 30(2) of the Insolvency and Bankruptcy Code, including requirements relating to priority payment of CIRP costs, payment to operational creditors, management of the corporate debtor, and implementation and supervision of the plan.
The Tribunal reiterated that its scrutiny was confined to the statutory requirements and that it could not interfere with the CoC’s commercial wisdom or modify the plan approved by it. However, it held that approval of the resolution plan did not itself sanction MetaX’s merger into Arch Pharmalabs, as the Tribunal did not exercise jurisdiction over the transferor company in the present application. The merger therefore remained subject to the applicable Companies Act procedure.
