NCLAT Upholds Duncans Industries Resolution Plan

New Delhi, Mar 9 (PTI) Appellate tribunal NCLAT has set aside petitions against the NCLT order that approved the resolution plan for Duncans Industries.

The National Company Law Appellate Tribunal (NCLAT) also clarified that while approving the resolution plan for Duncans Industries, the NCLT has not made any observations regarding the "grant or non-grant of renewal of leases" of tea gardens.

The Kolkata bench of the National Company Law Tribunal (NCLT), on October 18, 2024, approved the resolution plan filed by Uniglobal Papers, which was challenged by Merico Agro Industries and Nagri Farm Tea Co before the appellate tribunal.

While approving the resolution plan, the NCLT in its order (paragraphs 18) had asked Uniglobal Papers, the successful bidder, to make an application for renewal of the leases and to get possession, if granted.

This part was challenged by Merico Agro Industries, Sammelan Tea and Beverages and Nagri Farm Tea Co. by filing appeals against the NCLT order before the appellate tribunal NCLAT.

A three-member NCLAT bench dismissed the petitions but clarified that the question of granting renewal is in the domain of the state government of West Bengal.

The NCLT order "has to be treated not to have expressed any opinion with regard to renewal of the leases, which is in the domain of state of West Bengal," said the NCLAT bench.

The appellate tribunal said "only liberty to pursue the application" was granted and the question of granting renewal is in the domain of the state government, it added.

"We, thus, only clarify that directions of the NCLT have to be treated, limited to the right to pursue the renewal application/ make an application for renewal and the Adjudicating Authority has not expressed any opinion on the merits of the renewal application, which is in the domain of State Government," it noted.

In its order, while approving the Resolution Plan, the NCLT said, "For the Tea Gardens, where the Lease period has expired, it is open for SRA (Uniglobal Papers) to make application to the Lessor or if a renewal application has already been made, pursue the same".

The petitioners had contended that while approving the resolution plan, the NCLT was not required to issue any direction with regard to the renewal of the leases, which had already expired and the said direction was beyond its jurisdiction.

The corporate Insolvency Resolution Process (CIRP) against Duncans Industries was initiated on March 5, 2020.

However, during the CIRP, Resolution Professional of Duncans Industries was permitted to take possession of only three tea gardens - Garganda, Kilcot and Bagarcote Div. I - whose lease were continuing on the day when CIRP commenced.