The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, while adjudicating an appeal filed in M/s. Aswathi Agencies v Bijoy Prabhakaran Pulipra & Ors., has held that there is no fetter, embargo or any legal impediment for a Trust to become a Resolution Applicant.

In this matter, PVS Memorial Hospital Private Limited (“Corporate Debtor”) runs a hospital and was admitted into Corporate Insolvency Resolution Process (“CIRP”).by the Adjudicating Authority. M/s. Lissie Medical Institutions (“Successful Resolution Applicant/SRA”) is a medical institution and a Registered Charitable Trust under the Indian Trust Act, 1882. The Successful Resolution Applicant had submitted a resolution plan for the Corporate Debtor which was approved by the Committee of Creditors. Subsequently, the Plan was approved by the Adjudicating Authority on 16.03.2021.

M/s Awasthi Agencies (“Operational Creditor/Appellant”) is an Operational Creditor of the Corporate Debtor who regularly supplied medicines to the Corporate Debtor. The payments pf the Operational Creditor were withheld by the Corporate Debtor for the period of June 2017 to April 2019 and GST was paid by the Operational Creditor to the tune of Rs. 12 Lakhs. The Resolution Plan did not provide for return of GST sum to the Operational Creditor at least. Hence, the Operational Creditor challenged the order dated 16.03.2021 before the NCLAT, opposing the approved plan.

The Bench observed that under Section 3(23)(d) of the Insolvency and Bankruptcy Code, 2016 a “Person” is defined and it includes a Trust. Therefore, there is no fetter/ embargo or a legal impediment, for a “Trust” to be a Resolution Applicant.