Tribunal Upholds 75% Voting Rule for Creditors' Committee Decisions

The Tribunal dismissed applications seeking to compel the Committee of Creditors (CoC) to reconsider its decision or approve a resolution plan with less than a 75% voting share. It upheld the statutory requirement for a supermajority for CoC decisions, emphasizing its limited jurisdiction under the Insolvency and Bankruptcy Code. The Tribunal ordered the liquidation of the Corporate Debtor, appointing the Resolution Professional as the liquidator and directing the continuation of the moratorium and the RP's remuneration during the liquidation process.

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Issues Involved:
1. Applicability of Ministry of Corporate Affairs' Circular to the Corporate Insolvency Resolution Process (CIRP).
2. Requirement of shareholders' approval for actions under the resolution plan.
3. Submission and approval of a revised resolution plan.
4. Jurisdiction of the Adjudicating Authority over the Committee of Creditors' (CoC) decisions.
5. Voting threshold for approval of the resolution plan by the CoC.
6. Impact of liquidation on stakeholders, including workmen.
7. Role and powers of the Resolution Professional (RP) during the liquidation process.

Detailed Analysis:

1. Applicability of Ministry of Corporate Affairs' Circular to the CIRP:
The Resolution Applicant sought a declaration that the position of law clarified by the Ministry of Corporate Affairs' Circular dated October 25, 2017, would apply to the CIRP of the Corporate Debtor. The Tribunal acknowledged the circular but emphasized that the statutory mandate requiring a 75% voting threshold by the CoC for approving a resolution plan remains unaffected by the circular.

2. Requirement of Shareholders' Approval:
The applicant requested that the approval of shareholders for actions under the resolution plan be deemed given upon the plan's approval by the Tribunal, as per the Ministry's circular. The Tribunal noted the circular's clarification that shareholders' approval is not required for actions under the resolution plan, aligning with the provisions of the Companies Act, 2013.

3. Submission and Approval of a Revised Resolution Plan:
The applicant sought permission to submit a revised resolution plan after reducing the time for obtaining shareholders' approval. The Tribunal highlighted that the CoC did not approve the initial resolution plan, with only 66.57% voting in favor, falling short of the required 75%. The Tribunal reiterated that it lacks jurisdiction to alter the statutory voting threshold or compel the CoC to reconsider its decision.

4. Jurisdiction of the Adjudicating Authority Over CoC Decisions:
The Tribunal emphasized its limited jurisdiction under the Insolvency and Bankruptcy Code (IBC). It stated that it cannot interfere with the CoC's decisions unless a resolution plan is approved with the requisite 75% voting share. The Tribunal underscored that the Code mandates a supermajority for CoC decisions and that this requirement is not subject to judicial interpretation or alteration.

5. Voting Threshold for Approval of the Resolution Plan by the CoC:
The Tribunal reiterated that the IBC mandates a 75% voting threshold for CoC decisions, including the approval of resolution plans. The applicant's reliance on previous judgments to argue that the 75% requirement is directory and not mandatory was rejected. The Tribunal clarified that the statutory language is clear and unambiguous, requiring a supermajority for CoC approvals.

6. Impact of Liquidation on Stakeholders, Including Workmen:
The Tribunal acknowledged the concerns raised by workmen regarding the adverse impact of liquidation on their livelihoods. However, it reiterated that its jurisdiction is limited to approving or rejecting resolution plans based on statutory requirements. The Tribunal emphasized that it cannot compel the CoC to approve a resolution plan or interfere with its decision to liquidate the company.

7. Role and Powers of the Resolution Professional During Liquidation:
The Tribunal addressed the application filed by the RP seeking liquidation of the Corporate Debtor. It noted that the RP had followed due process, including appointing valuers and presenting offers to the CoC. The Tribunal ordered the liquidation of the Corporate Debtor, appointing the RP as the liquidator and directing the continuation of the moratorium and the RP's remuneration during the liquidation process.

Conclusion:
The Tribunal dismissed the applications seeking to compel the CoC to reconsider its decision or approve a resolution plan with less than 75% voting share. It upheld the statutory mandate requiring a supermajority for CoC decisions and emphasized its limited jurisdiction under the IBC. The Tribunal ordered the liquidation of the Corporate Debtor, appointing the RP as the liquidator and directing the continuation of the moratorium and the RP's remuneration during the liquidation process.

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