Tribunal upholds approval of Resolution Plan by Adani Ports; emphasizes limited scope of judicial review

The tribunal dismissed the appeal challenging the approval of the Resolution Plan submitted by Adani Ports Special Economic Zone Limited (APSEZ). It affirmed the commercial wisdom of the Committee of Creditors in rejecting a settlement proposal and approving APSEZ's plan, stating that the CoC's decisions are final as long as they comply with the Insolvency and Bankruptcy Code. The tribunal found no procedural irregularities and upheld the Adjudicating Authority's order, emphasizing the limited scope of judicial review in such cases.

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Issues Involved:
1. Approval of the Resolution Plan by the Adjudicating Authority.
2. Rejection of the settlement proposal by the Committee of Creditors (CoC).
3. Compliance with the Insolvency and Bankruptcy Code (I&B Code) and Competition Act, 2002.
4. Commercial wisdom of the Committee of Creditors.
5. Non-consideration of MA 3298 of 2019.

Detailed Analysis:

1. Approval of the Resolution Plan by the Adjudicating Authority:
The appeal was filed by a former Director and shareholder of the Corporate Debtor challenging the order dated 5th March 2020, which approved the Resolution Plan submitted by Adani Ports Special Economic Zone Limited (APSEZ). The Adjudicating Authority approved the plan with certain modifications, which was contested on the grounds that objections raised by the appellant were not considered.

2. Rejection of the Settlement Proposal by the Committee of Creditors (CoC):
The Corporate Insolvency Resolution Process (CIRP) was initiated on 25th March 2018. During the process, the CoC considered various resolution plans, including a settlement proposal from the promoter's holding company, Balaji Infra Projects Limited (BIPL). The CoC rejected the settlement proposal with 99.68% votes and approved APSEZ's plan with the same percentage. The appellant argued that the CoC did not properly consider the settlement proposal.

3. Compliance with the Insolvency and Bankruptcy Code (I&B Code) and Competition Act, 2002:
The appellant contended that APSEZ's Resolution Plan required prior approval from the Competition Commission of India (CCI) before being approved by the CoC, as mandated by Section 31(4) of the I&B Code. However, the tribunal found that the requirement for CCI approval is directory, not mandatory. The tribunal cited the case "Arcelormittal India Pvt. Ltd. v. Abhijit Guhathakurta" to support this view, stating that the CoC can approve the plan subject to subsequent CCI approval.

4. Commercial Wisdom of the Committee of Creditors:
The tribunal emphasized that the commercial wisdom of the CoC in approving or rejecting a resolution plan is not subject to judicial review. It reiterated the principle established in "Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta & Ors." that the CoC's business decisions are final, provided they comply with the I&B Code. The tribunal found no evidence that the approved plan contravened any legal provisions.

5. Non-consideration of MA 3298 of 2019:
The appellant argued that MA 3298 of 2019, which objected to the rejection of BIPL's proposal and the approval of APSEZ's plan, was not considered. The tribunal found no record indicating that MA 3298 was reserved for judgment. It noted that the issues raised in MA 3298 were already addressed in Appeal No. 139 of 2018, which was decided on 12th March 2020.

Conclusion:
The tribunal dismissed the appeal, affirming that the CoC's decision to approve APSEZ's Resolution Plan was based on commercial wisdom and complied with the I&B Code. It rejected the appellant's arguments regarding the necessity of prior CCI approval and the alleged procedural irregularities. The tribunal upheld the Adjudicating Authority's order approving the Resolution Plan, emphasizing the limited scope of judicial review in such matters.

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