Tribunal Upholds Approval of Sify Technology's Resolution Plan Under Insolvency & Bankruptcy Code

The Tribunal upheld the Adjudicating Authority's approval of the Resolution Plan submitted by Sify Technology Limited, dismissing the appellant's challenge. It was determined that the Resolution Plan complied with the Insolvency and Bankruptcy Code, respected the commercial wisdom of the Committee of Creditors, and adequately considered stakeholders' interests, including provisions for employees and workmen. The Tribunal emphasized the importance of the CoC's decision-making authority in approving the Plan, which was found to be feasible, viable, and in accordance with the law.

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Issues Involved:

1. Approval of the Resolution Plan.
2. Change in the nature of the business of the Corporate Debtor.
3. Compliance with the Insolvency and Bankruptcy Code (IBC) and related regulations.
4. Consideration of stakeholders' interests.
5. Commercial wisdom of the Committee of Creditors (CoC).

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan:

The challenge in the appeal was against the approval of the Resolution Plan by the Adjudicating Authority (NCLT). The Resolution Professional filed MA 2972/2019 for the approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016, read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Adjudicating Authority approved the Resolution Plan submitted by Sify Technology Limited, which was contested by the appellant.

2. Change in the Nature of the Business of the Corporate Debtor:

The main objection raised by the appellant was that the Resolution Applicant intended to change the business of the Corporate Debtor from printing to running Data Centers. The Adjudicating Authority observed that there is nothing in the Code that prevents a Resolution Applicant from pursuing a different line of business. The Code only contemplates that the Corporate Debtor shall continue to be run as a going concern, which does not bind the Resolution Applicant to the erstwhile business, especially when the existing business is obsolete.

3. Compliance with the Insolvency and Bankruptcy Code (IBC) and Related Regulations:

The appellant argued that the Resolution Plan did not comply with the intent, object, and purpose of the Code. The Adjudicating Authority, however, found that the Resolution Plan was compliant with Section 30(2) of the Code and that the commercial wisdom of the CoC should be respected. The CoC had approved the Resolution Plan with a majority of 70.5%. The Tribunal emphasized that the limited judicial review available is to ensure that the CoC has taken into account the need to keep the Corporate Debtor as a going concern, maximize the value of its assets, and consider the interests of all stakeholders.

4. Consideration of Stakeholders' Interests:

The appellant contended that the Resolution Plan did not protect the interests of all stakeholders, particularly the workmen and employees. The Tribunal noted that the Resolution Plan provided for the continuation of services for approximately 70 active employees and workmen and made provisions for their training and upskilling. The Plan also earmarked substantial amounts for workmen and employees, addressing their interests adequately.

5. Commercial Wisdom of the Committee of Creditors (CoC):

The Tribunal reiterated that the commercial wisdom of the CoC is paramount and not subject to judicial review, except on limited grounds specified in Section 61(3) of the IBC. The CoC's decision to approve the Resolution Plan submitted by Sify was based on a thorough evaluation of the feasibility and viability of the Plan. The Tribunal emphasized that the CoC's decision, taken by a majority vote, reflects a collective business decision that should not be interfered with by the Adjudicating Authority.

Conclusion:

The Tribunal concluded that the Resolution Plan approved by the CoC met the requirements specified under Section 61(3) of the IBC. The Plan was found to be feasible and viable, balancing the interests of all stakeholders, and not in contravention of any law. The Tribunal dismissed the appeal, upholding the Adjudicating Authority's approval of the Resolution Plan.

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