2022 (6) TMI 209 - Tri - Insolvency and Bankruptcy

Tribunal Upholds Creditors' Decision on Resolution Plan Rejection, Emphasizes CoC Authority

The Tribunal upheld the Committee of Creditors' decision to reject the Applicant's resolution plan, emphasizing the CoC's exclusive authority in ... Approval of Resolution Plan - Seeking reconsideration of resolution plan submitted by the resolution applicant within the parameters of the provisions of the Code as required under regulation 39(3) of the CIRP Regulations, 2016 - alternatively seeking to place a revised resolution plan in consultation with the Committee of Creditors for the resolution of the Corporate Debtor - HELD THAT:- In the present case it is undisputed fact the Resolution Plans submitted by both the PRAs have been rejected by CoC. It is well settled that evaluation and acceptance of a resolution plan is exclusive domain of CoC who is expected to apply best of its commercial wisdom and arrive at appropriate decision. Further, RP is agreed upon that unsuccessful Resolution Applicant does not have any vested right for consideration or approval of its resolution plan. Accordingly, having regard to the judgment of Hon'ble Apex Court in Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors. [2018 (10) TMI 312 - SUPREME COURT] and submissions made by RP, there are no merits in contentions of the Applicant in present. Application dismissed. Issues Involved:1. Reconsideration of the resolution plan by the Committee of Creditors (CoC).2. Alleged non-compliance by the Resolution Professional with the CIRP Regulations.3. Eligibility and due diligence of the Resolution Applicant under Section 29A of the Insolvency and Bankruptcy Code.4. Suppression of material facts by the Resolution Applicant.5. Vested rights of the Resolution Applicant to have its resolution plan considered.Issue-wise Detailed Analysis:1. Reconsideration of the resolution plan by the Committee of Creditors (CoC):The Applicant sought directions for the CoC to reconsider its resolution plan or allow it to submit a revised plan. The Applicant contended that the CoC did not follow the provisions of Regulation 39(3B) of the CIRP Regulations, which mandates placing the resolution plan with the highest votes for re-voting. The Tribunal noted that both resolution plans were rejected by the CoC with equal votes, and thus, Regulation 39(3B) was not applicable. The Tribunal upheld the CoC's decision, emphasizing that the evaluation and acceptance of a resolution plan fall within the exclusive domain of the CoC, which exercises its commercial wisdom.2. Alleged non-compliance by the Resolution Professional with the CIRP Regulations:The Applicant alleged that the Resolution Professional failed to conduct the Corporate Insolvency Resolution Process (CIRP) in accordance with the CIRP Regulations, specifically Regulation 39(3B). The Tribunal found no merit in this contention, as the scenario of both plans receiving equal votes was not covered under Regulation 39(3B). The Tribunal also noted that the CoC's decision-making process is non-justiciable, as per the Supreme Court judgment in Jaypee Kensington Boulevard Apartments Welfare Association & Ors v. NBCC (India) Ltd. & Ors.3. Eligibility and due diligence of the Resolution Applicant under Section 29A of the Insolvency and Bankruptcy Code:The Applicant argued that the Resolution Professional sought additional details for determining eligibility under Section 29A after issuing the list of Prospective Resolution Applicants (PRAs), which was beyond his powers. The Tribunal observed that the Resolution Professional was within his rights to seek further information to ensure compliance with Section 29A. The Tribunal noted that the final list of eligible PRAs included the Applicant, and the CoC allowed the Applicant to continue in the process to avoid litigation.4. Suppression of material facts by the Resolution Applicant:The Resolution Professional accused the Applicant of suppressing material facts, particularly regarding criminal proceedings and the blacklisting of a related party by the South Delhi Municipal Corporation (SDMC). The Tribunal found that the Applicant's failure to disclose these facts was significant. The Tribunal highlighted that the CoC was informed of these issues but chose to allow the Applicant to continue in the process.5. Vested rights of the Resolution Applicant to have its resolution plan considered:The Tribunal reiterated that an unsuccessful Resolution Applicant does not have any vested right for consideration or approval of its resolution plan. This principle was upheld in the Supreme Court judgment in Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors. The Tribunal concluded that the Applicant's contentions lacked merit and dismissed the application.Conclusion:The Tribunal dismissed the application filed by the Applicant, finding no merit in the contentions raised. The Tribunal emphasized the exclusive domain of the CoC in evaluating and accepting resolution plans and upheld the CoC's decision to reject the Applicant's resolution plan. The interim order dated 15.03.2022 was vacated, and no order as to costs was made.