Tribunal Upholds Resolution Plan Approval Under I&B Code, Emphasizes CoC's Commercial Decision

The Tribunal upheld the approval of the Resolution Plan under Section 30(6) of the I&B Code, 2016, emphasizing minimal judicial interference in commercial decisions of the CoC. The Appeals challenging the approval, citing lack of Operational Creditors' involvement and inadequate payment, were dismissed. The Resolution Plan, compliant with legal requirements, received CoC approval and was deemed appropriate. The Tribunal affirmed the Adjudicating Authority's decision, highlighting the importance of CoC's commercial wisdom in insolvency proceedings. The parties were directed to bear their own costs as the Appeals lacked merit.

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Issues:
Appeal against approval of Resolution Plan under Section 30(6) of I&B Code, 2016 by Adjudicating Authority without Operational Creditors' involvement in CoC meetings.

Detailed Analysis:

Issue 1: Approval of Resolution Plan
The Appeals challenged the approval of the Resolution Plan under Section 30(6) of the I&B Code, 2016 by the Adjudicating Authority. The Resolution Plan was submitted by the Consortium of Resolution Applicant and was approved on 20.07.2020. The Appellants, Operational Creditors of the Corporate Debtor, were not part of CoC meetings and were not informed about the settlement proposal for their claims. The Resolution Plan proposed a total payment of Rs. 368.5 crore to all stakeholders, with Operational Creditors receiving a meager sum of Rs. 3 crore despite their total claim of Rs. 175.13 crores.

Issue 2: Lack of Involvement in CoC Meetings
The Appellants argued that as Operational Creditors, they were not involved in the deliberative process of CoC meetings, depriving them of the opportunity to oppose the Resolution Plan on its merit. The Adjudicating Authority's approval of the Plan without their participation was deemed as not in accordance with the law.

Issue 3: Compliance with Legal Requirements
The Resolution Applicant's plan was found to be compliant with the technical and commercial requirements of the Request for Resolution Plans (RFRP) and the I&B Code. The plan had the necessary approvals from CoC members, with 67.9% voting in favor of the plan on 27.11.2019. The Resolution Applicant followed the legal procedures and submitted a compliance certificate as per the law.

Issue 4: Judicial Interference
The Tribunal emphasized minimal judicial interference in the commercial wisdom of the CoC, citing previous Supreme Court judgments. The recent judgment highlighted the need to avoid judicial intervention in the framework of the Insolvency and Bankruptcy Code (IBC). The Tribunal concluded that the Appeals lacked merit and upheld the Adjudicating Authority's approval of the Resolution Plan, dismissing the Appeals and closing the associated applications.

In conclusion, the Tribunal upheld the approval of the Resolution Plan, emphasizing the commercial wisdom of the CoC and minimal judicial interference in insolvency proceedings under the I&B Code. The Appeals were dismissed, and the parties were directed to bear their own costs.

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