Tribunal upholds Committee of Creditors' Resolution Plan approval via Swiss Challenge Method

The Tribunal dismissed the appeals challenging the approval of the Resolution Plan by the Committee of Creditors (CoC). The Tribunal upheld the CoC's commercial wisdom in approving the plan through the Swiss Challenge Method. It found no manipulation of the evaluation process and deemed the distribution of funds among creditors to be in accordance with the law. The Tribunal concluded that the Resolution Plan was valid and already in implementation, dismissing the appeals as lacking merit and without awarding costs.

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Issues Involved:
1. Approval of the Resolution Plan by the Committee of Creditors (CoC).
2. Alleged manipulation of the Swiss Challenge Method.
3. Admission and treatment of claims by the Resolution Professional.
4. Distribution of funds among creditors.
5. Compliance with procedural requirements and legal precedents.

Summary:

1. Approval of the Resolution Plan by the Committee of Creditors (CoC):
The Appellant challenged the approval of the Resolution Plan by the CoC, alleging that the plan was approved in contravention of the law. The CoC approved the plan using the Swiss Challenge Method, selecting M/s Serveall Land Developers Pvt. Ltd. as the Successful Resolution Applicant (SRA). The Appellant argued that the plan was vague and lacked specific funding sources, making it uncertain and unviable.

2. Alleged manipulation of the Swiss Challenge Method:
The Appellant alleged that the Swiss Challenge Method was manipulated by the Resolution Professional in connivance with the sole secured Financial Creditor, Bank of Baroda. The Appellant claimed that the Evaluation Matrix was rigged to favor the second highest bidder (H2), M/s Serveall Land Developers Pvt. Ltd., by allocating 90% marks on qualitative parameters and only 10% on quantitative parameters.

3. Admission and treatment of claims by the Resolution Professional:
The Appellant's claim of Rs. 1.90 Crores was initially not acted upon by the Resolution Professional, compelling the Appellant to file an application before the Adjudicating Authority. The Authority directed the Resolution Professional to admit the Appellant's claim as an Unsecured Financial Creditor. The Appellant argued that the Resolution Plan was shared with them only after their claim was admitted.

4. Distribution of funds among creditors:
The Appellant contended that the distribution of funds was skewed in favor of the secured Financial Creditor, Bank of Baroda, while the Unsecured Financial Creditors received a meager distribution. The Appellant also argued that the distribution was changed without following due process, violating the Supreme Court judgment in MK Rajagopalan.

5. Compliance with procedural requirements and legal precedents:
The Appellant relied on the Supreme Court judgment in MK Rajagopalan, arguing that non-compliance with procedural requirements had a significant bearing and could not be ignored as mere technicalities. The Appellant sought to set aside the impugned orders and the approved Resolution Plan, requesting permission to submit a new plan.

Tribunal's Findings:
The Tribunal found that the majority of the Appellant's averments fell within the domain of the CoC's commercial wisdom, which is paramount and non-justiciable. The Tribunal noted that the distribution of funds among creditors was in accordance with the CoC's decisions and the law. The Tribunal also observed that the inclusion of the Appellant in the CoC did not invalidate prior decisions. The Tribunal dismissed the appeals, finding no error in the impugned orders, and noted that the Resolution Plan was already under implementation.

Conclusion:
The appeals were dismissed as devoid of merit, with no costs awarded. The Tribunal upheld the commercial wisdom of the CoC and found no procedural irregularities or legal violations in the approval and implementation of the Resolution Plan.

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