Resolution plan rejection upheld as Committee of Creditors' commercial decision cannot be judicially reviewed absent statutory violations

NCLAT dismissed the appeal challenging rejection of appellant's resolution plan. The CoC properly considered appellant's plan after he submitted Rs.1 crore EMD following 30.09.2022 order. Minutes of 8th and 9th CoC meetings showed thorough deliberation of all plan aspects including proposed sale of factory with bank charge. Appellant's plan failed to secure requisite votes. NCLAT held CoC's commercial wisdom in approving resolution plans is not subject to judicial review except for statutory violations under Section 30(2). Swiss Challenge Method adoption is discretionary and not mandatory. No infirmity found in adjudicating authority's approval of successful resolution plan.

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Issues Involved:
1. Approval of the Resolution Plan by the Adjudicating Authority.
2. Rejection of the Appellant's Resolution Plan by the Committee of Creditors (CoC).
3. Alleged non-consideration of the Appellant's Resolution Plan by the CoC.
4. Adoption of the Swiss Challenge Method.
5. Commercial wisdom of the CoC in approving the Resolution Plan.
6. Judicial review of the CoC's decision.

Summary:

Issue 1: Approval of the Resolution Plan by the Adjudicating Authority
The Appellant challenged the order dated 05.01.2024, where the Adjudicating Authority approved the Resolution Plan submitted by Respondent No.16, 'Eastern Copper Manufacturing Company Pvt. Ltd.', and rejected the Appellant's Resolution Plan. The Adjudicating Authority's decision was based on the commercial wisdom of the CoC, which had approved the Resolution Plan of Respondent No.16 with 86.02% votes.

Issue 2: Rejection of the Appellant's Resolution Plan by the CoC
The Appellant's Resolution Plan was initially non-compliant due to the absence of the Earnest Money Deposit (EMD) of Rs.1 Crore. After the Adjudicating Authority's order on 30.09.2022, the Appellant submitted the EMD and his plan was considered in the 8th and 9th CoC meetings. Despite this, the CoC rejected the Appellant's plan with a vote share of 73.41% against it.

Issue 3: Alleged Non-Consideration of the Appellant's Resolution Plan by the CoC
The Appellant argued that his plan was not duly considered. However, the minutes of the 8th and 9th CoC meetings indicated that the plan was discussed, and the Appellant was present to explain his plan. The CoC deliberated on the plan, including the proposed sale of the Calcutta factory, and found it not feasible or viable.

Issue 4: Adoption of the Swiss Challenge Method
The Appellant contended that the Swiss Challenge Method was not adopted for his plan. The Tribunal noted that this method was used when the Appellant's plan was non-compliant. The CoC's decision not to adopt the Swiss Challenge Method for the Appellant's plan was within its discretion.

Issue 5: Commercial Wisdom of the CoC in Approving the Resolution Plan
The Tribunal emphasized that the commercial wisdom of the CoC in approving a Resolution Plan is paramount and not subject to judicial review, except on limited grounds such as violation of statutory provisions. The CoC's decision to approve the plan of Respondent No.16 was based on thorough deliberation and consideration of all aspects, including plan value and feasibility.

Issue 6: Judicial Review of the CoC's Decision
The Tribunal reiterated that the commercial decisions of the CoC are non-justiciable unless there are glaring omissions or statutory violations. The Adjudicating Authority and the Tribunal found no such deficiencies in the CoC's decision-making process.

Conclusion:
Both Appeals were dismissed, affirming the approval of the Resolution Plan submitted by Respondent No.16 and the rejection of the Appellant's plan. The Tribunal upheld the commercial wisdom of the CoC and found no grounds for judicial interference.

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