2024 (4) TMI 1363 - Tri - IBC

Approval of Resolution Plan confirms CoC choice; plan validated, non-plan claims extinguished and moratorium lifted.

Approval of a resolution plan approved by the committee of creditors is subject to limited judicial scrutiny confined to whether the plan meets the ... Approval of the Resolution Plan - limited judicial review of Committee of Creditors' commercial decision - Extinguishment of claims on approval of Resolution Plan - vesting of management and affairs on approval - cessation of moratorium - Reverification of claims and effect on plan - Performance security under CIRP Regulations - HELD THAT:- In this case three Resolution Plans had been put to vote and the Resolution Plan submitted by 'Macrotech Developers Limited' received highest votes (100%) and hence this Resolution Plan is considered as approved by the CoC. Section 30(6) of the Code enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. section 31 of the Code deals with the approval of the Resolution Plan by the Authority if it is satisfied that the Resolution Plan as approved by the CoC under section 30(4) meets the requirements provided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan as approved by the CoC meets the above requirements. In K Sashidhar vs. Indian Overseas Bank and Ors. [2019 (2) TMI 1043 - SUPREME COURT] the Hon'ble Apex Court held that if the CoC had approved the Resolution Plan by the requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority. On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan, as approved by the CoC, meets the requirements specified in Section 30(2). The Hon'ble Apex Court further observed that the role of the NCLT is 'no more and no less'. The Hon'ble Apex further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan 'as approved' by the requisite percent of voting share of financial creditors. Even in that enquiry the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. The legislature, consciously, has not provided any other ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the Adjudicating Authority. Thus, we are of the considered view that the instant Resolution Plan meets the requirements of Section 30(2) of the Code and the Regulations 37, 38, 38(1A) and 39(4) of the CIRP Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. We, therefore, allow the Application. In terms of the judgment of Hon'ble Supreme Court in the matter of Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited [2021 (4) TMI 613 - SUPREME COURT], on the date of the approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the Resolution Plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which are not a part of the Resolution Plan. Accordingly, no person including the Central Government, any State Government or any local authority, guarantors and other stakeholders, will be entitled to initiate or continue any proceedings in respect to a claim prior to CIRP which is not a part of the Resolution Plan. The approval of the Resolution Plan shall not be construed as waiver of any future statutory obligations and shall be dealt with by the appropriate Authorities in accordance with law. The Corporate Debtor may obtain necessary approval required under any law for the time being in force from the appropriate Authority within a period of one year from the date of approval of the Resolution Plan. The moratorium declared under Section 14 of the Code shall cease to have effect from this date. The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with the copy of this order for information. Issues: Whether the Resolution Plan submitted by Macrotech Developers Limited, as approved by the Committee of Creditors, meets the requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 and related CIRP Regulations and whether the Tribunal should approve the Resolution Plan under Section 31 of the Code.Analysis: The Tribunal examined the Resolution Plan and the record of the CIRP including voting by the Committee of Creditors, compliance with Section 30(2) of the Code, eligibility under Section 29A, revised claim amounts following NCLAT directions (rate of interest adjustment) and relevant CIRP Regulations (including Regulations 36B(4A), 37, 38, 38(1A), 39(3B) and 39(4)). The Tribunal considered statutory parameters for approval under Section 31, settled principles limiting the Adjudicating Authority's role to scrutiny under Section 30(2) (as per K. Sashidhar and Essar Steel precedents), verification of admitted claims and the plan's provisions for payment of CIRP costs, operational and financial creditor payouts, implementation mechanisms, performance security and treatment of avoidance/ litigation recoveries pursuant to provisions of the Code.Conclusion: The Tribunal concluded that the Resolution Plan submitted by Macrotech Developers Limited satisfies the requirements of Section 30(2) of the Code and the applicable CIRP Regulations, is not in contravention of Section 29A, and therefore the Application seeking approval of the Resolution Plan is allowed; the Resolution Plan is approved and binding as provided in the order.