Resolution plan approval upheld as creditor committee's commercial wisdom cannot be challenged under Section 30(2) IBC

The NCLAT dismissed an appeal challenging the approval of a resolution plan. The appellant alleged that the resolution professional failed to properly scrutinize plans and that the Committee of Creditors (CoC) improperly applied commercial wisdom. The NCLAT held that when a resolution plan is approved by CoC with requisite 66% majority after due deliberations, it becomes a binding collective business decision. The tribunal emphasized that CoC's commercial wisdom cannot be fettered, and the Adjudicating Authority has limited jurisdiction in reviewing resolution plans under Section 30(2) of IBC. Creditor haircuts do not violate statutory provisions. The court found no transgression of rules causing miscarriage of justice, affirming the resolution plan approval.

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Issues Involved:
1. Whether the RP failed in his duties in steering the CIRP in a procedurally correct manner.
2. Whether the CoC failed to apply its commercial wisdom in a proper manner.
3. Whether the Adjudicating Authority erred in approving the resolution plan of the SRA.

Issue-Wise Detailed Analysis:

1. Whether the RP failed in his duties in steering the CIRP in a procedurally correct manner:
The Appellants argued that the RP did not ensure that the interests of all stakeholders were protected before placing the resolution plan of the SRA to the CoC for approval. They contended that the RP failed to inform the CoC that the resolution plan did not pass on the benefit of FSI and TDR to the home buyers and that the plan only maximized the benefits of Respondents No. 2 and 3, burdening the home-buyers with additional payments. However, the tribunal found that the RP had given sufficient opportunity to resolution applicants and had published Form G five times. The minutes of the 15th CoC meeting showed that the CoC was apprised of the change in FSI availability, and the PRAs had the opportunity to factor in this increase while formulating their plans. Thus, the tribunal concluded that there was no requirement for the RP to specifically instruct the PRAs to consider this factor, and the RP had discharged his duties appropriately.

2. Whether the CoC failed to apply its commercial wisdom in a proper manner:
The Appellants contended that the CoC ignored the plea of the home-buyers and that the scheme of Aanya Real Estate Pvt. Ltd. offered better returns. They argued that the CoC's decision was influenced by Respondent No. 2, who had a dominant vote share, and that the decision was not collective but rather unilateral. The tribunal noted that the CoC meetings were held timely, and all three PRAs were given equal opportunity to present their plans. The CoC's decision to approve the plan of the SRA was preceded by extensive negotiations, a thorough comparative analysis of all plans, and satisfaction that the plans were compliant with the IBC provisions. The tribunal found no evidence of collusion or unfair treatment of the home-buyers and upheld the CoC's decision as a collective business decision made with the requisite majority.

3. Whether the Adjudicating Authority erred in approving the resolution plan of the SRA:
The Appellants argued that the Adjudicating Authority failed to consider their objections and that the plan did not address the interests of all stakeholders. They contended that the plan provided only a lumpsum amount to unsecured financial creditors, causing prejudice to their interests. The tribunal emphasized that the commercial wisdom of the CoC is paramount and not subject to judicial review, as long as the mandatory statutory requirements are met. The tribunal found that the resolution plan met all the mandatory requirements under Section 30(2) of the IBC and that the Adjudicating Authority had limited jurisdiction to interfere with the CoC's commercial decisions. The tribunal concluded that there was no contravention of law or material irregularity in the approval of the resolution plan and dismissed the appeals.

Conclusion:
The tribunal held that the RP had discharged his duties appropriately, the CoC had applied its commercial wisdom judiciously, and the Adjudicating Authority did not err in approving the resolution plan. The appeals were dismissed, and the impugned order was upheld.

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