NCLAT upholds resolution plan approval with 97.54% creditor vote, reaffirms limited judicial interference under Section 30(2) IBC

NCLAT dismissed appeal challenging resolution plan approval. The plan was approved by Committee of Creditors with 97.54% vote share. Tribunal held that commercial wisdom of CoC in approving resolution plans cannot be lightly interfered with. Adjudicating Authority's jurisdiction to interfere with approved resolution plans is limited to Section 30(2) IBC requirements. Since the resolution plan met Section 30(2) requirements and was properly approved by CoC, no grounds existed to interfere with the adjudicating authority's approval order.

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Issues Involved:

1. Entitlement of the ex-Director to access the Resolution Plan and related documents.
2. Allegation of undervaluation of assets and concealment of Fixed Deposit receipts by the Resolution Professional (RP).
3. Approval of the Resolution Plan by the Committee of Creditors (CoC) and the role of the Adjudicating Authority.

Issue-wise Detailed Analysis:

1. Entitlement of the ex-Director to access the Resolution Plan and related documents:

The Appellant, an ex-Director of the Corporate Debtor, challenged the denial of access to the Resolution Plan and other related documents. The Appellant relied on the Supreme Court judgment in 'Vijay Kumar Jain Vs. Standard Chartered Bank & Ors.', which established that members of the suspended Board of Directors are entitled to relevant information, including the Resolution Plan, to participate effectively in the Corporate Insolvency Resolution Process (CIRP). However, the Tribunal found that the Appellant, having resigned before the initiation of the CIRP, did not qualify as a member of the suspended Board and was not entitled to such documents. The Tribunal emphasized that the Vijay Kumar Jain judgment pertained to directors who were in office at the commencement of the CIRP, which was not the case for the Appellant. Consequently, the Tribunal dismissed the Appellant's request for the Resolution Plan.

2. Allegation of undervaluation of assets and concealment of Fixed Deposit receipts by the RP:

The Appellant alleged that the RP undervalued the Corporate Debtor's assets by not accounting for approximately Rs. 20 Crores in Fixed Deposit Receipts (FDRs) used as Performance Guarantees. The Appellant claimed these were concealed from the CoC. The RP countered that no proceeds from these FDRs were received during the CIRP, and all relevant facts were disclosed to the CoC. The Tribunal noted the RP's efforts to recover the FDR amounts from the Public Works Department (PWD), which had not responded. The Tribunal found no merit in the Appellant's claims of undervaluation or concealment, as the RP had followed CIRP regulations for valuation, and the CoC had approved the Resolution Plan with knowledge of the RP's disclosures.

3. Approval of the Resolution Plan by the CoC and the role of the Adjudicating Authority:

The Tribunal upheld the CoC's approval of the Resolution Plan, which received a 97.54% vote in favor. The Tribunal reiterated the principle that the commercial wisdom of the CoC should not be interfered with lightly, and the Adjudicating Authority's role is limited to ensuring compliance with Section 30(2) of the Insolvency and Bankruptcy Code. The Tribunal found that the Resolution Plan met all statutory requirements and dismissed the Appellant's challenge to its approval. The Tribunal emphasized that the Appellant, not being a suspended director at the time of CIRP initiation, had no standing to contest the Resolution Plan's approval.

Conclusion:

Both appeals filed by the Appellant were dismissed. The Tribunal found no grounds to interfere with the Adjudicating Authority's orders, which were consistent with legal precedents and the statutory framework governing insolvency proceedings. The Tribunal's decision reinforced the limited scope of judicial intervention in matters of commercial wisdom exercised by the CoC.

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