Resolution plan approval upheld as Regulation 37(ba) restructuring provisions deemed discretionary not mandatory under IBC

NCLAT dismissed appeal challenging approval of resolution plan. Tribunal held that Regulation 37(ba) regarding corporate restructuring through merger, amalgamation, or demerger applies only "as may be necessary" and is not mandatory for all resolution plans. Since appellant failed to demonstrate violation of Section 30(2) IBC, and citing SC precedent that commercial wisdom of Committee of Creditors requires no interference unless plan violates statutory provisions, NCLAT upheld the adjudicating authority's approval of the resolution plan.

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Issues:
Challenge to the Order approving Resolution Plan by Suspended Directors.
Alleged procedural violations by Resolution Professional.
Compliance with Regulation 37(ba) of the Insolvency and Bankruptcy Board of India Regulations.
Approval of Resolution Plan without voting on second Addendum.
Allegations of non-implementation of Resolution Plan by Successful Resolution Applicant.

Analysis:
The judgment involves an appeal by two Suspended Directors of a Corporate Debtor challenging the Order approving the Resolution Plan submitted by Respondent No. 3. The key issues revolve around alleged procedural violations by the Resolution Professional and compliance with Regulation 37(ba) of the Insolvency and Bankruptcy Board of India Regulations. The Appellants raised objections regarding the Resolution Plan's approval without voting on the second Addendum and the non-implementation of the Plan by the Successful Resolution Applicant.

The Appellants contended that the Resolution Professional violated procedural requirements, including not sharing the Valuation Report with the Suspended Management and not putting the second Addendum for voting. They argued that the Resolution Plan should be rejected due to these violations. On the other hand, the Resolution Professional defended their actions, stating that all necessary processes were followed, and there was no breach of Regulation 37(ba) as restructuring clauses are not mandatory in the Plan.

The judgment analyzed Regulation 37(ba) and clarified that the restructuring clause is only required if necessary for insolvency resolution, thus a Plan lacking such provision does not violate the law. It also found that the second Addendum was not voted upon as the Revised Resolution Plan with the first Addendum was approved. The judgment emphasized that interference with the commercial wisdom of the Committee of Creditors is not warranted unless the Plan violates Section 30(2) of the Insolvency and Bankruptcy Code.

Regarding the Valuation Report, it was shared with the CoC members, and no objections were raised, precluding the Appellants from raising valuation issues at this stage. The judgment also noted that the Application for recall of the approved Resolution Plan by the Successful Resolution Applicant was not a ground for consideration in the Appeal. Ultimately, the judgment concluded that there were no grounds to interfere with the Adjudicating Authority's decision to approve the Resolution Plan, dismissing the Appeal for lack of merit.

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