https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770310 https://www.taxtmi.com/caselaws?id=770310 Approval of Resolution Plan - primary objection of the Appellant on the conduct of the RP was that the claims admitted in respect of the two Financial Creditors were not in conformity with their respective financial records and that the RP had manipulatively allowed them to artificially balloon their claims - HELD THAT:- It was only reasonable on the part of the Adjudicating Authority to infer that the apprehensions of the TDB in respect of the claim filed by ISARC stood allayed. We are also inclined to agree with the RP that when there were only two Financial Creditors in the CoC and they had settled their doubts and ambiguities about each other's claim and there was no inter se dispute between them on the quantum of claim, they had actually opted and chosen to put a quietus to the matter. That being the ground situation, the suspended management of the Corporate Debtor has no locus to raise unfounded allegations about the quantum of claims claimed by the Financial Creditors and admitted by the RP. When TDB was fully satisfied about the fairness and reasonableness of the claim filed by the other Financial Creditor, there are no reasons to disagree with the findings returned by the Adjudicating Authority that merely because the Appellant was the personal guarantor of the ex-management, they cannot be seen to unduly persist with their allegations that the claims of the Financial Creditor were inflated and exaggerated to the detriment of the Corporate Debtor. RP failed to effectively discharge his statutory responsibilities under the IBC in not having disclosed crucial material information in the RFRP document with regard to the land on which the hospital of the erstwhile Corporate Debtor was running, in that it was a leased property, the lease having been granted by the Government of Odisha on 02.11.2000 - HELD THAT:- Perusal of the contents of the communication does not in any manner manifest that the RP had committed any breach of the Lease Deed. All that the Government of Odisha had communicated in the said letter to the RP was to take adequate safeguards and precaution that the terms and conditions of Lease Deed were not deviated from or get overrun in any manner. Material placed on record also show that the RP had sent a reply on 29.08.2022 and 18.11.2022 to the Government of Odisha that all the points contained in their letter of 03.09.2022 had been taken cognisance of. There are no material on record which substantiates that the Lessor-Government of Odisha had raised any such objection that the land lease deed has been violated. No permission was either necessary from Government of Odisha since there was no change in the purpose of the use of the land. Neither was the land being put for sale. The business activity of the SRA pursuant to approval of resolution plan was for the same purpose for which Lease Deed had been granted to the suspended management. Furthermore, as to whether the terms of conditions of the Lease Deed had been breached or not is an issue to be examined and determined by the Government of Odisha, the latter being the Lessor - there are no infirmity in the finding returned by the Adjudicating Authority that no breach of the lease deed had been pointed out by the Government of Odisha and that the RP had scrupulously complied to the suggestions and directions of the Government of Odisha which was the Lessor. The approval of the valuation of Corporate Debtor is an exercise which falls under the purview of commercial wisdom undertaken by the CoC. The scope of interference by the Adjudicating Authority in the commercial wisdom exercised by the CoC is minimal. Since the Appellant had no right to vote in the meeting of the CoC, they cannot be said to have suffered from any prejudice for not being provided with the valuation report. Whether the detailed valuation report was placed before the Appellant or not is immaterial and irrelevant since it is only the members of the CoC who were required to exercise the commercial wisdom on the valuation reports placed before them and not the Appellant who did not have the right to exercise their vote. Non-sharing of the valuation reports, as per the CIRP regulations - HELD THAT:- The confidential nature of the fair value and liquidation value of the Corporate Debtor is highlighted in Regulation 35(2) of the CIRP Regulations and the RP is not obligated to share these reports with anyone but for the members of the CoC. The RP had not violated the statutory construct of the IBC in not acceding to the request of the Appellant to provide them with the valuation report. There are no merit in the contention of the Appellant that by not getting access to the valuation reports, they were denied their due - It is settled law that the collective business decision of the CoC cannot be interfered with either by the RP or the Adjudicating Authority. Hence the complaint of the Appellant that their settlement offer did not receive deserve due regard is misplaced and cannot be sustained. The resolution plan was approved with 100% vote share in the 9th CoC meeting on 06.06.2022. The plan having been approved by full majority, the Adjudicating Authority did not commit any error while approving the resolution plan after noting its satisfaction about the plan being compliant to the provisions of the IBC in terms of Section 30(2) of the IBC. Law is now well settled that the jurisdiction of the Adjudicating and Appellate Authorities to interfere with approval of the resolution plan is limited. The scope of judicial review is confined to the provisions contained in Section 30(2) of the IBC for the Adjudicating Authority and Section 61(3) for the Appellate Authority. There is only limited review which can be exercised by the Adjudicating Authority or the Appellate Authority. Conclusion - As long as the statutory provisions of the IBC and the CIRP Regulations framed thereunder are complied with, it is the commercial wisdom of the requisite majority of the CoC which is to negotiate and accept a resolution plan. Once all the mandatory requirements have been duly complied with and taken care of, the Adjudicating Authority cannot deal with the merits of Resolution Plan unless it is found it to be contrary to the express provisions of law and against the public interest. There is neither any material irregularity nor contravention of any provision of law by the CoC which has been justifiably substantiated by the Appellant. In the present case when no valid grounds have been made out to challenge the approval of the resolution plan, the legislative fiat of the IBC that the Adjudicating Authority cannot trespass upon the business decision of the CoC holds ground. The plan has been rightly approved by the Adjudicating Authority on having successfully passed the muster of commercial wisdom of CoC - Appeal dismissed. Case-Laws IBC Wed, 07 May 2025 00:00:00 +0530