TaxTMI 
TaxTMI 
2019 (5) TMI 1515
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....he approval of Resolution Plan submitted by Royale Partners Investment Fund Ltd. (RPIF/Successful Resolution Applicant) by the Committee of Creditors (CoC) of the Corporate Debtor on 10.01.2019 void, illegal and contrary to the provisions of IBC; ii. To direct the CoC of the Corporate Debtor to forthwith consider and conduct a re-vote on the Applicant's Resolution Plan only; iii. To direct the RP and the CoC not to proceed further with the implementation of Royale Partners Investment Fund Ltd.'s Resolution Plan or take any steps in furtherance of decision dated 10.01.2019 of the CoC. (A) Submissions by the Applicant: 3. It is submitted that the Applicant filed a Resolution Plan pursuant to invitation for 'expression of interest' and in accordance with the process document issued by the RP. On 10.01.2019, the resolution Plans of the Applicant as well as RPIF were put to vote before the CoC and the CoC approved the resolution plan of RPIF, despite it not having Competition Commission of India (CCI) approval as required under proviso to S. 31(4) of the Insolvency & Bankruptcy Code, 2016 (Code). S. 31(4) says that: "(4) The resolution ap....
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....s Resolution Plan. 7. The Applicant states that it was orally informed to the CoC on the date of the meeting dated 10.01.2019, that CCI has approved its proposed transaction and formal approval letter is expected shortly. On 11.01.2019, a formal approval was received from CCI and the same has been intimated to the RP on the very same day. However, the damage had already been done as RPIF's plan was approved on 10.01.2019. 8. The Applicant further states that the total value of the Applicant's offer in its resolution Plan is in excess of Rs. 2,200 Crores, including Rs. 1,084 Crores of fresh equity in the Corporate Debtor. It is submitted that the RP is unreasonably favouring the RPIF notwithstanding the question raised on RPIF's financial credibility in view of its failure to submit the earnest money deposit of Rs. 5 Crores, together with the resolution plan submitted on November 24, 2018. 9. The Applicant in the Additional Affidavit filed pursuant to the reply of RP states that its revised resolution plan was not even placed before the CoC for approval due to the fact that the Applicant did not have the approval of the CCI in respect of resolution plan as on th....
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....alue of its assets and the concerns the CoC had vis-à-vis the conditions precedents, value being offered and the viability and feasibility of the resolution, however, the Applicant insisted on the following key conditions precedent: approval of the CCI and approval of this Tribunal for the extinguishment of claims, liabilities and existing contracts and any proceedings against the Corporate Debtor. 13. It is further stated that the 'evaluator' appointed by the CoC presented its evaluation to the CoC wherein the resolution plan of the Applicant scored higher in the evaluation matrix. Therefore, the resolution plan of the Applicant was placed before the CoC for voting on meeting dated 10.01.2019. The CoC rejected the Applicant's claim with 77.87% of the CoC voting against the resolution plan. Only 17.67% of CoC voted in favour of the resolution plan and the rest abstaining from voting. The CoC highlighted that the receivables being assigned to the creditors while having book value of Rs. 700 Crores would be insignificant if the contracts thereto are cancelled as proposed in the plan. Moreover, the offer made by the Applicant was significantly lower than the liqu....
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....The proviso came into force on 17.08.2018 i.e. subsequent to initiation of CIRP. The question is whether this amendment has to take effect retrospectively or prospectively. As a general rule of law, the amendments in a procedural law are to be applied prospectively, unless specified. However, in the matter of CIT v. Vatika Township (P.) Ltd. 367 ITR 466, it was held that the amendments which are beneficial can be applied retrospectively and the amendments in a statute which are onerous in nature or imposes some liability or obligation on a party, can be held to be prospective. Relevant portion of the judgement is reproduced below: "We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This ....
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....approval as on the date of meeting i.e. 10.01.2019 stands rejected. 21. Even otherwise, assuming that the aforesaid amendment was applicable in the present case, as on 10.01.2019 the Applicant itself did not have CCI's approval. CCI's approval was furnished on 11.01.2019, a day after the resolution plan of RPIF was approved. In that scenario, even if we assume that RPIF was ineligible to place a resolution plan before the CoC due to not having CCI's approval, but so was the case of the Applicant. The current position is that the RPIF has also furnished the necessary approval from CCI post the resolution plan was approved by the CoC. 22. It is understood that the plain reading of the proviso to section 31(4) of the Code mandates the approval of CCI prior to approval of resolution plan by CoC as the word used in the statute is 'shall'. However, the intent of the legislature for introducing such mandatory requirement which poses an additional obligation on the resolution applicants is that post the approval of resolution plan, it should not be the case that the implementation of resolution becomes difficult due to absence of necessary approvals. As is said by....
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....mittee shall record the reasons for approving or rejecting a resolution plan" 24. It is understood from the reasons given by the CoC that the feasibility and viability of both the plans presented before it on the date of meeting i.e. 10.01.2019, have been carefully looked into and due application of mind has been done in approving the RPIF's resolution plan. Moreover, in view of the directions given by the Hon'ble Supreme Court in K Sashidhar v. Indian Overseas Bank [2019] 152 SCL 312, the role of the Adjudicating Authority is merely limited to see the compliance of procedural requirements by the RP & the CoC to approve the resolution plan. Commercial wisdom of CoC cannot be interfered with by the Adjudicating Authority. Definitely, it does not mean that Carte Blanche powers are given to RP & the CoC but to apply 'commercial mind' is the forte of the CoC and to apply the 'judicial mind' is forte of the Adjudicating authority. All this Tribunal is entitled to see is whether law as prescribed by the legislature has been complied with or not. The relevant portion of K Shashidhar judgement has been reproduced below: "As aforesaid, upon receipt of a "....