TaxTMI 
TaxTMI 
2020 (8) TMI 547
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....ing Authority has allowed application filed by the 'Resolution Professional' for approval of the 'Resolution Plan' submitted by 'Adani Ports Special Economic Zone Limited' ("APSEZ" for short) (Respondent No.4). The impugned order is assailed on the ground that the Adjudicating Authority has failed to consider objections raised by the Appellant to the 'Resolution Plan' submitted by 'APSEZ' as also the objections raised by the Appellant qua the rejection of settlement proposal submitted by 'Balaji Infra Projects Limited' ('BIPL' for short). 2. For appreciating the controversy raised in this appeal, it would be appropriate to make a brief reference to the material facts bearing upon the approval of the 'Resolution Plan' of 'APSEZ' by the Adjudicating Authority. 3. The 'Corporate Insolvency Resolution Process' of the 'Corporate Debtor' was initiated in terms of admission order dated 25th March, 2018 passed by the Adjudicating Authority in C.P. (IB) No. 1382/MB/2017. The admission order came to be challenged before this Appellate Tribunal in Appeal being Company Appeal (AT) (Insolvency) No. 139 of 2018 preferred by the present Appellant. During the pendency of the aforesaid appeal, so....
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....itors' with 99.68% votes. Thereafter, the 'Resolution Plan' of the Respondent No.4 approved by the 'Committee of Creditors' with requisite majority was placed by the 'Resolution Professional' before the Adjudicating Authority by filing an application under Section 31 of the 'I&B Code' and the same was approved by the Adjudicating Authority in terms of the impugned order with certain modifications and the same has been assailed through the medium of instant appeal. 4. Learned counsel for the Appellant submits that in terms of the order dated 11th October, 2019, the Adjudicating Authority had reserved orders in both MA No. 3270 & MA No. 3298 of 2019. Thereafter, the constitution of the Bench changed due to elevation of the Judicial Member and both MAs were reheard on 15th January, 2020 but in the order sheet reserving of the order in regard to MA No. 3298 of 2019 was omitted. 5. We have scanned through the record to find out the factual position. It appears from copy of order dated 15th January, 2020 forming Annexure A-31 (Page 381 Vol.II of the appeal paper book) that the re-constituted Bench, after re-hearing the matter, reserved orders on MA 3270 of 2019 and MA 1560 of 2019. The....
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....hority has failed to consider whether or not Competition Commission of India's approval has been obtained as required in proviso to Section 31 (4) of the 'I&B Code'. It is further submitted that MA No. 3298 filed by the Appellant is still pending before the Adjudicating Authority and any action with respect to the approved Resolution Plan is illegal and non-est. It is submitted on behalf of Appellant that BIPL has not been declared as a wilful defaulter by any Bank and the Settlement Proposal has been submitted in terms of order dated 24th July, 2019 passed by this Appellate Tribunal. Learned counsel for the Appellant submits that the impugned order, being unsustainable, is liable to be set aside. 7. Per contra, it is submitted on behalf of the 'Committee of Creditors' that three Resolution Applicants namely- (i) 'Jawaharlal Nehru Port Trust' ("JNPT" for short), (ii) 'APSEZ', (iii) 'Veritas India Limited' ("Veritas" for short) submitted their Resolution Plans before the 'Committee of Creditors'. Resolution Plan of 'JNPT' was approved by the 'Committee of Creditors'. However, the Adjudicating Authority proposed additional conditions to be complied with by 'JNPT', which it was unabl....
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....ame voting percentage of 'Committee of Creditors' i.e. 99.68% which has approved the Resolution Plan of 'APSEZ' and reasons for rejection of Appellant's plan and approval of plan of Respondent No.4 are reflected in the minutes dated 13th September, 2019 of 22nd 'Committee of Creditors' meeting. It is further submitted that the objections taken by the Appellant in MA 3298/2019 are a mere reiteration of the objections already raised by him before this Appellate Tribunal in Appeal No. 139 of 2018 which have been considered in its Judgment dated 12th March, 2020. The Appellant's plan has been deliberated in various Committee of Creditors' meeting whereafter it has been rejected under Section 12A by an overwhelming majority. This Appellate Tribunal declined to interfere with the commercial wisdom of 'Committee of Creditors' as reflected in Judgment dated 12th March, 2020. Lastly, it is submitted that the admitted dues of the Financial Creditors being over Rs. 3000 Crores, approval of the Resolution Plan of the Respondent No.4 by the Adjudicating Authority would not only satisfy portion of claim of the Creditors but also revive the Corporate Debtor. 8. It is submitted on behalf of the R....
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....resolution of the 'Corporate Insolvency' and revival of the 'Corporate Debtor' thereby jeopardising the legitimate interests of all stakeholders and defeating the object of legislation. This is besides the fact that each day's delay entails the consequences of increasing the liabilities and depleting the resources/ diminishing the value of assets of the Corporate Debtor. We say so as in the instant case this is the third attempt to stall the process, the earlier two efforts on the part of promoters having fizzled out. 10. Fathoming through the depths of the recorded versions of events, we find that in the 'Corporate Insolvency Resolution Process' against 'Dighi Port Limited' at the instance of 'DBM Geotechnics and Constructions Limited'- an 'Operational Creditor' of the 'Corporate Debtor'. 'JNPT', APSEZ' and 'Veritas Consortium' submitted their Resolution Plans. It happened in the 7th meeting of the 'Committee of Creditors' held on 22nd November, 2018. On evaluation, the Resolution Plan submitted by 'APSEZ' got the first ranking with 60.46%. The Resolution Plan submitted by 'APSEZ' being declared as the Highest Evaluated Compliant Resolution Plan was put to vote on 31st January, 2....
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....', pursuant to the order of this Appellate Tribunal, directed the promoters to submit their final settlement offer along with Earnest Money Deposit. The Resolution Applicants too were directed to submit their respective improved Resolution Plans or revalidate their previous Resolution Plans. Subsequently, 'JNPT' withdrew from the fray and 'APSEZ' offered Rs. 650 Crores upfront payment in addition to payment of CIRP cost and dues payable to the 'Maharashtra Maritime Board' in priority to other dues whereas 'Veritas Consortium' offered Rs. 50 Crores as upfront payment and Rs. 475 Crores as deferred payment starting from 2024 with 10% equity besides payment of CIRP costs and dues of 'Maharashtra Maritime Board'. The promoter offered Rs. 680 Crores to the Financial Creditors besides Rs. 50 Crores towards the CIRP costs and payment to 'Operational Creditors'. The plan of the promoter was in the nature of a settlement offer. Admittedly, the promoter failed to submit an Earnest Money Deposit as required by the 'Committee of Creditors' at its 19th meeting. This was in addition to failure on the part of promoter to provide clarity as regards the source of funds. 'Committee of Creditors', in....
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....dation value - which in most cases would amount to nil after secured creditors have been paid - would certainly not balance the interest of all stakeholders or maximise the value of assets of a corporate debtor if it becomes impossible to continue running its business as a going concern. Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or subclass of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements ref....
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....with in Judgment delivered on 12th March, 2020. Thus viewed, the grievance on this score does not survive for consideration anymore and cannot be held to clothe the Appellant with a right to raise the plea of material irregularity in Corporate Insolvency Resolution Process vitiating the entire exercise culminating in approval of the Resolution Plan of 'APSEZ'. 14. Now adverting to the issue raised by the Appellant in regard to permission under the Competition Act, 2002 from the Competition Commission of India prior to the approval of the 'Resolution Plan' by the 'Committee of Creditors', be it seen that the approved Resolution Plan has not been found to be violative of the mandate of Section 30(2) (e) of the 'I&B Code'. The finding in regard to the approved Resolution Plan, not being in conflict with any provision of law in force, has been affirmed hereinabove. In so far as the Resolution Plan being compliant with proviso to Section 31(4) of the 'I&B Code' is concerned, there is no doubt that a Resolution Plan containing a provision for combination falling within the ambit of Section 5 of the 'Competition Act, 2002', prima facie appears to require prior approval of the Competition....
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....ommittee of Creditors. It is manifestly clear that a Resolution Plan containing provision for combination has been treated as a class apart requiring approval of the Competition Commission of India even prior to such Resolution Plan being approved by the Committee of Creditors. However, treating such requirement as mandatory is fraught with serious consequences. The issue regarding the statutory requirement of a Resolution Plan containing a provision for combination requiring prior approval of the Competition Commission of India even before such Resolution Plan is approved by the Committee of Creditors, being not mandatory and only directory in nature stands addressed by this Appellate Tribunal in "Arcelormittal India Pvt. Ltd. v. Abhijit Guhathakurta─ Company Appeal (AT) (Insolvency) No. 524 of 2019". Para 15 which is relevant for our purposes, is reproduced hereunder: "15. We have noticed and hold that proviso to subsection (4) of Section 31 of the 'I&B Code' which relates to obtaining the approval from the 'Competition Commission of India' under the Competition Act, 2002 prior to the approval of such 'Resolution Plan' by the 'Committee of Creditors', is directory and not....