TaxTMI 
TaxTMI 
2021 (4) TMI 594
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....onal Company Law Tribunal, Mumbai Bench - II), in MA 2972/2019 in CP (IB) No. 82 of 2018 and MA 3137 of 2019 in MA 2972 of 2019 in CP (IB) No. 82 of 2018. 2. Aggrieved by the Impugned Order dated 20.01.2020 in MA 3724/2019 in CP (IB) No. 82/MB/2018, preferred by the Next Orbit Ventures Fund opposing the approval of the Resolution Plan submitted by another Resolution Applicant "Sify Technology Limited", Company Appeal (AT) (Insolvency) No. 417 of 2020 is filed by the Appellant herein. 3. MA 2972 of 2019 was filed by the Resolution Professional of Print House (India) Pvt. Ltd. (the 'Corporate Debtor') by invoking the provisions of Section 30(6) of the Insolvency and Bankruptcy Code, 2016 ('in Short the Code') read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India. (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, for approval of the Resolution Plan in respect of Print House (India) Pvt. Ltd., against whom Corporate Insolvency Resolution Proceedings (CIRP) has been initiated vide an Order dated 09.10.2018 in CP (IB) No. 82/MB.II/2018. MA 3137/2019 in MA 2972/2019 was filed by the Suspended Directors and Promotors of the Corporate Debtor....
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....isdom of the Committee of Creditors which has approved the Resolution Plan should be respected, subject to the limited judicial review that is available to us. 52. In this view of the matter and having evaluated the Resolution Plan through the limited window of Section 30(2) of the Code available to us, we do not see any reason to interfere with the decision of the CoC taken after due consideration. This Adjudicating Authority does no exercise appellate jurisdiction over the decisions of the Committee of Creditors."...... "54. For these reasons, the Application in MA 3137 fails, and hence the same is dismissed, but without costs. MA No. 2972/2019 is APPROVED as stated in para 42 supra." Submissions of the Learned Counsel for the Appellant: 4. Learned Counsel for the Appellant vehemently contended that the Learned Adjudicating Authority has erred in approving a Resolution Plan which completely changed the nature of the business of the ''Corporate Debtor'' and is therefore in contravention to the objective of the Code, which is 'Resolution', maximization of the value of assets of the ''Corporate Debtor'', 'promoting entrepreneurship, availability of credit and....
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....had requested SIFY to resubmit the revised Plan after carrying out necessary modifications/corrections in the Plan to make it compliant with the Code. 6. Learned Counsel for the Appellant further placed reliance on the 16th CoC Meeting deliberations which are observed as follows; "With regard to observations made in previous meeting on Resolution Plan submitted by Sify about their intension not to continue with existing business of the 'Corporate Debtor' and start new business activity of developing Data Centers at the land of the 'Corporate Debtor', the representatives of Sify informed the meeting that they have relooked into this matter and will suitably change their Resolution Plan to provide for continuation of existing business of the 'Corporate Debtor'. After discussion, the Committee decided to give some more time to resubmit the revised Resolution Plan; accordingly, the Sify representatives were asked to resubmit their revised Resolution Plan by 5:00 p.m. on 21.08.2020." 7. Learned Counsel contended that the Resolution Professional and the CoC approved the Plan despite the fact that the Plan did not provide for 'continuation of existing business of t....
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....the Resolution Plan of both the Appellant and the third Respondent; that on 16.08.2019 in the 15th CoC Meeting, the Resolution Professional tabled his Compliance Report after examining both the Resolution Plans and it was suggested that the Resolution Applicant make certain corrections/modifications in their Plan to make it compliant with the Code and give a revised proposal by 19.08.2019; that in the 16th CoC Meeting held on 19.08.2019 the representative of SIFY informed that they were in process of finalizing the revised Resolution Plan and needed some time to submit the same; that the CoC unanimously agreed to discuss the Appellant's revised bid and convened a Meeting for 21.08.2019. 10. Learned Counsel submitted that on 21.08.2019 in the 17th CoC Meeting, though an opportunity was given to the Appellant to submit a revised Plan, the Appellant refrained from coming to the Meeting and requested additional time beyond 22.08.2019 which was denied by the CoC and it was requested that the same be submitted by 22.08.2019. On 26.08.2019 in the 18th CoC Meeting after going through various aspects of both the plans, submitted by the Appellant and SIFY, CoC approved the Resolution Plan....
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....llant herein is a 'fund' and neither a Company nor a trustee and therefore the Appeal preferred by them is not maintainable. Submissions of the Learned Counsel appearing for the SIFY 14. The submissions of the Learned Counsel appearing for the SIFY, the Successful Resolution Applicant is as hereunder:- * The Learned Counsel submitted that the plant and machinery used by the 'Corporate Debtor Company' and the printing technology employed by the Company had become obsolete on account of which the business suffered and revenues reduced from 32.2 Crs. (FY 2014) to 4.1 Cr. (FY 2018) and therefore 'SIFY' sought to invest large amounts of money to revive the 'Corporate Debtor' and integrate the obsolete printing business with the digital Data Centers. * The business plan reproduced by the Adjudicating Authority envisages that the scope and intent of the Code has been met by 'SIFY'. Assessment: 15. Heard all parties at length and perused the Written Submissions filed. 16. The main point for consideration in this Appeal is whether the Resolution Plan approved under Section 31 by the Learned Adjudicating Authority is in contravention with the scope and object....
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....te insolvency resolution process of a corporate debtor - (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred Under Section 61 or Section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;] (c) provides for the management of the affairs of the corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. Explanation. - For the purposes of Clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of th....
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.... (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority. 31. Approval of resolution plan. - (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors Under Sub-section (4) of Section 30 meets the requirements as referred to in Subsection (2) of Section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan: Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this Sub-section, satisfy that the resolution plan has provisions for its effective implementation. (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in Sub-section....
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....ebt due from the corporate debtor; (h) amendment of the constitutional documents of the corporate debtor; (i) issuance of securities of the corporate debtor, for cash, property, securities, or in exchange for claims or interests, or other appropriate purpose; (j) change in portfolio of goods or services produced or rendered by the corporate debtor; (k) change in technology used by the corporate debtor; and (l) obtaining necessary approvals from the Central and State Governments and other authorities.] 38. Mandatory contents of the resolution plan. - [(1) The amount payable under a resolution plan - (a) to the operational creditors shall be paid in priority over financial creditors, and (b) to the financial creditors, who have a right to vote under sub-section (2) of section 21 and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan.] [(1-A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholder, including financial creditors and operational creditors, of the corporate....
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....0; and (d) fraudulent transactions under section 66; and the orders, if any, of the adjudicating authority in respect of such transactions.] [(3) The committee shall evaluate the resolution plans received under sub-regulation (1) strictly as per the evaluation matrix to identify the best resolution plan and may approve it with such modifications as it deems fit: [Provided that the committee shall record its deliberations on the feasibility and viability of the resolution plans.]......" 20. These provisions have been recently considered in the Judgement of the Hon'ble Supreme Court in 'Kalpraj Dharamshi & Anr.' V/s. 'Kotak Investment Advisors Ltd. & Anr.' reported in 2021 SCC OnLine SC 204. 21. The Jurisdiction of NCLAT being in continuation of the proceedings envisages that any Appeal against an Order approving the Resolution Plan shall be in the manner and on the grounds specified in Section 61(3) of the IBC. Pertinently, the grounds, be it under Section 30(2) or under Section 61(3) are regarding testing the validity of the Resolution Plan approved by the CoC. The enquiry in such an Appeal would be limited to the power authorized to the RP under Se....
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.... Golden Peacock Award in the year 2014, which is a recognition of strong corporate governance practices. Our governance structure and the effective management team will ensure that the assets are put to the maximum and most relevant use thereby benefiting all the stakeholders involved. 2. To be Relevant in Digital India: India is transforming into digital country with the Government of India encouraging Indian Companies to set up Data Centre to support the institutions and Industries. The Government and industries have gained hugely due to Digital growth in the Country over the last decade. The data privacy and data projection rights proposal by Government of India is likely to make more multi-national companies have their data residing in India, which will push for buoyant growth in Data Center services. Mumbai, being one of the primary Gateway for the Internet in the country, will largely benefit from this policy initiative. Sify, with its Data Center strategy in Navi Mumbai, will look to partner in this digital India campaign. 3. To support Make in India Policy: Sify sources the inputs required for the construction, operation and maintenance o....
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....Committee is of the opinion that there should be freedom permitted to the overall market to propose solutions on keeping the entity as a going concern. Since the manner and the type of possible solutions are specific to the time and environment in which the insolvency becomes visible, it is expected to evolve over time, and with the development of the market. The Code will be open to all forms of solutions for keeping the entity going without prejudice, within the rest of the constraints of the IRP. Therefore, how the insolvency is to be resolved will not be prescribed in the Code. There will be no restriction in the Code on possible ways in which the business model of the entity, or its financial model, or both, can be changed so as to keep the entity as a going concern. The Code will not state that the entity is to be revived, or the debt is to be restructured, or the entity is to be liquidated. This decision will come from the deliberations of the creditors committee in response to the solutions proposed by the market. (Emphasis Supplied) 25. It is seen from the aforenoted extract that the Committee has advocated that there should be freedom given to the market, to p....
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....e I&B Code--are regarding testing the validity of the "approved" resolution plan by CoC; and not for approving the resolution plan which has been disapproved or deemed to have been rejected by CoC in exercise of its business decision." [Emphasis Supplied] "149. It will therefore be clear, that this Court, in unequivocal terms, held, that the appeal is a creature of statute and that the statute has not invested jurisdiction and authority either with NCLT or NCLAT, to review the commercial decision exercised by CoC of approving the resolution plan or rejecting the same. 150. The position is clarified by the following observations in paragraph 59 of the judgment in the case of K. Sashidhar (supra), which reads thus: "59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors....." 151. This Court in Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra) after reprodu....
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....he basis of 'commercial wisdom', NCLAT was not correct in law in interfering with the commercial decision taken by CoC by a thumping majority of 84.36%." (Emphasis Supplied) 29. The argument of the Learned Counsel appearing for the Unsuccessful Resolution Applicant that it is not the commercial wisdom of CoC which is being challenged here but that the Resolution Professional did not take into consideration the feasibility and viability of the 'Resolution Plan' which was deliberated upon in the 15th and 16th CoC Meetings, wherein the 'Resolution Applicant' was asked to revise the Plan and the same was not adhered to and the same is in contravention of Regulation 38(3)(b), is untenable, for the following reasons. In the 18th CoC Meeting held on 26.08.2019, the 'Resolution Plan' submitted by the Appellant herein was deliberated upon and the salient features of the Plan were compared with that of the revised 'Resolution Plan' submitted by 'SIFY'. It is pertinent to reproduce the Minutes of the Meeting wherein both the Plans were compared and a final decision was arrived that; "The Committee went through the revised final Resolution Plan as received from Sif....
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....t the plan Abstained from voting Rejected 7. Revised final Resolution Plan submitted by Sify Technologies Ltd. Voted for the Plan Abstained from voting Approved Accordingly, the plan submitted by Sify Technologies Limited was approved with requisite majority." (Emphasis Supplied) 30. It is seen from the aforenoted Minutes of the CoC Meeting that the Plan submitted by 'SIFY' was approved with a majority of 70.05% with a weighted score of 93.85, whereas the Plan submitted by the Appellant herein scored only 22.44 Pts. Therefore, the submissions of the Learned Counsel that deliberations of the 15th and 16th CoC Meetings were not considered pales into insignificance, keeping in view the Minutes of the final CoC Meeting and further we are of the considered view that the issues raised in this Appeal need to be decided on the touchstone of the Principle laid down by the Hon'ble Supreme Court decided in 'K. Sashidhar' V/s. 'Indian Overseas Bank' 2019 SCC OnLine SC 257 and in 'Kalpraj Dharamshi & Anr.' (Supra). 31. It was strenuously argued by the Counsel for the Appellant that the workman's dues were disregarded and therefore, the interests of a....
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.... stakeholders is ignored, is not sustainable, keeping in view, the substantial amounts earmarked for workmen and employees in the aforenoted table and also what Schedule V of the Plan has envisaged to balance the interests of all stakeholders. 33. We address ourselves to the submissions of the Learned Counsel that a 'Resolution Plan' under the 'IBC' is not an 'Auction' and 'feasibility and viability' of the 'Resolution Plan' are not amenable to bidding an auction. He placed reliance on the ratio laid down in 'Binani Industries' (Supra). Dictionary meaning of 'Feasibility' and 'Viability': 34. Black's Law Dictionary defines 'feasible' as being 'reasonably capable of being completed or accomplished'. 'Viability' is defined as 'the ability to live, grow and develop; the ability to function adequately; the ability to succeed or being sustained. 35. 'Feasibility' means analyzing the strengths and weaknesses of an existing business or a proposed business venture, taking into consideration the opportunities offered and the risks present. 'Feasibility' can be economic feasibility, legal feasibility, market and real estate feasibility, resource feasibility, financial feasibil....
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....vate Limited' (Supra) it has been observed by the Hon'ble Apex Court that 'if there is a 'Resolution Applicant' who can continue to run the 'Corporate Debtor' as a going concern every effort must be made to try and see if this is possible'. 'Going concern' does not mean that the nature of the business cannot be changed with an objective to 'add value' or 'create synergy'. If it is viewed in this perspective, it would be interpreting the word 'going concern' in a very narrow compass which is not the scope and objective of the Code. 38. The Hon'ble Supreme Court has observed that paramount importance is to be given to the decision of CoC, which is taken on the basis of commercial wisdom which cannot be interfered with excepting under the limited scope as provided under Sections 30 & 31 of the I&B Code. At the cost of repetition 'IBC' provides for restructuring of the 'Corporate Debtor' change in technology, change in portfolio of goods and services produced or rendered by the 'Corporate Debtor' as long as the scope and objective of the Code is not hampered and therefore we are of the considered view that if the Resolution Plan contemplates a change in the nature of business to ano....