TaxTMI 
TaxTMI 
2021 (7) TMI 1316
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....on which is moved by the Resolution Professional of the Corporate Debtor viz., M/s. Appu Hotels Ltd. under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of the IBBI (Insolvency Resolution for Corporate Persons) Regulations, 2016 seeking reliefs as follows:- (a) Pass an order approving the resolution plan submitted by the Resolution Applicant in respect of the Corporate Debtor under Section 31(1) of the Code and declare that the same be binding on the Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan; (b) Pass an order directing that, pending disposal of the present application by this Tribunal, the Resolution Professional shall continue to conduct his hold as Resolution Professional of the Corporate Debtor and during such period shall have all powers, duties and protections as available to him as a Resolution Professional under the Code and regulations thereunder; (c) Pass an order directing the Resolution Applicants to implement the Resolution Plan in the manner set out in the resolution plan; (d) Pass an order approving the appointment of....
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....ntures Trusteeshi Limited 765,288,159 19.64 3. Indian Bank 693 354 538 17.80 4. Bank of India Tok o 522 361 980 13.41 5. TFCI 218 796 084 5.62 6. IDBI 118 103 307 3.03 7. Edelweiss ARC 41 315,506 1.06 8. Allium Finance P Ltd. 16 294,149 0.42 SECURED CREDITORS AMOUNT 3 404 327 622 87.39% UNSECURED CREDITORS 9. Prabhat Resources Limited 166,612,427 4.28 10. Sub Bri ht Industries 165 568.956 4.25 11. M/S RSM Industries 55 854 738 1.43 12. Ar av Ex orts P Ltd. 48,749,914 1.25 13. Modern Constructions 33 440,000 0.86 14. URC Builders 15 000 000 0.39 15. M. Chandrasekaran 6,060,082 0.16 UNSECURED CREDITORS MOUNT 491,286,117 12.61% TOTAL AMOUNT 3 895 613 739.40 100% 5. The list of persons who have been categorized as related parties both in relation to the Financial Creditors and Operational Creditors are as under:- LIST OF FINANCIAL CREDITORS WHO ARE RELATED PARTIES S. No. NAME OF CREDITOR AMOUNT CLAIMED AMOUNT ADMITTED 1. A. Sennimalai 2,38,91,366 2,38,91,366 ....
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....on 06.08.2020 had approved the proposal of the IRP in relation to the Information Memorandum and accordingly the IRP had published Form G for submission of Expression of Interest on 17.08.2020 and thereby fixed the last date for submission of the "Expression of Interest" by the prospective Resolution Applicants as 01.09.2020. 10. Thereafter, in the 3rd CoC meeting held on 04.09.2020 the IRP has placed a list of prospective Resolution Applicants before the CoC and the CoC had approved the list of prospective Applicants. The date of issuance of the request for Resolution Plan was 16.09.2020 and the last date for submission of the Resolution Plan was fixed as 31.10.2020. 11. In pursuance of the same, the IRP has received the Resolution Plans from the following persons:- (i) Madhav Dhir (ii) M.K. Rajagopalan (iii) Kotak Special Situations 12. It is further seen that in the 6th CoC meeting held on 16.12.2020, the Applicant had apprised the CoC members that totally three Resolution Plans were received and out of which two Resolution Plans were being presented to the CoC after conducting legal due diligence of the Resolution Plan. The Applicant had prim....
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....vency and Bankruptcy Code, 2016 before this Tribunal on 22.01.2021. The same is pending, adjudication. 17. It is seen that the final Resolution Plan was put up for consideration by the CoC in the 9th CoC meeting held on 22.01.2021 and the said Resolution Plan was approved with a thumping majority of 87.39%. 18. It is also seen that the Resolution Professional has filed Compliance Certificate in Form H under Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 containing the details of the compliance of the Resolution Plan with the mandatory requirements as envisaged under IBC, 2016 and the Regulations framed thereunder. 19. Further, it is seen that the Resolution Applicant, in pursuance of the approval of the Resolution Plan by the CoC, had provided Bank Guarantee for a sum of Rs. 25 Crore on 01.02.2021. Pursuant to the approval of the Resolution Plan by the CoC under Section 30(4) of IBC, 2016, the Applicant has filed I.A./150/CHE/2021 before this Adjudicating Authority under Section 30(6) of IBC, 2016 seeking Approval of the Resolution Plan in terms of Section 31(1) of IBC, 2016 read with Regulation 39(4) of the IBBI (Insol....
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.... Crore is being paid by the Resolution Applicant on priority basis. (vi) Further it is also seen that the 1st upfront payment of Rs. 116.75 Crore is being paid by the Resolution Applicant within a period of 45 days from the date of approval of the Resolution Plan and the remaining amount of Rs. 223.68 Crore is paid by way of 2nd instalment within 90 days from the date of approval of the Resolution Plan. (vii) Similarly, in relation to the unsecured financial creditors (other than related parties) a sum of Rs. 16.83 Crore is paid as the 1st upfront payment within 45 days from the date of approval of the Resolution Plan. The remaining amount of Rs. 32.30 Crore will be paid in the 2nd instalment within 90 days from the approval of the Resolution Plan by this Adjudicating Authority. (viii) The Resolution Plan also proposes to create a contingency fund to the tune of Rs. 22.02 Crore to meet out any contingent expenses being incurred after approval of the Resolution Plan. The payment schedule being made by the Resolution Applicant in terms of the Resolution Plan is being captured hereunder:- PAYMENT PROPOSAL 1^ST INSTALMENT 2^ND INSTALMENT ....
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....um of Rs. 3.86 Crore. A proposal in the Resolution Plan is subject to maximum of 25% of the claim admitted or 20% of the Contingency Fund-II, whichever is lower and also the contingency fund will be utilized towards payment to any statutory payments to be incurred during the implementation of the Resolution Plan. (xiii) It is also seen that as a part of the plan that the unutilized contingency fund, if any, will be credited to the account of the Corporate Debtor, thereafter. (xiv) The Resolution Plan also provides for formation of the Monitoring Committee, post approval of the Resolution Plan. The Monitoring Committee shall comprise the following persons:- a) Resolution Professional (as head of the Monitoring Committee); b) Two representatives from the Committee of Creditors; c) Two representatives nominated by the Resolution Applicant. (xv) In clause 5.14 of the Resolution Plan, the Resolution Applicant has sought for certain reliefs and concessions in relation to the proper implementation of the Resolution Plan. 21. However, the Resolution Plan filed by the successful Resolution Applicant however has been challenged by way ....
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....the valuers appointed by the IRP were based out of Delhi and never visited or inspected the property of the Corporate Debtor themselves, and their functions were delegated to the local associates in Tamil Nadu. It was submitted that Regulation 35 of the IBBI (IRPCP) Regulations 2016 mandates physical verification of the assets by the valuers which has admittedly been violated in the present case. 26. It was also contended by the Learned Senior Counsel for the erstwhile Promoter that the CoC itself was not properly constituted at that time and the unsecured Financial Creditor amounting to 12.61% were not part of the decision making process in respect of appointing the valuers. The Learned Senior Counsel also submitted that the valuation Report as such was not given either to the Promoter or the Members of the CoC and the Resolution professional only circulated the valuation figures. 27. Further, it was submitted that the suspended Director of the Corporate Debtor has placed a request with the Petitioner Creditor, the Resolution Professional and the members of the CoC to call for a meeting to consider the financial proposal through the promoter protected by conditional Term She....
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....hanism and that the members of the CoC represent the interest of all the stakeholders. (ii) MA/18/CHE/2021-Dharani Finance Limited (iii) MA/48/CHE/2021-Dharani Finance Limited 30. MA/18/CHE/2021 is an Application which is filed by M/s. Dharani Finance Limited, who has filed his claim before the IRP in the capacity as an Operational Creditor for a sum of Rs. 1,94,14,024 in Form-B on 03.08.2020. The relief as sought in the said Application is as follows; a. That this Hon'ble Tribunal may be pleased to direct the Resolution Professional to adjudicate and admit the claim of the Applicant submitted on 03.08.2020 as an Operational Creditor. b. That this Hon'ble Tribunal may be pleased to declare that the Applicant is not a related party of the Corporate Debtor (i.e.) M/s. Appu Hotels Limited c. That this Hon'ble Tribunal may be pleased to declare the Resolution Plan, if any, approved by the Committee of Creditors (CoC) without admitting the claim of the Applicant as an Operational Creditor as void and non-est in law. d. That this Hon'ble Court may be pleased to direct the respondent to produce the minutes of the Committee of Cr....
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....icant that they are "Related Party" in relation to the Corporate Debtor. Hence the Applicant Company has moved the above two Applications seeking for admission of the claim and sought to declare them as not a Related Party of the Corporate Debtor and also not to act upon the Resolution Plan submitted by the prospective Resolution Applicant. 33. In so far as admission of the claim is concerned, it is seen from the Resolution Plan that the claim of the Applicant has been admitted by the RP both in the capacity as an Operational Creditor and Financial Creditor; however the Applicant was classified as "Related Party" of the Corporate Debtor. However during the course of submissions, the Learned Senior Counsel Mr. Sathish Parasaran, submitted that there is a discrimination in relation to the distribution of the amount by the Resolution Applicant. It is seen that no such pleading has been made in the Application in relation to the discrimination of the amount being made to the Related Parties in the Resolution Plan and the present Application has been filed only with a prayer to declare the Applicant Company as not a Related party of the Corporate Debtor. In so far as the admission of....
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....r implicit prohibition for payment of debts owed. 37. The Learned Senior Counsel for the Applicant Company further submitted that in the present case, the successful Resolution Applicant has promised to pay all the Creditors every money owed to them, except for the Applicant/Objector. Reliance was placed by the Learned Senior Counsel on Section 53 of IBC, 2016 to state that the said provision does not provide for such a discrimination to a person who happens to be a related party, then the successful Resolution Applicant, cannot under the guise of a "Resolution Plan" discriminate the similarly placed creditor on untenable grounds. 38. The Learned Senior Counsel for the Applicant Company relied upon the Judgment of the Hon'ble Supreme Court in the matter of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors. (2020) 8 SCC 531 and the decision of the Hon'ble NCLAT in the matter of Binani Industries Limited vs. Bank of Baroda & Anr., in Company Appeal (AT)(Insolvency) No. 82 of 2018 to hold that there is a discrimination in relation to the distribution of the amount by Resolution Applicant as no such amount has been paid to the Related Party....
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....hich the IRP has sent an e-mail on 07.09.2020 to the Applicant requesting for some additional documents. It was submitted that the IRP had caused a notification of the provisional list of eligible prospective Resolution Applicants dated 11.09.2020 and that the name of the Applicant Company was there in the provisional list of eligible prospective Resolution Applicants. However, it was submitted that the Information Memorandum was issued to the Applicant Company only on 16.09.2020 and owing to strict lockdown imposed by the State/Central Government in view of Covid-19 pandemic, the Applicant has sent an e-mail to the IRP on 29.10.2020 to extend the time for submission of the Resolution Plan till the end of November 2020, to which the IRP has sent a reply on 29.10.2020 itself by extending the time till 02.11.2020. 43. Thereafter, it was submitted that the Applicant Company has informed the RP that the Information Memorandum is incomplete in respect of certain details relating to the financials of the Corporate Debtor and that the Applicant Company was under a bona fide impression that the RP would furnish updated Information Memorandum. While things stands thus, to the shock of th....
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....9;ble Court may be pleased to direct for fresh consideration or ratification of all decisions made at the meetings of the CoC from the start of the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor since the Creditors were only permitted to participate at a very belated stage and not afforded the opportunity to be part of the decision making process; e. That this Hon'ble Tribunal may pass such other and further reliefs as the nature and circumstances of the case may require and thus render justice. 46. The Learned Counsel Mr. R. Venkatavaradhan, appearing on behalf of the Applicants in IA/181/CHE/2021 and IA/183/CHE/2021 submitted that the Applicants are unsecured Financial Creditors in relation to the Corporate Debtor and submitted a claim to the tune of Rs. 5,58,54,738/- and Rs. 16,55,68,956/- respectively before the IRP in Form-C on 03.08.2020. However, the claim which was submitted by the Applicants were not admitted by the IRP and hence the Applicants have sent a representation to the IRP vide their letter dated 02.09.2020, to include the Applicants in the 3rd CoC meeting which was scheduled to be held on 04.09.2020. It was submitted that t....
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....both the IAs are one and the same and they are extracted hereunder; a. Direct the Respondent-Resolution Professional to publish For G afresh (Expression of Interest) with wider publicity and invite fresh Resolution Plans for the Corporate Debtor in order to ensure wider participation in the interest of all the stakeholders of the Corporate Debtor, including that of the Project creditors, and to place before the Committee of Creditors (CoC) to consider the same along with the existing Resolution Plans; and b. Pass such further or other orders/reliefs as may be deemed fit and proper in the facts and circumstances of the case and thus render justice. 50. The Learned Counsel Mr. S. Sathiyanarayanan, appearing on behalf of the Applicants in IA/172/CHE/2021 and IA/291/CHE/2021 submitted from the commencement of the CIRP, the IRP and the RP have focused only on the recovery of the Corporate Debtor without taking any sincere efforts towards continuity of the Corporate Debtor's business as a going concern. Further, it was submitted that the RP was appointed by this Tribunal only on 02.11.2020 and before that the IRP has appointed a Delhi based valuer and inspite of ....
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....Debtor who have submitted their claim to the IRP as early as on 03.08.2020, for a sum of Rs. 4,87,49,914/-, however the IRP has admitted the claim belatedly and the Applicants herein was allowed to participate only in the 6th Meeting of the CoC which was held on 16.12.2020. The relief portion as sought for in IA/192/CHE/2021 is extracted hereunder; a. That this Hon'ble Tribunal may be pleased to stay the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor pending adjudication of the present Application; b. That this Hon'ble Tribunal may be pleased to direct for fresh start of the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor in view of the severe violations of the Code during the process; c. That this Hon'ble Tribunal may pass such other and further reliefs as the nature and circumstances of the case may require and thus render justice. 55. The Learned Counsel appearing on behalf of the Applicant in IA/192/CHE/2021 has made submissions similar to that of the Applicants in IA/181/CHE/2021 and IA/181/CHE/2021, since they all stand on the same footing. Hence in order to avoid prolixity, the same is n....
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....arned Counsel was that the impugned Resolution Plan contravenes Regulation 38(2) and 38(3) of the IBBI (IRPCPR) Regulations, 2016 read with Section 30(2)(e) and (f) of IBC, 2016. In this regard, it was submitted that nowhere in the Resolution Plan the following mandatory requirements contemplated under Regulation 38(3) have been effectively dealt with; a) Provide for the Management and Control of the Corporate Debtor. b) Addresses the cause of default. c) It has provisions for approvals required and the timelines for the same. d) Resolution Applicant has the capability to implement the Plan. 60. The fourth objection raised by the Learned Counsel was that the impugned Resolution Plan contravenes Regulations 38(1A) and 39(3) read with Section 30(2)(e) and (f) of IBC, 2016. In this regard it was submitted that the aforesaid Regulations mandates that the CoC may evaluate the Resolution Plan and approve the same after recording the feasibility and viability of the same and in the record of the 7th, 8th and 9th CoC meetings, nowhere it is seen that the CoC had discussed the "feasibility and viability" of the Plan. 61. The fifth objection raised b....
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....heir interest and among there one Resolution Applicant was disqualified. Further, it was also submitted that the Resolution Plan amount was arrived on the basis of the market value which cannot be questioned. 64. The Learned Senior Counsel further submitted that the valuation Report relied by the suspended Directors/erstwhile Promoters of the Corporate Debtor of "BVe Consulting Engineers" dated September 2019, cannot be taken as a yardstick and in the absence of a specific challenge to the valuation report such allegations as made by the objectors do not have any force. It was further submitted that the value of the Corporate Debtor is derived from the market as Rs. 423 Crore which was the best price after following due course of law and such a Resolution Plan has been approved by the CoC in its commercial wisdom. Thus, it was submitted that, so long as there is no violation of any of the provisions of the Code and the Code is in compliance with Section 32 and other provisions of IBC, 2016. In so far as other allegations as raised by the suspended Directors/erstwhile Promoters of the Corporate Debtor, it was submitted that they were a mute spectator to all the proceedings and di....
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...., it is the duty of the RP only to collate and admit the claim of the Applicant and that it is the prerogative of the Resolution Applicant to make allocation of payments for the related parties. In the present case, the Resolution Applicant had thought it fit not to make any payment for the Related Party and in so far as the Resolution Professional is concerned, he has ensured that the Resolution Plan is in conformity with Section 30(2) of IBC, 2016 read with attendant Regulations framed thereunder. 68. In relation to the objections raised by the potential Resolution Applicant M/s. Apex Laboratories, in IA/571/CHE/2021 it was submitted by the Learned Senior Counsel that they are challenging the plan after the approval of the same by the CoC, on the ground that there were material violations by the Resolution Professional. It was submitted that the request of the Applicant herein seeking for extension of time for submission of the Resolution Plan was rejected by the Resolution Professional on 29.10.2020 and the Applicant did not even challenge the same in the manner known to law and has preferred to file the Application IA/571/CHE/2021 as an objector after the Resolution Plan has....
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.... the RP vide his emails dated 03.01.2021, 05.01.2021 and 07.01.2021 had rejected the claims of the Applicants. Even though the said communications were received by them, the Applicants have chosen to file the present Application before this Tribunal only on 10.03.2021 and a perusal of the prayer portion of the Application would reveal the fact that the same is nothing but an attempt to derail and frustrate the Resolution Plan which was approved by the CoC with the requisite majority. Further, it was submitted that even though their claims have been rejected, the Applicants have not chosen to challenge the said rejection, however chose for a direction to issue a fresh Form-G and it is not the case of the Applicants that they are prospective Resolution Applicant, which itself goes on to show that the present Application has been filed with an ulterior design. Lastly, it was contended that the Applicants have no locus standi to file the present Application with such a relief since they are only Trade Creditors and not forming part of the CoC and as such the Learned Senior Counsel sought for the dismissal of the present Application. 72. In relation to the objections raised by M/s. D....
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.... category of assets. The appointment of the said valuators was made in accordance with Regulation 27 r/w 35 of the CIRP Regulations and IBBI circulars in connection to such engagement of valuers........." ......... ......... .........In light of the forgoing, the Chairman assured the Committee members that the Valuers had stated the process of Valuation and a few information was awaited from the end of the Corporate Debtor on pursuance to which the valuers will visit the sites of the Corporate Debtor. It is further informed that in furtherance of the process, the valuers sent their questionnaire for requirement of information and documents. The IRP provided the information sought by them as available with the Corporate Debtor. However, it was informed to the CoC that the difficulties were being faced in collecting the desired information from the Corporate Debtor, owing to travel restrictions, mandatory quarantine/partial lockdown rules and unavailability of staff in Chennai. The Chairman also informed the members that he has filed an application with NCLT Chennai under Section 19(2) of IBC, 2016 regarding non-cooperation of the Corporate Debtor. As on th....
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.... who have submitted their undertaking. The RP emphasised that their value is not very significant, and it will not affect the liquidation value much. However, second valuation for the non-core assets will be needed in order to reach a final value. RP apprised the CoC members that the valuers appointed by IRP are based in Delhi and they are asking much higher price for carrying the valuation of non-core assets. Therefore, the RP will hire a local valuer keeping the cost in mind." 77. In pursuance of the same, it is seen from the minutes of the 7th CoC meeting that the third valuer Mr. Vaidya Raman was appointed by the Resolution Professional who visited the premises and conducted the valuation to the non-core assets. 78. In relation to the appointment of Registered valuers, Regulation 27 of IBBI (IRPCP) Regulations, 2016 deals with the same, which is extracted hereunder; 27. Appointment of registered valuers. The resolution professional shall within seven days of his appointment, but not later than forty-seventh day from the insolvency commencement date, appoint two registered valuers to determine the fair value and the liquidation value of the corporate debt....
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....ther apprised the CoC members, that due to significant difference in the value of land and building submitted by the valuers appointed by IRP, the RP had to appoint third valuer in accordance with provisions of Regulation 35 of CIRP Regulations, 2016. Accordingly, the third valuer has submitted his report before the RP and accordingly the fair value and the Liquidation value in relation to the Corporate Debtor was arrived at by the Resolution Professional. 81. Thus, it is clear that the RP has arrived at a Fair Value and the Liquidation Value based on the average of all the three valuers and the same has been done in accordance with Regulation 35 of the IBBI (IRPCP) Regulations 2016. Further, the valuation certificate dated September 2019 relied on by the promoter/suspended Director of the Corporate Debtor would be of no relevance as the same was not done in accordance with the Regulations framed under the IBC, 2016. Also, the RP who is in charge of the affairs of the Company Debtor once the CIRP has been triggered in relation to the Corporate Debtor, he has to act as per the provisions of the Regulations and cannot act according to the whims and fancies of the promoters/erstwhi....
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....'s contention about the valuation of the Corporate Debtor of Rs. 1600 crores is unsupported by any evidence. The fact remains that the Resolution Plan amount has arrived after following the procedure prescribed under the Code and the Rules and Regulations made thereunder. (emphasis supplied) 83. Thus, the Hon'ble NCLAT also has rendered a finding that the Resolution Plan amount has been arrived at after following the procedure prescribed under the Code and the Rules and Regulations made thereunder. 84. Hence for reasoning stated supra, this Adjudicating Authority finds that there was no error committed by the IRP/RP in so far as appointing the registered valuers in relation to the Corporate Debtor, nor there was any error on the valuation being submitted by those Registered valuers and as a consequence thereof, the objections as raised by all the objectors in relation to the valuation of the Corporate Debtor are overruled. Accordingly, MA/13/CHE/2021 stands dismissed. (ii) On non-consideration of Sec. 12A Application:- 85. The Learned Senior Counsel Mr. P.S. Raman, appearing on behalf of the erstwhile Promoter/Director of the Corporate Debtor contended that t....
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....ng Creditor viz. Tourism Finance Corporation of India (TFCI) was also kept in dark about the 12A proposal by the promoters and also flagged an issue stating that the letter has been addressed to the CoC and not to them. However, it is seen that the said agenda of proposal to be made under Section 12A was not considered by the CoC and that they proceeded to vote for the Resolution Plan. 87. It is also seen that the Term Sheet relied on by the Learned Senior Counsel for the promoter in order to substantiate that they have the source to settle the entire dues of the CoC, it is seen that the said Term Sheet dated 22.01.2021 issued by Deutsche Bank would start of with a disclaimer as follows; "Please note that the terms set out in this Term Sheet are indicative only and do not constitute an offer to finance the Facility. The terms and conditions of the term sheet remain subject to the diligence, internal approvals, credit committee approval, successful syndication, KYC and satisfactory documentation." 88. Thus, it is seen that the proposal as projected by the Learned Senior Counsel for the promoters to be made under Section 12A, seems to be only an eye wash and a dilatory....
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....r that these Applications as filed by the objectors are motivated. 91. Thus, the objections as raised by the objectors in relation to the procedural irregularities in relation to the conduct of the Corporate Insolvency Resolution Process, are not so grave in order to defeat the Resolution Plan as filed by the Resolution Professional. Hence, for the said reasons, the objections as raised by the objectors in respect of the same are overruled. Accordingly, IA/181/CHE/2021, IA/183/CHE/2021, IA/192/CHE/2021, IA/172/CHE/2021 and IA/291/CHE/2021 stand dismissed. (iv) Related Party:- 92. M/s. Dharani Finance Limited has filed two Applications viz. MA/18/CHE/2021 and MA/48/CHE/2021 aggrieved against the action of the RP in categorizing them as the "Related Party" of the Corporate Debtor. The Learned Senior Counsel for the said Applicant Company placed reliance upon second provision to Section 21(2) to state that they are not related party. For the sake of convenience the said provision is extracted hereunder; 21. Committee of Creditors.- (1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determinat....
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....ial Creditor or Operational Creditor. In this regard, it is to be noted here that the way in which the amount has to be distributed and paid, purely falls within the domain of the Resolution Applicant and further the CoC in its commercial wisdom has accepted the same. Further, there is no provision in the IBC, 2016 which mandates that the Related party should be paid in parity with the unrelated party. The judgment relied on by the Learned Senior Counsel by the Hon'ble NCLAT in the matter of Binani Industries, was reconsidered by the Hon'ble Supreme Court in the matter of Essar Steels (supra), wherein the Hon'ble Supreme Court in para 109 has held as follows; "109. When it comes to the validity of the substitution of Section 30(2)(b) by Section 6 of the Amending Act of 2019, it is clear that the substituted Section 30(2)(b) gives operational creditors something more than was given earlier as it is the higher of the figures mentioned in sub-clauses (i) and (ii) of sub-clause (b) that is now to be paid as a minimum amount to operational creditors. The same goes for the latter part of sub-clause (b) which refers to dissentient financial creditors. Mrs. Madhavi Div....
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....ections and make modifications in such schemes, as it may consider necessary, for the proper working of the said Schemes. This power in Section 392 is conspicuous by its absence when it comes to the Adjudicating Authority under the Code, whose jurisdiction is circumscribed by Section 30(2). It is the Committee of Creditors, under Section 30(4) read with Regulation 39(3), that is vested with the power to approve resolution plans and make modifications therein as the Committee deems fit. It is this vital difference between the jurisdiction of the High Court under Section 392 of the Companies Act, 1956 and the jurisdiction of the Adjudicating Authority under the Code that must be kept in mind when the Adjudicating Authority is to decide on whether a resolution plan passes muster under the Code. When this distinction is kept in mind, it is clear that there is no residual jurisdiction not to approve a resolution plan on the ground that it is unfair or unjust to a class of creditors, so long as the interest of each class has been looked into and taken care of. It is important to note that even under Sections 391 and 392 of the Companies Act, 1956, ultimately it is the commercial wisdom o....
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....less provision is made in the final Resolution Plan." (emphasis supplied) 99. Thus, in the present case, a provision is made in the Resolution Plan as to the fate of the avoidance Application pending in relation to the Corporate Debtor and hence the objections raised by the objectors in this regard are required to be eschewed. (vii) Objections by Prospective Resolution Applicant 100. M/s. Apex Laboratories Private Limited, claiming to be a prospective Resolution Applicant has filed IA/571/CHE/2021 seeking direction to refix the timelines under the CIRP process and also to issue the Information Memorandum. In this regard, it is seen that M/s. Apex Laboratories is not a prospective Resolution Applicant, since they have not submitted the Resolution plan before the CoC, however sought additional time only to submit the Resolution Plan before the CoC, which came to be rejected by the RP on 29.10.2020. While this being the fact, the inability of M/s. Apex Laboratories to submit the Resolution Plan within the timeframe fixed by the CoC, would not empower the Applicant to file an Application seeking extension of time to submit a Resolution Plan, nor challenge the Resolution Pla....
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.... is concerned, section 30(6) of the IBC, 2016 cast certain duties upon this Adjudicating Authority to examine the Resolution Plan as to whether the Plan falls within the contours of the said Section. Hence, a comparison of the mandatory compliance as required under IBC, 2016 vis-a-vis the compliance as made in the Resolution Plan is being tabulated hereunder. MANDATORY COMPLIANCE UNDER IBC CODE AND REGULATIONS COMPLIANCE UNDER RESOLUTION PLAN S. 30(1) - Resolution Applicant to submit an affidavit stating that he is eligible under Sec.29A of the Code, 2016 The Affidavit of the Resolution Applicant (RA) is found in "Format 3B" in Volume Il of the Resolution Plan wherein Mr. M. K. Rajagopalan, the Resolution Applicant has stated that he is eligible under Section 29A of IBC, 2016 to submit a Resolution Plan. Further, the Resolution Professional in Form - H has certified that the said Affidavit is in order. S. 30(2)(a) Payment of Insolvency and Resolution cost in the manner specified by the Board Clause 5.3.1 of the Resolution Plan provides for the payment of CIRP costs in priority. The CIRP Cost is arrived at ?2.90 Crore and would be paid within 45 days from the date ....
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....of the law for the time being in force The Resolution Professional in Form H has confirmed that the Resolution Plan is not in contravention with the provisions of any Applicable Law S. 30(4) Committee of Creditors approve the Resolution Plan by not less than 66% of voting share of Financial Creditors, after considering its feasibility, viability and such other requirement as specified by the Board The COC in its 9th meeting held on 22.01.2021 has approved the Resolution Plan in the following voting pattern ; S. No Name of Creditor Assent 0/0 Dissent 0/0 1. State Bank of India 26.41 - 2. IDBI Debentures Trusteeshi Ltd. 19.64 - 3. Indian Bank 17.80 - 4. Bank of India 13.41 - 5. TFCI 5.62 - 6. IDBI 3.03 - 7. Edelweiss ARC 1.06 - 8. Allium Finance P Ltd. 0.42 - 9 Prabhat Resources Ltd. - 4.28 10 Sun Bri ht Industries - 4.25 11 M/S. RSM Industries - 1.43 12 A av Exports P Ltd. - 1.25 13 Modern Constructions - 0.86 14 URC Builders - 0.39 15 M. Chandrasekaran - 0.16 TOTAL 87.39 12.6....
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....sofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar (supra). 106. Further the Supreme Court in the matter of K. Sashidhar v. Indian Overseas Bank and Ors. (2019) 12 SCC 150 has lucidly delineated the scope and interference of the Adjudicating Authority in the process of approval of the Resolution Plan and held as follows; "55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan "as approved" by the requisite per cent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides: (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate ....
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.... matter of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors. (2020) 8 SCC 531 after referring to the decision in K. Sashidhar (supra) has held as follows; "73. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or sub-class 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 referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into ac....
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..... 77.1. Such limitations on judicial review have been duly underscored by this Court in the decisions above-referred, where it has been laid down in explicit terms that the powers of the Adjudicating Authority dealing with the resolution plan do not extend to examine the correctness or otherwise of the commercial wisdom exercised by the CoC. The limited judicial review available to Adjudicating Authority lies within the four corners of Section 30(2) of the Code, which would essentially be to examine that the resolution plan does not contravene any of the provisions of law for the time being in force, it conforms to such other requirements as may be specified by the Board, and it provides for: (a) payment of insolvency resolution process costs in priority; (b) payment of debts of operational creditors; (c) payment of debts of dissenting financial creditors; (d) for management of affairs of corporate debtor after approval of the resolution plan; and (e) implementation and supervision of the resolution plan. 77.6.1. The assessment about maximisation of the value of assets, in the scheme of the Code, would always be subjective in nature and the question, as to whether....
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....5 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This point has been dealt with in the case of Essar Steel (supra). We have quoted above the relevant passages from this judgment. 27. It appears to us that the object behind prescribing such valuation process is to assist the CoC to take decision on a resolution plan properly. Once, a resolution plan is approved by the CoC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the Code is to ascertain that a resolution plan meets the requirement of sub-sections (2) and (4) of Section 30 thereof. We, per se, do not find any breach of the said provisions in the order of the Adjudicating Authority in approving the resolution plan." 110. Thus, as held by the Hon'ble Supreme Court, there is no provision in IBC, 2016 or in the Regulations which stipulates that the bid of the Resolution Applicant has to match the Liquidation value of the Corporate Debtor. 111. Thus, from the catena of judgments rendered by the Supreme Court on the scope of approval of the Resolution Plan, it is amply made clear that only limited judicial review ....