TaxTMI 
TaxTMI 
2022 (4) TMI 884
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....ptcy Code, 2016 ("Code" for short) challenging the order dated 18.01.2022 passed in I.A No. 43(AHM)2022 in CP (IB) No. 185 of 2018. The Adjudicating Authority (National Company Law Tribunal), Ahmedabad, Court-2, by impugned order has allowed the I.A No. 43(AHM)2022 filed by the Respondent No.3. The Appellant- Successful Resolution Applicant has filed this Appeal challenging the impugned order. The brief facts of the case and sequence of the events necessary to be noted for deciding this Appeal are:- By order dated 01.09.2020, 'Corporate Insolvency Resolution Process' ("CIRP" for short) was initiated against the Corporate Debtor- 'AMW Auto Component Ltd.'. Form-G was issued on 30.11.2020. The last date for submission of the Expression of Interest was 15.12.2020. The Adjudicating Authority granted extension of 90 days' time. The Committee of Creditors (CoC) has fixed 19.04.2021 as final date of submission of the Resolution Plan. The Appellant submitted its Resolution Plan on 24.04.2021. The Appellant was communicated by Respondent No.1 that CoC has decided to consider the Resolution Plan of the Appellant and CoC has granted one-time opportunity to all the Prospective Resolution Ap....
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....t to consider the Resolution Plan of the Appellant which is Respondent No.3 in the I.A. The above Application I.A. No. 43 of 2022 was taken by the Adjudicating Authority on 18.01.2022 and allowed. 2. The Appellant aggrieved by the said order has filed the present Appeal. 3. We have heard Shri Krishnendu Datta, Learned Senior Counsel for the Appellant, Shri Jayant Mehta, Learned Senior Counsel for Respondent No.1, Ms. Prachi Johri, Learned Counsel for Respondent No.2 and Shri Darius Khambata, Shri Amit Sibal, Shri Devang Nanavati, Learned Senior Counsels for Respondent No.3. 4. Shri Krishnendu Datta, Learned Senior Counsel for the Appellant submits that the Resolution Plan of the Appellant having been approved by the CoC with 98.55% voting shares pursuant to the meeting of the CoC dated 26.08.2021 and the Application for approval of the Resolution Plan having been filed and pending before the Adjudicating Authority, there was no occasion for the Adjudicating Authority to pass an order for consideration of the Resolution Plan submitted by the Respondent No.3. The period for submitting Expression of Interest and the Resolution Plan had long expired and the name of Respondent ....
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....the Respondent No.3. 7. Learned Counsel for the CoC submits that the Respondent No.2 support the reply of the Resolution Professional dated 04.03.2022. It is further submitted that looking to the objects and reasons of the Code, the CoC in its meeting dated 05.03.2022 deliberated and decided that the Respondent No.3 may be given an opportunity to present their Resolution Plan. 8. Learned Senior Counsel appearing for the Respondent No.3 submits that the Resolution Plan submitted by the Respondent No.3 is joint Resolution Plan with regard to Corporate Debtor as well as another sister concern. It is submitted that the Appellant itself had failed to submit the Resolution Plan before the final date of submission fixed by the CoC i.e. 19.04.2021. Keeping in mind the object and purpose of the Code, in the interest of the Corporate Debtor the Respondent No.3 be permitted to submit Resolution Plan. Respondent No.3 is a leading Company in Auto Component Sector and the Resolution Plan of Respondent No.3 will not only maximise the value of the assets of the Corporate Debtor but also provide value maximisation and a timely exit to all stakeholders of the CIRP including all the employees/ ....
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....and file affidavit in response to the objections filed by the parties. List the matter on 04.03.2022" 11. The Adjudicating Authority by impugned order dated 18.01.2022 in I.A No. 43 of 2022 passed following order:- "IA 43(AHM)2022 Application filed by a proposed Resolution Applicant seeking permission to submit the resolution plan to RP to enable CoC to consider the same. Learned Counsel for the Applicant states that they have already sent the copy of plan to RP and CoC and the application was informed that CoC is of the view that it could be taken into consideration subject to the outcome of this application or directions issued by the Bench. The CoC is the final Authority as on date to decide about the discretion and decision with respect to resolution plans. If CoC finds that considering this plan may bring maximisation of value, it may take a call and decide accordingly. RP to file an affidavit to the effect of the decision taken by the CoC with respect to the present applicant. Issue notice to RP and CoC. List the matter on 04.03.2022." 12. With reference to the request received by Respondent No.3, Resolution Professional h....
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....'ble National Company Law Tribunal, Ahmedabad Bench ("Hon'ble NCLT") vide order dated July 26, 2021 expired on September 22, 2021. During the CIRP, 2 prospective resolution applicants had submitted resolution plans for the Corporate Debtor. The 2 resolution plans were placed for approval of the Committee of Creditors ("CoC") of the Corporate Debtor by the undersigned in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016, as amended ("IBC') and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016, as amended ("CIRP Regulations"). The CoC has approved one of the resolution plans by the requisite majority and an application under Section 30(6) of the IBC has been filed by the undersigned for seeking approval of the Hon'ble NCLT. The application for approval of the resolution plan is pending before the Hon'ble NCLT. In light of the aforesaid background, your e-mail and proposal was placed before the CoC for their consideration at the meeting of the CoC held on December 18, 2021. After due discussions and deliberations on your proposal, the CoC members have instructed the undersigned....
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....d reliance on the judgment of the Hon'ble Supreme Court in "Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited and Another- 2021 SCC OnLine SC 707". In the said judgment, the Hon'ble Supreme Court held that Resolution Plan even prior to the approval of the Adjudicating Authority is binding inter se the CoC and the successful resolution applicant. Para 132 of the judgment is as follows:- "132. While the above observations were made in the context of a scheme that has been sanctioned by the Court, the Resolution Plan even prior to the approval of the Adjudicating Authority is binding inter se the CoC and the successful Resolution Applicant. The Resolution Plan cannot be construed purely as a 'contract' governed by the Contract Act, in the period intervening its acceptance by the CoC and the approval of the Adjudicating Authority. Even at that stage, its binding effects are produced by the IBC framework. The BLRC Report mentions that "[w]hen 75% of the creditors agree on a revival plan, this plan would be binding on all the remaining creditors". The BLRC Report also mentions that, "the RP submits a binding agreement to the Adjudicator befor....
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....and a delayed liquidation is harmful to the value of the Corporate Debtor, the recovery rate of the CoC and consequentially, the economy at large." 17. Further in para 249, the Hon'ble Supreme Court noticed the cause for deviation of the original objective and timeline for CIRP. It was also noticed that "late and unsolicited bids by Resolution Applicants after the original bidder becomes public upon passage of the deadline for submission of the plan' is a reason for deviation of the original objective and timeline. In para 249, following has been stated:- "249. In its observations, the Report noted that a delay in the resolution process with more than seventy-one per cent cases pending for more than 180 days is in deviation of the original objective and timeline for CIRP that was envisaged by the IBC129. The delays were attributable to: (i) the NCLT taking considerable time in admitting CIRPs; (ii) late and unsolicited bids by Resolution Applicants after the original bidder becomes public upon passage of the deadline for submission of the Plan; and (iii) multiplicity of litigation and the appellate process to the NCLAT and the Supreme Court130. Such inordinate delays ca....
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....orporate debtor and Rs. 4 crores towards working capital for the corporate debtor. 7. After elaborate discussions, Adjudicating Authority rejected the application on two grounds, firstly the A-1 has come after the submissions of approved resolution plan to the Adjudicating Authority and secondly the COC or RP has not sought any relief to recall the approved resolution plan and for allowing them to reconsider the approved resolution plan along with the new resolution plan offering better value. Adjudicating Authority suo moto cannot direct the COC to consider the new resolution plan and re-consider the already approved resolution plan. As the decision of the COC accepting or rejecting the resolution plan is limited to the grounds mentioned in Section 30(2) and purely commercial decision of COC cannot be adjudicated by the Adjudicating Authority. Thus Adjudicating Authority rejected the application of the A-1, and approved the plan by the impugned order". 20. This Tribunal after noticing the judgment of the Hon'ble Supreme Court in "Committee of Creditor of Essar Steel India Ltd. vs. Satish Gupta- 2019 SCC OnLine SC 1478" made following observations in para 17:- ....
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....w willing to consider the plan of the Respondent No.3 does not in any manner shall take away the finality of plan of Appellant approved by the CoC. 24. Learned Counsel for the Respondent No.3 has also emphasised that the commercial wisdom of the CoC cannot be questioned by the Appellant. The present is not a case where issue of commercial wisdom of the CoC regarding approval or disapproval of the plan is under consideration. In exercise of commercial wisdom, CoC has already approved the plan of the Appellant in its meeting dated 26.08.2021 on the basis of voting share of 98.55%. 25. Learned Counsel for the Respondent No.3 has emphasized that the plan which is being submitted by Respondent No.3 is of much higher value and is favourable to the Corporate Debtor. After approval of the Resolution Plan by the CoC by requisite vote and after expiry of CIRP, it is not open for the CoC to contend that it is ready to consider the plan of Respondent No.3 which according to it may be better plan. 26. Another judgment of this Tribunal has been relied by the Learned Counsel for the Appellant is "Kalinga Allied Industries India Pvt. Ltd. vs. Hindustan Coils Ltd.- 2021 SCC OnLine NCLAT 51....
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....ssar Steel India Ltd. Vs. Satish Gupta & Ors. 2019 SCC Online SC1478 held that: "In the light of the above pronouncement of Hon'ble Supreme Court, we have examined the issues raised in these Appeals. Admittedly, the A-1 filed its resolution plan before the Adjudicating Authority on 13.02.2019 whereas, the last date for submission of Resolution Plan before RP was 15.10.2018. Resolution plan of successful Resolution Applicant i.e. Dera Finvest Pvt. Ltd. (R2) was approved by 98.72 % of the Committee of Creditor in e-voting conducted on 01.11.2018 and 02.11.2018. When the Resolution Plan is filed before the Adjudicating Authority then the Authority has to satisfy that the Resolution Plan approved by the Committee of Creditor fulfils the requirements as specified in Sub-Section 2 of Section 30. However, the Adjudicating Authority cannot direct the CoC to consider the second Resolution plan submitted before the Authority although the second Resolution Applicant is ready to invest more amount in comparison to first Resolution Applicant. Learned Adjudicating Authority has rightly held that Adjudicating Authority cannot suomotu direct the CoC to consider new resolution plan and rec....