TaxTMI 
TaxTMI 
2022 (8) TMI 649
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....al may deem fit in the facts and circumstances of the matter. 2. The Respondent No. 1 is Nivaya Resources Private Limited (formerly known as GP Global Energy Private Limited), (the successful resolution applicant of the Corporate Debtor), a company registered under the Companies Act, 2013, having its registered address at Gandhidham Kachchh, Gujarat. Brief facts are as under: 3. The Applicant had filed a petition for initiation of CIRP of the Corporate Debtor under section 7 of the Code, which was admitted on 2nd May, 2019 and Mr. Divyesh Desai was appointed as IRP, who was confirmed as RP on May 31, 2019. 4. The Respondent No. 1 had submitted a resolution plan which was approved in the 17th CoC meeting held on 10th February, 2020 with 82.41% voting share of CoC members. A copy of the resolution plan is attached. 5. It is submitted by the Applicant that at the time of negotiations in relation to the resolution plan of the Respondent No. 1 and while considering the feasibility and viability prior to the approval of the aforementioned resolution plan, the following issues were discussed and highlighted: a. After the plan was approved applicant sought from CoC, additional time ....
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....'ble Tribunal bearing number IA No. 159 of 2020 for approval of the resolution plan of the Respondent No. 1. 7. Subsequent to the approval of the resolution plan of the Respondent No. 1 by the CoC, the following facts came to the light and in the knowledge of CoC: a. The credit rating of the Respondent No. 1 has deteriorated considerably and it was classified as 'default rating' for delays in servicing its debt obligations due to poor liquidity position. A copy of the default rating for the Respondent No. 1 as on June 04, 2021 is attached herewith and marked as Annexure-C. b. The National Company Law Tribunal, Principal Bench vide its order dated November 01, 2021 in the matter of Mr. Sandeep Mahajan, Monitoring Professional (Resolution Professional as appointed for Allied Strips Limited) vs GP Global Energy Private Limited [CA No. 1246/2019 in CP (IB) No. 46/2018] referred the matter to the Insolvency and Bankruptcy Board of India ("IBBI") for taking appropriate action in light of the default in the obligations by the Respondent No. 1 as the successful resolution applicant of Allied Strips Limited. The Hon'ble Principal Bench allowed the forfeiture of a sum of....
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....o reconsider the resolution plan and call for new resolution plans from fresh proposed applicants if required. It is of utmost importance for the lenders to reconsider the resolution plan of Respondent No. 1 in order to achieve timely resolution of the Corporate Debtor and maximizing the value of the Corporate Debtor, as envisaged under the Code. It is also important to ensure that the Corporate Debtor is successfully resolved upon acquisition by the resolution applicant and Resolution Plan gets fully implemented. 11. It was submitted in furtherance to the aforementioned facts, that it is pertinent to highlight that in the background of defaults in obligations under the approved resolution plans in the CIRP of Allied Strips Limited and Tirupati Infraprojects Private Limited, and the order of the Hon'ble Principal Bench in the aforementioned matters, it is necessary for the resolution plan to be remanded back to the CoC for reconsideration and compliances. On account of the aforementioned default, which was not apprised or disclosed to the CoC, Respondent No. 1 has misrepresented the facts and provided false undertakings in its resolution plan. 12. Thus, it is absolutely clear....
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....creditors is non-justiciable and thereby it is within the domain of the committee of creditors to review their decision. 16. The Hon'ble Supreme Court in the case of Jaypee Kensington Boulevard Apartments Welfare Association & Ors. vs NBCC (India) Limited & Ors. has held that in the event the resolution plan requires modifications, the adjudicating authority must send back the resolution plans to the committee of creditors to reconsider. A similar position has been upheld by the Hon'ble Supreme Court in the case of Committee of Creditors of Essar Steel India Ltd., Through authorized signatory vs Satish Kumar Gupta & Ors. [(2020) 8 SCC 53], wherein it was held that "Thus, while the Adjudicating Authority cannot interfere 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 account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that interests of all stakeholders including the operational creditors has been taken care of If the adjudicating authori....
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...., consciously, has not provided any ground to challenge the "commercial wisdom " of the individual financial creditors or their collective decision before the adjudicating authority. That is made nonjusticiable." 2. Adjudicating Authority has the right to send back the resolution plan to CoC: i. The Hon'ble Supreme Court in the case of Committee of Creditors of Essar Steel India Ltd., Through authorized signatory vs Satish Kumar Gupta & Ors. [ (2020) 8 SCC 53],(decided on 15.11.2019) ("Essar Steel Judgement") has clearly held that, while considering the resolution plan, in case the AA feels that there is some reason to alter the resolution plan or in case the relevant parameters are not addressed, they have a right to send the resolution plan back to the CoC. Relevant portion of paragraph No. 73 of the said judgement is quoted below: "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 a 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....
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...., it finds in public interest and the amount of loss which the public exchequer is to bear with such unprecedented haircut in such a large fund employment, it is in the fitness of thing that the proposal can be remanded back to the CoC, particularly, in view of their own affidavit to review their decision. The CoC is not functus -officio on the approval of the Resolution plan and accordingly, the judicial precedents clearly established that the Adjudicating Authority and this Tribunal is competent to send back the Resolution plan to the CoC for reconsideration." iv. From reference to the above, it is crystal clear that NCLT does have the right to send back resolution plan for reconsideration, if requested by the CoC. 3. Right to exercise commercial wisdom has an implied right to review the same: The Hon'ble NCLAT, in the Videocon Judgement, has clearly stipulated that along with the right to exercise commercial wisdom, the CoC has the right to review such a decision. In the instant case, even though CoC had approved the plan already, pursuant to an affidavit filed by the CoC, the Tribunal considered the request and allowed the plan to be sent back to the CoC for considerati....
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.... otherwise impact." 20. Through the written submissions, Respondent No. 1 made the following submissions: a) The only other plan submitted during CIRP has already been rejected: * It is an admitted fact that the only other resolution applicant, i.e., M/s. Panch Tatva Promoter Pvt. Ltd., who had filed the application before this AA which was dismissed on July 3, 2020, and thereafter the said applicant filed an appeal before NCLAT and the said appeal was also dismissed on August 18, 2021. The said unsuccessful resolution applicant then filed appeal before Hon'ble Supreme Court, and the said appeal was also dismissed on September 17, 2021. M/s. Panch Tatva Promoters Pvt. Ltd. was given eight opportunities by the same CoC to revise its plans, but all such plans were found to be non-compliant by CoC. b) CoC's soft corner for M/s. Panch Tatva Promoter Pvt. Ltd., for unknown reasons: * In an appeal preferred by M/s. Panch Tatva Promoter Pvt. Ltd. against the order dated July 3, 2020 passed by this AA before the NCLAT wherein, the CoC tried to support the Appellant therein by taking a similar stand, which is presently sought before this AA. * It is to be noted the appeal....
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....ubmissions made by the applicant and the respondents. The issue is whether a resolution plan which is already approved by the CoC, and which is pending before the Adjudicating Authority for approval can be withdrawn for reconsideration by the CoC on the discovery of new facts and events relating to the resolution applicant and whether the Adjudicating Authority is empowered to send back the resolution plan, on such request, to the CoC. 22. It is noticed that the present application was filed by the Asset Reconstruction Company (India) Ltd., being the authorised representative of the CoC by passing the resolution with 96.95% for filing the present application. It is also noticed that the parent company of Respondent No. 1, i.e., Gulf Petrochem FCZ has been declared bankrupt and there is a freezing injunction on the promoters. The credit rating of the Respondent No. 1 is in default as on June 04, 2021. The successful resolution applicant has defaulted in other CIRP of M/s. Allied Strips Ltd. and M/s. Tirupati Infraprojects Pvt. Ltd., wherein also he was the successful resolution applicant. In this background, the present application has been moved by the CoC/lenders, with 96.95% vot....
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....they have a right to send the resolution plan back to the CoC. For sake of ready reference, the relevant para of the said order is reproduced: "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 a 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 account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan ....