TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 934
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....thority has approved the Resolution Plan under Sub-section (1) of Section 31 of the I&B Code, 2016. Brief Facts: Appellant's Submissions: 2. Sh. Abhijeet Sinha, Learned Counsel for the Appellant has submitted the brief facts. It is submitted that the Appellant is aggrieved by the impugned order dated 02.01.2020 in approving the Resolution Plan of 3rd Respondent herein is in complete contravention to the objects and provisions of the I&B Code, 2016 and its Regulations thereof. The Appellant is one of the prospective Resolution Applicant whose plan has been rejected by the Committee of Creditors in its 9th meeting dated 26.07.2019 and the same was approved by the Adjudicating Authority (NCLT). 3. The Corporate Debtor was admitted into CIRP vide order dated 03.12.2018, the RP made a public announcement on 06.12.2018 and CoC was constituted consisting of sole Financial Creditor i.e. 2nd Respondent herein who holds 100% voting right. The RP published The Expression of Interest (EoI) on 01.02.2019 for inviting prospective Resolution Applicants and the Appellant submitted an EoI on 15.02.2019. The RP issued RFRP (Request for Resolution Plan) on 07.03.2019 and the Appellant submitted i....
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....tter of the Appellant dated 24.08.2019 was put for discussion and the RP vide e-mail dated 03.09.2019 informed the Appellant that the CoC stood by its decision taken on 26.07.2019 and never intended to have a revised bid process. 7. The Appellant filed an application under Section 60(5)(c) of the Code, 2016 challenging the CoC decision dated 26.07.2019 for declaring 3rd Respondent as the highest bidder and approving its plan. 8. Apart from the facts as stated above, the Learned Counsel raised following grounds in the Appeal stating that the Adjudicating Authority has failed to appreciate the material irregularity, referred to in Section 61(3)(ii), which includes incorrect calculation of the evaluation criteria provided for in the RFRP. It is stated that the Appellant had scored 32 marks in the parameter of upfront payment, however, in the parameter of NPV payments to be made within 0-5 years, the Appellant was awarded astonishing 0. The Adjudicating Authority failed to appreciate the true and correct interpretation of Section 30(5) of the I&B Code, 2016. Further, the Adjudicating Authority failed to appreciate the law laid down by this Tribunal in Padmanabhan Venketesh Vs. Shri V....
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....g. While so, this Respondent informed the CoC that vide mail dated 25.07.2019 the Appellant submitted its revised Resolution Plan. The CoC was of the view that the said revised Resolution Plan is not to be considered. Further, the CoC was of the view that even after the calculations, it was found that even if the figures of their revised Resolution Plan are put in the evaluation matrix the said resolution applicant (Appellant) continues to be H2. 14. It is submitted that after deliberations and discussions, the Resolution Plan put up for voting and the CoC approved the plan by 100% voting minuted as under: "To approve the Resolution Plan submitted by Shree Metals Mujibi Private Limited for the CD, Era T & D Ltd. and authorize the Resolution Professional to submit the approved Resolution Plan before the Hon'ble NCLT for approval thereof. The above resolution is resolved as under: "RESOLVED THAT" in accordance with sections 30(4) & 30(6) of the Code read with regulations made thereunder, the approval of the members of Committee of Creditors be and is hereby accorded to the Resolution Plan submitted by Shree Metals Mujibi Private Limited for the CD, Era T&D Ltd. and for filing ....
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....cants. Upon going through the entire observations made by the RP and in accordance with the evaluation matrix and financials provided by the PRAs, the CoC compared the plan and provided the scores. On the other hand, the 3rd Respondent viz. Successful Resolution Applicant was infusing a total amount of Rs.11.5832 crores to be paid within a period of 12 months. The decision of the CoC in approving the plan of the 3rd Respondent was communicated to the Appellant vide e-mail dated 16.08.2019. On the basis of evaluation matrix, the 3rd Respondent has been categorised as H1 bidder and the Appellant still fell within the category of H2 bidder. The Appellant has proposed to make entire payment within 30 days, thus, upon evaluating the proposal of payment with the evaluation matrix, the Appellant has taken the benefit under parameter mentioned at point No A1 and has been granted 32 points. The Appellant revised its plan by enhancing its proposed finance from Rs.10 crore to 12.06 crore, the fresh equity infused in the operation of the corporate debtor still remained Rs. 98.96 lacs i.e. 3.77% thus, upon evaluating the plan provided by the Appellant with the evaluation matrix, it is evident t....
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....0.05.2019 and upon evaluating the plan, the CoC approved the same on 26.07.2019 and the formalities were completed on 13.08.2019. The plan has been implemented and 5 meetings of monitoring committee have already taken place on 09.01.2020, 22.01.2020, 04.02.2020, 24.02.2020 and 17.03.2020. The following steps have already been taken in respect of the Corporate Debtor that a sum of Rs.8,30,00,000/- has been transferred to the account of the Corporate Debtor by this Respondent and the performance bank guarantee has been released by this Respondent. The dues payable to the employees of the Corporate Debtor and the 2nd Respondent have already been paid. The financial statement up to 02.01.2020 has been prepared under the aegis of the monitoring committee. The Board of Directors of the Corporate Debtor has been modified and the representatives of this Respondent have been appointed as the Directors of the Corporate Debtor. It is submitted that in view of the compliance of the resolution plan by this Respondent, the Appeal is liable to be dismissed as infructuous. 24. The Learned Counsel has also relied upon the judgment of the Hon'ble Supreme Courts in (i) K. Sashidhar Vs. Indian Overse....
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....s 9th meeting dated 26.07.2019 recorded the reasons for selecting the 3rd Respondent to be a Successful Resolution Applicant as under: "The above resolution is resolved as under: RESOLVED THAT in accordance with sections 30(4) & 30(6) of the Code read with regulations made thereunder, the approval of the members of Committee of Creditors be and is hereby accorded to the Resolution Plan submitted by Shree Metals Mujibi Private Limited for the CD, Era T&D Ltd and for filing of the approved Resolution Plan with Hon'ble Adjudicating Authority i.e. NCLT by RP." Reasons for selection of CoC are: The Resolution Plan addresses the interest of all the stakeholders and provides for a time-bound resolution of corporate debtor in a very short period of time. There is no layoff of workmen and employees of the Corporate Debtor and no change in their employment terms or conditions. Comments on feasibility and viability of CoC: The Resolution Applicant has progressive figures in their revenue generation in Balance Sheet for the year 2015-16 Rs.135.70 Cr. 2016-17 Rs.228.28 Cr. And for 2017-18 Rs.301.51 Cr. Besides they have strong net-worth of 2015-16 Rs.8.11 Cr. 2016-17 Rs. 11.71 Cr. A....
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....hority 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 sub-section (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 Statement 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 an authorities to whom statutory dues are owed), guarantors and others 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). 32. In this regard, the procedure has been enunciated regarding approval of Resolution Plan under Regulation 39 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which emphasises the approval of Resolution Plan. Sub-regulation (1) thus, provides, a prospective Resolution Applicant in the final list may submit Resolution Pla....
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....dify the plan." 36. From the record and the order passed by the Adjudicating Authority, this Tribunal finds that there is neither any material regularity nor contravention of any provisions of law by the CoC and the plan has been rightly approved by the Adjudicating Authority. Moreover, as stated supra, the plan has been approved by the sole member of CoC with 100% voting share in their commercial wisdom as contemplated under the law. Therefore, the commercial wisdom of the creditors is paramount and cannot be interfered with by the Adjudicating Authority or this Tribunal. Precedents: 37. The Hon'ble Supreme Court in the matter of: (i) K. Shashidhar Vs. Indian Overseas Bank (2019) 12 SCC 150, paras 52, 58, 59 and 64 held that; "52. As aforesaid, upon receipt of a rejected resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC much less to enquire into the justness of the rejection of the resolution plan....
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....cise plenary powers. 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. The fact that substantial or majority percent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 06.06.2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter−III of the I&B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October, 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified percent (25% in October, 2017; and now after the amendment w.e.f. 06.06.2018, 44%). The inevitable outcome of voting by not less than requisite percen....
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.... in our opinion, proceeded on equitable perception rather than commercial wisdom. On the face of it, release of assets at a value 20% below its liquidation value arrived at by the valuers seems inequitable. Here, we feel the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. Such is the scheme of the Code. Section 31(1) of the Code lays down in clear terms that for final approval of a resolution plan, the Adjudicating Authority has to be satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on which an Adjudicating Authority has to be satisfied. That factor is that the resolution plan has provisions for its implementation. The scope of interference by the Adjudicating Authority in limited judicial review has been laid down in the case of Essar Steel (supra), the relevant passage (para 54) of which we have reproduced in earlier part of this judgment. The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not thi....