TaxTMI 
TaxTMI 
2022 (9) TMI 1128
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....ory dues have been paid 100%. 2. Facts in brief, are that the Adjudicating Authority admitted the Petition and CIRP was initiated on 18.02.2020 and the Appellant/'Operational Creditors' filed their 'Claims' before the IRP for an amount of Rs.11,05,850/- on 14.03.2020. On 07.01.2021, the Resolution Applicant was directed to give details regarding whether the interest of the 'Operational Creditors' was in adherence to Section 30(2) of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'The Code'). The 'Operational Creditors' issued a Notice dated 20.01.2021 to the RP and the COC Members claiming that their dues of Rs.51,91,935/- is payable. Another Notice was issued on 22.01.2021 seeking all the documents which the RP had relied upon for assessing the Liquidation Value of the 'Corporate Debtor', but there was no response. It is averred that the Appellant received an email dated 23.01.2021 from the Respondent/'Financial Creditor' requesting the RP to fix a CoC Meeting in view of the objection raised by the 'Operational Creditors' and observations made by the Adjudicating Authority in the Order dated 15.01.2021. The Adjudicating Authority while addressing to the i....
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....as offered value of Rs. 655.21 lakhs, which is more than the liquidation value and it is further observed that there are two situations under Section 53, under situation 1, the amount payable to the operational creditors in the event of liquidation is NIL and in situation 2, the amount payable to the operational creditor is also NIL. Therefore, in our considered view that the provision regarding the payment of Operational Creditor to the extent of 2% is in accordance with the provision of Section 30(2) (b) of the IBC and Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 89. For the reasons discussed above, we are of the considered view that the contention of the applicant, in the event of liquidation, the Operational Creditor is entitled to get more than the amount, which is proposed to paid to the Operational Creditor, in our considered view is not liable to accepted........................... 93. In view of the aforesaid decision, we are of the considered view that since the power of adjudicating authority while considering the Resolution Plan which was duly approved by the CoC ....
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....r' and is part of the CoC. The 'Operational Creditor' was never given any Notice of the CoC nor were they shared the Resolution Plan or their comments taken. Learned Counsel placed reliance on Section 24(3)(c) of the Code and Regulation 35(2) of the IBBI Regulations, 2016, in support of his case. 5. Learned Counsel for the Appellant has placed reliance on the Judgements of the Hon'ble Supreme Court in 'Vijay Kumar Jain' Vs. 'Standard Chatered Bank & Ors., AIR 2019 SC 2377, 'ANG Industries Ltd.' Vs. 'Shah Brothers Ispat Pvt. Ltd. & Anr.', Company Appeal (AT) (Insolvency) No. 109 of 2018 and 'Swiss Ribbons Pvt. Ltd. & Ors.' Vs. 'Union of India (UOI) & Ors.', (2019) 4 SCC 17. 6. It is the case of the first Respondent that the RP Mr. Atul Jain has only assumed charge on 15.07.2020; that there is no discrimination against the 'Operational Creditor' and the revised Resolution Plan was approved with 100% Voting Shares in the CoC Meeting held on 17.01.2021 providing for payment of dues to the employees; neither the RP nor any Creditor can question the Commercial Wisdom of the Members of the CoC; that the true purport of the Order dated 15.01.2021 passed by the Adjudicating Authority ....
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....al Creditor' who had 82% Voting Rights and was the de facto Committee of Creditors who initially filed their 'Claims' as a 'Secured Financial Creditor' and got it verified by the then IRP. The Resolution Plan was approved by the CoC with 100% voting and the said Mr. Maheshwari represented the entire CoC on both the occasions. The value which Mr. Maheshwari has offered was less than half of what the current SRA has paid. It is submitted that in the present Appeal, the averments are verbatim to the averments in the Interlocutory Application No. 641/2021 and the Application filed by SM Finlease who are hand in glove and making an attempt to derail the proceedings. The Information Memorandum contains all the details of the 'Corporate Debtor' including the Contracts and Purchase Orders receipt. It is argued that the Appellant are not entitled to know the Liquidation Value of the 'Corporate Debtor' or question the Liquidation Value arrived at by the valuers registered by the Insolvency and Bankruptcy Board of India. Reliance in this regard is placed upon Regulation 35 of the IBBI Regulations, 2016, whereby only the Members of CoC are entitled to know the Fair Value and the Liquidation Va....
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.... (6A) of section 21 and sub-section (5)]; (b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be; (c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent. of the debt. (4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings: Provided that the absence of any such director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting. (5) Any Creditor Subject to sub-sections (6), (6A) and (6B) of section 21, any creditor] who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors: Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor. (6) Each creditor shall vote in accordance with ....
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....ention that the 82% shareholder whom the Appellant states had raised objections which were not adhered to, had also attended the Meeting and approved the Plan. 12. Now we address to the contention of the Appellant that a copy of the Plan was never given to them and they did not know the Liquidation Value of the 'Corporate Debtor'. Regulation 35 of IBBI Regulations, 2016, read as follows: "35. Fair value and Liquidation value - (1) Fair value and liquidation value shall be determined in the following manner:- (a) the two registered valuers appointed under regulation 27 shall submit to the resolution professional an estimate of the fair value and of the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor; (b) if in the opinion of the resolution professional, the two estimates of a value are significantly different, he may appoint another registered valuer who shall submit an estimate of the value computed in the same manner; and (c) the average of the two closest estimates of a value shall be considered the fair ....
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....espass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insofar 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" 152. It can thus be seen, that this Court has clarified, that the limited judicial review, which is available, can in no circumstance trespass upon a business decision arrived at by the majority of CoC. 153. In the case of Maharashtra Seamless Limited (supra), NCLT had approved the plan of appellant therein with regard to CIRP of United Seamless Tubulaar (P) Ltd. In appeal, NCLAT directed, that the appellant therein should increase upfront payment to Rs.597.54 crore to the "financial creditors", "operational creditors" and other creditors by paying an additional amount of Rs.120.54 crore. NCLAT further directed, that in the event the "resolution applicant" failed to undertake the payment of additional amount of Rs.120.54 crore in addition to Rs.477 crore and deposit the said amount in escrow account....
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....sought to be urged, that since there has been a material irregularity in exercise of the powers by RP, NCLAT was justified in view of the provisions of clause (ii) of subsection (3) of Section 61 of the I&B Code to interfere with the exercise of power by RP. However, it could be seen, that all actions of RP have the seal of approval of CoC. No doubt, it was possible for RP to have issued another Form 'G', in the event he found, that the proposals received by it prior to the date specified in last Form 'G' could not be accepted. However, it has been the consistent stand of RP as well as CoC, that all actions of RP, including acceptance of resolution plans of Kalpraj after the due date, albeit before the expiry of timeline specified by the I&B Code for completion of the process, have been consciously approved by CoC. It is to be noted, that the decision of CoC is taken by a thumping majority of 84.36%. The only creditor voted in favour of KIAL is Kotak Bank, which is a holding company of KIAL, having voting rights of 0.97%. We are of the considered view, that in view of the paramount importance given to the decision of CoC, which is to be taken on the basis of 'commercial wisdom', NC....