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TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 101
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.... Law Tribunal, New Delhi Bench- V), whereby the 'Adjudicating Authority', in first 'impugned order' dated 13.02.2023 passed in IA 878/2023 'Plan Objection Application' raising objection to the 'Resolution Plan' approved by the 'Committee of Creditor' (in short 'CoC') was dismissed and the Second 'impugned order' dated 09.03.2023 passed in IA 5027 of 2022 (Plan Approval Application) was approved by the 'Adjudicating Authority'. 2. Aggrieved by the same, the 'Appellant' has preferred the present appeals. 3. Heard the Counsel for Parties, perused the records and including cited judgments. 4. Learned Counsel for the Appellant stated that the Plan was approved by the CoC in contravention to the provisions of the law, as the 'Swiss Challenge Method' was not conducted in accordance with stipulated guidelines of RBI to the extent that second highest bidder (H2) i.e., M/s Serveall Land Developers Pvt. Ltd. in 'Swiss Challenge Method' was selected as Successful Resolution Applicant (in short 'SRA'). Learned Counsel for the Appellant alleged that the 'Respondent/ Resolution Professional' in connivence with the sole secured 'Financial Creditor' i.e. Bank of Baroda manipulated Swiss Challeng....
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....rned Counsel for the Appellant stated that the Plan submitted by the SRA was vague and did not provide any specific source of funding making it uncertain and unviable plan. 8. Learned Counsel for the Appellant submitted that the Resolution Plan which was approved and recommended by the CoC to the 'Adjudicating Authority' was later modified by the Resolution Professional without seeking the fresh approval of the CoC and obtained approval from the 'Adjudicating Authority' directly in violation of the law. Learned Counsel for the Appellant stated that initially M/s Damont Developers Pvt. Ltd. was admitted as Unsecured Financial Creditor along with Sikka Hotels and Resorts Pvt. Ltd. who had voting percentage in CoC of 10.46% and 4.54% respectively along with sole secured Financial Creditor i.e. Bank of Baroda having 85% of voting share in the CoC. However, later M/s Damont Developers Pvt. Ltd. was removed from the CoC and the 'Appellant' was included in the CoC with reduced voting percentage. Learned Counsel for the Appellant stated that in earlier composition of CoC, the combined voting percentage of two Unsecured Creditor was 15% and voting percentage of Sole Financial Creditor was ....
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....licants' (4th Resolution Applicant was not considered in absence of his EMD). Learned Counsel for the Respondent stated that it was decided to allocate 90% weightage based on quantitative score i.e., consideration for Creditors (cash upfront + NAV of the deferred payments) and remaining 10% on qualitative scores. Learned Counsel for the Respondent stated that based on these pre-determined parameters in the Evaluation Matrix, M/s Serveall Land Developers Pvt. Ltd. was declared as highest bidder (H-1) which was duly approved by the CoC in the 47th CoC Meeting held on 03.10.2022 with 85% voting and other remaining 15% voting the then Unsecured Financial Creditors members preferred to remain absent on all voting agenda. 12. Learned Counsel for the Respondent stated that on 11.10.2022 Plan Approval Application i.e., I.A. No. 5027/2022 was filed before the 'Adjudicating Authority' and, in the meantime, the 'Appellant' also filed I.A. No. 1439/2020 for seeking admission of the Appellant's claim which was finally decided vide order dated 30.11.2022 by the 'Adjudicating Authority' directing the 'Respondent' to admit the claims of the 'Appellant' as an Unsecured Financial Creditor. Learned ....
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....that it is a settled law that the commercial wisdom of the CoC cannot be challenged by anyone and no judicial scrutiny is therefore warranted. Learned Counsel for the Respondent also submitted that in terms of Regulation 12(3) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 the validity of decision taken by the CoC prior to such inclusion cannot be affected. 18. Learned Counsel for the Respondent, summarising his arguments, urged to dismiss these 'Appeals'. 19. Learned Counsel for the Successful Resolution Applicant, supported by and large, the averments of the Learned Counsel for the Respondent. 20. Learned Counsel for the Successful Resolution Applicant stated that after the Swiss challenge process, all resolution applicants were also permitted to tender final offers and the SRA's Plan provided an amount of Rs. 61,21,03,175/- for the sole secured creditor and an amount of Rs. 48,96,825/- for the two unsecured creditors (namely Damont Developers P. Ltd & Sikka Hotels & Resorts P. Ltd). Learned Counsel for the Successful Resolution Applicant stated that in terms of Section 30(4) of the Code, the distribution....
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....n plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, 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 non-justiciable." 23. We have perused the relevant records including the relevant minutes of the CoC Meetings which considered the 'Resolution Plan' and the 'impugned orders' under challenge. Prima-facie detailed reasoning have been recorded in the minutes of the CoC regarding distribution of the amount amongst the 'Creditors' and the same has been adjudicated suitably by the 'Adjudicating Authority' in accordance with law. 24. The main point as emerged from the above discussion requiring the decision of this 'Appellate Tribunal' is to determine, whether the approval of 'Resolution Plan' and distribution of funds amongst the 'Creditors' was legal and correct in accordance with law or otherwise. The 'Appellant' has taken shelter of the judgment of MK Rajagopala....
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....inancial Creditors gained in absolute terms for getting more distribution which is evident from the fact that the M/s Sikka Hotels & Resorts Pvt. Ltd. who were initially getting Rs. 14,81,509/- were finally allocated Rs. 33,23,216/-. We also observe that the sole Financial Creditor continue to get the exact same amount i.e. Rs. 61,21,03,175/- in both the scenarios and total earlier proposed and subsequently distributed to Unsecured Financial Creditors also remained the same as Rs. 48,96,826/-. 28. As regard, the judgment cited by the Appellant' i.e. MK Rajagopalan (Supra), this Appellate Tribunal has carefully gone through the judgment and find that this is not applicable in the present appeals, being based on different facts. The main issue before the Hon'ble Supreme Court of India in MK Rajagopalan (Supra), was regarding non submission of the revised plan to the CoC for consideration and directly taking to the 'Adjudicating Authority' without benefit of commercial wisdom of the CoC. In contrast, herein there is no change in the Resolution Plan or change in overall amount or change in amount of inter-se distribution between two classes of Creditors i.e. Secured Financial Creditor....