TaxTMI 
TaxTMI 
2022 (1) TMI 1415
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....e with Mr. Rajendra Barot Ms. Neerja Balakrishnan, and Ms. Apoorva Gupta, Advocates. For the Respondent : Mr. Abhinav Vasisht, Sr. Advocate Ms. Meghna Rajadhyaksha with Ms. Radhika Indapurkar, Mr. Vaijayant Paliwal, Mr. Bryan Pillai, Mr. Anoop Rawat, Mr. Zeeshan Khan, Ms. Moulshree Shukla, Ms. Priya singh, Ms. Ishani Mookherjee Advocates for RP, R-1. Mr. Gopal Jain, Sr. Advocate with Mr. Diwakar Maheshwari, Mr. Karan Mehta and Ms. Shreyas Edupuganti, Advocates for R-2. Mr. Tushar Mehta, Solicitor General, with Biswajit Dubey, Ms. Surabhi Khattar and Mr. Madhav Kanoria Mr. Kanu Agarwal and Mr. Prafful Goyal Advocates for COC. JUDGMENT DR. ASHOK KUMAR MISRHA, TECHNICAL MEMEBR Contents: SL No. Particulars Para No. Page No. A. Brief Background 04-08 12-16 B. Submissions by the parties 09-18 17-174 C. Analysis of facts, law and reasons 19-49 174-212 D. Conclusion 50 213 1. All these appeals have been filed by the 'Appellants' under Section 61 of the 'Insolvency and Bankruptcy Code, 2016' (in short 'Code') against the impugned order dated 08.06.2021 passed by the 'Adjudicating Authority' (National Compan....
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....of instalments in the year 2016 onwards. 5. It is also reflected from the 'Appeal Paper book' that VIL and its other group companies (12 domestic subsidiary) and their lenders entered into a 'Syndicated Rupee Term Loan Agreement' dated 08.08.2012 as-obligor - co-obligator on the one hand and the banks and financial institutions as the group of lenders with SBI as Facility Agent and SBICaps Trustee Company Limited as the onshore Security Trustee. Entities of Videocon group with respective orders were under CIRP and the action taken by the lead bank i.e. SBI under Section 7 of the Code and few companies who are also part of the group, certain 'Operational Creditors' (OC) had filed insolvency petition. List of 13 Videocon group companies taken from Form- H- Compliance Certificate given by RP at 70 of the Appeal paper book in CA(AT) (Ins) No. 505 of 2021. Table - 1 Sl No. Name of the Videocon group company Insolvency commencement date Date of appointment of the IRP Date of appointment of RP 1. Videocon Telecommunications limited 11.06.2018 11.06.2018 10.07.2018 2. Electroworld Digital Solutions Ltd 30.08.2018 30.08.2018 10.10.2018 3....
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....t the Resolution Plan of 'Successful Resolution Applicant' (SRA) was approved by the CoC by 95.09 % voting share. However, the 'Assenting Financial Creditors' (AFC) constituting 94.98%, who have approved the Resolution Plan submitted by the SRA has filed an affidavit stating that they feel duty bound to reconsider their decision in larger public interest resulting from unprecedent haircut of 95% & observations of the Adjudicating Authority as also this Appellate Tribunal while granting interim stay on the impugned order dated 08.06.2021 at the hearing on 19.07.2021 observing the followings stated hereafter. "14. Considering the observations of the Adjudicating Authority and the submissions made by the Learned Sr. Counsel for Appellants in both these Appeals and the grounds raised in these Appeals, and considering the exceptional facts of present matter the Impugned Order is stayed till the next date and status quo ante as before passing of the Impugned Order is directed to be maintained. Resolution Professional will continue to manage the Corporate Debtors as per provisions of IBC till the next date". 8. AFC have accepted that proceedings with the implementation of the ....
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....king of CoC. However, this has been belatedly violated in this case. iii. It was also stated by the Ld. Sr. Counsel for the Appellant that the 'Adjudicating Authority' has made observations and directions to the CoC to make payments as per liquidation value to all 'Dissenting Financial Creditors' in cash up-front. While the Resolution Plan also envisages payment through 'NonConvertible Debenture' (NCD). These changes the nature of the plan which requires reconsideration by the CoC independently. They have also cited the judgment of Hon'ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Associations & Ors. Vs. NBCC (India) Ltd. & Ors. in Civil Appeal No.3395 of 2020 at para 126 to 130. The ld. Sr. Counsel also stated that the said judgment of Hon'ble Apex Court has specifically held that 'modification in payment is a commercial aspect and falls within the exclusive domain and commercial wisdom of the CoC and cannot be interfered. Such modification is not permissible'. iv. Clause 3.5 of the 'Resolution Plan' (appearing at page 237-238 of the Appeal Paper Book) clearly reflects that the payment will also be made by way of NCD and 'there is no whisper....
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....stions for a particular modalities of distributions as they are the 'Process Advisor' of the CoC. He has also done valuation through two valuers registered with 'IBBI'. The distribution mechanism is said to have been done assuming that all 'Financial Creditors' will vote in favour of the 'Resolution Plan' and done prior to completion of voting. The distribution suggested by SBI Caps was not put vote to the CoC. What is to be paid to 'Dissenting Financial Creditors' is in 'Form -H' which has been submitted alongwith the plan and the same can only be paid on the approval of the CoC. ii. It is also stated by the RP that he was not in a position to determine the exact amount payable to the Appellant prior to the date of actual payment in view of eventualities that could arise. (Para 11 of Written Submission of the RP dated 17.09.2021 vide diary no.29811). iii. It is also stated by the RP that 'Dissenting Financial Creditors' can be paid in cash (para IV page 13 of the RP reply). He has also stated that the Resolution Plan was in compliance with the applicable provisions of the Code and the CIRP Regulations and there was no reason or occasion that the same should be se....
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.... * Kalpraj Dharamshi Vs. Kotak Investment Advisors CA No. 2943 of 2020 and * Ebix Singapore Private Limited Vs. Committee of Creditors of Educomp Solutions Limited CA No. 3224 of 2020 v. It has also stated that equitable considerations cannot influence the approval of the Resolution Plan, once the same has been approved by the CoC. It has also stated that the Resolution Plans and liquidation value relationship is relevant in view of the data available on the IBBI Website as on 30.06.2021. * Till date (upto 30th June 2021) only 393 CIRP processes yielded resolution plans; * 177 resolution plans out of 393 i.e.45% resolutions have had a realization which is 1.25 times the liquidation value or less; (Twin Star Resolution Plan was at a valuation of 1.25 times the liquidation value for 100% equity (92% stake of RA extrapolated to 100% as 8% equity is offer to Financial Creditors under the plan) * 82 resolution plans out of 393 resolutions i.e. 21% resolutions have had a realization below the liquidation value; * There are 11 approved resolution plans (out of 393) where the resolution value is between 99% and 101% of the Liquid....
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.... Secured Financial Creditors would get only 4.89%, Dissenting Secured Financial Creditors would get only 4.56%, Assenting Unsecured Financial Creditors would get only very meagre amount of 0.62%, Dissenting Unsecured Financial Creditors would get "NIL/ ZERO" amount and Operational Creditors would also get a very meagre amount of only 0.72%. Out of total claim amount of Rupees 71,433.75 Crore, claims admitted are for Rs 64,838.63 Cores and the plan is approved for an amount of only Rs 2962.02 Crore which is only 4.15% of the total outstanding claim amount and the total hair cut to all the creditors is 95.85%. Therefore, the Successful Resolution Applicant is paying almost nothing and 99.28% hair cut is provided for Operational Creditors (Hair cut or Tonsure, Total Shave). During the Course of hearing it is also submitted that voluminous number of Operational Creditors are also MSME and if they are paid only 0.72 % of their admitted claim amount, in the near future many of these Operational Creditors may have to face Insolvency Proceedings which may be inevitable, therefore this Adjudicating Authority suggests, requests both CoC and the Successful Resolution Applicant to increase the....
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....so they could have persuaded the Assenting Financial Creditors not to accept the Resolution Plan with such unprecedented huge haircut. This has necessitated a reconsideration by the CoC of the decision to accept the haircut of 95%. Considering the observations of the Adjudicating Authority and this Appellate Tribunal, Assenting Financial Creditor (AFC) majority of which are public sector banks and Financial institutions dealing with public money have to give serious consideration and weightage to the observations. Accordingly, in the fitness of thing, AFC has proposed to reconsider its decision in larger public interest so as to ensure that the public money is secured and maximized in the best possible manner. This is a peculiar fact of this case and requires reconsideration by certain AFC, particular, public sector banks and financial institutions. They have requested this Appellate Tribunal to remand the matter back to the CoC for its reconsideration including authorization after the reconsideration by the CoC to inter alia allow the CoC and the RP after the reconsideration of the CoC to conduct a fresh process of the inviting fresh 'Expression of Interest' (EoI) and 'Fresh Resol....
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....quires modification, the Adjudicating Authority (which would include this Appellate Tribunal by virtue of the scheme of the Code) must send back the resolution plan to the CoC to consider the modifications, as so to afford an opportunity to the resolution applicant to modify the plan, and CoC may then re-consider the plan and vote upon the same. Relevant observations of the Hon'ble Supreme Court in this regard is reproduced below: "The submissions made on behalf of the IRP in this regard are correct that if the Adjudicating Authority was of the view that the plan did not meet with any particular requirement, it could have only sent it back to the CoC to consider the proposed modifications, so as to afford an opportunity to the resolution applicant to modify the plan and to the CoC to reconsider and vote upon the same." iv. Thus, it has been made amply clear that the Adjudicating Authority (and this Appellate Tribunal) has powers to send the matter back to CoC for reconsideration. Thus, in the larger public interest, and in light of the observations made by the Adjudicating Authority and this Appellate Tribunal, the most appropriate course of action would be to rem....
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....rements referred to in Section 30(2) would include 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 after satisfying the aforesaid parameters. The reasons given by the Committee of Creditors while approving a resolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key fea....
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..... What is important is that it is the commercial wisdom of this majority of creditors which is to determine, through negotiation with the prospective resolution applicant, as to how and in what manner the corporate resolution process is to take place." The report of the Bankruptcy Law Reforms Committee, Volume I: Rationale and Design (November 2015) too had observed that the business decision regarding appropriate disposition of a defaulting company should be made solely by the CoC. The said observation has even been relied upon by the Hon'ble Supreme Court in the case of Kalpraj Dharamshi & Anr. Vs. Kotak Investment Advisors Ltd. & Anr., 2021 SCC OnLine SC 204, BlRC's relevant portion is reproduced below: "The Committee believes that there is only one correct forum for evaluation such possibilities, and making a decision: a creditors committee, where all financial creditors have votes in proportion to the magnitude of debt that they hold. In the past, laws in India have brought arms of the government (legislature, executive or judiciary) into this question. This has been strictly avoided by the Committee. This appropriate disposition of a defaulting firm is a bus....
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....of separate provisions, which are understood to be implied in the powers expressly provided under the Code. Thus, the Adjudicating Authority and this Appellate Tribunal is fully empowered under the Code to send the matter back to CoC for reconsideration of its decision and the CoC is fully empowered to reconsider its decision. ix. It has also been stated by the Ld. SG the power to approve includes power to vary, modify and reconsider. It is also a wellsettled principle of law that the power to take a decision, also encompasses within it the power to modify, review and reconsider such decision [see Duli Chand Vs. State of Uttar Pradesh and Ors. Writ-C No. 45851 of 2011 (Allahabad High Court; Kamal Kumar Vs. State of H.P. CWP No. 3443 of 2020 (HP High Court); and District Collector Vs. Bhaskara, Writ Appeal No. 615 of 1982 (Kerala High Court)]. x. In this regard, observation of the Hon'ble Bombay High Court in the case of Rajesh Hansraj Chopra Vs. the Competent Authority & Ors., 2001 SCC OnLine Bom 1145 is very pertinent. Its states: "Section 21 of the General Clauses Act is a general provision how to interpret provision of an enactment or regulation or rul....
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....Rupee Term Loan Agreement dated 08.08.2012 between VIL and its 12 domestic subsidiaries as Obligor-Co-obligor on one hand and the Banks and Financial Institutions as the group of lenders, with the SBI as Facility Agent and SBICAP as the Onshore Security Trustee. It is stated that vide letter dated 13.09.2013 the Appellant granted in principle agreement to participate in the syndicated RTL Facility to provide loan not exceeding Rs. 400 Crore to VIL. It is stated that the Appellant became party to the RTL by Deed of Accession Dated 23.09.2013. the Appellant craves leave to produce the Rupee Term Loan Agreement if required. III. It is also stated that apart from the assets covered under the Rupee Term Loan Agreement, the Appellant separately enjoys an exclusive charge over a property. It is stated that the property is specifically the land and buildings at the factory at SP-1 Vigyan Nagar Industrial Area, Opp. RIICO Office, Shahjahanpur, Dist:Alwar - 301706, Rajasthan, admeasuring approx.. 81554.60 sq. mtr. It is stated that the Appellant had granted Gran Electronics Limited (GREL), a subsidiary of VIL not covered under the consolidation, a term loan of Rs. 200 crore. It is s....
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....e Virtual Data Room. It is stated that as per the Appellant, the liquidation value that has been used by the CoC in its subsequent calculations, suffers from an arithmetic error in terms of (i) simplicitor transcription error in terms of the liquidation value of the Shahjahanpur property, (ii) double jeopardy to the liquidation value due to again deducting the values for VTL Cash Balances, after it has already been accounted for in the liquidation value calculation, (VTL cash balances refer to certain amounts of VTL which may be subject to the outcome of legal proceedings) and (iii)error in transcription between the values for secured and unsecured creditors' admitted claims, as given by the RP and as used by the SBICaps for the calculation of the distribution mechanism. VI. It is also stated that pursuant to the notices inviting EOI, 11 proposals were received by the CoCs of the Videocon Companies, out of these proposals, the legal advisors of the R-14 disqualified 9 proposals. Hence, the only proposals which were put before the CoC were the proposals of R-15 and V-Shape Investment Management Limited. The above referred two plans were therefore, tabled before the CoC for ....
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....reiterated by the RP that the Resolution Plan was complaint with the provisions of the Section 30(2) of the Code and Regulation 38(1)(b) of the Regulations. Reference may be had to the below paragraphs reproduced from the minutes of the 21st Meeting of the CoC. "2.IFCI query: IFCI raised their pending queries to the Chair, which was also e-mailed by IFCI to RP before the CoC meeting: VTL Cash Balance :IFCI raised that VTL cash balance is part of the liquidation value and accordingly should not be deducted for computing share of dissenting FCs. On the contrary, SBI caps has deducted INR 120.30 Crore towards VTL cash balance from submitted average LV. The RP responded that firstly, the distribution mechanism and the supporting calculations were finalized by the lenders alongwith SBI caps and the same was approved by the CoC members by majority. He further continued that the mention VTL cash balance is subject to certain litigations and currently there is a lien on the subject cash balance of VTL. IFCI further added that in spite of the litigations and lien, the CoC has accepted the valuation reports of 2 external valuation agencies who have given some liquidation value to th....
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.... Prayer for the payment of the liquidation value as per Section 30(2) of the Code payable to the Appellant as a dissenting financial Creditor and quantified at Rs. 70.31 crore, be paid in cash and upfront i.e. in priority to assenting financial creditors. b. Prayer to consider the correct value of the Videocon Telecommunications limited cash balance for the purpose of calculation of the liquidation value. XI. However, the Adjudicating Authority by its impugned order dated 08.06.2021 was pleased to approve the plan submitted by TSTL and was further pleased to dispose of the all the pending IA's including that of the Appellant with certain directions. XII. It is submitted that a bare perusal of the said Resolution Plan would evince that the same is not in conformity with, inter alia, the provisions of Section 30 of the Code to the extent of the liquidation value and the priority of payment contemplated to dissenting financial creditors. It is trite and evident on a bare perusal of the Code and the Regulations framed thereunder, including the CIRP Regulations that a Resolution Plan must meet certain mandatory criteria and failure to meet such mandatory requi....
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....completed his duty to maximize the valuation of the CD in the letter and spirit of the Code. XIV. It is also submitted that Section 30(2) contemplates treating the dissenting financial creditors as per the treatment they would have received under a liquidation scenario, in the very least. It is submitted that in the present resolution plan under consideration, the plan will put the application, as a dissenting financial creditor in a position even worse than in a liquidation scenario. It is submitted that the payment envisaged towards dissenting financial creditors is not less than the amount to be paid in accordance with sub-section (1) of Section 53 in the event of a liquidation of the CD. However, this computation has to take into account not just the component of the quantum of money but also when the Applicant receives the money, as time value has a great impact on money. XV. Further, in terms of the Resolution Plan, the financial creditors who vote in favour of the resolution plan are to also be provided a total of 8% equity shareholding in VIL on a post money fully diluted basis and financial creditors such as the Appellant nonconvertible debentures to be i....
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....n Mechanism that is annexed to the minutes of the 19th meeting of the CoC. Part (ii) of the Component II talks about the available cash balancing being subject to the vacation of lien by the Hon'ble Delhi High Court. Thereafter, in the further explanation, it is stated that the Contingent Cash balance and Contingent Recoveries shall be distributed in the Distribution Ratio of 95:5 amongst the financial creditors towards their secured and unsecured admitted Financial debts. However, such a scenario is assuming all members of the CoC have assented to the Plan. In the case of any DFC, like the Appellant, it is stated that the distribution mechanism provides that such dissenting creditors would be paid in accordance with the proposal under the resolution plan(s) for the DFC. It is trite to note that the resolution plan under consideration does not provide for the deduction of the VTL cash balance at all, contrary to what is being considered by the CoC in its calculation. Therefore, for this reason the errors as pointed out by the Appellant regarding the calculation need to be properly addressed by the RP and resolved. Also, Appellant separately enjoys an exclusive charge over a propert....
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....or reconsideration in terms of the judgment passed by the Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited (Supra), the relevant para is reproduced herein below: "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 resubmit such plan after satisfying the aforesaid parameters. The reasons given by the Committee of Creditors while approving a resolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key features, it must then pass the resolution plan, other things being equal." XIX. Further, it is categorically clear that the Adjudicating Authority is not empowered to modify the Resolution plan while exercising the limited jurisdiction. It is submitted that once the Adjudicating Authority made a determination that the resolution plan is not in compliance to the provisions of the Code then the only recourse available with the Adjudicating Authority was to either reject the Resolution....
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....C. c. Clause 3.4.5(b) of the resolution plan is set out herein below: "(b) In lieu of and as consideration of the said assignment, transfer and conveyance of the part debt and the VTL debt, an amount of INR 200 Crore ("Upfront Payment") shall be paid to the Financial Creditors towards assignment of Part Debt. This Upfront payment shall be deposited as per the timelines specified in Clause 7.2 in such bank account as may be specified by the Financial Creditors. The Upfront payment shall be subject to adjustments on account of payments to DFC." d. In view of the aforesaid, it is submitted that the Appellant's contention that, being a DFC, it is in a worse position than it would be in the event the CDs were liquidated under Section 53 of the Code is misplaced and without any merit. e. Without prejudice to the aforesaid, it is submitted that there was no reason or occasion for the resolution plan to be sent back to the CoC for reconsideration. i. After filing of the said application and before its disposal by the Adjudicating Authority, on or around 15.03.2021, the Appellant filed its application before the Adjudicating Authority inter alia ....
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.... complaint with the Code, is within the domain of the CoC and ought not to be interfered with by the Adjudicating Authority in view of Section 30(4) of the Code. ii. It is therefore, submitted that all contentions of the Appellant on the basis that the Appellant or the other creditor have received a purportedly small amount as an outcome of the insolvency resolution process of the CDs are misconceived and against the letter and spirit of the Code and the Regulations framed thereunder. It is settled position of law that the Adjudicating Authority as also this Tribunal do not exercise jurisdiction over the commercial wisdom of the CoCs who are obligated to take a decision after consideration inter alia the viability and feasibility of the plan, the manner of distribution and the order of priority of payments within their commercial wisdom so long as their decisions are complaint with the applicable provisions of law. iii. It is also submitted that this Tribunal in the matter of India Resurgence ARC Pvt. Ltd. Vs. M/s. Amit metaliks Limited CA(AT) (Ins) no. 1601 of 2020 dated 02.03.2021 had observed as under in the context of section 30(4) of the Code: "6. ......
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....claim to the extent of Rs. 200 Crore pertaining to the Corporate guarantee provided by R1 in favour of appellant to secure the aforesaid facility to Gran Electronics Limited is also admitted by the RP. The Appellant has filed a claim with the Respondent seeking to recover its dues from the present CIRP, it cannot at the same time contend that the mortgage given to secure the said debt should remain unaffected by the present proceedings. It is also stated that the said property belongs to the CD and ought to be part of the CIRP proceedings in any event, and the limited right that is available with the secured creditor is to vote against the resolution plan if it so chooses. Under Section 18(f) r/w Section 23(2) of the Code, the Answering Respondent is duty bound to take custody and control of all assets over which the CD has ownership rights. The said property at Shahajanpur being a property of the CD i.e. R-1, could not be left untouched or unaffected in the ongoing CIRP of R-1. h. The Appellant's contention that the valuation of the CD is incorrect is misconceived and deserves to be dismissed. I. The Appellant has sought direction to the RP to place on record the....
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....ore this Tribunal. In any event, it is submitted that as stated above, the Appellant shall be paid its dues amounts on the basis of the liquidation value arrived by the valuation undertaken by the registered valuers at the time of distribution. It is therefore, submitted that the contentions of the appellant on valuation are without any merit and deserve to be dismissed. In view of the above there is no reason why the Appellant should not be satisfied as regards the valuation exercise undertaken by the Answering Respondent in respect of the CDs. i. It is also stated that there arises no question of sending the Resolution plan back to the CoC for reconsideration as the only aspect of the plan that was not allegedly not in line with the Jaypee decision was also addressed by the direction of the adjudicating Authority that upfront payment in cash shall be made to the DFCs. Since the primary grievance of the DFCs was that they should be paid in cash up front and in priority, and it has been addressed as per the existing position of law, the present appeal deserves to be dismissed. In any event, the Resolution plan is already approved by over 95% of the CoC, approval from the C....
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....st August 2020 and amended on 7th November 2020 r/w. e-mail clarification submitted by TSTL was approved and the distribution mechanism, as laid out in Annexure 2 of the 19th COC meeting was also approved. The Appellant bank dissented the resolution plan submitted by TSTL and also abstained from voting under distribution mechanism, making the Appellant a dissenting financial creditor 15/12/2020 Post approval of resolution plans by COC, the KP issued Letter of Intent dated 12.12.2020 to the successful Resolution Appellant TSTL on behalf of COC which was accepted unconditionally by on TSTL 05/01/2021 And 11/02/2021 20th meeting and 21st meeting of COC were conducted, in both meetings the issue of priority payment to dissenting creditors was raised However, again the RP dismissed the said query. Dissenting Financial Creditors specifically raised the query as to whether there is any change to the distribution amounts provided by SBI CAPS to which the RP responded that there is no change. 08/06/2021 The Hon'ble NCLT by its impugned Order dated 08.06.2021 was pleased to Approve the Plan submitted by TSTL Hence, this Company Appeal. II. The Plan....
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....t. The contention the said amounts will be calculated 'at the time of pay out' shows that there is a complete noncompliance of Section 30(2)(b) that is to say that if the amounts were never calculated. 3. Section 30(4) provides that the COC may approve after considering its feasibility and viability including 'the manner of distribution proposed', which may take into account the 'order of priority amongst creditors as laid down in Sub Section (1) of Section 53', 'including the priority and value of Security Interest of a secured Creditor', and such other requirements as may be specified by the Board. 4. Thus, even the said section pre-supposes 3 aspects (i) manner of distribution is already determined, (ii) liquidation value is calculated as per Section 53, (iii) and the COC is aware of the values of security interest of secured creditors. 5. Infact, the very decision making of COC is vitiated for not determining the said liquidation value payable to the financial creditors. C. The direction by the Adjudicating Authority to the SRA to pay the dissenting financial creditors by cash instead of NCD's (without sending the plan back to the COC for reconside....
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....ial creditor as provided in Section 30 of IBC code 2016 r/w IBBI regulation 38 1. It is submitted that to show compliance of 'priority' payment to dissenting creditors, the plan is engineered in such a fashion so as to show that the NCDs available with the dissenting financial creditors would be redeemable one day prior to the assenting financial creditors. This is no priority at all and merely an eye wash. The same violates the scheme and the spirit of the code. 2. A priority is a situation where the money is being paid over and above other creditors. Akin to CIRP cost. Regulation 38 provides that operational creditors will have priority over financial creditors and thereafter dissenting financial creditors will have priority over assenting financial creditors. Thus, conjoint reading of Section 30 with Regulation 38, reflect the distribution pattern of priority in the event if the resolution plan is approved. In the above circumstances, the Appellant humbly prays that the appeal should be allowed. B. Submissions of the Respondent No.1 to 13 [Resolution Professional (RP)]: I. The Ld. Sr. Counsel on behalf of the RP of Respondent No.1 to 13 hav....
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....gton Boulevard Apartments Welfare Association v. NBCC (India) Ltd ("Jaypee") was passed only on 24th March, 2021, which was after the filing of the Application for approval of the Resolution Plan ("Plan Approval Application") before the National Company Law Tribunal, Mumbai ("Adjudicating Authority") on 15th December, 2020, for approval of the Resolution Plan. Therefore, the RP could not have checked the Resolution Plan for compliance in accordance with Jaypee. In any event, as submitted hereinabove, the Resolution Plan by way of the aforesaid clauses, in particular Clause 3.5.7, clearly provides that in all circumstances and in any event, the payment proposed to be made and the manner of making the said payment to the Dissenting Financial Creditors shall be strictly as per Section 30(2)(b) of the Code read with Regulation 38(1)(b) of the CIRP Regulations. Further, pursuant to the position in Jaypee and the Impugned Order dated 8th June, 2021, the grievance of the Appellant that they should be paid in cash and in priority has also been addressed. Therefore, the present Appeal deserves to be dismissed for being devoid of merit. [Ref para 4 II e), pg. 9, para 4 IV e) and f), pg. 15 o....
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....red by the registered valuers have been stated in Form H submitted along with the Plan Approval Application filed before the Adjudicating Authority for approval of the Resolution Plan. [Ref para VI b) iii), pg. 21 of RP Reply]. iv. Along with the Resolution Plans, the "distribution mechanism" was put to the vote and was placed before the Adjudicating Authority; the "distribution mechanism" stated that the Dissenting Financial Creditors will be paid the amount payable to them as per law. The "distribution working" as mentioned by the Appellant, which was arrived at by SBI Caps, was not put to vote before the CoC and neither did the RP confirm that the "distribution working" is final nor was the same placed before the Adjudicating Authority. [Ref para VI c), pg. 21-22 of RP Reply]. v. The "distribution mechanism" is said to have been prepared assuming that all financial creditors will vote in favour of the Resolution Plan and was prepared prior to voting. After completion of the voting, the RP has arrived at the amounts owed to the Dissenting Financial Creditors, the security interest mapped to them, the value of asset over which such security is created, he cash / ....
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.... not contravened the requirements of the Code and the CIRP Regulations. d. The Resolution Plan does not need to be sent back to the CoC for reconsideration i. The only aspect of the Resolution Plan that was allegedly not compliant with the Jaypee decision was also addressed by the direction of the Adjudicating Authority that upfront payment in cash shall be made to the Dissenting Financial Creditors. The primary grievance of the Dissenting Financial Creditors that were before the Adjudicating Authority has been addressed by the Impugned Order. ii. This Appellant never approached the Adjudicating Authority challenging the Resolution Plan, therefore, it cannot be permitted to raise these concerns at such a belated stage for the first time. [Ref para IV, pg. 14-16 of RP Reply]. 16. Submissions of the Respondent No.15/Successful Resolution Applicant (SRA): I. The Resolution Plan does not provide DFC with Liquidation Value. a. Clause 3.4.5 and Clause 3.5.1 clearly provide that the DFC shall not be paid less than at least the amount payable to them in accordance with sub-section (1) of section 53 of the IBC in the event of a liquidation of ....
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....of payout". (iv) As per Clause 7.2 of the Resolution Plan, the time of payout to the DFC is on the T+44th day, with T being the date of approval of the Resolution Plan by the Hon'ble Adjudicating Authority. (v) Even before such a stage could have been reached, the Appellant has filed the present Appeal. (vi) Hence, the present Appeal is premature. g. In addition to above and in any event it has been clarified by the Resolution Plan and the Form H that the amount payable to the DFC shall not be less than the liquidation value. Therefore, it is submitted that the present Appeal, apart from being premature, is misleading and without any basis. II. The Approval Order modifies the Resolution Plan a. It is submitted that the decision of the Hon'ble Supreme Court in the case of Jaypee (supra) (passed on 24.03.2021) directing that DFCs should be paid in cash was not in existence on the date when the Resolution Plan was submitted i.e., 07.11.2020 or the date when the Resolution Plan was approved by the CoC i.e., 11.12.2020. b. Nevertheless, Clause 3.5.7 of the Resolution Plan clarifies that in all circumstances and in any event,....
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.... CoC in approving the Resolution Plan is paramount and there can be no interference in the same unless the Resolution Plan contravenes a mandatory provision of the Code. In this regard, the Respondent No. 15 relies on the following decisions of the Hon'ble Supreme Court: * K. Sashidhar v. Indian Overseas Bank (2019) 12 SCC 150; * Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta (2020) 8 SCC 531; * Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd 2021 SCC Online SC 253, and; * Kalpraj Dharamshi v. Kotak Investment Advisors Civil Appeal Nos. 2943-2944 of 2020]. 17. Company Appeal (AT) (Ins) No. 545 of 2021: A. Submissions of the Appellant- Electrolux Home Products INC. I. The Ld. Sr. Counsel for the Appellant has submitted that it is a market leader in the business of manufacturing and distributing electrical appliances including refrigerators, dishwashers, washing machines, vacuum cleaner, cookers, which, through its globally established brands, sells over 60 million household and professional products in more than 150 markets every year. II. The Appellant is the Regist....
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....s, cooker hoods and hobs (all for consumer use) whose specifications, quality, packaging, advertising and promotional literature conformed to the standards imposed by the TLA in respect of which the licensee was entitled to use the Trademark. Some of the key terms of the TLA are set out below, for ease of reference: Clause 3.1- " "Licensee shall not voluntarily or by operation of law assign or transfer this Agreement or any of Licensee's rights or duties hereunder or any interest of Licensee herein ... Any assignment, transfer or sub-license without Licensor's written consent shall be null and void ... " Clause 6.9: "Licensee shall warrant Trademark Products as the applicable laws in the Sales Area may require, furnish a locally competitive warranty to the user of every Trademarked Products, and arrange to provide, at no cost to Licensor prompt and adequate warranty service for all Trademarked Products sold by Licensee throughout the Sales Area for the duration of the warranty period, even after the termination of this Agreement ... " Clause 16.2: "Notwithstanding anything to the contrary in this Agreement, Licensor may terminate this Agreement wi....
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....or. The TLA specified that the Appellant was entitled to terminate the TLA if the Corporate Debtor underwent any event that resulted in the Dhoot family no longer being in control. Accordingly, in terms of its rights under Clause 16.2(d)( iii) of the TLA, the Appellant stated that the TLA would stand terminated from the date on which the Petition would be admitted. The relevant portions of the June Letter are extracted below: "Clause 16.2(d)(iii) of the TLA provides that Licensor is entitled to terminate the agreement with immediate effect in the case the Licensee undertakes any action or undergoes any event, which results in the Dhoot family no longer being in control of the Licensee. In the present case, admission of the CIRP application by the NCLT will have (inter alia) the following consequences by necessary operation of law: (i) under Section 17(l)(a) of the IBC, management of the affairs of the Licensee will vest with the interim resolution professional; and (ii) under Section 17(l)(b) of the IBC, the powers of the board of directors of the Licensee shall stand suspended and be exercised by the interim resolution professional. Therefore on admission of the ....
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.... b. The termination of contracts pursuant to initiation of insolvency proceedings would frustrate the objectives of the Code; and c. The Corporate Debtor was entitled to continue to operate as per the TLA. VII. It is also stated that On October 19, 2018, the Appellant replied to the RP I Letter and RP II Letter ("October Letter"). In this October Letter, the Appellant: a. Reiterated that the termination of the TLA was valid and lawful; b. noted that the RP's challenge of the termination was belated; c. pointed out that the RP's conduct in not denying the termination in earlier correspondence estopped the RP from challenging the termination at this stage; d. without prejudice to the valid termination of the TLA by the June Letter, it also invoked its rights under Clause 16.2 (a) of the TLA. Clause 16.2(a) entitled the Appellant to terminate the TLA in case Videocon "files for bankruptcy, goes into liquidation other than a voluntary liquidation for the purpose of a bonafide reorganization or any winding up, restructuring or any other proceedings to a similar effect have been filed and admitted against [Videocon] a....
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....eocon "files for bankruptcy, goes into liquidation other than a voluntary liquidation for the purpose of a bonafide reorganisation or any winding up, restructuring or any other proceedings to a similar effect have been filed and admitted against [Videocon] and has not been withdrawn, dismissed or disposed of within 90 days from the date of such admission". XI. It is also stated that Respondent No. 1 had placed no material on record as to why or how the TLA is essential to the CIRP of thirteen group companies, twelve of whom never manufactured the Trademark Product. Further, Respondent No. l admitted at the hearing before the NCL T that the Corporate Debtor has stopped manufacturing products under the Trademark since sometime in 2018 - which further bears out the fact that the TLA is not relevant to the going concern status of the Corporate Debtor, let alone something that goes to the root of the same. The Code did not entitle the RP to take possession of assets belonging to a third party. The license under the TLA was a mere right (that too determinable in the circumstances set out in the TLA) to use the Trademark, which, at all times, remained the asset of the Appellant. ....
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....y the termination of the TLA was valid, and why the Corporate Debtor and/or entities claiming under it could not utilize the Trademark, the Adjudicating Authority passed the Impugned Order granting Respondent No. 2 the right to use the Trademark for one year. It recorded no reasons for its arbitrary order on this front. On this ground alone, the Impugned Order requires to be set aside. XIV. That the Impugned Order is arbitrary and has been passed without application of mind, insofar as it concerns MA 527/2019. The question before the Adjudicating Authority was whether the termination of the TLA was valid. If the termination was valid, there is no question of any right to use the same continuing to vest in Respondent No. 2. If the termination was found to be invalid, there is no requirement for the right to be limited to one year. In recording an extra-legal 'transitional arrangement', with respect, the Adjudicating Authority has overstepped its role as Adjudicating Authority and attempted to step into the shoes of contracting parties, forcing parties to extend bargains/ vary the terms of the same, and that too without any reasons whatsoever being recorded for the s....
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....nal right, for example, of termination or acceleration of the contract (sometimes referred to as "ipso facto" clauses). These events of default commonly include the making of an application for commencement, or commencement, of insolvency proceedings; the appointment of an insolvency representative; the fact that the debtor satisfies the criteria for commencement of insolvency proceedings; and even indications that the debtor is in a weakened financial position ... " The validity of such ipso facto clauses has been considered in a global perspective by international organizations and in the domestic jurisdictions of nation-states in their national insolvency laws. In order for us to assess their validity in India, we must first understand the global trends in contemporary jurisprudence. We can attempt to extrapolate our experiential learning from comparative law. As India develops into a responsive member of the international community, our laws cannot afford to be inward looking. ... J.3 Position in India 129 Before we consider the extent to which the lessons of other jurisdictions should be applied to India, it is important to advert to the dis....
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....he termination, suspension or interruption of specified "essential goods or services" (i.e. water, electricity, telecommunication services and information technology services to the extent they are not direct inputs to the output produced or supplied by the corporate debtor), and also provides relief to the corporate debtor from the recovery of any property by an owner or lessor during the moratorium". As a solution, the report recommends a conditional stay on the operation of ipso facto clauses, beginning from the insolvency commencement date, since "a complete stay on the operation of ipso facto clauses would constitute a serious restraint on the freedom of contract and would effectively compel suppliers to perform contracts even when such an action is against their commercial interests". In relation to the implementation of this solution, the report suggests the insertion of a new provision to the Code. 133 More recently, however, the IBC was amended by the Insolvency and Bankruptcy Code (Amendment) Act, 2020 which, inter alia, introduced an Explanation to Section 14(1). The Explanation to Section 14(1) reads thus: "14. Moratorium.- Explanation.-For th....
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....ve the corporate debtor as a going concern. Consequently, their termination during the CIRP by relying on ipso facto clauses or on nonpayment of dues would be contrary to the purpose of introducing the provision for moratorium itself. Thus, the Committee concluded that the legislative intent behind introducing the provision for moratorium was to bar such termination. 8.5. In this regard, the Committee noted that depending on the nature of rights conferred by them, these grants may constitute the "property" of the corporate debtor. Section 3(27) of the Code provides an inclusive definition of property which includes "money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out to: or incidental to, property." This definition is substantially the same as the definition of "property" under Section 436 of the Insolvency Act, 1986 (UK), which has been considered the widest possible definition of property. In India too, it is accepted that certain licenses and concessions can convey permission to use property, or may embody a le....
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....n the one hand and corporate rescue on the other. We are cognizant that any rule that we might craft, howsoever narrow, could have a series of unintended second order effects, in terms of opening the floodgates for intervention from the NCLT that might impinge upon contractual freedom of the terminating party. Further, the comparative experience also teaches us that, given that the invalidation of ipso facto clauses can unsettle the interests that contractual relationships are founded upon, some jurisdictions that have invalidated such clauses have done so in a cautious, prospective fashion. This ensures that while the policy of the insolvency law is brought into tandem with the global regimes, it does not affect the contractual rights of those parties who could not have reasonably accounted for this change in position while negotiating their contractual terms. Such an approach is an evidence and recognition of the harmful effects on commercial stability that such encroachment into contractual freedom can generate, even when done legislatively after careful deliberation. 154 The question of the validity/invalidity of ipso facto clauses has been discussed in a variety of do....
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....te debtor will be negated by a termination of its sole contract, on the basis of an ipso facto clause. It is pertinent to note that the IBC has been in effect from 5 August 2016, and has also been amended multiple times. Hence, if the 'going concern' status of corporate debtors was being affected on a regular basis due to ipso facto clauses (which are in vogue even in the present contracts similar to the current PPA), then the legislature may, if it considered necessary, have proceeded to legislate on an explicit position with regard to the operation of ipso facto clauses. However, this Court in the present case is not required to resolve the broad question of whether the invalidation/stay of ipso facto clauses in India, generally, is legally permissible. This is a matter which raises complex issues of legal policy and a balancing between distinct and conflicting values. Reform will have to take place through the legislative process. The stages through which legislative reform must take place absolute or incremental - is a matter for legislative change. Our task is limited to the issue of deciding whether the Adjudicating Authority correctly exercised the jurisdiction veste....
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.... paramount object, in construing penal as well as other statutes, is to ascertain the legislative intent and the rule of strict construction is not violated by permitting the words to have their full meaning, or the more extensive of two meanings, when best effectuating the intention. They are indeed frequently taken in the widest sense, sometimes even in a sense more wide than etymologically belongs or is popularly attached to them, in order to carry out effectually the legislative intent, or, to use Sir Edward Cole's words, to suppress the mischief and advance the remedy." 165 Given that the terms used in Section 60(5)(c) are of wide import, as recognized in a consistent line of authority, we hold that the NCLT was empowered to restrain the appellant from terminating the PPA. However, our decision is premised upon a recognition of the centrality of the PPA in the present case to the success of the CIRP, in the factual matrix o(this case, since it is the sole contract for the sale of electricity which was entered into by the Corporate Debtor. In doing so, we reiterate that the NCLT would have been empowered to set aside the termination of the PPA in this case because ....
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....ned Order, so far as it relates to MA 527/2019, requires to be set aside. There was no pleading let alone material placed on record by Respondent No. l, nor does the Impugned Order note, that the Trademark which was licensed to Corporate Debtor is the sheet anchor of the Corporate Debtor or that termination of the license would cut the legs out from under the CIRP of the Corporate Debtor - which are crucial tests framed by the Hon'ble Supreme Court in Gujarat Urja (supra). In fact it is clear from the Respondent No.1's admission that the Trademark has not been used since 2018. That the Respondents clearly failed to make out any case to satisfy the test laid down by the Hon'ble Supreme Court in Gujarat Urja (supra) and was therefore, precluded from questioning the termination of the TLA on the ground that it was precluded or not permitted under the Code. That the Impugned Order fails to consider that the Trademark is not an asset of the Corporate Debtor. The NCL T failed to consider in this regard that under the TLA: a. The Trademark IS the exclusive property of the Appellant. b. The Corporate Debtor was simply granted a license to use the Trademark in ....
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....erminated as set out in the explanation extracted above. There is therefore no basis in the law to suggest that the termination of the TLA by the Appellant is impermissible in law. Notwithstanding the aforesaid, assuming (without admitting) that the TLA is considered to fall in the category of 'essential good or services' and could not have been terminated during the moratorium, then under the provisions of Section 14 of the IBC read with Regulation 13 of the IBBI (Insolvency Regulation Process for Corporate Persons) Regulation, 2016, any losses owed to the Appellant during the continued refusal to recognize the termination of the TLA would be payable as Insolvency Resolution Process Costs, which the resolution plan admittedly fails to do. Further any such moratorium on terminating essential services also ceases to operate on completion of the CIRP period. Accordingly, in any event, there is no circumstance under which the TLA can be said to transfer to the successful resolution applicant. XVII. That the Impugned Order has been passed in violation of settled principles of law, natural justice, without noting or dealing with the Appellant's submissions, and with....
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....of the Corporate Debtor and which were subsisting or having effect immediately before the Impugned Order, be deemed to continue and to be valid and subsisting. The Resolution Plan is binding on all stakeholders including the Appellant and the TLA is deemed to be valid and subsisting. The Appellant is not aware about the contents of the Resolution Plan. Notwithstanding the same, the aforesaid argument is misconceived primarily for the reason that the TLA was already terminated by the Appellant on June 5, 2018, and therefore the Resolution Plan could not have provided for validity and subsistence of a contract which was already terminated. (Appellant's Affidavit in Rejoinder to the Affidavit in Reply of Respondent No. 2, paras 7-8). Additionally, it is settled law that a resolution plan cannot operate to unilaterally modify contractual rights of an entity that is a third party and entirely unrelated to the Corporate Debtor. (Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Limited & Ors., 2021 SCC OnLine SC 253, para. 265; MCGM v. Abhilash Lal & Ors., (2020) 13 SCC 234; para. 47) VI. It has also been emphatically conveyed the validity of ipso....
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....any incorporated in US, is the registered proprietor of the trademark "Kelvinator" ("Trademark") which was licensed to the Corporate Debtor via a Trademark License Agreement dated 7th July, 2005 ("TLA"). The TLA was terminated by Electrolux vide a letter dated 1 st September, 2018 ("Termination Letter") on account of the initiation of insolvency and change of control of the Corporate Debtor from the Promoters (defined as Dhoot Family in the TLA) to the Resolution Professional ("RP"). The RP objected to the said termination, specifically on the grounds of moratorium under Section 14 of the Code. Electrolux preferred an application (M.A. 527/ 2019) before the Adjudicating Authority seeking a permanent injunction against the Respondent from manufacturing the goods under the Trademark and upholding the termination of the TLA. II. It is Electrolux' case that the Adjudicating Authority Order is in violation of principles of natural justice as it fails to record and deal with the contentions and written submissions with regard to M.A. 527 of 2021, thereby disposing off the application in an unreasoned and arbitrary manner. It is submitted that the Adjudicating Authority Order was....
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....s Reply]. The termination of the TLA by Electrolux is contrary to Section 14(1) of Code which specifically prohibits alienation or disposing of the Corporate Debtor's assets or any legal right or beneficial interest in such asset. As the purpose of the moratorium includes preserving the Corporate Debtor's assets during the CIRP, maximising their value and facilitating orderly completion of the CIR process, the termination of license or any such adverse action to the detriment of the Corporate Debtor is in direct contradiction with the purpose and intent of the moratorium under Section 14 of the Code. [Para 14 -16, RP's Reply]. IV. It is submitted that the TLA adds value to the goods produced by the Corporate Debtor and in effect is of value for the Corporate Debtor. The RP has carried out his duties effectively and protected the assets of the Corporate Debtor in the interest of maximisation of value of the Corporate Debtor. Also, while inviting the resolution plans, the RP had categorically mentioned in the Information Memorandum the said termination of the TLA by Electrolux. In any event, the implementation of the Resolution Plan is not contingent upon the decision in....
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.... Therefore, as per Clause 11.3 of the approved Resolution Plan, the TLA continues to be valid and subsisting. IV. It is also submitted that the Appellant has allegedly terminate the TLA vide its letter dated 05.06.2018 by invoking clause 16.2(d)(iii) of the TLA. The Appellant has thereafter issued a Letter dated 19.10.2018 (appearing at page No.240 of the Appeal Paper Book), whereby, as an afterthought, the Appellant has also included Clause 16.2(a) of the TLA as a ground for termination. It is submitted that the events of termination mentioned in Clause 16.2(a) and 16.2(d)(iii) are inconsistent with the provisions of Section 14 of the Code, especially clause (d) of subsection (1) thereof, which prohibits the recovery of "any property" (in this case the trademark) by an owner (in this case the Appellant) where such property is occupied by or in the possession of the CD (in this case the R-1). V. In view of the above, it is submitted that Clause 16.2(a) and 16.2(d) (iii) of the TLA are null and void upon the enactment of the Code and the Appellant cannot rely on the said clause to terminate the TLA. Rely on the decision in Gujarat Urja (supra), the Appellant argues....
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...., particularly, foreign oil and gas assets are not included in the 'Information Memorandum' as also no valuation thereof has been considered while the claim of lenders of foreign oil and gas assets of Rs. 23,120.90 Crore being considered as claimed upon CD. II. It was also stated by Ld. Sr. Counsel, the reason for considering consolidated group insolvency resolution with main thrust on foreign oil and gas assets not to be treated separately so that all the creditors should get maximum value. The RP and CoC have committed material irregularity of high magnitude in ignoring to include foreign oil and gas assets of VIL as assets of VIL. They have also raised the issue that just by paying only Rs. 262 Crore (out of which cash balance available with CD is Rs. 200 Crore) & approximately Rs. 2700 Crore through NCD carrying 6.65% p.a. payable annual interest rate, the Resolution Applicant will get possession of all 13 CDs to run these units against the property for which claim has been raised for over Rs. 71,000/- Crore. Although the Appellant is not privy to CoC minutes, however, in the impugned order makes it clear that RP has not maintained confidentiality clause in its true le....
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.... VHHL in favour of SBICAP Trustee Company Limited so as to sequester the foreign oil and gas assets from the CIRP of VIL. Valuation of standalone foreign oil and gas assets was at 4.29 billion USD in 2017, the value was projected at 5.08 Billion USD in 2019, 5.61 Billion USD in 2020 and 7.02 Billion USD in 2023 (appearing at page no.101 of rejoinder to the reply of R1). Therefore, it is evident that if the said assets would have been included in the CIRP of the CDs then the same would have resulted in maximization of wealth of the CDs. However, SBI, in order to have an edge over the other creditors and to have benefit of such valuable foreign oil and gas assets, in collusion with the RP, made sure that the said foreign oil and gas assets are excluded from this CIRP. All the assets and liabilities of VHHL, VINI, VEBL and other subsidiaries of VOVL have been specifically included in the IM VOVL. However, in VIL's IM and the consequent resolution plan, the assets of its subsidiaries i.e. VOVL have not been included despite admittedly VIL being the ultimate beneficiary. Commercial wisdom exercised by CoC is arbitrary and irrational and does not reflect any application of mind. 'Stakeho....
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....f assets for maximization of value of CDs whereas on the other hand SBI invited interest for sale of foreign oil and gas assets and is contesting upon inclusion of same is common pool of assets. The RP failed to examine whether the resolution plan is in compliance of section 30(2) of the Code and a noncomplaint resolution plan was placed by the RP before the CoC for their deliberation/approval. The RP ought to have taken active steps to have the appeals dealing with inclusion of foreign oil and gas assets pending before this Appellate Tribunal adjudicating at the earliest. VII. It is also stated that it needs to be considered if Resolution Professional and their appointed agencies were concerned only with drawing their remuneration to the extent of Rs. 1.5 crore per month, without discharging the duties to maintain the Corporate Debtors as going concern and prevent eroding value of assets of Corporate Debtors? It needs to be considered as to what are the reasons of arriving at such low liquidation value when for the same assets for restructuring the same lenders and experts were agreeing on much higher valuation and particularly the Appellant was ready and willing to take ....
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.... Code and /or the Regulations thereunder, which would entitle the Appellant to seek acceptance of his 12A proposal by the CoC as a matter of right. As recognized by the Hon'ble Supreme Court in Swiss Ribbions Pvt. Ltd & Ors. Vs. Union of India & Ors. AIR 2019 SC 739 (para 38, 121), the requirement of seeking approval for majority of the CoC implies that those proposing the settlement cannot claim it as a matter of right. Since Section 12A proposal is a "settlement/withdrawal" mechanism, the Appellant cannot seek re-consideration of the proposal on the same lines as a resolution plan. The RP has acted in accordance with the Code and had no occasion to treat the foreign oil and gas assets as part of VIL's assets in view of the stay order. At the outset, it is important to highlight that the RP only acted within the ambit of duties/powers conferred upon it by the Code and its CIRP Regulations. Pertinently, under Section 18(f) of the Code r/w Section 23(2) of the code, a RP is under the mandate to take control and custody of any asset over which the CD has ownership rights as recorded in the balance sheet of the CD. However, Explanation (b) to Section 18 of the Code specifically exclud....
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....il and gas assets of Videocon Group is subject matter of CA(AT) (Ins) No. 299, 467, 639, 640 of 2020, pending before this Appellate Tribunal, and thus cannot be entertained in the present appeal. Additionally, the allegation that the RP inflated the liabilities of the CD is misconceived. The RP has admitted those claims of other entities creditors filed with him and to such extent that they relate to security interests created in favour of these creditors by the CDs being crosscollateralized and corporate guarantee claims in accordance with the Code and Regulations thereunder. The Appellant has provided no substantiation to his bald allegations, the Respondent reserves its rights and would be happy to provide a detailed explanation for each admitted claim if deemed necessary by this Tribunal. IV. It is also stated that the Appellant's contention that the RP has failed to examine whether the Resolution Plan is compliant or not is totally devoid of merit and untenable both in law and facts. It is submitted that the resolution plan is complaint with Section 30(2) of the Code and the IBBI(Insolvency Resolution Process for Corporate Persons) Regulations, 2016. In this regard it....
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....evidentiary value are baseless and extraneous to the present appeal. B. Submissions of the Committee Creditors of Consolidated Videocon Group of Companies:- I. It is stated by the Ld. SG that the instant appeal has filed by the Appellant is a part of a long-drawn strategy of the Appellant herein to disrupt the successful and smooth functioning of the CIR Process of Consolidated Corporate Debtors. It is submitted that Videocon Industries Limited and Videocon Telecommunications Limited were 2 (two) of the largest accounts that were classified as non-performing assets by banks on account of the defaults and in respect of whom, the Reserve Bank of India ("RBI") had provided specific instructions for initiating insolvency proceedings pursuant to the provisions of Section 35AA of the Banking Regulation Act, 1949, as amended. It is submitted that RBI had sent a letter to SBI in its capacity as Lead Bank ("RBI Letter"), directing to provide the companies classified as 'Non-performing assets' as per the data maintained by the Central Repository of Information on Large Credits (as listed in the annexure to the RBI Letter, which included inter alia VIL and VTL), time till December....
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....s against him and since it is preferred merely to scuttle the CIR Process of the Consolidated Corporate Debtor and misuse the same to create hindrances in the personal insolvency proceedings before the Hon'ble Adjudicating Authority. The Respondent No. 2 respectfully submits that the instant Appeal contains several false, unfounded, bald, vague and inaccurate statements/ averments which are in the form of allegations against the lenders. Such allegations are totally devoid of any merit. III. It is submitted that the present Appeal deserves to be dismissed in limine and ought to be dismissed on, inter alia, the following grounds: a. The Appellant lacks the locus standi to file the present Appeal as the Appellant cannot be considered to be an aggrieved person under Section 61 of the Code. The Appellant after having made all attempts to frustrate the successful resolution of Consolidated Corporate Debtors is merely attempting to further derail and disrupt the CIR Process of the Consolidated Corporate Debtors in gross abuse of the process and in complete contravention of the object of the Code. b. The Appellant's conduct in initiating various litigations befo....
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.... defeating the very objects of the Code. The Appellant has filed numerous litigations in a gross abuse of the process with the sole intention to disrupt the CIR Process and frustrate smooth conclusion of the CIR Process. It is a matter of record that the Appellant's acts of commission and omission while in control of the Consolidated Corporate Debtors are being investigated by several investigating agencies. Furthermore, Appellant's instant challenge to the Impugned Order is unmerited inasmuch it is squarely covered by this Hon'ble Tribunal judgment in Mr. Vishal Vijay Kalantri vs. Mr. Shailen Shah (Resolution Professional of Dighi Port Limited) & Ors., CA-AT (Ins) No. 466 of 2020 ("Vijay Kalantri"). In Vijay Kalantri, this Hon'ble Tribunal was faced with similar fact situation as there as well the 12A settlement proposal of the promoter was rejected by the CoC with 99.68% vote while the resolution plan of one resolution applicant was approved by 99.68% vote. While dismissing the promoter's challenge to the approval of the resolution plan and rejection of its 12A proposal, this Tribunal observed that the averment that 12A proposal is better as regards maximisation of the value of t....
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.... No. 2620 of 2019, for inclusion of the foreign oil & gas assets held by the foreign incorporated subsidiaries of VIL in the CIR Process of VIL. It is pertinent to note that even during the consolidation proceedings leading upto the Order dated 8 August 2019, the Appellant did not raise any averment about inclusion of foreign oil and gas assets in the CIRP of Consolidated Corporate Debtors. These MAs came to be filed only after almost a year after initiation of CIR Process against VIL and 12 group companies, with the sole intention to delay and derail the CIRP of Consolidated Corporate Debtors. The said MAs were contested by the lenders, inter alia, on the ground of it being ultra vires the provisions of the Code inasmuch as the Code has no extra-territorial application over such foreign incorporated subsidiaries and the assets held in subsidiaries of Videocon Industries Limited. Despite this, the Adjudicating Authority vide 12.02.2020 Adjudicating Authority Order (defined below) directed inclusion of the foreign oil and gas assets in the CIR Process of VIL. However, the said 12.02.2020 Adjudicating Authority Order was appealed against and was stayed by this Tribunal vide Order dat....
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....ancial creditors, have employed all possible tactics to delay and frustrate the judicial process, including but not limited to: A. Appellant and other related promoters, namely Mr. RN Dhoot and Mr. PN Dhoot, have been constantly delaying and frustrating the DRT recovery proceedings initiated against them by, inter alia, evading service; B. Similarly, before the Adjudicating Authority in the personal insolvency proceedings, Mr. RN Dhoot attempted to evade service of the insolvency petition. Three separate personal insolvency proceedings were filed against three personal guarantors namely Mr. RN Dhoot, Mr. VN Dhoot and Mr. PN Dhoot before Adjudicating Authority Mumbai, which were pending before different benches Inspite of there being no correlation between the three personal insolvency proceedings, with the sole intention to cause further delay, Mr. RN Dhoot had also filed a transfer petition seeking transfer of all the personal insolvency applications before a single bench of the Mumbai Bench of the Adjudicating Authority that has been dealing with the CIR Process of Consolidated Corporate Debtors, on baseless and untenable grounds. C. The Appellant herei....
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.... Petition, VOVL did not raise any contention that the Oil & Gas Assets belong to VIL and hence should be resolved under the ongoing CIR Process of VIL (which had commenced on 6th June 2018) at the time of filing the Writ Petition. However, in July 2019, viz., after a lapse of almost 10 months from the date of filing of the Writ Petition, the Appellant filed MA 2385 of 2019 before the Adjudicating Authority praying that the foreign oil & gas assets belong to VIL. VIII. The Resolution Professional placed 2 compliant resolution plans before the Respondent No. 2 for approval, out of which the Respondent No. 2 approved the resolution plan of Respondent No. 3 with 95.09% voting share. It is submitted that extensive discussions and deliberations were held with all resolution applicants. IX. It is submitted that the Appellant cannot claim consideration of its 12A proposal as a matter of right. In fact, the very person who is directly responsible for the present condition of the Consolidated Corporate Debtors and the extensive losses being suffered by all the stakeholders of the Consolidated Corporate Debtors does not have any vested or fundamental right for this Appellant....
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....lming majority of 98.14% voting share. It is respectfully submitted that except one financial creditor (namely ABG Shipyard Limited, which itself is a company undergoing liquidation currently), all the financial creditors who cast their vote rejected the Appellant's Withdrawal Proposal (including the dissenting financial creditors namely Bank of Maharashtra, IFCI Limited and SIDBI who have filed separate appeals against the Impugned Order). The Appellant is belatedly trying to challenge the rejection of his Appellant's Withdrawal Proposal with an ulterior motive only known to him. XII. The Appellant has incorrectly, and in any case belatedly, sought to challenge the rejection of its 12A proposal by the CoC of the Consolidated Corporate Debtors vide the instant Appeal. It is submitted that the Appellant in the instant Appeal has sought to indirectly bring into life a dead issue inasmuch as the Appellant's Withdrawal Proposal was rejected way back on 11.12.2020, while the present Appeal is filed on 31.07.2021, i.e., after lapse of more than 7 months. It is respectfully submitted that the background circumstances under which the Appeal has been filed by the Appellant cannot b....
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....L even responded to SBI Letter dated December 18, 2018 and requested SBI to initiate the process of assessing the valuation of Oil & Gas Assets and undertake monetisation, and VOVL is ready and willing to do necessary things in this regard. Thereafter, Deed of Undertaking dated January 9, 2019 from VOVL, VHHL, VEBL and VINI was also executed in SBI's favour in relation to mutual decision taken to initiate process of valuation and monetisation of certain Oil & Gas Assets. XV. It is submitted that the 12.02.2020 Adjudicating Authority Order came to be passed on the MA 2385 filed by the Appellant more than a year after the initiation of the CIR Process against Consolidated Corporate Debtors. Appellant mischievously filed the MA 2385 seeking inclusion of foreign oil and gas assets held by the foreign incorporated subsidiaries of Videocon Group. The said application was vehemently opposed by SBI for the CoC before the Adjudicating Authority. However, despite the strong objections to the inclusion of these assets, Adjudicating Authority vide Order dated 12.02.2020 directed the Resolution Professional of VIL to: a. to consider and treat all assets, properties, rights, cl....
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....w as a 'special purpose vehicle' hardly holding independent valuable assets but burdened with liability, Which may cause disadvantage if segregated. But after consolidation all the liabilities pooled together can be satisfied up to large extent against the value of common pooled assets, which are otherwise in control of a single entity. In this group Licenses, Good-will, Permits, Trademarks etc. are valuable but scattered all over the group entities. One more valuable asset is 'Oil & Gas field' acquired through joint venture and duly taken as a valuable property by the banks while granting loan. So all are to be consolidate which shall create a high value cumulative asset, going attract an equally high value Resolution Plan. Singly it is a far sight. Therefore apart from all other reasons inter-alia, the existence of Reeva oil-field in the common pool of assets is a good reason for propounding 'Consolidation'." XVIII. It is also stated that the Appellant has no locus standi to espouse issues purportedly at the behest of creditors of the Consolidated Corporate Debtors. The proceedings initiated against the Appellant and the personal guarantors are bona fide and in accordanc....
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....ts of Section 30(2) and it is only upon examination of such provisions that the adjudicating Authority has approved the Resolution plan. In this regard it would not be out of place to mention that not even a single OC has challenged the resolution plan. Hence, the present appeal alleging that the resolution plan discriminates OCs is exfacie meritless. IV. Similarly, in so far as the allegations of the Appellant regarding the haricuts provided in the resolution plan to the OCs and the FCs is concerned, it is submitted that: a. The Appellant has no locus to make such averment; b. The commercial wisdom of CoC in accepting a particular haricut is not amenable to judicial review as settled by the Hon'ble Supreme Corut in a catena of decisions, and; c. The Appellant never raised its objection on haircut provided in the Resolution plan before the Adjudicating Authority. V. It is also submitted that the Appellant has never filed any application before the Adjudicating Authority opposing the approval of the Resolution plan of R-3 on the ground that the consolidated CIRPs ought to have included the foreign oil and gas assets. Hence, without prejud....
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....ent appeal). Hence, the Appellant by way of his conduct, acquiesced to the consolidated CIRPs and is now estopped from arguing that such consolidated CIRPs sought to have included the foreign oil and gas assets of the four entities. VII. It is also submitted that the Appellant is merely raising the aforesaid issue to sabotage and derail the CIRP upon approval of the resolution plan. Hence, the appellant's averment that foreign assets of four entities ought to have been considered in the consolidated CIRPs is plainly meritless and liable to be dismissed. VIII. The Section 12A proposal of the Appellant was placed for voting during the 19th meeting of the CoC 11.11.2020 along with the Resolution plan of the Respondent No.3 and the one other resolution plan filed by the V-shape investment management limited. Upon consideration, the CoC has rejected the section 12A proposal. Admittedly the above decision of CoC has not been impugned by the Appellant before the adjudicating Authority, a fact which has been suppressed in the present appeal. Hence, the appellant has no standing and case of action to seek the prayer for reconsideration of the 12A proposal by CoC when, in f....
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.... subsequently it is upto both the parties to decide on the same as per their mutual understanding". 20. However, the Hon'ble Supreme Court in Civil Appeal No. 3045 of 2020 in Tata Consultancy Services Limited Vs. Vishal Ghisulal Jain, Resolution Professional, SK Wheels Pvt. Ltd. has held vide para 27 that NCLT does not have any residuary jurisdiction to entertain the contractual dispute and the same is stated below: "Para 27. - It is evident that the appellant had time and again informed the Corporate Debtor that its services were deficient, and it was falling foul of its contractual obligations. There is nothing to indicate that the termination of the Facilities Agreement was motivated by the insolvency of the Corporate Debtor. The trajectory of events makes it clear that the alleged breaches noted in the termination notice dated 10 June 2019 were not a smokescreen to terminate the agreement because of the insolvency of the Corporate Debtor. Thus, we are of the view that the NCLT does not have any residuary jurisdiction to entertain the present contractual dispute which has arisen dehors the insolvency of the Corporate Debtor. In the absence of jurisdiction over the di....
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....nts that were classified as NPA by banks on account of defaults and in respect of whom RBI had provided specific instructions as per Banking Regulations Act, 1949 for initiating insolvency proceedings. The RBI has sent a letter to SBI in its capacity as lead bank to resolve their debts outside the scheme of the Code till December, 13,2017 failing with insolvency proceedings under the Code are to be initiated against the companies before 31.12.2017. As a result of non-resolving the continuing default, the CIRP petition was filed on 01.01.2018 against VIL and VTL ; they are blaming the poor management of the appellant leading to such situation who is obstructing to frustrate and derail the CIRP and thwart all attempts of a Successful Resolution of a consolidated CD. It has also been stated by the CoCs that it is a matter of record the applicants act of commission and omission while in control of the consolidated CDs are being investigated by several investigating agencies and the proposal under Section 12A of the Code was already rejected by the CoCs. The Appellants are challenging the impugned order just for reviving its Section 12A (of IBC) proposal. It has also been stated by them....
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....stimated amount to be paid to the DFC as per Code and the CIRP Regulations. The RP has washed off his hands that he is not responsible for the figure provided by SBI Caps, while he himself has given estimated figure and has undertaken to provide correct figure at a later date. This does not seem to be appealing. 25. It is also revealed that the amounts to be paid to the banks will be determined at the time of payout in itself, is misconceived. Simply stating everywhere that it shall not be less than the amount to be paid to such creditors in accordance with Section 53 of the Code in the event of liquidation is just washing off his hands. It is also a fact that the direction by the Adjudicating Authority to the SRA to pay the DFC by cash instead of NCD amounts to modification of the Resolution Plan. This is a domain of the CoC & not Adjudicating Authority. Resolution Plan does not provide for 'upfront' payment in priority to the DFC as provided in Section 30 of the Code R/w IBBI ( INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS ) Regulations 38. Para 3.5 of the resolution plan proposes that NCD will be issued to the DFC redeemable after a significant period of time around fiv....
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.... Indian economy and other operational creditors under the Resolution plan requires to be reviewed by the CoC. It has also been stated in an unambiguous terms that they wish to give due consideration of observations in the impugned order and the stay order passed by this Tribunal on 19.07.2021. The CoC, majority of which are public sector banks and financial institutions dealing with public money is acting as the custodian of public trust and discharging statutory role. The CoC is vested with a duty of trust and care. The CoC power is not without responsibility and even Hon'ble Apex Court has made the CoCs decision on commercial matters as non-justiciable. Keeping in view these factors in mind, the public sector banks and financial institutions etc., constituting approx.95% of the CoC (out of 95.09% voted in favour) have resolved to request this Tribunal to remand the matter back to the CoC for its reconsideration through an affidavit. We agree that the CoC, if it has power to approve the plan, has also power to reconsider and review its own decisions on Resolution Plan. Power to approve, no doubt, carries with it power to reconsider. As stated supra, the 'Board of Directors' of the....
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....pproved at a particular point of time. Shareholders are the owners of the Company and generally they are the appointing authority of the Director either in the Annual general meeting of the Company or in the Extra ordinary general meeting of the Company. Based on Board approved resolution as per the requirement of the Companies Act, whether it is of Companies Act, 1956 or Companies Act, 2013. Certain resolutions require approval of the shareholders as per provisions of the Companies Act. These shareholders based on the wisdom approves a particular proposal or disapproves a particular proposal at a particular point of time. They also can change their approval based on input provided at a later stage by a majority votes or otherwise or may be if it is proposed by requisite majority as per provisions of the Companies Act by convening Extraordinary General Meeting or placing it before the Annual General Meeting. 35. We all talk of going concern concepts under the Code and this concept is meant for giving a life to the company under a resolution. With the initiation of CIRP, the management changes instead of Board of Directors, it is the CoC who takes over the management of the Compa....
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....e domain of CoCs and the Adjudicating Authority should have considered to send back for reconsideration to the CoC. For brevity and clarity Section 30 & 31 of the Code is reproduced below for ready reference: Section 30: Submission of resolution plan. (1) A resolution applicant may submit a resolution plan 1 [along with an affidavit stating that he is eligible1A under section 29A] to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the [payment] of other debts of the corporate debtor; [(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution p....
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....re of the financial creditors, after considering its feasibility and viability, [the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor] and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A: Provided also that nothing in the second proviso shall be construed as extension of period for the pu....
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....he corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later. Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors." 38. The CoCs are the best judge to analyze, pick up and take prudent commercial decision for the business but they are also subjected to test of prudence in order to ensure fairness and transparency. 39. The level of haircut being unprecedented and involving large public interest involving thousands of crore of public money requires perhaps deep thinking and coo....
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.... been a leak of liquidation value in the resolution process. Concerns raised by the lenders regarding distribution mechanism provided to the Dissenting Financial Creditors in the resolution plan and the contentious issue of distribution amount. All these are not complied with in accordance with Section 31(1) which is a requirement for satisfaction of Adjudicating Authority. Section 30(2) of the Code has also not been complied with. The said plan provides for payment to the Dissenting Financial Creditors by way of NCD and Equities which is impermissible as per the Code. Paras 3.5.4, & 3.5.2 of the Resolution Plan (at page 237 -239 of the Appeal paper book) are not in accordance with the directions given by the Hon'ble Supreme Court in the case of Jaypee Kensington Boulevard Apartment Welfare Association and Ors. Vs. NBCC (India) Ltd. Ors., (Civil Appeal No. 339 of 2020 decided on 24.03.2021) which are as follows: "124. To sum up, in our view, for a proper and meaningful implementation of the approved resolution plan, the payment as envisaged by the second part of clause (b) of sub-section (2) of Section 30 could only be payment in terms of money and the financial creditor w....
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....lan of 13 companies having large number of MSMEs. 2. Further it is also observed that by just paying only Rs. 262 Cores (8.84% of total plan value) (Cash balance available with the Corporate Debtors is approx.. Rs. 200 Crore) the Successful Resolution Applicant will get possession of all the 13 Corporate Debtors to run these units and the first payment of Rs. 200 Crore as part redemption amount of NCDs will be paid within 25 months from the closing date and the balance amount of Rs. 6,25,00,00,000/ each is spread over in 4 instalments starting from 3rd year onwards up to sixth year from the closing date and the interest rate for the NCDs is also a nominal of only 6.65% P.A payable annually. It may also be noted that at the time of granting loan, restructuring, approving the resolution plan with such a huge hair cut also the financial institutions, Committee of Creditors consisting 35 members exercised their Commercial Wisdom. Since this is the Commercial Wisdom of the COC and as per the various judgements of the Hon'ble Supreme Court and by following the judicial precedents, discipline the Adjudicating Authority approves the resolution plan of the Successful Resolution App....
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....red or monitory benefit (fees) to these Representatives. Therefore, we request IBBI to examine this issue as well and appropriate guidelines may be issued. 24. In the light of above stated discussions and the law has been settled, we find that the proposed Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39 (4) of the Regulations. The Resolution Plan is not found in contravention of any of the provisions of Section 29A of the Code and is in accordance with Law. Hence the same deserves approval with following observation and direction to the CoC to make payments as per liquidation value to all the dissenting Financial Creditors in cash upfront before any payment is made to assenting Financial Creditors as per the judgment of the Hon'ble Supreme Court in the matter of Jaypee Kensington Boulevard Apartments Welfare Association & Ors. Vs NBCC (India) Ltd. & Ors. matter. The above para of the impugned order reflects that the Adjudicating Authority has made certain observations and require reconsideration by the CoC so the resolution plan should have gone for a review to the CoC as it fails to meet the criteria of Section ....
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.... was considered to be capable of being reviewed and even withdrawn. Relevant portion of the judgment is quoted below: "61. By the very nature of the power that is conferred in these authorities, it is apparent that it coupled with a duty i.e. to maintain discipline and order of highest nature in the academic field. If that is the obligation to the society as a whole that these authorities have to discharge, then, to hold that they will be powerless or that they do not possess any implied or incidental power to withdraw or cancel the approval, would make the M.U.Act unworkable and its provisions meaningless. In several cases of this nature, the Hon'ble Supreme Cot has applied doctrine and principle of implied power. That principle is founded on the premises that conferment of a statutory power would necessarily take within its import he authority to use all means to make effective and meaningful.(...)" 45. All these reflect that power to reconsider any decision is within the domain of CoC and even Hon'ble Apex Court in Catena of judgment held that the commercial wisdom of the CoCs is non justifiable and hence, it is in the domain of CoC, particularly, if at a later stage....
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....fere 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 after satisfying the aforesaid parameters. The reasons given by the Committee of Creditors while approving a resolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key features, it must then pass the resolution plan, other things being equal." 46. Hence, we are of the considered view that the resolution plan is not complying with Section 30(2)(b) of the Code r/w Section 31 of the Code. Hence, it can be reman....
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....ees one thousand crore or turnover of more than rupees three thousand crore; or (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover more than fifteen hundred million US dollars; or (ii) the group, to which enterprise whose control has been acquired, or is being acquired would belong after the acquisition, jointly have or would jointly have,- (A) either in India, the assets of the value of more than rupees four thousand crore or turnover of more than rupees twelve thousand crore; or (B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars or turnover of more than six billion US dollars; or (c) any merger or amalgamation in which- (i) the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have,- (A) either in India, the assets of the value of more than rupees one thousand crore or turnover of more than rupees three thousand crore; or (B) in India or outside India, in aggregate, the assets of the value of more than five hundred milli....
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....h the Code prior to the approval of CoC. In the 19th CoC meeting held on 11.11.2020, the CoC were apprised of acknowledgment copy of the applications filed with the CCI seeking CCI approval of the resolution under the present case. BOB enquired for such requirements also. However, we could not find even in 20th & 21st CoC meeting (page 199-322 of the Appeal paper book) whether such approval from CCI has been obtained or not, while the Resolution Plan was approved by the CoC in the 19th CoC meeting. Hence, it is very much clear that prior approval of the CCI has not been obtained as per proviso to section 31(4) of the Code. This reflects that the approved Resolution Plan requires review and reconsideration for the legal compliances. Statutory compliances does not fall under the commercial wisdom of the CoC. ence, the statutory compliances as mandated by proviso to Section 31 (4), have to be ensured before the Resolution Plan is approved by CoC. D. Conclusion 50. In view of the above stated analysis of facts and law, we have come to the conclusion that Section 30 (2)(b) of the Code has not been complied with and hence, the approval of the Resolution Plan is not in accordance wi....