TaxTMI 
TaxTMI 
2024 (10) TMI 295
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....rishnan, Ms. Pooja Mahajan, Mr. Savar Mahajan, Ms. Geetika Sharma, Ms. Shreya Mahal war, Advocates for SRA/R-3 Mr. Ravi Kadam and Mr. Sunil Fernandes, Sr. Advocates with Mr. Bishwajit Dubey, Mr. Ramakant Rai, Mr. Somesh Srivastava, Mr. Rajshree Chaudhary, Ms. Diksha Dadu, Advocates for R-1. JUDGMENT ASHOK BHUSHAN, J. These Appeal(s) by unsuccessful Resolution Applicants have been filed challenging the same order dated 13.08.2024 passed by National Company Law Tribunal, Mumbai Bench-IV, allowing IA No.2794 of 2023 filed by Resolution Professional ("RP") for approval of the Resolution Plan submitted by Sarda Energy and Minerals Ltd. ("SEML") (one of the Respondent herein). By the impugned order, IA No.3399 of 2023 filed by Torrent Power Ltd. and IA No.3336 of 2023 filed by Vantage Point Asset Management Pte. Ltd. have been rejected by the Adjudicating Authority. Intervention Petition No.40 of 2024 filed by Jindal Power Ltd. also came to be rejected by the impugned order. All the three unsuccessful Resolution Applicants by these Appeal(s) have challenged the orders of the Adjudicating Authority approving the Resolution Plan of SEML as well as order passed in different IAs fil....
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....the CoC held on 16.05.2023, seven Resolution Plans were put to vote. E-voting was conducted for approval of Resolution Plans from 28.05.2023 to 08.06.2023. By voting result dated 08.06.2023, the Resolution Plan of SEML as amended read with addendum dated 10.05.2023 was approved with 100% vote share. (vi)On 08.06.2023, the RP issued a Letter of Intent ("LoI") to SEML, who was called upon to submit Performance Bank Guarantee ("PBG") of INR 150 crores. On 12.06.2023, SEML unconditionally accepted the LoI and submitted PBG of INR 150 crores in favour of Bank of Baroda. (vii)On 14.06.2023, Vantage Point Asset Management Pvt. Ltd. has sent an email to the RP, offering to increase its financial proposal by INR 50 crores with object to maximise the value of the Corporate Debtor. Another email was sent by Vantage Point Asset Management Pvt. Ltd. on 16.06.2023 reiterating the same prayer. The CoC held its 32nd meeting on 17.06.2023 rejecting the offer of Vantage Point Asset Management Pvt. Ltd. submitted on 14.06.2023 with 100% vote share. (viii)On 17.06.2023, RP filed an IA No.2794 of 2023 before the Adjudicating Authority praying for approval of Resolution Plan o....
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....al (AT) (Ins.) No.1395-1397 of 2023; Vantage Point Asset Management Pte. Ltd. also filed a Company Appeal (AT) (Ins.) No.1445 of 2023 and Ashish Arjunkumar Rathi, the RP has also filed Company Appeal (AT) (Ins.) No.1535 of 2023. Jindal Power Ltd. has filed an Intervention Application being IA No.1214 of 2023 in Company Appeal (AT) (Ins.) No.1395-1397 of 2023. All the aforesaid Appeal(s) were heard by this Tribunal and vide judgment and order dated 10.05.2024, all the Appeal(s) were decided by this Tribunal. The operative portion of order of this Tribunal passed on 10.05.2024 is as follows: "89. In view of the foregoing discussions, we dispose of all these Appeals in following manner: (i)The impugned order dated 06.10.2023 passed in IA No.2794 of 2023, IA No.3336 of 2023 and IA No.3339 of 2023 is set aside. (ii)The Plan approval Application, i.e., IA No.2794 of 2023 and other two Applications, i.e. IA No.3336 of 2023 and IA No.3339 of 2023 are revived before the Adjudicating Authority for fresh decision. (iii)The Plan approval Application is pending from June 2023; we request the Adjudicating Authority to dispose of the Plan approval Application a....
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....e NCLAT Order. The same has been dealt at Page No. [55] of this Order hereto 7.4. PART-IV To consider the captioned application viz. I.A. No. 2794 of 2023 apropos the Resolution Plan in the matter of the Corporate Debtor herein, in due consonance with paras {87} r/w. {89} of the NCLAT Order. We have further deemed it fit to additionally consider two Interlocutory Applications (bearing I.A. Nos. 3286 of 2023 and 3654 of 2023) and two Intervention Petitions (bearing IVN. P. 40 of 2024 and 41 of 2024), filed during the pendency of the afore- mentioned I.A. Nos. 2794 of 2023, 3336 of 2023 and 3399 of 2023. The captioned application has been dealt at Page No. [80] of this Order hereto." 4.Part-I deals with IA No.3336 of 2023. Prayers made in the Application filed by Vantage Point Asset Management Pvt. Ltd. has been noticed in paragraph 8, which are as follows: "8. The instant application bearing I.A. No. 3336 of 2023 has been filed on 01.08.2023, by Vantage Point Asset Management Pvt. Limited ("VPAM") against the Resolution Professional viz. Respondent No. 1 herein (Applicant RP in the captioned application) and the Committee of Creditors of Corporate Debto....
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....ank of India; The materials on record clearly demonstrate that the said CoC had in-fact deliberated at length upon the feasibility and viability of the Resolution Plan(s) submitted by the respective Resolution Applicant(s), including that of the Applicant in the instant application, and it is not open for this Tribunal to undertake any (quantitative) analysis apropos the same. It was only after such examination that the Resolution Plan(s) (including that of the Applicant hereto) were put up for voting during the 31st Meeting of the CoC. Furthermore, the Apex Court in Essar Steel India (supra) has categorically observed the following: "46 ... There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or subclass of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of C....
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....solicited offer has been received at a stage where the Resolution Plan of the SRA has already been voted upon. Further, all the Resolution Plans were discussed in the CoC meetings with detailed justifications for each parameter of evaluation. Also, in case of VPAM, the shortcomings were also pointed out by the advisors appointed by the lenders to evaluate the plans. The CoC, considering the interests of all stakeholders, in a fair and transparent manner, deliberated and considered each Resolution Plan holistically before making its decision and had exercised their commercial wisdom. In view of the same, considering that the Resolution Plan of the SRA has been voted with 100% majority, he expressed that there is no justification for accepting the request of VPAM, while it is also not legally possible as pointed out by the legal counsels. The views of SBI were also sought on this matter, and SBI representative stated that they concur with the views of Bob and the Legal Counsels." {emphasis applied}" 7.One of the prayers of the Applicant that he should be given copy of Resolution Plan of Successful Resolution Applicant was also not acceded to. Consequently, the Adjudicating Authori....
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....aid submission of discrimination was also pressed before the Adjudicating Authority at the time of hearing of the Application. The RP and the CoC have pleaded in their replies that under the decision of the CoC, a clarification was asked from four Resolution Applicant by email dated 08.05.2023 to give certain clarification. The email itself contemplated that clarification should be given by way of an Addendum. The Resolution Applicants, who were asked the clarification, had provided the clarification. The CoC during submission has rightly submitted that the said clarification was asked under the directions of the CoC, which is fully permissible as per the provisions of RFRP and Process Note, which empowers the CoC to ask for clarification from any Resolution Applicant. It is submitted that clarification was asked from all Resolution Applicants and there cannot be any modification of any financials by clarification and no modification was made to the earlier Resolution Plan. It is relevant to notice that the said argument was considered and did not find favour with the Adjudicating Authority. This clarification was not asked only from the Appellant - Sarda, rather, they said clarifi....
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.... and Resolution Applicants were required to submit their proposal in the format set out in Appendix-1 (Identified Criteria). The Appendix-1 clearly indicated both upfront as well as deferred payment. Thus, in view of the Process Note of Appendix-1, the submission cannot be accepted that all amounts were to be offered upfront. The learned Counsel for the Appellant has also relied on Clause 4.1.8 of RFRP, which clearly provided that the CoC is under no obligation to any of the Resolution Applicant to approve the Resolution Plan, which has secured the highest value as per the Evaluation Matrix and any Resolution Plan shall be approved solely based on CoC's commercial wisdom. To the same effect is Clause-9(c) and 9(d) of the Process Note dated 12.04.2023, where the CoC has reserved its right to evaluate the compliances of Resolution Plans and accept or reject the Resolution Plans." {emphasis supplied}" 10.The Adjudicating Authority has further noticed that in pursuance of order dated 07.08.2023 passed by the Bench, RP has sought to place affidavits dated 10.08.2023 and 20.08.2023, which affidavits were taken on record for consideration of the Applications. In paragraph 21.4....
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....l finding(s) in para {82} holding that ". We do not find any substance in the submission on behalf of Torrent Power Limited that any discrimination was made with other Resolution Applicants by calling clarification from Appellant - Sarda", we are of the considered view that we need not dwell further on this issue-at-hand. 11.All allegations made by the Applicant - Torrent Power Ltd. regarding perversity and/ or discrimination in the process has also been dealt with. The prayer of the Applicant seeking copy of the Resolution Plan was not acceded to. Consequently, IA No.3399 of 2023 filed by Torrent Power Ltd. was rejected. 12.Part-III of the order dealt with aspect of "incomplete financial data placed before the CoC of the Corporate Debtor in the decision-making process while approving the Resolution Plan", which was the basis of order dated 06.10.2023, earlier passed by the Adjudicating Authority (which now stands set aside by order dated 10.05.2024 of this Tribunal). The submission of RP, SRA and the CoC were noticed. The aspect of placing of incomplete data by RP and its Process Advisor, as well as treatment of the Bank Guarantees, were dealt in detail. The Adjudicating Aut....
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....y by the CoC and its advisors.", more specifically so in relation to Clauses (6.3.13), (6.3.14), (6.3.15) and (6.3.16) of the resolution plan of the SRA herein as noted by the CoC, and has further sought to delve into the findings of the (now set-aside) NCLT Order and has thereby re-iterated its earlier position in this regard that "..there seems to be no variance from the earlier factual position decided by the CoC members during the 30th and 31st CoC meetings and the decision arrived at by the CoC members seems to be unaltered." 31.Upon conflating and being bound by the nature (and scope) of jurisdiction exercisable by this Adjudicating Authority in this regard,more specifically so, in light of the Apex Court's judgement in Ngaitlang Dhar v. Panna Pragati Infrastructure Private Limited [CA No. 3665-3666 of 2020] and Vallal RCK v. M/S Siva Industries and Holdings Limited And Others [Civil Appeal Nos. 1811-1812 Of 2022] as afore-extracted respectively in para nos. [14.2] and [14.6] of this Order, concomitant to observations of Hon'ble NCLAT in this regard in para {73} of its Order dated 10.05.2024 and from a perusal of materials (including the minutes of 34th CoC Meeting d....
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....ecifically so, at the backdrop of the CoC having re-considered the Intervenor's resolution plan at the backdrop of the financial aspects provided therein, during its 34th Meeting dated 19.10.2023. The Conclusion of the said discussion (at sub-clauses (a) to (f)) in clause (4.1.5) of the minutes of the 34th meeting, are extracted herein to warrant for the same: "(f) In view of the review of the terms of the JPL Resolution Plan and after detailed deliberations with the Counsels, the CoC members were of view that the observations of the Hon'ble NCLT appears to be at variance from the terms of the JPL Resolution Plan and further seems to be factually incorrect, as JPL is offering an amount of INR 101.1 Cr, out of which INR 83 Cr is towards financial creditors and the aforementioned paras deal with the scoring of the BGs as well. It was further noted that, the facts and numbers considered by the CoC in the evaluation of the JPL Resolution Plan were accurate and the scoring as per the evaluation matrix is appropriate." 14.The Adjudicating Authority from paragraph 45 to 59 has dealt with Application - IA No.2794 of 2023 and after examining different aspect of Resolution Plan has conclu....
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....lution Plan provides for a Scheme of Amalgamation of the Corporate Debtor herein, with the SRA ". upon the Corporate Debtor becoming a WOS of the Resolution Applicant." We make it clear that the same may be subject to necessary procedure(s), as enshrined under applicable law. 56. The Resolution Applicant has additionally sought certain Reliefs and Concessions per Chapter {11} of the Resolution Plan. We make it expressly clear that no reliefs, concessions and dispensations that fall within the domain of other government department/ authorities are granted hereto, and the same shall be dealt with by the respective competent authorities/fora/offices, Government (State or Central) about the respective reliefs, if any. Be that as it may, the Learned Counsel for the Applicant RP, during hearing on 04.07.2024, has categorically affirmed that the implementation of the Resolution Plan is not conditional or contingent upon grant of any or all such reliefs, concessions and dispensations by this Tribunal. 57.In the case of K Sashidhar (supra) the Hon'ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of ....
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....Shri Sunil Fernandes, Sr. Advocates with Shri Bishwajit Dubey has appeared for the Resolution Professional in the above Appeals; Shri Harish Salve, Sr. Advocate, Shri Arun Kathpalia, Sr. Advocate and Mr. Krishnendu Datta, Sr. Advocate have appeared for the Successful Resolution Applicant (SRA)- SEML in the above Appeals. 18.Learned Senior Counsel appearing for the Appellants in all the above Appeals has raised two principal submissions in support of the Appeals. The principal submissions raised by the Appellants being common in all the Appeals, we shall notice the said submissions as submissions on behalf of the Appellants. An additional submission has been raised by the Appellants in 'Vantage Point Asset Management Pte. Ltd.' and 'Jindal Power Ltd.' which we shall separately notice. 19.Counsel for the Appellant challenging the impugned decision passed by the Adjudicating Authority dated 13.08.2024 contends that this Tribunal vide order dated 10.05.2024 set aside the earlier order of the Adjudicating Authority dated 06.10.2023 and remanding the matter for fresh consideration which obliged the Adjudicating Authority to consider all contentions raised afresh. Adjudicating Autho....
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....deviated from the Resolution Plan. Resolution Professional itself has confirmed that the Resolution Applicants could not modify their commercial offer by way of clarification permitted the SEML to change its commercial terms. The CoC and the Resolution Professional has permitted the SEML to change its commercial under the garb of seeking clarification. Such similar opportunities were not made to other Resolution Applicants. The SRA has made third highest offer in its plan whereas it was 'Vantage Point Asset Management Pte. Ltd.' who has made the 1st highest offer and 'Torrent Power Ltd.', the 2nd highest offer. In support of second limb of arguments, it is submitted that Sarda has provided treatment of margin amount pertaining to bank guarantees listed in Item Nos.1 to 5 in its Resolution Plan submitted on 28.04.2023 and had offered to infuse INR 103.39 Crores as replacement of margin money. Bank guarantees listed at Item Nos.6 and 7 were not proposed to be continued so that the Resolution Plan did not provide for their treatment. Pursuant to clarification from the Resolution Professional with regard to bank guarantees at Item Nos.6 and 7, Sarda clarified that the margin money pert....
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.... 21.Counsel appearing for Jindal Power Limited has raised an additional issue in support of these Appeals that Jindal Power has offered 10% equity upside with a buyback value of INR 27 Crores. The said amount has not been considered in the financial proposal for voting. It is submitted that upon the conclusion of the bidding process on 19.04.2023, SEML's offer amounted to INR 1995 Crores whereas it is submitted that JPL's offer following the conclusion of bidding on the same date, stood at INR 2003 Crores and in event, 10% equity upside is added, the said amount will become INR 2130.10 Crores. It is submitted that in the facts of the present case, the Tribunal may permit the Resolution Applicant to submit fresh revised plan. It is submitted that the Adjudicating Authority erroneously rejected application IA No.40 of 2024. JPL after becoming aware of the rejection of the plan in the resolution process has issued letter dated 09.01.2024 requesting the Resolution Professional and the CoC to conduct another round of auction. 22.Counsel for the CoC submits that the clarifications had been sought by the Resolution Professional from all the Resolution Applicants pursuant to a decision....
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.... was conducted by the CoC in fair and transparent manner. All Resolution Applicants got a level playing field and participated without demur till conclusion of the process. It was after the approval of the plan by the CoC and after the Appellants took back their EMDs, as an afterthought, 'Vantage Point Asset Management Pte. Ltd.' and 'Torrent Power Ltd.' filed applications before the Adjudicating Authority raising certain objections. 23.The arguments of option of INR 240 Crores given by the SEML as upfront payment, changes the financial offer is incorrect. The deferred payment which was offered of INR 143.37 Crores at the end of 2nd year and INR 158.27 Crores at the end of 3rd year, applying 10% discounting, the said amount comes to INR 240 Crores, hence, NPV of INR 240 Crores was added in the upfront component which is clear from Appendix-I. The language of certain clauses of the Resolution Plan being not clear and there being some doubts, clarification was asked from SEML. 24.Coming to the bank guarantees infusion, it is submitted that Sarda was always offering INR 180.49 Crores under the plan in relation to bank guarantees. Clarification was sought on the modality and ther....
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.... the Resolution Professional in conduct of the CIRP process. The query was made to all Resolution Applicants as per the decision of the CoC taken in the CoC meeting held on 06.05.2023. There is no substance in the submission of the Counsel for the Appellants that any irregularity was committed by the Resolution Professional in the CIRP process. The CIRP process was conducted as per the provisions of the IBC Regulations, 2016, RFRP and the Process Note. All the Appellants after approval of the plan have taken back their EMD. 26.Counsel for the SRA refuting the submissions of the Appellants submits that the arguments raised by the Appellant that SRA by way of clarification sent by e-mail dated 10.05.2023 has modified its financial offer is wholly incorrect. Appellants from time to time changed their stand at different stages of the present proceeding. It is submitted that the SRA in the bidding process held on 19.04.2023 offered both upfront payment and deferred payment which was permissible as per the RFRP and the Process Note. SRA along with Affidavit filed in Company Appeal (AT) (Insolvency) No. 1621 & 1622 of 2024 has brought on the record last Appendix submitted by SEML to Re....
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.... be treated as any deviation from the Resolution Plan. The submission of the Appellant that there is deviation by the SRA by its reply dated 10.05.2023 is baseless and unfounded. The Resolution Plan submitted by the SRA along with the Addendum dated 10.05.2023 has been considered and approved by the CoC, it is not open to the Unsuccessful Resolution Applicant to question the commercial wisdom of the CoC in approving the Resolution Plan. 28.Dr. Abhishek Manu Singhvi, Learned Senior Counsel appearing for 'Torrent Power Ltd.' has contended that the remand made by this Tribunal by its order dated 10.05.2024 was open remand for fresh decision. Adjudicating Authority was obliged to consider all issues raised and Adjudicating Authority has not adverted to all submissions advanced by the Appellant and certain arguments were rejected relying on the earlier order of this Tribunal dated 10.05.2024. 29.These Appeals have been filed challenging the order of the Adjudicating Authority dated 13.08.2024. We proceed to examine all contentions advanced by the Appellants on merits to find out as to whether there are any grounds made in these Appeals to interfere with the order of the Adjudicati....
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....ithstanding anything contained hereinabove, the CoC reserves the right to engage in discussions with any Resolution Applicant(s)." 32.The above clause of the RFRP makes it clear that the powers of the CoC to deliberate, discuss and/or negotiate with any one or more Resolution Applicants in any manner deemed fit by the CoC is unfettered. Clause 2.6.2 (g) provides that on the basis of clarifications and negotiations with the Resolution Applicants, such Resolution Applicants may be required to submit a revised resolution plan. Clause 2.6.2 (g) is as follows: - "(g) Basis clarifications and negotiations with the Resolution Applicants, such Resolution Applicants may be required to submit a revised Resolution Plan or make any modifications/amendments to the Resolution Plan in writing. Such submissions made at the instructions/request of the CoC shall not be considered as submission of a Resolution Plan made after the Resolution Plan Submission Date." 33.Clause 2.9.4 begins with non-obstante clause reserving the absolute right of the CoC. Clause 2.9.4 is as follows: - "2.9.4. Notwithstanding anything contained in this RFRP, the CoC reserves the absolute right to ....
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....tional documents or information in relation to its Resolution Plan 35.Right of CoC to request for additional information/ documents and/or seek clarifications from Resolution Applicant(s) is also reiterated in Clause 2.16.7 which is as follows: - "2.16.7. Save as provided in this RFRP, no change or supplemental information to the Resolution Plan shall be accepted after the Resolution Plan Submission Date. The Resolution Professional, or CoC may, at their sole discretion, request for additional information/ documents and/or seek clarifications from Resolution Applicant(s), even after the Resolution Plan Submission Date. Delay in submission of additional information and/or documents sought by the Resolution Professional, or RP Professional Advisor (on behalf of the Resolution Professional) or the CoC shall make the Resolution Plan liable for rejection and the same may be treated as non-responsive." 36.Clause 2.18.5 contains heading 'acknowledgments and representations' which provides that by accessing/ obtaining RFRP and upon obtaining access to the Data Room and Information Memorandum, the Resolution Applicant is deemed to have made the following warranties, undertaki....
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....ause 9(v) details 'modalities for negotiation meetings. Sub- clause (vii) provides that the financial proposal received in the negotiation process under the Identified Criteria shall be strictly as per the format prescribed in Appendix-I. Sub-clause (xi) provides that only the financial proposal which is offering the highest value as per the Identified Criteria at the end of each round will be disclosed. Clauses 9(v), (vii) and (xi) are as follows: - "(v) Modalities for Negotiation Meetings (vii) During the Negotiation Meetings, the participating Resolution Applicants shall be provided an opportunity to submit their revised and increased financial proposal in respect of identified Criteria (as defined hereinafter). Any financial proposal received in the Negotiation Process under the Identified Criteria shall be strictly as per the format prescribed in Appendix I. The said Appendix 1 shall be duly submitted by the authorised representative of the Resolution Applicant. (xi)To ensure confidentiality, the details of the resolution plans of Resolution Applicants will not be disclosed. Only the financial proposal which is offering the Highest Value as per the I....
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....ated by the RP (pursuant to approval of the CoC) (ii) All Resolution Applicants must note that the proofs for the source of funds shall be required to be submitted within 48 hours from the Closure of the Negotiation Process, unless otherwise extended by the CoC in its discretion. iii) All revised signed resolution plans along with the addendums, if any, which are in compliance with the provisions of the Code and the CIRP Regulations shall be put to vote simultaneously, in accordance with Regulation 39(3) of the CIRP Regulations 40.As noted above, after completion of the Negotiation Process on 19.04.2023 in four rounds, the Resolution Plans were submitted on 28.04.2023 by all the Resolution Applicants reflecting the offer given by the Resolution Applicants in Negotiation Process dated 19.04.2023. 41.After having noticed the relevant Clauses of RFRP and the Process Note, now we revert to respective submissions of the parties. As noted above, both Vantage and Torrent have filed the Applications before the Adjudicating Authority much after RP communicated the approval of Resolution Plan to unsuccessful Resolution Applicants. The Applications were filed by both Van....
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....e of clarification asked by the RP vide email dated 08.05.2023 to the SRA, the SRA was given an opportunity to modify its commercial offer, which opportunity was not given to other Resolution Applicants, which process reflect the material irregularity by RP, warranting interference by this Tribunal in approval of Resolution Plan. We while hearing the Appeal(s) on 21.08.2024, granted liberty to the RP to bring on record the email dated 08.05.2023, which was sent to the SRA. The learned Counsel for the RP has also made a statement that he shall keep all other relevant records ready for perusal of the court, if so required. On 21.08.2024, this Tribunal passed following order: "21.08.2024: Ld. Counsel for the Resolution Professional seeks liberty to bring on record the email dated 08.05.2023 which was sent to SRA. Ld. Counsel for the Resolution Professional further submits that he shall keep all other relevant records ready for perusal the court if so required. Let affidavit be filed by Friday i.e; 23.08.2024. List these appeals on 30.08.2024." 46.In pursuance of the order of this Tribunal dated 21.08.2024, the RP has filed an affidavit bringing on record ....
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....nt any Relevant BG is encashed and paid out to the beneficiary by the relevant issuing bank, then Margin Money Replacement Amount corresponding to such encashment shall be utilised for making payment to the Secured Financial Creditors or to creditors as decided by the CoC, on- the Transfer Date. In this regard, please clarify the following: (i)Will the Resolution Applicant replace all the BGs that are secured by the margin money of INR 180.05 crore since such amount of INR 180.05 Crores is sought to be returned to the Corporate Debtor on the Transfer Date and utilised for making payment to the Secured Financial Creditors or to creditors as decided by the CoC under clause 6.3.14 of the Resolution Plan? (ii)In case the Resolution Applicant will not replace all the BGs as above that are currently secured by margin money of INR 180 05 crore, then what will be the treatment of the bank guarantees at Item Nos. 6 and 7 of Annexure 3 which are currently secured by margin money of INR 76.66 crore? The treatment of the aforesaid BGs is not clear from the Resolution Plan. Further, please clarify the treatment of the underlying margin money, if it is not rel....
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....Debtor. This is inconsistent with Clause 6 3 5(a). In this regard, as also informed earlier, the pleadings in relation to Avoidance Transaction litigation were already made available in the Data Room to all the resolution applicant [VDR Ref. No. 12_ CIRP/Avoidance Application and 13_ Additional Data/ Additional Data _ 27 April 2023/ Avoidance Application], Accordingly, please clarify the treatment of Avoidance Benefits. 5.We note that Clause 2.2.7 deals with furnishing of a report by the Interim Accounting Agency (tAC). Responsibilities of IAC are yet to be defined. The CoC cannot vote on the terms/obligations of the IAC. Monitoring committee may take up this responsibility. Please clarify that furnishing of the report by IAC is not a prerequisite to distribution of plan amounts and determination of CIRP costs. 6.Clause 6.3.2.(b), states that Resolution Applicant will pay a "discounted amount of INR 240 Cr" to the CoC, in case CoC wishes to obtain the deferred portion of INR 240 Cr upfront. Please clarify whether Resolution Applicant is offering a value lower than INR 240 Cr (i.e. INR 240 Cr discounted to a lower value), if the option to obtain the value upfront i....
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....he resolution plans to arrive at a considered decision in acceptance with the provisions of the Code and the regulations thereunder. This communication has been issued without prejudice to the rights of the CoC and the Resolution Professional to undertake all actions permissible under law and the RFRP to achieve the objectives of the Code." 47.In paragraph-1 of the email, clarification was asked from the Sarda regarding margin money of INR 180.05 crores. Paragraph-1 asked Clarifications (i) to (vi) as extracted above. The above email has referred to paragraph 6.3.14 of the Resolution Plan. We may also need to notice paragraph 6.3.14 of the Resolution Plan to understand the nature of query and the reply given by Sarda. The RP in pursuance of the liberty, which was granted by this Tribunal by order dated 21.08.2024 has handed over the copy of the Resolution Plan to the Court for reference of relevant Clauses as referred to regarding which queries were raised by the RP. The relevant Clauses of Resolution Plan dealing with replacement of Bank Guarantee are 6.3.14 and 6.3.15. Clauses 6.3.13 to 6.3.16 are under the heading "Bank Guarantee" issued by various Banks as listed in....
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....eastern Coal fields Limited 36.33 This was provided under the Cost Supply Agreement. 3. Ajmer Vidyut Vitran Nigam Limited (Rajasthan PPA) 8.14 Issued to Rajasthan Discom 4. Jaipur Vidyut Vitran Nigam Limited (Rajasthan PPA) 12.08 Issued to Rajasthan Discom 5. Jaipur Vidyut Vitran Nigam Limited (Rajasthan PPA) 9.78 Issued to Rajasthan Discom 6. Excise Department 69.77 Issued to Rajasthan Discom 7. Customs 6.89 Total 180.05 49.We may now notice the reply to the queries as given by the Sarda to the RP. Sarda in its email dated 10.05.2023 after referring to paragraph 1 of the email dated 08.05.2023 gave its response as follows: "Response: In our Resolution Plan, it is proposed that the entire Margin Money will be utilised for payment to Secured Financial Creditors. In our Resolution Plan, we had proposed continuation of certain Bank Guarantees listed in Annexure 3 (except BGs listed in point 6 and 7) to ensure going concern status of the Corporate Debtor and had accordingly provided for replacement of the Margin Money with respect to such BGs. In respect of BGs listed....
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....revert to the Clause 6.3.14 of the Resolution Plan submitted by Sarda. From the first sentence of Clause 6.3.14, which provides for margin money of INR 180.05 crores, it is stated that BGs will be returned by the relevant issuing bank to the Corporate Debtor on the transfer date and utilized for making payment to the secured Financial Creditors or in the manner decided by the CoC. Reading the aforesaid paragraph of Resolution Plan with the query dated 08.05.2023, where paragraph 1 of the query in email of the RP stated that "We note that under clause 6.3.14 of the Resolution Plan, the Resolution Applicant has provided that the margin money of INR 180.05 crore provided against bank guarantees will be returned by the relevant issuing bank to the Corporate Debtor on the Transfer Dale and utilised for payment to the Secured Financial Creditors or in the manner decided by the CoC", the query by the email itself noticed that Resolution Applicant has provided for margin money of INR 180.05 crores. Further, Clause 6.3.15 was noticed and in the above reference six queries were raised as extracted above. The Sarda in its reply dated 10.05.2023 has clarified that margin money will be used for....
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....s as per the Resolution Plan. We thus do not find any substance in submission of learned Counsel for the Appellant(s) that Resolution Plan of Sarda only had provided for return of the BGs of INR 103.39 crores and by clarification, the Sarda has changed its offer of entire BG to INR 180.05 crores. The Resolution Plan cannot be read to mean that Resolution Applicant has only provided for replacement of BG of INR 103 crores. Query about Clause 6.3.15 was answered by Sarda clarifying the doubt, which was raised by the RP. It is also relevant to notice that the RP on 08.05.2023 has also sent the queries to other Resolution Applicants, asking them to clarify certain aspect of their respective Resolution Plan. The RP has also brought on the record dated 08.05.2023, which was sent to Torrent as well as Vantage. The email, which was sent to Torrent on 08.05.2023 has also been brought on record by the RP in its affidavit filed on 30.08.2024. The clarification sought from the Torrent was also regarding margin money and Bank Guarantees are as follows: "Clarifications sought: 1.We note that as per clause 11.2.2 of Part B of the Resolution Plan, the bank/financial institution w....
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....ts of the financials of the Resolution Plan of all the Resolution Applicants and are aware of the financial implications of the Plan. As noted above, the CoC and RP are fully empowered to ask for any clarification from any or all Resolution Applicants as per the RFRP and RP has issued the email dated 08.05.2023 under the direction and decision of the CoC. Hence, it cannot be said that any irregularity was committed by RP in issuing the queries to the Resolution Applicants. We, thus, are not persuaded to accept the submission that above is an irregularity within the meaning of Section 61, sub-section (3) (ii), making any ground for interference. 53.Now, we come to the second limb of attack by the Appellant(s) on the approval of Resolution Plan, which is that by clarification dated 08.05.2023, the CoC and RP has given an opportunity to Sarda to modify its commercial offer to permit it to give deferred payment of INR 240 crores as upfront payment, which has given undue benefit to the Sarda in evaluation of its Plan. It is submitted that had Sarda not been allowed to change its commercials in guise of reply to the clarification, there was no occasion to add INR 240 crores upfront pa....
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....roval of its Resolution Plan. It is clarified that in case the CoC decides to take the Deferred Amount Compensation, no NCDs shall be issued, and no Interest on the Deferred Amount shall be payable to the Secured Financial Creditors:" 55.The reply given by Sarda on 10.05.2023 to the above email, has been filed by the Sarda along with its affidavit. The reply of Sarda about query No.6, is as follows: ". Clause 6.3.2.(b), states that Resolution Applicant will pay a "discounted amount of INR 240 Cr to the CoC, in case CoC wishes to obtain the deferred portion of INR 240 Cr upfront. Please clarify whether Resolution Applicant is offering a value lower than INR 240 Cr (i.e. INR 240 Cr discounted to a lower value), if the option to obtain the value upfront is exercised. Response: No. The value of INR 240 crores is the discounted value of deferred payment (which includes principal amount of NCDs i.e. INR 240 Crore plus interest on such NCDs). If CoC exercises the option to obtain the value upfront, then the RA will pay INR 240 Crores upfront i.e. the principal amount of NCDs." 56.For appreciating the query and its response, we need to investigate App....
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....lution Plan, Appendix-1 as noted above clearly mentioned that upfront payment offered is INR 1553 crores and deferred payment was INR 301 crores (net present value was INR 240 crores), for which an option was given to CoC. From the Clauses of Resolution Plan, the CoC was under the impression that Sarda was offering discounted value of INR 240 crores, which was clarified by Sarda that if CoC opt for the said amount upfront, which was clarified by the Sarda that there will be no discounting in INR 240 crores, since INR 240 crores itself is a discounted value of deferred payment of INR 301.64 crores. 57.We, thus, reject the submission of the Appellant(s) that the amount offered by Sarda which was to be paid as deferred payment has been permitted to be paid as upfront in guise of clarification. The deferred payment, which was offered was INR 301.64 crores and not INR 240 crores. INR 240 crores was the discounted value of deferred payment applying 10% discounting as per the Appendix-1 itself. Ratio of discount as per Appendix-1 was for one year it was 8% more than two years but less than three years it as 10%. Thus, the query raised by the RP under the instruction of CoC was answered....
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....arned Senior Counsel appearing for the Vantage submits that Vantage has given the highest offer of INR 1815.04 crores. Hence, to fulfill the objective of IBC and to maximize the value of assets of the Corporate Debtor, the Resolution Plan submitted by Vantage needs approval and CoC has acted arbitrarily in not considering the highest commercial offer made by the Vantage. 60.We have already noticed that the facts that Vantage has given highest offer, under the RFRP and the Process Note, it was clearly mentioned that the mere fact that Resolution Applicant has given the highest offer, the CoC is not obliged to approve its Resolution Plan, which has the highest value as per the identified criteria. Clause-9(e) of the Process Note, clearly incorporate the undertaking given by all Resolution Applicants. When the Vantage has acknowledged the aforesaid fact while submitting the Resolution Plan, it cannot be allowed to contend that its offer, which was highest, ought to have been accepted by the CoC. The CoC, while approving the Resolution Plan in its commercial wisdom, takes into account host of factors and overall feasibility and viability of Resolution Plan. The commercial wisdom of ....
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....ch the Resolution Plans are to be evaluated. The submission of the Appellant that 10% upside equity offer by it ought to have been included in its upfront payment, in which event its financials could have increased to INR 2130.10 crores, cannot be accepted. In any view of the matter, all financial offers given by Applicant, in Resolution Plan along with evaluation matrix of Resolution Applicant, comes within the domain of business decision of CoC and Resolution Plan of the Applicant - Jindal Power Ltd. was evaluated, considered, deliberated and voted by the CoC. Jindal Power cannot be allowed to question the commercial decision of CoC on the ground that 10% upside equity offered by it ought to have been added in its upfront payment. We do not find any substance in the submission of Jindal Power to interfere with the decision of Adjudicating Authority in approving the Resolution Plan. 64.We also need to notice law laid down by the Hon'ble Supreme Court with respect to limit and extent of jurisdiction of NCLT and NCLAT while interfering with commercial decision of the CoC in approving a Resolution Plan in the CIRP Process. 65.Learned Counsel for the Appellant has placed relianc....
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....CoC. 29. Shri Abhijeet Sinha, learned counsel, fairly concedes that though the final decision of the CoC would not be challenged on the ground that the "commercial wisdom" of the CoC should not be interfered with, it is only the process of decision- making, which can be challenged if there is any material irregularity in the said proceedings. 33. No doubt that, under Section 61(3)(ii) IBC, an appeal would be tenable if there has been material irregularity in exercise of the powers by the RP during the corporate insolvency resolution period. However, as discussed hereinabove, we do not find any material irregularity." 67.There can be no quarrel to the proposition laid down by the Hon'ble Supreme Court in the above. The argument was accepted by the Hon'ble Supreme Court that decision making process can be challenged there being material irregularity in the said Proceedings. Hon'ble Supreme Court has referred to Section 61(3)(ii) of the IBC where Appeal is tenable if there has been material irregularity in exercise of the power by the RP. Hon'ble Supreme Court, however, in the case did not find any material irregularity. 68.In the above case, Hon'ble Supreme Co....
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....udicating authority (NCLT) or the appellate authority (Nclat) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) IBC. It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, as per voting shares, is the collective business decision and that the decision of the CoC's "commercial wisdom" is non-justiciable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) IBC. This position of law has been consistently reiterated in a catena of judgments of this Court, including: (i)K. Sashidhar v. Indian Overseas Bank [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150: (2019) 4 SCC (Civ) 222], (ii)Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta [Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531: (2021) 2 SCC (Civ) 443], (iii)Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh [Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467: (2021) 1 SCC (Civ) 799], (iv)Kalpraj Dharamshi v. Kotak Investment Advisors Ltd. [Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., (....
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....and NCLAT in the framework of IBC. Referring to the Judgment in the matter of `Arun Kumar Jagatramka' Vs. `Jindal Steel & Power Ltd.' reported in (2021) 7 SCC 474, following observations were made in Paragraph 27: "27. This Court has, time and again, emphasised the need for minimal judicial interference by Nclat and NCLT in the framework of IBC. We may refer to the recent observation of this Court made in Arun Kumar Jagatramka v. Jindal Steel & Power Ltd. [Arun Kumar Jagatramka v. Jindal Steel & Power Ltd., (2021) 7 SCC 474]: (SCC p. 533, para 95) "95. ... However, we do take this opportunity to offer a note of caution for NCLT and Nclat, functioning as the adjudicatory authority and appellate authority under the IBC respectively, from judicially interfering in the framework envisaged under the IBC. As we have noted earlier in the judgment, the IBC was introduced to overhaul the insolvency and bankruptcy regime in India. As such, it is a carefully considered and well thought out piece of legislation which sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by const....
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....tion letter dated 18.11.2021 where the Appellant put forth his gestures of making the payment upfront if the Bank allowing the same within 90 days of the receipt of the Order of NCLT approving the Resolution Plan, which request was declined by the RP thereafter the I.A.367/2021 was filed by the Appellant which prayer was allowed but, at the time of granting the prayer of the Appellant, Adjudicating Authority allowed the other Resolution Applicant to place any modification in their submitted Resolution Plan before the CoC so as to provide a level playing field. Order passed by the Adjudicating Authority has been noticed in Paragraph 6 of the Judgment which is as follows: "6. The order dated 13-12-2021 [Bank of India v. B.B. Foods (P) Ltd., 2021 SCC OnLine NCLT 662] so passed by the adjudicating authority reads as under: (B.B. Foods case [Bank of India v. B.B. Foods (P) Ltd., 2021 SCC OnLine NCLT 662] , SCC on-line NCLT paras 1-5) "IA No. 367 of 2021 1.The learned counsel for the applicant present. The learned counsel for the CoC present. The learned counsel for the RP present. The learned Senior Counsel for the other resolution applicant whose plan is also....
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....te Tribunal was questioned before the Hon'ble Supreme Court in the aforesaid Civil Appeal filed by the Ajay Gupta. The arguments raised before the Hon'ble Supreme Court was that there was no justification for the Adjudicating Authority granting liberty to the other Resolution Applicant to modify its Resolution Plan, which argument was noticed in Paragraph 12 of the Judgment and rejected. It is useful to extract Paragraphs 12, 13 & 14 which are as follows: "12. The learned Senior Counsel for the appellant has painstakingly taken us through the relevant contents of the request for resolution plan ("RFRP" for short) as issued by the resolution professional as also the minutes of the meeting of CoC and the affidavit filed by the appellant. The learned counsel would strenuously contend that so far as the appellant is concerned, it had not been a case of modification of the resolution plan because modification as such was not even permissible under the conditions of RFRP; and the submissions of the appellant by way of the affidavit dated 17-11- 2021 had only been to meet with the requirements of the CoC, as reflected in the minutes of the meeting dated 2-11-2021 and for such a p....