TaxTMI 
TaxTMI 
2024 (12) TMI 681
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....ned Order') passed by the Adjudicating Authority (National Company Law Tribunal, Jaipur Bench) in CP(IB) No.03/9/JPR/2018. By the impugned order, the Adjudicating Authority has approved the resolution plan of Trufalir Buildwell LLP-the Successful Resolution Applicant ("SRA" in short) as placed by the Resolution Professional ("RP" in short) in IA No. 06/JPR/2024 before it while rejecting the objections raised thereto by the Appellant vide IA No. 353 of 2024. Aggrieved by the impugned order, this appeal has been preferred by the Appellant-suspended management of the Corporate Debtor. 2. Making his submissions, Shri Suraj Prakash, the Ld. Counsel for the Appellant submitted that the RP had failed to conduct the CIRP proceedings of the Corporate Debtor with due diligence. To substantiate their contention, it was stated that resolution plans of the Corporate Debtor as submitted by the Prospective Resolution Applicants ("PRAs" in short) were considered by the Committee of Creditors ("CoC" in short) in a manner marred by irregularities. There were clear violations of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIR....
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....orporate Debtor entailing huge haircut suffered by the Secured Financial Creditor and nil payment for other creditors. It is also submitted that the resolution plan is conditional because prior consent of Rajasthan State Industrial Development and Investment Corporation Ltd. ("RIICO" in short) had not been taken for renewal of the lease in favour of the Corporate Debtor before the approval of the resolution plan. It was pointed out that the Hon'ble Supreme Court in the case of Greater Noida Industrial Development Authority Vs Prabhjit Singh Soni in Civil Appeal No. 7590-7591 of 2023 held that though feasibility and viability of a plan are economic decisions best left to the commercial wisdom of the CoC, but when a plan envisages use of land not owned by the Corporate Debtor but by a third party, there has to be a closer examination of the plan's feasibility. It has also been added that the RP has failed to do due diligence in respect of the source of funds to be infused by the SRA. It is also contended that the CoC had rejected the settlement proposal of the promoters which settlement proposal aimed at maximizing the value of the Corporate Debtor and exceeded the plan value of the ....
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....d to substitute the wisdom of the CoC in deciding on the merits of a resolution plan. It was also contended that the issue of valuation of the Corporate Debtor was not raised before the Adjudicating Authority and cannot therefore be agitated before the Appellate Tribunal. It was added that in any case this contention is misconceived as CIRP Regulation 35(1)(b) is applicable in case of variance in the estimates of registered valuers appointed by the same RP while in this case the valuation report was submitted during the tenure of the erstwhile RP. Further, on the contention of the Appellant that the resolution plan of the SRA was contingent upon resumption of lease by RICCO, it was pointed out that this issue has been looked into by the Adjudicating Authority at para 37 of the impugned order and found that the obligation under the resolution plan of the SRA is not contingent or conditional upon continuation of occupation of the said land or resumption of lease by the RICCO. On the issue of failure of the CoC to consider the offer of settlement of the promoters, it was contended that this matter not having been raised before the Adjudicating Authority cannot be therefore be raised a....
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....CoC meeting concluded by around 6 pm which shows that the resolution plan was hastily passed by the CoC. It is therefore contended that the CoC had approved the resolution plan without the resolution plan in its final form being available before it and hence impermissible as held by the Hon'ble Supreme Court in the M.K Rajagopalan Vs Dr. Perisamy Palani Gounder (2024) 1 SCC 42. Advancing their arguments further, it has been stated that since the word document of the resolution plan was opened in the CoC meeting, the necessary steps outlined under IBC like scrutiny of plan by RP under Section 30(2) of the IBC, evaluation of plan by RP and CoC as per evaluation matrix could not have been completed. It is also contended that the scoring on evaluation matrix which is the prerogative of the CoC was in fact done by the RP which is not in order. 8. To go to the root of the matter, we need to go into the record of deliberations of the CoC. From material placed on record, it is apparent that in the 52nd CoC meeting dated 09.05.2024, the CoC in exercise of its commercial wisdom decided to adopt the Swiss Challenge method for approval of the resolution plan wherein the consideration offered ....
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....e CoC to follow the Swiss Challenge Method cannot be said to be arbitrary or in violation of any statutory provisions of the IBC. We also find that in the 53rd CoC meeting, the RP requested the COC for a discussion on Swiss Challenge method adopted and its fairness and transparency as the same had been questioned by one of the PRAs. The CoC had noted that the process has been carried on by the RP and his team in a completely fair and transparent manner which process was also well explained to all the PRAs. The declaration of the Anchor Bidder was also made in a transparent manner and all the other PRAs were given opportunity to improve the consideration in two rounds of discussions held in the COC meeting on 09.05.2024. 11. Thus, we are of the considered opinion that this contention of the Appellant questioning Swiss Challenge method clearly lacks merit as the adoption of Swiss Challenge for value maximization was the outcome of the commercial wisdom of COC. The Adjudicating Authority has not committed any error in holding at para 30 of the impugned order that "a perusal of the 52nd CoC Meeting reveals that the agenda qua adoption of the Swiss Challenge Method and the Anchor Biddi....
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.... conditional clause. Thus, clearly this is a case where the revised resolution plan of the SRA was duly considered, evaluated and approved by the CoC before the RP placed the same for the approval of the Adjudicating Authority and hence the ratio of the judgement of the Hon'ble Supreme Court in M.K Rajagopalan supra is clearly not applicable in the present factual matrix. 15. This brings us to the related contention raised by the Appellant that the RP had only screen shared the resolution plan during the 54th CoC meeting in the second session and this prevented effective discussion of the resolution plans by the CoC and the suspended management. When we look at the entire chain of events, we find that the Appellant has deliberately chosen to ignore the fact that all the PRAs were given opportunity to present their plan in the COC meeting held on 09.05.2024 and after threadbare discussion given opportunity to improve their plan value consideration. Thus, the CoC members were fully aware of the details of the plan proposals submitted by the PRAs. At this stage, all PRAs were asked to send their best possible offers in a closed envelope and password protected soft copy by 21.05.2024 ....
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....s recognises the vital interest of the suspended management in a resolution plan. This judgment of the Hon'ble Supreme Court which has been relied upon by the Appellant is however not applicable in the facts of the present case since here in light of the distinguishing fact that suspended management had also staked their claim as a Resolution Applicant. In the present case, when it is an admitted fact that the Appellant was also a competing Resolution Applicant, no copy of the resolution plan of other PRAs could have been shared in advance with the Appellant as it would have triggered conflict of interest. Even though the resolution plan of the Appellant had been rejected, since the Appellant was admittedly in the fray until 22.05.2024, it cannot be ruled out that an element of bias would arise while considering the resolution plan of another competing Resolution Applicant. 18. This brings us to the submission made by the Appellant that there was irregularity in the process on account of the scoring of quantitative parameters as per the evaluation matrix having been carried out by the RP and not by the CoC. We find this allegation also to be misleading. When we look at the proceed....
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.... any facts and circumstances placed on record which substantiate that the Appellant in their capacity as suspended management was prevented by the RP/CoC from effectively participating in the CoC deliberations. 20. This brings us to the question as to whether the Adjudicating Authority had erred in approving the resolution plan of the SRA. It is equally pertinent at this juncture to notice that the plan of SRA was put to vote and approved by the CoC with 100% voting. The Hon'ble Supreme Court in a catena of judgments has laid down that commercial wisdom of CoC has to be given paramount importance and cautioned time and again about the need of minimal interference in the commercial decision of CoC to approve the Resolution Plan. 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) of IBC. The Hon'ble Supreme Court has consistently held that it is not open to the Adjudicating Authority or the Appellat....