TaxTMI 
TaxTMI 
2025 (5) TMI 1923
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....M HOMES LIMITED Versus VASHISHTH BUILDERS AND ENGINEERS LIMITED AND VASHISTH ESTATES LIMITED (IN CONSORTIUM) RESOLUTION APPLICANT, COMMITTEE OF CREDITORS [ Justice Ashok Bhushan ] Chairperson, [ Barun Mitra ] Member ( Technical ) And [ Arun Baroka ] Member ( Technical ) For the Appellant : Mr. Nipun Gautam, Mr. Kartik Pandey, Advocates For the Respondents : Mr. Aalok Jagga, Mr. APS Madaan, Mr. Vibhu Aggarwal, Advocates for RP. Mr. Abhijeet Sinha, Sr. Advocate with Mr. Viren Sharma, Advocate for CoC JUDGMENT ASHOK BHUSHAN, J. These three appeals have been filed challenging the same order dated 23.04.2025 passed by the Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench-II in I.A. No.(Plan)05/CHD/2024 in C.P. (IB) No.132/CHD/HRY/2022. By the impugned order the Adjudicating Authority has rejected I.A. (Plan) No. 5 of 2024 praying for approval of Resolution Plan submitted by the Successful Resolution Applicant. Company Appeal (AT) (Ins.) No.680 of 2025 has been filed by the Committee of Creditors, Company Appeal (AT) (Ins.) No.681 of 2025 has been filed by the Resolution Professional and Company Appeal (AT) (Ins.) No.732 of 2025 has been filed by ....
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....to file audited financial statements of the Corporate Debtor and certain other requirements were asked for. The Adjudicating Authority heard the applicant and reserved the order. (xii) Vide order dated 23.04.2023, the Adjudicating Authority dismissed the application I.A. No.(Plan)05/CHD/2024 seeking approval of the plan, aggrieved by which order these appeals have been filed. 3. Learned counsel for the CoC as well as learned counsel for the Resolution Professional and Successful Resolution Applicant contended that order of the Adjudicating Authority rejecting the plan approval application is not in accordance with the law. The resolution plan submitted by the Successful Resolution Applicant was compliant plan. The Successful Resolution Applicant also filed an affidavit of compliance in the pursuance of order dated 28.08.2024 to provide for payment of statutory liabilities post approval of the plan. Resolution Plan considered all statutory liabilities provided in the Information Memorandum and provides for complete payment of statutory liabilities. The Resolution Plan was prepared as per the provisions of the CIRP Regulations. CoC in its commercial wisdom had approved th....
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.... Authority that distribution does not appear just, fair and reasonable cannot be supported by materials on the record. Distribution is in accordance with law. The scope of interference with the commercial wisdom of the CoC is now well settled. Unless there is violation of Section 30(2) in a resolution plan, the Adjudicating Authority cannot reject the approval of Resolution Plan by the CoC in its commercial wisdom. All reasons given in the impugned order of the Adjudicating Authority cannot be basis for rejection of the plan which was approved by the CoC with requisite majority. 4. Present is a case where the CoC, Resolution Professional and Successful Resolution Applicant are all aggrieved by the order rejecting the Resolution Plan and filed appeals, as noted above. In the appeal filed by the CoC, the Resolution Professional and SRA are parties. Similarly, in the appeal filed by the Resolution Professional, the SRA and CoC are parties and in the appeal filed by SRA, Resolution Professional and CoC are parties. As noted above, all the three entities being aggrieved by the order has filed appeals and those who are respondents in each appeal are also Appellant aggrieved by the imp....
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....rd 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 plan had been distributed in accordance with the order of priority in sub- section (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1.-For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.-For the purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resoluti....
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.... irrational. Further the direction in Para 18(a) that said increase in cost shall be met by SRA, cannot be approved. The CoC in its commercial wisdom, which consist of majority of homebuyers - creditors in class, having undertaken to bear the increased cost, if any, no exception can be taken in said clause. 10. In Para 18(b), the Adjudicating Authority has noted the proposal for payment of debts of Operational Creditors and other Creditors as well as dissenting Financial Creditors. In Para 18(b) (iii) and (iv), the Adjudicating authority has raised certain issues regarding valuation report. It is useful to notice Para 18(b) (iii) and (iv), which is as follows: "(iii) This Adjudicating Authority vide its Order dated 16.10.2024 sought clarification, whether all the assets appearing in the balance sheet on the CIRP date has been considered in the valuation report and the reconciliation of the liability side of the balance sheet regarding communication sent to all the creditors appearing in the balance sheet as on the CIRP date as per Regulation 6A of CIRP Regulations. (iv) The RP/ Applicant in the compliance affidavit dated 04.11.2025 submitted that all the assets....
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.... GRAND TOTAL 50,00,67,826 68,42,05,413 61,50,27,375 It may be seen from the above Table that the fair value of various assets (shown in italics) have been valued at nil or Significantly less than the value appearing in the balance sheet. 11. It is relevant to notice that Valuers were appointed by the Resolution Professional as per Regulation 27 of the CIRP Regulations, who submitted its Valuation Report. Value of the assets of the Corporate Debtor is asked for to assist the CoC to take decision. It is relevant to notice that order impugned does not show that any stakeholder has raised any objection to the valuation done by the Valuers. 12. Learned counsel for the Appellant has relied on judgment of the Hon'ble Supreme Court in "M. K. Rajagopalan vs. Dr. Periasamy Palani Gounder & Anr., Civil Appeal No.1682-1683 of 2022" where the order passed by NCLAT rejecting the Resolution Plan and remanding the matter to the committee of creditors with directions to the resolution professional to proceed from the stage of publication of Form G. One of the issue raised was regarding valuation. The Hon'ble Supreme Court in the above case has occasion to consider Regulat....
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....ision in Maharashtra Seamless (supra) that resolution plan is not required to match the liquidation value as such. 41.3. The findings of the Appellate Tribunal in regard to the question of valuation and thereby taking the resolution plan to be in contravention of Sections 30(2) and 61(3) of the Code cannot be approved and are required to be set aside." 13. Another judgment which has been relied is judgment of the Hon'ble Supreme Court in "Ramkrishna Forgings Ltd. Vs. Ravindra Loonkar, Resolution Professional of ACIL Ltd. & Anr., Civil Appeal No.1527 of 2022". The Hon'ble Supreme Court in the above case held that no objection having been raised by any stakeholder with regard to any deficiency/ irregularity, there was no occasion to direct for re-valuation. In Para 27 of the judgment following was held: "27. Having considered the matter in depth, the Court is unable to uphold the decisions rendered by the Adjudicating Authority-NCLT as also the NCLAT. The moot question involved is the extent of the jurisdiction and powers of the Adjudicating Authority to go on the issue of revaluation in the background of the admitted and undisputed factual position that no objec....
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....ssets value of asset is Nil or significantly less in comparison to as appearing in the balance sheet. It has been submitted on behalf of the Appellant that the IBBI registered valuers have noticed balance sheet, all assets and considered all relevant facts with regard to current account, which has been also noticed by the Adjudicating Authority. It is submitted that the amount of Rs.22,681/- in Current Account, which was shown in the balance sheet, being nil was not taken note of. Further, regarding Deposit Account (FDR) for Rs.28,99,033/- an amount of Rs.12,46,811/- was taken since the amount of Rs.18,46,800/- was utilized for bank guarantee for EDC dues of Corporate Debtor. Learned counsel for the parties have submitted that there are entries which are blackened by the Adjudicating Authority in Para 18(iv) and the Valuers having taken their own decision, who are expert in valuing the assets, non- mention of any amount towards TDS receivable, MAT credit, GST credit as nil, cannot be said to be any error in valuation. It was not known as to when the said amount will be received, hence, it was not included in the valuation which cannot be said to be any error. We, thus, are of the v....
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....2024 passed by the Adjudicating Authority in I.A. No.(Plan)05/CHD/2024. In Para 2 of the affidavit, the direction was referred, which Para 2 is as follows: "2. That L.A. No. (Plan) 05/CHD/2024 was listed before this Hon'ble Tribunal on 16.07.2024 whereby this Hon'ble Tribunal issued the following directions to the Resolution Professional:- i. To file an affidavit that individual notices were issued to homebuyers who have not filed their claims; and ii. File the latest balance sheet prepared by the erstwhile management and the first balance sheet prepared by the Resolution Professional along with reconciliation of assets and liabilities thereof." 20. Resolution Professional has filed the affidavit giving details of claim from the Financial Creditor/ Creditor in class. Reference of 174 Financial Creditors who did not file their claim and some of the letters sent to them were returned. In Para 4 to 8, the Resolution Professional has submitted as follows: "4. That the Resolution Professional Applicant had received 227 claims from the Financial Creditors in a class / allottees/ homebuyers in the matter of M/s Trishul Dream Homes Limited til....
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....avit has held that there is breach of Regulation 6A. Thus, the observation of the Adjudicating Authority that there is breach of Regulation 6A is unsustainable. 22. Present is a case where public announcement was made, the proviso to Regulation 6A is also relevant which contains an exception, that where it is not possible to send a communication to creditors, the public announcement made under regulation 6 shall be deemed to be the communicated to such creditors. We, thus, are of the view that rejection of the Resolution Plan on the ground as mentioned in Para 18(x) is unsustainable. 23. Now we come to another reason given by the Adjudicating Authority in Para 18(xi) where with regard to PUFE application, plan provided that all the recoveries from the avoidance transactions shall be exclusively for the benefit of the Resolution Applicant and the financial and other creditors shall not have any rights on the ground that RA has proposed to settle all the claims in full. 24. CIRP Regulation 38(2)(d) which has been added w.e.f. 14.06.2022 provides as follows: "[(d) provides for the manner in which proceedings in respect of avoidance transactions, if any, under Chapter....
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.... Learned counsel for the Resolution Professional submitted that the claims were collated and verified in accordance with the CIRP Regulation and no grievance has been raised with regard to claims admitted, as mentioned in Para 18(xii). 28. We have also noticed the provision of Section 31(1) which require the Adjudicating Authority to scrutinize the Resolution Plan and if the Resolution Plan meets the requirements of Section 30(2), it needs to be approved. The provision of Section 31(2) clearly provides that in event the resolution plan is in violation of Section 30(2), it can be rejected by the Adjudicating authority exercising its jurisdiction under Section 31(1). The scope of intervention by the Adjudicating Authority with the commercial wisdom of the CoC is well settled in the judgment of Hon'ble Supreme Court in "Arun Kumar Jagatramka vs. Jindal Steel & Power Ltd. & Anr., Civil Appeal No.9664 of 2019". In Para 89 of the judgment, the Hon'ble Supreme Court has issued following note of caution: "..... However, we do take this opportunity to offer a note of caution for the NCLT and NCLAT functioning as the Adjudicatory Authority and Appellate Authority under the IBC re....