TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 1923
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....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 the Successful Resolution Applicant. All the ....
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.... 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 the Resolution Plan with 91.55% voting share. Reasons given by the Adjudicating Authority for rejecting Resolution Plan cannot be valid....
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....s 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 impugned order. Present is a case where there is no opposition to the resolution plan nor any objection was filed by any stakeholder objec....
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.... 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 resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section ....
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....xception 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 appearing in the balance sheet on the CIRP date have been considered in the valuation report obtained by the RP under Regulation 35 of the CIRP Regulations. However, based on the audited balance sheet as on the CIRP date (16.06.2023) submitted by the Applicant lRP, vide compliance affi....
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.... 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 Regulation 27 and 35 of CIRP Regulation. It has been held that CoC being fully satisfied and having endorsed the process of valuation and re-evaluation, there was no reason to interfere with the order of the NCLT. The finding of this Tribunal on the question of valuation was not approved. It is useful to extract Para 41, 41.1, 41.2 and 41.3 of the judgment, which is as follows: "41. The Appellate Tribunal has laid great emphasis on the point that commercial wisdom of CoC was materially affected for want of existence of a valid and actual valuation report and sharing of all the relevant facts pertaining to the valua....
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....ving 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 objection was raised by any quarter with regard to any deficiency/irregularity, either by the RP or the appellant or the CoC, in finally approving the Resolution Plan which was sent to the Adjudicating Authority-NCLT for approval, Further, the statutory requirement of the RP involving two approved valuers for giving reports apropos fair market value and liquidation value was duly complied with and the figures in both reports were not at great variance, Significantly, the same were then put up before the CoC, which is the decision-maker and in the driver's seat, say, to SO Debtor. K Sashidhar (supra) and Committee of Creditors of Essar Steel India ....
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.... 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 view that observation made by the Adjudicating Authority with regard to valuation of assets are wholly uncalled for and not germane in rejecting the Resolution Plan. 16. The Adjudicating Authority in Para 18 has also referred to certain statutory liabilities as shown in the balance sheet as on CIRP date of the Corporate Debtor and has observed that they have not been considered in the Resolution Plan. On direction issued by the Adjudicating Authority by order dated 22.08.2024, an affidavit was filed by the SRA that all statutory liabilities including GST, workmen labour cess, compensation etc. would be borne by the SRA. When the SRA as per the order ....
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....fessional 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 till the date of issuance of RFRP i.e. 29.10.2023. 5. That the Resolution Professional had sent individual letters to 174 Financial Creditors in a class / allottees/ homebuyers who did not file their claim in November 2023. Subsequently, approximately 24 letters were returned undelivered. Copy of the postal receipts in relation to the letters sent by the Resolution Professional is attached herewith as Annexure-1. 6. That, in pursuance to the letters sent by the RP, after the date of issuance of RFRP Le. 29.10.2023, the Resolution Professional received 34 claim forms from the Financial Creditors in a class/ allottees/homebuyers. In addition to this, the COC in its 9% meeting held on 06.02.2024 voted in favou....
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.... 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 III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, will be pursued after the approval of the resolution plan and the manner in which the proceeds, if any, from such proceedings shall be distributed: Provided that this clause shall not apply to any resolution plan that has been submitted to the Adjudicating Authority under sub-section (6) of section 30 on or before the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022.]" 25. When the statutory regulation itself provides that the plan can provide for the manner in which the proceeds from such proceedings shall be distributed, no exception can be taken from the clause in the ....
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....d. & 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 respectively, from judicially interfering in the framework envisaged under the IBC. As we have noted earlier in the judgment, the IBC was introduced in order 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 constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from the NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC. This conscious shift in their role has been noted in the report of the Bankruptcy Law Reforms Committee (2015) in the following terms : "An adjudicating authority ensures adherence to the process....