TaxTMI 
TaxTMI 
2025 (7) TMI 1719
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.... By order impugned, Ld. 3rd Member has approved the decision of the CoC taken in 23rd & 24th Meeting to permit R-3 as also the appellant to submit revised and compliant resolution plan for value maximisation of the assets of the corporate debtor. Aggrieved by the said order, this appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding the appeal are: i. The Corporate Insolvency Resolution Process (CIRP) of the corporate debtor M/s. Future Enterprises Limited commenced by order dated 27.02.2023. In the CIRP process, the form G was issued inviting resolution plan in respect of corporate debtor's Cluster 3 Assets. ii. Both the appellant and R-3 submitted their Expression of Interest (EoI) in response to the request to the resolution plan which was issued on 01.02.2024. Both appellant and R-3 submitted their respective resolution plan for Cluster 3 assets of the corporate debtor. iii. The Committee of Creditors (CoC) requested both the appellant and R- 3 to revise their plan. Appellant submitted a revised resolution plan of Rs.60 crore, however, R-3 did not submit any revised plan. The R-3 again sought time to file revised re....
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....n which was referred to Ld. 3rd Member for opinion and notice the answer to the question given by Ld. 3rd Member in its order dated 16.06.2025. It is useful to notice paragraphs 33 to 35 of the order dated 16.06.2025, which is as follows: "33. In view of the specific facts and circumstances of the case, keeping in view the provisions of the IBC and Regulations made thereunder including case laws as discussed in preceding paragraphs, I am of the view that decision of the CoC taken in 23rd and 24th meeting to permit Uniworth and also to OMPL to submit revised and compliant resolution plan for value maximization of the assets of the Corporate Debtor is not a material irregularity in conducting CIRP process, subject to following conditions : (a) OMPL should be given reasonable and effective opportunity (not merely an empty formality) for submitting revised Resolution Plan. Recourse to challenge mechanism as per Regulation 39(1A) (b) may be adopted to give equal opportunity to both, as also mentioned in para 9 of the CoC affidavit. (b) In view of the fact that Uniworth had earlier submitted non-compliant Plan, CoC is supposed to consider, examine and evaluate ....
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.... the CoC taken in 23rd and 24th meeting to permit Uniworth and also to OMPL to submit revised and compliant resolution plan for value maximization of the assets of the Corporate Debtor is not a material irregularity in conducting CIRP process, subject to certain conditions. 35. Subject to above, I concur the views of Ld Judicial Member." 4. Challenging the order passed by the adjudicating authority, learned counsel for the appellant submits that R-3 having not submitted a revised plan within the time allowed by the CoC, it had no jurisdiction to submit revised plan, more so, when voting on the resolution plan of the appellant has already commenced on 22.05.2024. It is further submitted that by email dated 29.05.2024, the R-3 has specifically communicated his withdrawal from the process and asked for the refund of the EMD, there was no occasion for permitting the R-3 to participate by filing the revised plan in view of the withdrawal. It is submitted that as per the RFRP negotiation, if any, could have been conducted by the CoC prior to plan having been put on the vote. When the plan has put on the vote, the CoC was obliged to complete the voting and consider the plan of....
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....plan was submitted by appellant for Rs.75 crore, whereas, no revised compliant plan was submitted by R-3. The CoC decided to commence voting on the plan of the appellant which voting commenced on 22.05.2024 and voting was upto 04.06.2024. The R-3 on 29.05.2024 has sent an email to the RP expressing its intention to withdraw from the process. Email dated 29.05.2024 is to the following effect: "Sushil Maheshwari [email protected] 10 avil, CIRP Dear Sir, As you know that we are one of the bidder for cluster 3 of Future Enterprises Limited and we have deposited earnest money of Rs. 2 cr. As per our discussion in last COC meeting, we are not agreed to revise our proposal. Now we request you that we are not interested to be in the bid, so we request you please refund deposit of Rs. 2 cr. at the earliest. Our bank details are as follows: A/c Holder Name: Uniworth Finlease Ltd Bank Name: Union Bank of India Branch: Goregaon East, Mumbai-400063 A/c Type. Current Account IFSC Code: UBIN0531707 Account No.: 317004010035020 Please do the needful and oblige. Thanking you, Yours Truly, Sushil Mahes....
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....of Regulation 39(3A) and 39(3B) of the CIRP Regulations and such Resolution Plan shall be considered as the "Successful Resolution Plan" for such Cluster. c) For avoidance of doubt, such selection of a Successful Resolution Applicant by the CoC shall be final and binding on all the Resolution Applicants. d) It is made abundantly clear that notwithstanding anything in this RFRP, the CoC is under no obligation to any of the Resolution Applicants or any other person to approve a Resolution Plan which has scored the highest as per the evaluation matrix and any Resolution Plan shall be approved solely on the basis of the CoC's commercial wisdom." 15. Clause 2.8.5(d) reserves the power of the CoC to approve or not to approve resolution plan which has secured the highest as per the evaluation matrix and it is solely on the basis of discretion of the CoC to approve any compliant resolution plan. The subsequent steps are provided for approval of the resolution plan. In the present case, the facts brought on the record indicate that the voting on the resolution plan of the appellant was not completed and before completion of the voting, revised plan was submitted by ....
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....l to refer to and rely upon the minutes of the 23rd Meeting of the Committee of Creditors as and when required during the course of the proceedings, or if directed by this Hon'ble Tribunal. 10. That thereafter, the 24th Meeting of the COC was held on 20 June 2024 and continued on 21 June 2024, wherein the proposal of the Applicant came to be reconsidered and redeliberated by the members of Respondent No. 2. Accordingly, the agenda was put to vote, and it was decided that the resolution plan of the Applicant shall be considered subject to the order of this Hon'ble Tribunal. The relevant portion of the minutes of the 24th Meeting of the COC is reproduced below: "The Chairman informed the members that, basis the voting conducted, the CoC Legal Counsel shall inform the Hon 'ble NCLT that the CoC members have decided to provide an opportunity to Uniworth to participate in the process by submitting a revised resolution plan for Cluster 3. The CoC Legal Counsel took note of the same." 16. Adjudicating authority in view of the facts on the record, had taken a decision approving the decision of the CoC to consider the revised resolution plan of R-3. Learned ....
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.... As noted above, the consideration by the CoC comes after the plan is examined by the resolution professional and presented before the CoC and thereafter, the deliberation by the CoC begins in the presence of the resolution applicants. The process of negotiations, thus, can commence only after plan comes for consideration, when the resolution applicants are also present. The modification of plan not more than once and improvement of plan under regulation 39(1A) completes before deliberation on the plan. Thus, it can neither foreclose, nor prohibit negotiations. The clauses in RFRP as noticed above reserve right to the CoC to negotiate and interact with one or all resolution applicants, which obviously is subsequent act, after plan is received under regulation 39(1A). Hence, regulation 39(1A) cannot prohibit any negotiation or any further steps of the CoC. The view of the Adjudicating Authority that "no negotiation or value maximisation exercise can be individually undertaken by the CoC dehors the mandate of the regulation 39(1A)" is contrary to the scheme delineated by the Code and CIRP Regulations. The very concept of negotiation envisages dialogue between two parties. The word "n....
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....ced that it is the sole discretion of the CoC to approve or not approve the resolution plan. We have already extracted Clause 2.8.5(d) of the RFRP. The present is a case where out of two RAs only one has submitted a revised resolution plan and since R-3 did not submit a revised resolution plan, CoC decided to vote on the plan of the appellant with effect from 22.05.2024. Voting was to complete on 04.06.2024 and on 31.05.2024 email was received from R-3 and it is informed that R-3 shall be filing a revised plan and on 03.06.2024 revised plan was also submitted along with the application filed before the adjudicating authority seeking a direction where the plan value disclosed by R-3 was Rs.85 crore. The CoC who has decided to vote on the plan of the appellant took note of the offer given by R-3 by email 31.05.2024 and revised plan given on 03.06.2024. The CoC noted the revised plan of Rs.85 crore submitted by R-3 and decided to consider the revised plan of R-3 and to give opportunity to both appellant and R-3. We have already noticed the affidavit of the CoC filed before the adjudicating authority where decision by CoC to consider the revised plan has been communicated. 20. Now c....
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....ny time, and the CoC may call upon the Resolution Applicants to submit revised Resolution Plan, at any time, without any liability or any obligation for such acceptance, rejection or annulment, and without assigning any reasons thereof" 22. Clause 1.13.5 (f) which is also relevant is as follows: "1.13.5. The Resolution Applicant(s) should note that: f. The CoC shall have no obligation to undertake or continue the Resolution Plan Submission Process with the Resolution Applicant(s) having the highest evaluated Compliant Resolution Plan at a given time including any obligation or duty to approve any such highest evaluated Compliant Resolution Plan, and further it shall have discretionary rights to engage in negotiations/ discussions with any or all Resolution Applicants." 23. The provisions of RFRP thus clearly empowers the CoC to take a decision not to continue with any resolution plan submission process and has right to engage in negotiation discussion with any or all the RAs. 24. We thus are of the view that NCLT has rightly come to answer the questions in the facts of the present case, CoC's decision to permit R-3 to submit a revised plan is in accordanc....