AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 725
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..... 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) The CD - M/s Sare Gurugram Pvt. Ltd. is in business of construction and development of residential and commercial real estate projects. One M/s Sun Agrifresh Industries Pvt. Ltd. ("Sun Agrifresh Industries"), the Borrower had approached Bajaj Finance Ltd. for grant of financial facilities for the purpose of seven flats developed by the CD. A sum of Rs. 6,65,08,737/- was advanced by Bajaj Finance Ltd. to Sun Agrifresh Industries against the equitable mortgage created on the aforesaid seven flats. A Tripatite Agreement between the Borrower, CD and Bajaj Finance Ltd. was entered in July 2015. Identical Agreement was entered for different units in Project - Sare Crescent ParC Township. (ii) On an application filed by Asset Care and Reconstruction Enterprises Ltd. ("ACREL") under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC"), Corporate Insolvency Resolution Process ("CIRP") against the CD commenced vide order dated 09.03.2021. Shri Ajit Gyanchand Jain was appointed as Interim Resolution Applicant ("IRP"). (iii) The IRP issued ....
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....nitiated SARFAESI proceedings under Section 13, sub-section (2) and Awards have already been made in favour of the Appellant for Rs. 3,38,00,688/- with 12% interest and Rs. 4,36,80,732/- with 12% interest and execution petitions have already been filed before the Debt Recovery Tribunal ("DRT"), which by order dated 07.03.2020 granted stay on the mortgaged flats. The CIRP commenced thereafter, where the claim was filed by the Appellant for Rs. 9,62,02,610/-. The RP refused to share the Resolution Plan and the CoC in the Resolution Plan has approved the meagre amount of Rs. 5 lakhs to other creditors. It is submitted that the mere fact that the Appellant has filed its claim under other creditors, did not in any manner restrict the RP to determine the claim in the correct category, i.e. the Financial Creditors. Learned Counsel for the Appellant submits that amount was disbursed by the Financial Creditors to the CD under the Tripartite Agreement and the amount disbursed by Bajaj Finance Ltd. was a 'financial debt' within the meaning of Section 5, sub- section (8) of the IBC. The Appellant placed reliance on judgment of the Hon'ble Supreme Court in (2024) 6 SCC 767 - Greater Noida Indus....
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....a case before the Hon'ble Supreme Court in Greater Noida, the Greater Noida claimed itself as a Financial Creditors and the decision of the RP to treat the Grater Noida as Operational Creditor was challenged by filing an IA, which was dismissed by the NCLT, giving rise to the Appeal before the NCLAT and an Appeal before the Hon'ble Supreme Court. It is submitted that the judgment of this Tribunal in Canara Bank vs. Sh. Vivek Kumar ("Canara Bank") is also distinguishable. In the above case, Canara Bank has filed its claim as Financial Creditor and not as other creditor. In Canara Bank, the application for approval of Resolution Plan was pending before the Adjudicating Authority, when the application filed by Canara Bank was decided. Whereas, in the present case, the Plan approval application has been allowed by the impugned order and the present Appeal has been filed challenging the order approving the Resolution Plan. The Resolution Plan being in compliance of Section 30, sub-section (2), no grounds have been made out to interfere with the commercial wisdom of the CoC in approving the Resolution Plan. It is submitted that the Appellant having obtained order from Debt Recovery Tribu....
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....ustries Private Limited Group 2 24,109,306 3,687,749 N/A No 1166 CPG010202 Sun Agrifresh Industries Private Limited Group 2 24,240,919 3,689,749 N/A No 1167 CPG020204 Sun Agrifresh Industries Private Limited Group 2 24,380,978 3,739,781 N/A No 1168 CPG022004 Sun Agrifresh Industries Private Limited Group 2 24,066,867 3,659,427 N/A No 1169 CPG040103 Sun Agrifresh Industries Private Limited Group 2 23,821,367 3,303,935 N/A No 1170 CPG040203 Sun Agrifresh Industries Private Limited Group 2 23,735,262 3,295,793 N/A No 1171 CPG030203 Sun Agrifresh Industries Private Limited Group 2 23,735,262 3,295,793 N/A No 9. The claim of the Appellant was filed in the category of other creditors. The claim of the Appellant was never admitted in the category of Financial Creditor, nor in the List of Creditors as published by the IRP, the name of the Appellant was included as Financial Creditors, i.e. creditors in a class. The Appellant had filed an IA No.214 of 2023, questioning the partial admission of the claim only, which application was ....
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....al of Resolution Plan is on the basis of List of Creditors as uploaded by the RP and shared with the Resolution Applicant, now at the time of challenging the order approving the Resolution Plan, the Appellant cannot be allowed to challenge the categorization of claim on the basis of which the Resolution Plan was submitted and approved. It is well settled that challenge to the order of commercial wisdom of the CoC approving the Resolution Plan can be questioned only on a limited ground, i.e. if Resolution Plan violates Section 30, sub-section (2) of the IBC. The learned Counsel for the Respondent has relied on judgment of the Hon'ble Supreme Court in K. Sashidhar vs. Indian Overseas Bank and Ors. - (2019) 12 SCC 150. The Hon'ble Supreme Court in paragraph 55 of the said judgment has laid down the limited scrutiny of the Resolution Plan, which the Adjudicating Authority is required to make while approving the Resolution Plan. In paragraph-55 of the judgment following has been laid down: "55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan "as approved" by the requisite per cent of voting s....
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....ll be apposite to refer to Sections 30 and 31 of the I&B Code, which read thus: "30. Submission of resolution plan.-(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under Section 29-A to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor; (b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board 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 pa....
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....e into account the order of priority amongst creditors as laid down in sub-section (1) of Section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under Section 29-A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of Section 29-A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of Section 29-A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of Section 12, and the corporate insolvency resolution process shall b....
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.... (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the adjudicating authority under sub- section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in Section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors." 151. The aforesaid provisions have been recently considered in three judgments of this Court. The first one, being in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222], to which one of us (A.M. Khanwilkar, J.) was a party, and two other judgments, delivered by three-Judge Bench of this Court, in Essar Steel India Ltd. Committee of Creditors [Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8....
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.... the solution must explicitly require the repayment of any interim finance and costs of the insolvency resolution process will be paid in priority to other payments. Secondly, the plan must explicitly include payment to all creditors not on the creditors committee, within a reasonable period after the solution is implemented. Lastly, the plan should comply with existing laws governing the actions of the entity while implementing the solutions. * * * 5.3.1. Steps at the start of the IRP * * * 4. Creation of the creditors committee The creditors committee will have the power to decide the final solution by majority vote in the negotiations. The majority vote requires more than or equal to 75 per cent of the creditors committee by weight of the total financial liabilities. The majority vote will also involve a cram down option on any dissenting creditors once the majority vote is obtained. ... The Committee deliberated on who should be on the creditors committee, given the power of the creditors committee to ultimately keep the entity as a going concern or liquidate it. The Committee reasoned that members of the creditors committee have to be ....
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.... be made by the creditors. It has been observed, that the evaluation of proposals to keep the entity as a going concern, including decisions about the sale of business or units, restructuring of debt, etc. are required to be taken by the Committee of the financial creditors. It has been provided, that the choice of the solution to keep the entity as a going concern will be voted upon by CoC and there are no constraints on the proposals that the resolution professional can present to CoC. 154. The requirements, that the resolution professional needs to confirm to the adjudicator, are: 154.1. That the solution must explicitly require the repayment of any interim finance and costs of the insolvency resolution process will be paid in priority to other payments. 154.2. That the plan must explicitly include payment to all creditors not on the creditors committee, within a reasonable period after the solution is implemented; and lastly. 154.3. The plan should comply with existing laws governing the actions of the entity while implementing the solutions. 155. The Committee also expressed the opinion, that there should be freedom permitted to the....
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.... affected the interest of the appellant because, firstly, it affected its right of being served notice of the meeting of the CoC, available under Section 24(3)(c) IBC to an operational creditor with aggregate dues of not less than ten per cent of the debt and, secondly, in the proposed plan, outlay for the appellant got reduced, being a percentage of the dues payable. In our view, for the reasons above, the resolution plan stood vitiated. However, neither NCLT nor Nclat addressed itself on the aforesaid aspects which render their orders vulnerable and amenable to judicial review. 54.2. The resolution plan did not specifically place the appellant in the category of a secured creditor even though, by virtue of Section 13-A of the 1976 Act, in respect of the amount payable to it, a charge was created on the assets of the CD. As per Regulation 37 of the CIRP Regulations, 2016, a resolution plan must provide for the measures, as may be necessary, for insolvency resolution of the CD for maximisation of value of its assets, including, but not limited to, satisfaction or modification of any security interest. Further, as per Explanation 1, distribution under clause (b) of sub-sect....
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....4) 243 Comp Cas 444 : 2022 SCC OnLine NCLAT 456] is set aside. The order dated 4-8-2020 [Ranjeet Ramakrishna Yadav v. JNC Constructions (P) Ltd., 2020 SCC OnLine NCLT 1432] passed by NCLT approving the resolution plan is set aside. The resolution plan shall be sent back to the CoC for re-submission after satisfying the parameters set out by the Code as exposited above. There shall be no order as to costs." 14. In the case of Greater Noida, the Greater Noida has filed an IA challenging to the categorization of it as an Operational Creditor, in which the Greater Noida claimed it to be a secured creditor. An IA No.344 of 2021 was filed by Greater Noida, challenging the decision of the RP, which came to be rejected by the NCLT. The Appeal having been dismissed by NCLAT, an Appeal was filed in the Hon'ble Supreme Court. In the present case, the categorization regarding non-inclusion of the Appellant as Financial Creditor in a class was never questioned by the Appellant, although List of Creditors was uploaded by RP, where Appellant was not included as creditor in a class. Further, the Appeal has been filed challenging the order approving the Resolution Plan, which has been submitted ....