TaxTMI 
TaxTMI 
2026 (5) TMI 1602
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....a Vyer, Mr. Deepanshu Chandra and Mr. Krishna, Advocates. Mr. Aspi Kapadia, Mr. Jaitegan Singh Khurana and Mr. Uday Bedi, Advocates for R16. Mr. Navin Pahwa, Sr. Advocate with Mr. Mohit D. Ram, Ms. Nayan Gupta, Advocates for R17. JUDGMENT [Per: Ajai Das Mehrotra, Member (Technical)] The present appeal has been filed by Express Resorts and Hotels Limited, who were the Successful Resolution Applicant (hereinafter referred to as the 'SRA') in the Corporate Insolvency Resolution Process (hereinafter referred to as the 'CIRP') of Neesa Leisure Limited (hereinafter referred to as the 'Corporate Debtor' or 'CD') against the impugned order dated 04.03.2024 in IA No. 851 of 2020 in C.P. (IB) No. 127 of 2017 whereby the resolution plan given by the Appellant, which was approved by the Committee of Creditors (hereinafter referred to as the 'COC') was rejected mainly on the ground that resolution plan does not comply with the requirements under Section 31(1) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the 'IBC, 2016'). 2. During the pendency of this appeal, debts of Asset Care & Reconstruction Enterprise Limited (Original Respondent No.12) and Small In....
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....04.2020. viii. In the 12th COC meeting held on 02.09.2020, the Resolution Professional briefed the COC about four resolution plans which were received. In the said meeting the suspended management raised objection regarding ARC on the ground that ARC cannot take over under IBC. During the presentations by the PRAs, the litigation about Jamdoli Property, wherein lease has been cancelled and possession taken over by the Jaipur Development Authority, litigation with RIICO etc. were discussed. The PRAs were given opportunity to revise the plan. ix. Various allegations were made by the suspended management on wide differences in valuations obtained. The RP then obtained a third valuation in compliance of Regulation 35(1)(b) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations. x. The suspended management, on the other hand, offered a settlement proposal to the COC to consider a debt resolution plan or convert debt to equity taking over 75% of the equity of the CD. The CoC directed the suspended management to give a proposal for repayment. xi. On 20.09.2020, the COC heard the promoter director on his settlement proposal. Certai....
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....filed various applications seeking intervention and participation in the CIRP of the Corporate Debtor, including another attempt of settlement by promoters. Having known the financial outlay of the resolution plan of the Appellant, the new entrants suggested that they are willing to pay higher amount than proposed by the Appellant. xxii. Some of the Applicants requested the Ld. NCLT to reject the resolution plan and requested COC be allowed to reconsider the plans of other interested Applicants also. xxiii. The IA for plan approval was heard and reserved for orders on 17.05.2022. Thereafter, through order dated 06.09.2022, the Ld. NCLT disposed of application for approval of the resolution plan allowing the Resolution Professional to accept new resolution plans afresh including from earlier unsuccessful resolution applicants, as well as other entities. xxiv. This order was challenged in appeal before this Tribunal and this Tribunal vide judgment dated 09.02.2023 had set aside the order dated 06.09.2022 passed by the Ld. NCLT. In the said order dated 09.02.2023, after discussing the judgments of Hon'ble Supreme Court in the case of (i) Ebix Singapore Priva....
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....re fact that certain other offers have been received after the approval of the Resolution Plan, CoC cannot have a change of heart and start clamoring before the Adjudicating Authority that they have no objection to sending back the Resolution Plan for reconsideration. This will be permitting an unending process, since by passing of time situation keeps on changing. After coming to know about the financial offer in a Plan, which has been approved by the CoC, any subsequent offer by any entity, who did not participate in the process earlier, cannot be entertained. 26. The CoC being satisfied that financial offer given by the Applicant is satisfactory, exercise their commercial wisdom, even CoC cannot be allowed to change its view, since it is bound by its own decision taken in approving the Resolution Plan. Present is not a case where the CoC is pointing out any breach of procedure or manifest error in their approval of the Resolution Plan, which may be a ground to be pressed before the Adjudicating Authority. The CoC after full consideration has approved the Plan and the financial offer made by the Applicant in the Plan. In the name of receiving higher offer, subsequently, ....
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....itors, namely, Asset Care Reconstruction Enterprise filed an IA 584/2023 before Ld. NCLT suggesting that the approval of resolution plan be deferred till the decision of the Hon'ble Rajasthan High Court regarding Rajasthan property. xxvi. On 10.05.2023, the Resolution Professional filed an affidavit regarding impact of the judgment of Rainbow Papers Limited. The Appellant filed an affidavit dated 19.05.2023 to deal with Resolution Professional's affidavit on the impact of judgment of Rainbow Papers Limited, with relevant judicial precedence. However, on 28.11.2023, the Ld. NCLT directed the Resolution Professional to convene a COC meeting to apprise the COC members of the judgment in the case of Rainbow Papers Limited and orders passed by the Hon'ble Rajasthan High Court. xxvii. In the second round of litigation before this Tribunal, the Appellant filed Company Appeal (AT) (Insolvency) No. 1624 of 2023 against the said order of Ld. NCLT dated 28.11.2023 referring the matter back to COC on above referred issues. This Tribunal vide order dated 18.12.2023 set aside the directions of the Ld. NCLT to refer the issue to the COC and directed the Ld. NCLT to conc....
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.... the impugned order dated 04.03.2024 rejecting the resolution plan is reproduced below: "Thus, it appears that: a) The Resolution Plan approved by COC has not been done with process that can be approved by this Adjudicating Authority as it lacked due and transparent process of examining each application. on its merits. Individual COC members were observed to be involved in various discussions, delaying approval of the plan in order to improve the plan value. b) The terms of RFRP were not complied with by way of an analysis of the NPV of the payment schedule as the Financial Creditors or the other eligible creditors had got 24% of the debt payable by equity which was also objected by the suspended management stating that the ARCs (3) were not eligible to get such equity contribution. c) The Information Memorandum had included the disputed RIICO properties at Nemrana and Jamdoli where the leasor had taken Raj. Raj. back the possession and many litigations on property in Rajasthan and Hon'ble NCLAT & Supreme court clearly stated that these were not assets of CD. There is also a stay on further proceedings in the matter before the Hon'ble Hig....
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....ed by the RP. The objection of the SRA was that it should not be done after the approval. This Tribunal did not agree with the same as it stated that they had not examined the merits of the case. The Tribunal could have remitted back the plan to the COC as there were valid 120 reasons which sought on account of covid situation, litigations and the valuation issues, g) It is further observed that the Resolution Plan was approved by a wafer thin majority of 67.5. Constitution of COC members with their voting rights have been done after rejecting the claims of the Rajasthan Golf Unit holders even though they had a right to claim and had also appeared and raised objections before this tribunal is not valid. Many FD holders have not submitted the claim and we are not sure whether a transparent process to invite their claims was done. Some of their claims are also rejected including a large claim of one of the claimants stating that he had submitted a plan along with suspended management. h) The promoter of the plan had been repeatedly offering a process of settlement and rejection of plan but was not considered even though heard before the plan was approved. It wa....
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....parent and many discussions and negotiations have taken place independently than in the meeting with the applicants. No explanation given as to why the Information Memorandum was not filed along with the application. m) Even though the suspended management has been repeatedly putting up proposals which are higher than the plan, which are better in content, there are many litigations and also IAs filed under Sec 19 and Sec 43 including enforcement department cases which needs review. It is to be assessed by COC on to whether such applications can be considered and if so only it is with approval of joint lenders forum and consideration of all other stake holders including operational creditors as per the provisions of IBC. n) The Resolution Professional did not make the operational creditors whose claims were considered to be NIL to be paid in the plan as party to this application. o) The Resolution Plan does not comply with the requirements under Sec 31(1) and is rejected under Sec 31(2). p) The bench has considered the submissions of applicant and respondents in other IAs filed (IA 188/2020, IA 1089 of 2023, IA 589 of 2023) which have opposed the....
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....ory authorities as operational secured creditors as per Rainbow Papers Limited judgment. vi. The Appellant has given an undertaking it shall pay the amount of Rs. 2.33 crores over and above the plan value in good faith to bring the matter to quietus. vii. This additional payment would ensure that the share of the creditors who are part of the COC remains same, and is not decrease due to the impact of the judgment of the Rainbow Papers Limited. viii. On the issue of valuation, it is submitted that the valuations were done by the registered valuer appointed by the Resolution Professional under supervision of the COC. No stakeholder, including members of the COC, other creditors, or former promoters have raised any objection to the valuation at the relevant time. The appointment of the registered valuer was ratified by the COC, and his report was placed before the COC and was duly considered by it. Valuation of the assets of the COC squarely falls within the 'commercial wisdom' of the COC and is non-justiciable. ix. The impugned order does not assign any cogent reason for non-compliance of Section 30(2) of the IBC, 2016 and Ld. NCLT has even referre....
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....aring the ARCs to hold equity. 2. Equity is given with a compulsory exit clause and is part of the RFRP carrying weightage in evaluation matrix. 3. Assumption of NCLT that NPV is not calculated as per RFRP. 4. The suspended management have no role in acceptance or rejection of a resolution plan by the CoC. It is a settled law that CoC's commercial wisdom will prevail over objections raised by the suspended management. 5. Further, in any case, the issue of NPV of the payment schedule falls within the exclusive domain of the commercial wisdom of the CoC. c) The Information Memorandum had included the disputed properties at Nemrana and Jamdoli where the leasor had taken back the possession and many litigations on property in Rajasthan and Hon'ble NCLAT & Supreme court clearly stated that these were not assets of CD. There is also a stay on further proceedings in the matter before the Hon'ble High Court. 1. IM is a document that is required to provide all information on the CD. 2. Properties at Neemrana and Jamdoli are bound to be included as rights & liabilities arise out of the said properties against the CD from the said properties. 3. The Hon'ble SC,....
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....5. Valuation Reports under IBC are confidential documents and are not shared with the SRA/Express. [Reg 35(2) & (3) prior to amendment in 2024] 6. In any case, Valuation is done by 2 Registered valuers as per Section 247 of the companies Act, 2013 and in complete compliance of Rule 27 and Rule 35 of the Insolvency and Bankruptcy board of India (Insolvency Resolution Process for Corporate persons) Regulations, 2016. e) Even though the Operational Creditors representing the Sales Tax Authorities have submitted a claim were part of COC, in the plan there is NIL distribution to government. There is also an acceptance affidavit that the various authorities of government will benefit from the Rainbow judgment, while the SRA has been repeatedly raising objections to any of the points raised by the COC members (one or more) on this impact but only stated that since nothing is left residual after paying secured creditors he has considered as NIL payment to operational creditors. Similarly, the payments made on claims stated to have been admitted to the workers and employees are not fully covered even though there is declaration. The dissenting creditors have also raised objections. to....
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....which was set aside by this Hon'ble Tribunal vide Order dated 09.02.2023 2. The said finding is directly contrary and passed in complete ignorance of the findings of this Hon'ble Tribunal in its judgment dated 09.02.23, which were confirmed by the Hon'ble SC on 17.03.23. g) It is further observed that the Resolution Plan was approved by a wafer-thin majority of 67.5. Constitution of COC members with. their voting rights have been done after rejecting the claims of the Rajasthan Golf Unit holders even though they had a right to claim and had also appeared and raised objections before this tribunal is not valid. Many FD holders have not submitted the claim and we are not sure whether a transparent process to invite their claims was done. Some of their claims are also rejected including a large claim of one of the claimants stating that he had submitted a plan along with suspended management. 1. Assumption that a transparent process is not followed. 2. Golf Unit Holders are represented by an Authorised Representative. 3. "Wafer thin" majority remains a majority under the provisions of IBC. The threshold of 66% was still crossed. 4. Observations without any basis that....
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...., which if rejected or allowed does not invalidate the Resolution Plan. j) The plan has treated the secured creditors to be paid and not considered the claims of unsecured creditors when the majority of the assets are under dispute which are mainly leased properties against which these secured creditors have created exposure. From the submissions unless a fresh legal opinion is obtained (which was not done by the Resolution Professional), most of these secured creditors would be deemed unsecured as the liabilities (in 3 cases) were acquired later after sanction of loan or when the assets turned NPA or under restructuring by Asset reconstruction companies who have submitted claim stating secured status. 1. Observations are without any basis and contrary to records. 2. The NCLT assumes that ARCs (3 in No.) could not have been secured creditors as liabilities are acquired after the loan was sanctioned and CD's account turned NPA. Normally, debt is acquired by ARCs only after (i) sanction of loan by Financial Institutions; and (ii) Accounts turn NPA. k) The CIRP cost has not been fully covered and the plan schedule of payment is not considerable due to the points mentioned ....
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....e a decision was made by NCLT vide its Order dated 28.11.2023 [reproduced @Pg.886; Vol IV] and was categorically set aside by this Hon'ble Tribunal vide its Order dated 18.12.2023 2. Further, Settlement Proposals have been considered and not accepted by the CoC. [1st Proposal rejected in 14^th CoC] [2nd Proposal Rejected in May, 2023]. 3. It is a settled law that once a proposal by the Suspended Management under S.12A is rejected by the CoC, the suspended management cannot submit revised/fresh proposals. Refer Sanjeev Mahajan vs. Indian Bank & Ors., Company Appeal (AT)(Ins.) No. 1440 of 2024 decided on 20.08.2024, Paras 18,19,20,21. Refer Pratham Expofab Pvt. Ltd. vs. Mr. Anil Matta, RP & Ors., Company Appeal (AT)(Ins.) No. 1803 of 2024 decided on 05.11.2024, Paras 25, 26, 27, 28, 29 n) The Resolution Professional did not make the operational creditors whose claims were considered to be NIL to be paid in the plan as party to this application. 1. This is neither a requirement under the Code or Rules/Regulations not a practice followed. 2. Joining all OCs will lead to an absurdity. 3. Such objections were not taken by any party since the Application was filed on 26.....
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.... secured dues makes the plan non-compliant to Section 30(2) of the IBC. v. It is submitted that the resolution plan provides that Assenting Secured Financial Creditors shall have right to nominate directors, and shall get equity stake in the Corporate Debtor. It is submitted that such demarcation between Assenting and Dissenting Financial Creditors is illegal. On specific query by the Bench, the Ld. Counsel was not able to identify the provision of IBC or any regulation which prohibits such treatment. vi. It is submitted that the valuation of resolution plan is low and they have filed an IA No. 115/2024 before the Ld. NCLT requesting for calling for fresh resolution plans instead of going for liquidation. It is submitted that the suspended management has filed IA 247/2025 before this Tribunal seeking directions to the COC to consider the settlement proposal of the applicant under Section 12A of the IBC, 2016. 6. The Ld. Sr. Counsel Mr. Navin Pahwa appearing for Respondent No. 17 (RARE Asset Reconstruction Limited) submitted that they are supporting the impugned order. It is submitted that resolution plan was in violation of the law as declared by the Hon'ble Su....
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....mmittee of Creditors of Educomp Solutions Limited & Anr. reported in (2022) 2 SCC 401. 6.8 In its written submissions, the Respondent No. 17 submitted that there were significant changes in valuation post-COVID and the Ld. Adjudicating Authority ought to have accepted the COC's request for sending back the plan to COC for reconsideration. 7. The Ld. Counsel appearing online on behalf of Ahmedabad Municipal Corporation (hereinafter referred to as the 'AMC') submitted that they had filed two IAs viz. I.A. No. 6082 and 7158 of 2025 for impleadment on behalf of Ahmedabad Municipal Corporation South West Zone and Ahmedabad Municipal Corporation North West Zone. The Ld. Counsel was allowed to make oral and written submissions. 7.1 It is the submission of Ld. Counsel that AMC is a statutory municipal body constituted under the Gujarat Provincial Municipal Corporation Act, 1949 ('GPMC Act') and is responsible for providing essential civic services and collecting statutory dues and other such levies within its jurisdiction. 7.2 It is submitted that the Corporate Debtor owns and occupies immovable property at Ahmedabad for which it is liable to collect such statutory dues as are ....
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....vernment dues and dues payable to the operational creditor. We may in this reference also notice the definition of operational creditor as contained in Section 5(21). The definition itself contemplates debts of local authority. 21. We feel ourselves bound by the judgment of the Hon'ble Supreme Court in 'Pashchimanchal Vidyut Vitran Nigam' (supra), and 'State Tax Officer' (supra) as well as the judgment of the Hon'ble Supreme Court in 'Greater Noida Industrial Development Authority' (supra). In view of the law laid down by the Hon'ble Supreme Court in above cases, appellant has a statutory charge by virtue of Section 2(32) of the Kolkata Municipal Corporation Act and the appellant is a secured creditor. Adjudicating authority committed error in rejecting the claim of the appellant as secured creditors." 8. In the rejoinder to submissions made by Ld. Counsel for AMC, Mr. Abhijeet Sinha, Ld. Sr. Counsel appearing for the Appellant submitted that the impact of judgment passed in Rainbow Papers Ltd. case was considered in the 19th CoC meeting dated 13.12.2023 as given in page 873 and 874 of the Appeal Paper Book (APB), according to which a further amount of Rs. 2.33 crore wa....
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....e and the related Regulations, is essentially the commercial wisdom of the Committee of Creditors; and a dissenting secured creditor like the appellant cannot suggest a higher amount to be paid to it with reference to the value of the security interest." 9. The Ld. Counsel for the Resolution Professional informed that through daily order dated 10.11.2023, the Ld. NCLT had asked the Resolution Professional to check whether the resolution plan is in compliance of the judgment in the case of Rainbow Papers Limited. The Resolution Professional had filed an affidavit which is placed at page 826 of the APB, according to the said affidavit the total amount due to the statutory authorities was Rs. 238 crores. However, the statutory dues covered by the judgment of Rainbow Papers Limited were much less, as there was no corresponding security charge against most of the statutory dues. The statutory dues covered by the said judgment were only Rs. 16.09 crores. 9.1 It was submitted that this issue was considered by the COC in the 19th meeting held on 13.12.2023, wherein the following was noted: "Applicability of Rainbow Judgement in our case 1. Resolution Plan of Neesa L....
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.... It is submitted that the Net Present Value (NPV) of payment was duly examined, and was submitted to the COC in the 13th COC meeting and only after considering this, in the 14th COC meeting, the plan was approved. Regarding inclusion of Jamdoli and Neemrana property in the Information Memorandum, the Resolution Professional submitted that the Information Memorandum (IM) was prepared by the erstwhile Resolution Professional who had duly disclosed ongoing dispute in Jamdoli and Neemrana property, including pending litigation before the Hon'ble Rajasthan High Court and the Ld. ADJ, Behror, Rajasthan. Further, the resolution plan was on an "as-is-where-is" and "no-recourse basis" and SRA would only have acquired the rights which the Corporate Debtor possesses. 9.5 It is submitted that as per the Companies (Registered Valuers and Valuation) Rules, 2017, three distinct asset classes, namely, "Land and Building", "Plant and Machinery" and "Securities and Financial Assets" are recognized. It is mandatory to appoint separate valuers for each asset class. Since there was huge difference between first and second valuation report regarding land and building, a third valuer was appointed in ....
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....jection that the suspended management's plan was higher in value (para 27(m) of the impugned order), it is stated that 12A proposals were repeatedly rejected by the CoC in its commercial wisdom and it is settled law, as stated in Hem Singh case cited supra that withdrawal application under Section 12A cannot be entertained after approval of the resolution plan by the CoC. 9.14 Regarding operational creditors not being made a party to the IA No. 851 of 2020, there is no provision under the Code mandating that operational creditors who receive no value under the plan be impleaded as a party in the IA filed for approval of resolution plan. 10. Heard. Perused the records. 11. We note that insolvency in this case was initiated on 26.04.2019. The CoC was quite diverse being constituted of representatives of banks and other creditors, including representatives of FD holders, Superintendent CGST and Golf Unit Holders etc. Eight EOIs were received and thereafter, only three plans were submitted. The CoC negotiated with prospective Resolution Applicants (PRAs) and obtained revised higher plans. The plans were then put to vote in the 14th CoC meeting held on 19.10.2020. The resolutio....
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.... (2). iv. The mere fact that certain other offers have been received after the approval of the Resolution Plan, CoC cannot have a change of heart seeking withdrawal of the resolution plan for reconsideration. v. This will be permitting an unending process, since by passage of time situation keeps on changing. vi. After coming to know about the financial offer in a Plan, offer of other entities to participate in the process cannot be entertained. vii. The CoC being satisfied that financial offer given by the Applicant is satisfactory, exercised their commercial wisdom and cannot be allowed to change its view, since it is bound by its own decision taken in approving the Resolution Plan. viii. The CoC after full consideration has approved the present plan and in the name of receiving higher offer, subsequently, CoC cannot turn around and ask back the plan. ix. The Adjudicating Authority was directed to pass a final order within a period of three months. The relevant portion of the said judgment of this Tribunal dated 09.02.2023 in Company Appeal (AT) (Ins.) No. 1158 of 2022 is as under: "23. The IBC and the CIRP Regulation....
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....t is satisfactory, exercise their commercial wisdom, even CoC cannot be allowed to change its view, since it is bound by its own decision taken in approving the Resolution Plan. Present is not a case where the CoC is pointing out any breach of procedure or manifest error in their approval of the Resolution Plan, which may be a ground to be pressed before the Adjudicating Authority. The CoC after full consideration has approved the Plan and the financial offer made by the Applicant in the Plan. In the name of receiving higher offer, subsequently, CoC cannot turn around and pray to the Adjudicating Authority to send the Plan back for consideration. The present case itself is an example that adopting such course by the CoC and Adjudicating Authority, enormous delay shall take place, which is not in the interest of CIRP, nor in the interest of Corporate Debtor. The Corporate Debtor has to be revived with speed and in timelines, which has been prescribed in the CIRP. Once, the said object is achieved, the same shall not be allowed to frustrate on the grounds, which have been raised before the Adjudicating Authority in the present case. We may notice that in this Appeal, an interim order....
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....der begins with the term "it appears that" and thereafter it gives observations of Ld. NCLT on various issues. The observation of the Ld. NCLT are examined hereinafter. (ii) The Ld. NCLT observes that approval of the resolution plan lacked due and transparent process of examining each application on its merits and involved various discussions in order to improve the plan value. No specific reason has been assigned by the Ld. NCLT nor any evidence, or correspondence has been quoted. This Tribunal in its order dated 09.02.2023 has clearly stated that no breach of any process in approval of the resolution plan by CoC has been noted. Regarding discussions in CoC with prospective resolution applicants to improve the value of the plan, we note that this is standard practice where CoC negotiates with the Prospective Resolution Applicants (PRA) to improve plan value or seek better implementation. This process of negotiation with the PRA prior to the submission of final resolution plan and its approval by the CoC has been approved by this Tribunal in para 20 of the judgment in the case of Jindal Stainless Ltd. vs. Mr. Shailendra Ajmera, RP of Mittal Corp Ltd. & Ors. in Company Appe....
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....ding; (b) to protect any intellectual property of the corporate debtor it may have access to; and (c) not to share relevant information with third parties unless clauses (a) and (b) of this sub-section are complied with. Explanation: For the purposes of this section, "relevant information" means the information required by the resolution applicant to make the resolution plan for the corporate debtor, which shall include the financial position of the corporate debtor, all information related to disputes by or against the corporate debtor and any other matter pertaining to the corporate debtor as may be specified." (Emphasis supplied) The plain reading of the aforesaid Section shows that information memorandum is required to contain all relevant information and as per the Explanation below the said Section, the relevant information includes all information relating to disputes by or against the Corporate Debtor. There is no doubt that Neemrana and Jamdoli properties were under dispute at various stages of litigation, but disputes were duly disclosed in the information memorandum. Disclosing the disputed property in the information memorandum is ....
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....nder regulation 27 shall submit to the resolution professional an estimate of the fair value and of the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor; [Provided that the resolution professional shall facilitate a meeting wherein registered valuers shall explain the methodology being adopted to arrive at valuation to the members of the committee before computation of estimates.] (b) if the two estimates of a value in an asset class are significantly different, or on receipt of a proposal to appoint a third registered valuer from the committee of creditors, the resolution professional may appoint a third registered valuer for an asset class for submitting an estimate of the value computed in the manner provided in clause (a)." (Emphasis supplied) The Resolution Professional had undertaken the valuation exercise as per requirements of the said Regulation 35. It is also noted that as per the relevant Regulations at the time the resolution plan was considered by the CoC, the valuation reports were treated as confidenti....
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....he Code. Learned counsel appearing for the Indian Bank and the said erstwhile promoter of the corporate debtor have emphasised that there could be no reason to release property valued at Rs. 597.54 crores to MSL for Rs. 477 crores. Learned counsel appearing for these two respondents have sought to strengthen their submission on this point referring to the other Resolution Applicant whose bid was for Rs. 490 crores which is more than that of the appellant MSL. 26. No provision in the Code or Regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This point has been dealt with in the case of Essar Steel (supra). We have quoted above the relevant passages from this judgment. 27. It appears to us that the object behind prescribing such valuation process is to assist the CoC to take decision on a resolution plan properly. Once, a resolution plan is approved by the CoC, the statutory mandate on the Adjudicating Authority under Section 31(1....
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....ses of Rs. 2.33 crores as suggested by the Resolution Professional, being the proportionate dues payable to the statutory authorities as per the judgment of the Hon'ble Supreme Court in Rainbow Papers Ltd. It is apparent that all the CoC members and Resolution Professional were aware that such offer existed prior to the pronouncement of the impugned order on 04.03.2024. It is noteworthy that the appellant had filed an affidavit dated 26.03.2026 before this Tribunal in which he has expressed his willingness to pay amount of Rs. 2.33 crores to statutory authorities in compliance of Rainbow Papers Limited Judgment. The two impleadment IAs filed by the two divisions of Ahmedabad Municipal Corporation (AMC), and the written and oral pleadings by the Ld. Counsel have been considered. We find that dues of AMC have been admitted as statutory dues covered by the judgment of the Rainbow Papers Ltd. by the Resolution Professional in his affidavit and proportionate payment has been promised to them by the SRA in his affidavit dated 26.03.2026. In view of this submission by the SRA, the grievance raised by the AMC does not survive. We note that the resolution plan was....
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....xercised its jurisdiction to align its order with binding precedent." The present case is slightly better than the case of Cosmos cited supra in as much as the SRA is not reducing any amount payable to any creditor under the plan but has promised to pay Rs. 2.33 crores over and above the disbursement specified in the plan. This additional payment does not alter the plan's commercial content or the CoC's commercial wisdom. The amount payable to the creditors is not being reduced and sanctity of distribution/disbursal of funds to creditors is maintained. If the plan is otherwise compliant to be Code, the Tribunal, in view of the judgment in the case of Cosmos cited supra, has the authority to cause implementation of the judgment of the Hon'ble Supreme Court in Rainbow Papers Limited and to ensure that the insolvency of the Corporate Debtor is resolved successfully and is not held back merely on issue of non-compliance of subsequent event/interpretation of law. (vii) Regarding the observation of the Ld. NCLT that the payments to workers and employees are not fully covered, we note the plan provides for payment of full dues of employees and workmen. In fact, as noted ....
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....are of CoC members. (xi) The next observation of the Ld. NCLT regarding non-acceptance of claims also has no basis as the Code and the CIRP Regulations provide procedure for filing of claims, and their acceptance by Resolution Professional, which is duly followed by the Resolution Professional. Any aggrieved person can challenge non-admittance of his/its claim. The CoC had representatives from Rajasthan Golf Unit and FD holders who have not raised any issue regarding non-admittance of their claims. The Ld. NCLT has not identified the claims which were not admitted. In the oral and written pleadings in the present appeal, no submission has been made regarding this. (xii) The next observation of the Ld. NCLT is that promoters have repeatedly offered a process of settlement and had asked for rejection of the plan. We note that the proposal of the suspended management for settlement was considered and rejected by the CoC on several occasions. The rejection of proposal of settlement is part of the commercial wisdom of the CoC which is not justiciable. It may also be noted that only the 'applicant' in the application under Section 7 or 9 or 10 has the authority to reque....
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....allenging non-admittance of claims or for wrong classification. No such instance has been cited in the order. No such pleading was made in the written or oral submissions made before us. Sometimes the loan of the financial creditor may be assigned to others like Asset Reconstruction Company, and this assignment may be after the accounts turned into Non-Performing Asset (NPA) and the assignee steps into the shoes of the assignor having equal rights and liabilities. The assignee gets the same status as the assignor. (xv) The next observation of the Ld. NCLT is that CIRP cost has not been fully covered and that during the COVID hotel assets have been valued at lesser value. We note that resolution plan provides for payment of full CIRP costs. As per plan available at page 468 of the APB, the plan provides for CIRP costs of Rs. 3,35,75,163/-. In para 3.1 of the resolution plan, it is stated as under: "3.1. IRP Costs: 3.1.1. The IRP Cost including the payment to IRP/ RP, all expenses incurred by IRP/RP to the extent duly ratified or approved by the Committee of Creditors (CoC), interim finance raised by during CIRP as per the details provided by RP on VDR will....
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..... (xviii) On the next observation of Ld. NCLT that the suspended management was repeatedly giving settlement proposals, we note that these proposals have been repeatedly rejected by the CoC. The 1st proposal was rejected in 14th CoC meeting and 2nd proposal was rejected in May, 2023. Once the proposal of suspended management is rejected, it cannot revise or submit fresh proposals. We note that this Tribunal in Hem Singh Bharana v. Pawan Doot Estate Pvt. Ltd. & Ors. in Company Appeal (AT) (Ins.) No. 1481 of 2022 has stated that withdrawal application under Section 12A of the IBC, after approval of resolution plan by the COC, cannot be accepted. Similarly, this Tribunal in Sanjeev Mahajan vs. Indian Bank in Company Appeal (AT) (Ins.) No. 1440 of 2024 has held that no fresh proposal from suspended management can be considered after rejection of their earlier proposal by CoC. (xix) On the observation, Resolution Professional had not made operational creditors party to the IA for approval of resolution plan, we find that there is no such requirement under the Code or Regulations regarding joining of operational creditors in the IA for approval of resolution plan. ....
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....t stating that he is eligible under section 29A] 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 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 a....
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....nst the cash payments to the financial creditors. The relevant paragraph of the resolution plan is as under: "3.1. IRP Costs: 3.1.1. The IRP Cost including the payment to IRP/ RP, all expenses incurred by IRP/ RP to the extent duly ratified or approved by the Committee of Creditors (CoC), interim finance raised by during CIRP as per the details provided by RP on VDR will be paid in full and in priority to other stakeholders and the same has been presently estimated at Rs. 3,35,75,163/- (Rupees Three crore thirty five lakhs seventy five thousand one hundred and sixty three only). it is clarified that in the event, the IRP Costs increases above the amount as mentioned herein, the Resolution Applicant will be entitled to offset such increase against the amounts payable as upfront cash payment (as envisaged in the Resolution Plan) to Financial Creditors under this plan. Payment Terms: The IRP Costs shall be paid in priority to any other creditors of the Corporate Debtor." 11.8 On the issue of compliance to the judgment of the Hon'ble Supreme Court in the case of Rainbow Papers Ltd. regarding statutory dues covered by the said judgment to be treated as secu....
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....Rs. 1.31 crore to it. The financial creditor, aggrieved by the impugned order rejecting its application, filed an appeal seeking release of Rs. 1.31 crore in favour of the appellant. In the said appeal, this Tribunal accepted the condition that Sale Tax Department be treated as a secured creditor and that the Resolution Professional and the Ld. NCLT had rightly directed that the said amount be released in favour of Gujarat Sales Tax Department in compliance of the judgment of the Hon'ble Supreme Court in Rainbow Papers Limited. In para 43 of the said judgment, this Tribunal notes the key issue in this case as under: "43. The key issue to be decided in this matter is whether retention and subsequent distribution of Rs. 1.31 crores from the amount earmarked for the financial creditor in the Resolution Plan to the State Tax Department after the approval of resolution plan is in accordance with the provisions of the Code and judicial precedents." 11.11 After analysing the facts of the said case, this Tribunal held as under: "64. Section 31(1) of the IBC provides that once the Adjudicating Authority is satisfied that a Resolution Plan meets the requirements of Secti....
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.... payment to the State Department was therefore not an exercise of review but an application of the prevailing legal position. 70. If we were to hold that the NCLT was powerless to give effect to a Supreme Court judgment in a matter already before it, it would amount to compelling the Tribunal to enforce an order contrary to the highest law of the land, something no court can do. Therefore, the NCLT rightly exercised its jurisdiction to align its order with binding precedent." (Emphasis supplied) 11.12 In summary, in the aforesaid case of Cosmos, this Tribunal has held that Rainbow Papers Limited has been rightfully applied and that the distribution has been rightfully changed in the light of the said judgment treating State Tax Department as a secured creditor in departure to the approved resolution plan. It was held that this is not modification but rather implementation of plan and held that the Ld. NCLT was not powerless to give effect to a Supreme Court judgment in a matter already before it. In this case plan value was not altered, but only distribution was altered affecting the amount distributed to the financial creditors. 11.13 The present case before us i....
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....e, thus, are satisfied that the Adjudicating Authority committed error in rejecting I.A. No.(Plan)05/CHD/2024." Consequently, the resolution plan submitted by the SRA was approved in the said judgment and following directions were issued: "The Adjudicating Authority may pass a consequential order consequent to approval of resolution plan within 60 days from the date this order is produced before the Adjudicating Authority." 11.16 We now look at judicial guidance on the scope of intervention of Ld. NCLT in a plan approved by the CoC in its commercial wisdom: (a) The Hon'ble Supreme Court in K. Sashidhar v. Indian Overseas Bank and Others, reported in (2019) 12 SCC 150 has held as under: "52. ............There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decisi....
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....he case of Arun Kumar Jagatramka vs. Jindal Steel & Power Ltd. & Anr., Civil Appeal No.9664 of 2019, the Hon'ble Supreme Court held as under: "..... 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 adhe....