TaxTMI 
TaxTMI 
2026 (9) TMI 1288
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....l has been preferred by Suraksha Realty Limited ("Appellant") under Section 61 of the Insolvency Bankruptcy Code, 2016 ("Code") against the Order dated 14.05.2024 passed in IA No. 22 of 2024 in CP (IB) NO. 2300 OF 2018 ("Impugned Order") by the National Company Law Tribunal, Mumbai Bench - I, Mumbai ("Adjudicating Authority") whereby the application filed by the Resolution Professional (RP) to Approve the Plan has been accepted. 2. Brief facts as reflected from the pleadings of the parties are in terms that the Appellant sanctioned loan of Rs. 60,00,00,000/- (Rupees Sixty Crores Only) to the corporate debtor (CD) and in lieu of the loan facility the Corporate Debtor is stated to have created equitable mortgage by depositing the original title deeds of the immovable property with the Appellant. In February 2015, the Appellant and the Corporate Debtor entered into a Supplementary Loan Agreement dated 18.02.2015. The Corporate Debtor defaulted in repayment of the loan in terms of the Loan Agreement read with the Supplementary Agreement dated 18.02.2015 and post-dated cheques were stated to have been issued as security under the Loan Agreement read with the Supplementary Agreement, ....
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....02.2023. 5. It is further evident that in the 35th meeting of CoC was convened on 04.09.2023 wherein the resolution for Liquidation of Corporate Debtor was approved with 78.83% voting share and the Liquidation Application was filed by the RP before the Ld. Adjudicating Authority. On 10.10.2023 two interested Prospective Resolution Applicants (PRA) Mr. Pankaj Kikavat and Bermaco Energy Systems Limited (SRA/Respondent No. 2) filed IA No.4498 of 2023 and IA No.4500 of 2023, respectively, before the Ld. Adjudicating Authority seeking approval to submit their Resolution Plans. Accordingly, the Adjudicating Authority granted opportunity to the said PRAs to submit their Resolution Plans. 6. It is also reflected that in the 38th CoC meeting convened on 23.11.2023 the Resolution Plan of Respondent No. 2 was discussed and it was asked to submit an unconditional Resolution Plan. The Resolution Plan submitted by Mr. Pankaj Kikavat the Promoter and Suspended Director of the C D was not considered because they failed to submit the EMD within the stipulated period of time. It is also stated that the charge in favour of the Appellant was registered on 14.12.2023 by the Ministry of Corporate ....
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....king approval of Resolution Plan dated 16.12.2023 before the Ld. Adjudicating Authority and the same was allowed vide Order dated 14.05.2024 and aggrieved by the same instant appeal has been filed by the Appellant. 9. We have heard Ld. Counsels for the parties and have perused the record as well the written submission's filed by the parties. 10. Ld. Counsel for the Appellant submits that the Appellant has challenged the approval of the Resolution Plan primarily on the grounds of, material concealment and false information provided and given by the SRA to the CoC,Resolution Plan not having provisions for its effective implementation in view of the order of attachment by the Enforcement Directorate, non-classification of the Appellant as a secured financial creditor and incorrect liquidation value and violation of the entitlements of the Appellant as a dissenting financial creditor and on account of other non-compliances with Section 30(2) of the Code. 11. It is further submitted during the pendency of the insolvency process, the Appellant came to know about the involvement of the SRA in questionable transactions, pursuant to which, the Enforcement Directorate had published ....
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....rsuance of the same, the CoC deferred the agenda for the approval of the Resolution Plan and a detailed letter was also sent by the Appellant on 21.12.2023 highlighting the involvement of the SRA in the ED case. Subsequently in the 41st meeting of the CoC held on 19.01.2024 the RP apprised the CoC on the basis of a report submitted by Bagchi & Gupta, Chartered Accounts pertaining to the eligibility of the Resolution Applicant under Section 29A of the Code contending that the SRA is eligible to submit their resolution plan. However, the said report does not even refer to the alleged antecedents of the SRA nor to the pending investigations against the same but is only confined to eligibility under Section 29A of the Code. 15. It is also submitted that wrong information was given by the SRA pertaining to the order passed by the Hon'ble High Court of Bombay as in pursuance of the order, only the eviction of the SRA was not to be proceeded with and there was no stay on the order of attachment made under the PMLA. In this regard Appellant also wrote an email dated 24.01.2024 to the RP and the CoC and submitted a memo of enquiry stating the details of the alleged criminal antecedents o....
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.... the Resolution Plan as the source of funds runs the risk of being tainted and thus prone to attachment in future and having regard to the scheme of the Code an SRA with alleged criminal antecedents and prima facie involved in money laundering and organized crime should not be allowed to be part of the resolution of the Corporate Debtor. In this regard it is submitted that provision under Regulation 39(1)(c) is distinct from Section 29A of the Code as the latter is applicable to the threshold for determination of 'eligibility' at the time of submission of the plan, while Regulation 39(1)(c) would be applicable after submission of plan to ensure that the sanctity of a CIRP is not violated. 19. It is further submitted that contention of the SRA that the proceedings of attachment of property in PMLA case are civil proceeding is patently false and could not be accepted in the background of their own admission that these are criminal proceedings. Reliance has been placed on the law laid down by the Hon'ble Supreme Court in the case of Vijay Madan Lal Choudhary & Ors. vs. Union of India & Ors. (2023) 12 SCC 1. 20. It is further submitted that even if the CoC had considered and deli....
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....th Section 53 of the Code and upon correct classification of the Appellant as a secured financial creditor, the entire distribution matrix under the Resolution Plan would change, and the plan is therefore liable to be rejected or remanded to the CoC. 23. It is further submitted that the liquidation values ascribed by the two registered valuers deviated by more than 25% for particular asset classes (INR 52.78 crore as against INR 35.04 crore), whereupon the Respondent No. 1 was bound to appoint a third valuer under the CIRP Regulations. Despite the issue being specifically raised by the Appellant at the 42nd meeting of the CoC and by email dated 31.01.2024, no third valuer was appointed. Appreciating assets (land) have been undervalued while depreciating assets have been overvalued, thereby artificially depressing the liquidation value of the Corporate Debtor to the benefit of the SRA. Further, the value of the Resolution Plan has been misrepresented as INR 60 crore whereas the true plan value is only INR 39.80 crore, the balance being attributable to future liabilities towards invocation of bank guarantees of Bank of India which cannot form part of the plan value. The plan value....
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.... order dated 14.05.2024. 27. It is further submitted that appellant has relied on provisional attachment orders and orders of the PMLA Appellate Tribunal in order to show that the non-disclosure of these proceedings is violation of RFRP and Regulation 39 (1) (c) of the CIRP regulations, 2016, however it is only under Section 29 A (d) of the Code a person, who has been convicted in the manner provided therein could be disqualified from submitting a plan and therefore the SRA was not disqualified from presenting Resolution Plan. More over the CoC was aware of the underlying proceedings against the SRA and discussed the same during 41st meeting of the CoC and thereafter Bagchi and Gupta CA were appointed to consider the eligibility of SRA and as per their report the resolution applicant is eligible as he has not been convicted for any offence and in 40th and 41st meeting of the CoC this issue was considered. 28. It is further submitted that the SRA has submitted an affidavit dated 25.10.2023, under Section 29 A of the code to demonstrate its bona fide. The object and purpose of Regulation 39 is to ensure that the resolution applicant acts in a bona fide manner and Section 31 of ....
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....s to preserve the property pending adjudication. By any stretch of imagination, the same may not be sufficient to infer the guilt of any person, more so, when the Hon'ble Bombay High Court has granted interim protection in favour of the respondent No. 2 by directing that the Enforcement Directorate would not act upon the eviction notices during the pendency of the proceedings. 33. It is further submitted that the Insolvency and Bankruptcy Code does not provide that every person whose assets are provisionally attached becomes ineligible to submit a resolution plan. Had the Parliament intended to create such a disqualification, it would have expressly said so and therefore the courts cannot add in Section 29A, which was not intended by the Parliament. Mere recording of FIR neither records guilt nor constitutes proof of commission of an offence and the same cannot result in disqualification of the appellant as a resolution applicant and the FIR relied on by the applicant is such that respondent No. 2 is not even named in the same. Neither respondent No. 2 nor its directors are shown to be persons against whom investigation has been initiated in the state proceedings. No charge shee....
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....e CoC was fully aware of every allegation relied upon by the appellant, and a conscious decision has been taken by the CoC considering all aspects of the matter and the same could not be doubted. 37. It is further submitted that what the CoC itself cannot do directly could not be permitted to be achieved indirectly by one dissenting financial creditor i.e. the appellant. Once the Resolution Plan has been approved by the requisite majority and thereafter comes to be approved by the Ld. Adjudicating Authority under Section 31 of the Code, the collective commercial decision and the commercial wisdom of the COC, which has attained finality, may not be subject to the judicial review as contemplated under Section 61 of the Code. 38. It is further submitted that an alleged breach of an undertaking furnished by the Resolution Applicant could not entitle the Appellant to seek annulment of the Resolution Plan. The undertaking contemplated under Section 39 is furnished to the resolution professional as part of the insolvency process. Whether such undertaking has been breached and the consequences it may follow is not a matter falling within the private domain of an individual member of ....
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....respondent number two, questioned the resolution professional regarding the eligibility of respondent number two under Section 29A of the Code, raised issues concerning the alleged proceedings before the Directorate of Enforcement, and participated in discussions regarding the source of funds. It deliberated upon the revised resolution plans and ultimately exercised its voting right after every material fact was placed before the COC. Therefore, the appellant was fully aware of every circumstance which it now seeks to portray as having been suppressed. 42. It is further submitted that the bona fide of the Appellant is under the shadow, as it has been widely reported that investigative agencies have initiated proceedings concerning alleged diversion of funds in relation to the Suraksha group, including registration of an FIR and a complaint by the ED in connection with the JP matter. A look-out circular has also been issued in an alleged bank-linked fraud. First of all, these proceedings are not relied upon as proof of the allegations reported, but only to demonstrate that the appellant, while seeking to disqualify Respondent No. 2 on the basis of pending proceedings and allegati....
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....admitted position that the issue regarding the alleged ED/PMLA proceedings was raised by the Appellant for the first time during the 40th CoC Meeting held on 20.12.2023. Consequently, the agenda to put the Resolution Plan of the SRA to vote was deferred, so that allegations raised by the Appellant can be duly examined. It was thereafter on 21.12.2023, the Appellant addressed a letter stating that SRA's assets are attached by PMLA and the plan of the SRA is barred by Section 29A of the IBC. Simultaneously, the Appellant objected of its treatment as an unsecured creditor. However on 21.12.2023, the RP addressed an email to the SRA seeking clarifications regarding the eligibility of the SRA, In response, the SRA furnished detailed clarifications vide letter dated 26.12.2023 and e-mail dated 28.12.2023 explaining the status of the PMLA proceedings and further stated that the Hon'ble Bombay HC vide order dated 09.08.2023 has accepted the statement made by the Counsel of ED and stayed further action qua Notice of Eviction issued by the ED, thereafter, a Third-Party Chartered Accountant, namely Bagchi & Gupta, was appointed to examine the eligibility of the SRA to submit the Resolution Pl....
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....eemed its violation and the same cannot be equated with furnishing false information within the meaning of Regulation 39(1)(c). 49. It is submitted that neither the IBC nor the CIRP Regulations require a Resolution Applicant to disclose every pending civil, criminal, regulatory or enforcement proceeding and there is no provision under the IBC or the CIRP Regulations that mandates that every query or disclosure sought under the RFRP must be answered in a particular manner, failing which the Resolution Plan would be rendered invalid. The reliance placed by the Appellant on Gaurav Katiyar v. Nisus Finance & Investment Managers LLP, CA(AT)(Ins.) No. 963-965, NCLAT New Delhi, is misplaced and distinguishable on facts. 50. It is further submitted that the allegations pertaining to violation of Regulation 39(1)(c) are founded on the very same facts and allegations which were earlier relied upon by the Appellant to question the eligibility of the SRA under Section 29A and on due examination, the SRA was found eligible under Section 29A. 51. It is further submitted that mere breach of Regulation 39(1)(c) of the CIRP Regulations does not ipso facto vitiate the resolution process, un....
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....ded to proceed with the existing valuation, considering the advanced stage of the CIRP and time bound process. Regulation 35(1)(b) of the CIRP Regulations provides that if the 2 valuation reports are significantly different, the RP may appoint a third valuer upon receipt of a proposal from the CoC. The use of the term "may" in the provision indicates that the appointment of a third valuer is not mandatory but rather left to the discretion of the RP and the CoC. Hon'ble Supreme Court in the case Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467 (Para 28 & 29) has held that it is not mandatory for a resolution applicant to match the liquidation value arrived at in the manner provided in Regulation 35. 56. It is further submitted that the Appellant had filed its claim as a secured Financial Creditor. However, upon verification, the Resolution Professional admitted the claim as that of an unsecured Financial Creditor. Aggrieved by the aforesaid treatment, the Appellant filed I.A. No. 318 of 2021 before the Ld. NCLT seeking recognition as a secured Financial Creditor. The said IA was decided by the Ld. NCLT vide order dated 01.11.2023. The said order passed by the....
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.... promoter and suspended director of the CD, however, the same could not be considered because the EMD was not deposited. The plan of the Respondent No. 2 was discussed in the 38th CoC meeting convened on 23-11-2023, and he was directed to submit an unconditional resolution plan. The revised resolution plan along with the addendum was submitted by the Respondent No. 2. 60. It is further reflected that the authorized representative of the Appellant pointed out in the 40th CoC meeting convened on 20/12/2023 that Respondent No. 2 is involved in certain questionable transactions which were being prosecuted by the Enforcement Directorate (ED). Thus, the agenda was deferred by the COC. The appellant also sent a letter dated 21/12/2023 to the RP with regard to the Resolution Plan submitted by the Respondent No. 2, and also indicating that the RP has not classified the appellant as secured creditor. The 41st CoC meeting was convened on 19-1-2024. The RP informed the CoC that he has appointed Baghchi and Gupta to verify the eligibility of the resolution applicant under Section 29A of the Code. No disqualification with regard to the Section 29A of the Code was reported by the Chartered Acc....
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....ing, wherein proceeds of crime of ABG Shipyard and Group Companies were taken by the SRA and its promoters. The order dated 3/8/2023 passed by the Appellate Tribunal was further challenged before the Hon'ble High Court of Bombay by filing Criminal Appeal No. 879 of 2023, the eviction of the SRA was stayed. Thus, it is argued that since the SRA, in pursuance of the requirement of the RFRP, was under obligation to clarify and share details of any criminal proceedings, investigations, inquiries, etc., commenced or pending against it or against any connected persons, material information has been concealed by the SRA in the undertaking filed under Regulation 39(1)(c) of the CIRP Regulation 2016 and the appellant had become disqualified and his plan should not have been considered by the CoC. However, despite the objections raised and materials supplied by the Appellant, the plan submitted by the SRA has been passed by the COC and approved by the and adjudicating authority, and the same was liable to be rejected. 63. It is also the case of the appellant that the concealment of the criminal proceedings by not giving correct information as provided under Regulation 39(1)(c) of the CIRP....
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....RA. Thereafter, the CoC has deliberated on the issue and has taken a conscious decision, in pursuance of its commercial wisdom, to approve the resolution plan submitted by SRA / Respondent No. 2. Thus, the commercial wisdom of the CoC cannot be questioned by the appellant, who had voted against the plan in the CoC meeting and has filed this appeal to derail the insolvency resolution process. 69. Much thrust has been given by the Learned Counsel for the appellant on Regulation 39(1)(c) of the CIRP Regulations 2016, and for convenience, the same is reproduced as under: - Regulation 39: Approval of resolution plan. 39.(1)(c) an undertaking by the prospective resolution applicant that every information and records provided in connection with or in the resolution plan is true and correct and discovery of false information and record at any time will render the applicant ineligible to continue in the corporate insolvency resolution process, forfeit any refundable deposit, and attract penal action under the Code. 70. Perusal of this regulation would reveal that a prospective resolution applicant may submit a resolution plan prepared in accordance with the Code and ....
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....of order dated 3rd August 2023 passed by the Appellate Tribunal of the PMLA has also been brought on record, whereby the stay application filed by the Director, Viren Vinod Ahuja, Kabir Viren Ahuja, and Barmaco Energy Systems Limited, filed in the Appeal, was dismissed. It is also mentioned in this order that a huge amount was rotated in an illegal manner through associated companies in an organized manner, the value of the attached properties after the order of adjudicating authority is only a sum of Rs.2,041 Crore out of the properties worth Rs.2,747 Crore, as against the proceeds of crime of Rs.22,842 Crore. It is also mentioned therein that facts are sufficient to prima facie show that appellant is part of the organized crime. 75. The Order of the Hon'ble High Court of Judicature at Bombay, passed in Criminal Appeal No. 879 of 2023, dated 9th August 2023, has also been placed on record, which shows that a statement was given by the counsel for the Enforcement Directorate that they will not act upon the eviction notice till the next date, and his statement was accepted. 76. Both parties have relied on the law laid down by the Hon'ble Supreme Court in Vijay Madan Lal Choudh....
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....Central Government under the 2002 Act for the collection of evidence is the intrinsic process of adjudication proceedings. In that, the evidence so collected by the authorities is placed before the adjudicating authority for determination of the issue as to whether the provisional attachment order issued under Section 5 deserves to be confirmed and to direct confiscation of the property in question. The expression "investigation", therefore, must be regarded as Interchangeable with the function of "inquiry" to be undertaken by the authorities for submitting such evidence before the adjudicating authority. 369. Suffice it to observe that being a special legislation providing for special mechanism regarding inquiry/investigation of offence of money laundering, analogy cannot be drawn from the provisions of the 1973 Code, in regard to registration of offence of money laundering and more so being a complaint procedure prescribed under the 2002 Act. Further, the authorities referred to in Section 48 of the 2002 Act alone are competent to file such complaint. It is a different matter that the materials/evidence collected by the same authorities for the purpose of civil action of....
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.... to be the proceeds of crime) is an action having civil nature, but the same cannot be construed as having civil consequences as the same is being done with regard to the properties, which according to the ED, are proceeds of some crime (offence) defined in the schedule appended with the PMLA. Therefore, the action of attachment of the property of a person under the relevant provisions of the PMLA may not be termed as having civil consequences. It would be proper to say that, though the action of attachment is of civil in nature, it would have criminal consequences and attachment is with regard to the properties which prima facie appears to be proceeds of crime. 79. We also notice that the legislature, in its wisdom, has enacted Section 29A of the Code, which apart from other, also provides that no person shall be eligible to submit a Resolution Plan if such a person or any other person acting jointly or in concert with such person has been convicted for any offence punishable with imprisonment for two years or more under any Act specified under the 12th Schedule, or for seven years or more under any other law for the time being in force. It is further provided in the Proviso ap....
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....t and Barmaco Energy Systems Limited and also that the Ld. Adjudicating Authority has directed the resolution applicants to submit their plans by 25th October 2023. The resolution plans submitted by the above prospective resolution applicants were opened and discussed. The RP was directed to confirm as to whether the plan submitted by the Resolution Applicant/Respondent No. 2 is compliant with Section 29A of the Code. The RP in pursuance of the same appears to have written an email to Respondent No. 2 on 27-10-2023. 84. Perusal of the minutes of the 38th meeting of the CoC held on 23rd November 2023 would reveal that the authorized representative of the appellant has raised the issue of the order dated 11/11/2023 passed by the Ld. Adjudicating Authority in favour of the Appellant, recognizing their charge against the property and recognizing them as a secured creditor. Further, the Adjudicating Authority has directed the Regional Director to register the charge, for which they have already filed an application. It is also highlighted that in the resolution plan which was being discussed, they have treated the appellant as unsecured creditor. In this meeting, the plans were furth....
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....onal details to assess eligibility under Section 29A of the Code. It was on 9/1/2024, the Respondent No. 2 responded to the email dated January 5, 2024, and provided all the details. 87. The 41st meeting of the CoC was held on 19th January 2024. In the report submitted by Chartered Accountants Baghchi and Gupta, it was discussed that the clean chit has been given to the Respondent No. 2. It was informed by the RP that the respondent No. 2 has provided clarification pursuant to the press release by the Enforcement Directorate. They have stated that they have filed an application (writ petition) and have been granted an ad interim stay by the order of the Hon'ble High Court till the next date of hearing. Since no order has been passed by the ED, the said matter is pending adjudication. The auditor has not disqualified the resolution applicant under Section 29A of the Code. The members of the CoC also discussed the eligibility of the resolution applicant under Section 29A of the Code. The CoC in this meeting also discussed the feasibility and viability of the Resolution Plan submitted by the Respondent No. 2. 88. The Appellant appears to have sent another email to the RP on ....
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....nto consideration the recent judgement of the Hon'ble Supreme Court of India delivered on 02.05.2025 in the matter of Kalyani Transco vs. M/s Bhushan Power and Steel Limited & Ors. [Civil Appeal No. 1808 of 2020] wherein in Para 79 the Hon'ble Supreme Court of India has categorically stated an illegality of any nature cannot be permitted to be perpetuated. The relevant portion of the para reads as under: - "79. An illegality of any nature cannot be permitted to be perpetuated, and a plea of fait accompli cannot be permitted to be raised by any party to cover up their illegal acts, after achieving the ill motivated intentions circumventing the law.****" 91. Relying on above law it is submitted that the compliance of Regulation 39 of IBBI CIRP Regulations is mandatory, which has not been complied by the SRA. 92. Respondent No. 2 has relied on Bhagwani Bai v. Life Insurance Corporation of India, Jabalpur, 1983 SCC OnLine MP 10 and Harjas Rai Makhija v. Pushparani Jain, (2017) 2 SCC 797 to show that on every misrepresentation or concealment of a fact, the contract cannot be avoided merely on trivial and inconsequential misstatement or non-disclosure. The ratio laid down ....
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....ularity refers to a significant deviation from established rules, practices, or procedures that is substantial enough to influence the outcome of a legal proceeding or decision. It involves failure to adhere to prescribed methods, either by omitting necessary actions or performing them improperly or untimely. Such irregularities are not merely formal defects but have material impact, affecting the merit of a case or the rights of the parties involved. Unlike illegality, which denotes a violation of law, material irregularity pertains to procedural defects that can undermine the fairness or validity of legal proceedings..... that a material irregularity in the conduct of the CIRP is one that significantly impacts the fairness, legality and integrity of the process. Such irregularities can lead to delays, financial losses, and litigation, thereby defeating the objectives of the Code. Material irregularities may arise from non-compliance with the statutory provisions, rules, and regulations governing the CIRP. Any deviation from these prescribed legal provisions, both procedural or substantive, may amount to a material irregularity and affect the legitimacy of the resolution process."....
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....the resolution process. If despite the violation of any Regulation, the consequences it produced falls short of what is stated herein above, why should there be a hurry to invalidate an act so done? 15.....Being a procedural law, the CIRP Regulations are but facilitatory provisions through which accomplishing, inter alia the statutory objective of value maximization of the CD is conceived. They principally aim to provide clarity, consistency and transparency for ensuring optimum fairness in the resolution process and also insulating it from any temptations eroding the ethical fidelity (defined by non-arbitrariness or subjectivity or personal preferences) associated with their respective duties. In other words what ought to be the norm of self-discipline for the RP or the CoC is given a statutory status through the Regulations. 17. For appreciating the allegation of material irregularity, it is necessary to remind that the statutory philosophy behind the resolution process: a) First, it aims to optimize the asset-value of the stressed assets of a debt trapped company. The entire resolution process is designed, devised and geared to gyrate around this philo....
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....ge of trial, may not be a bar for a resolution applicant to submit the resolution plan under Section 29A of the Code and it is only on account of conviction in the manner provided therein, he may be found ineligible from submitting any resolution plan, which is not a case with the Respondent No. 2. 97. Now, we will have to see as to whether the CoC, in its commercial wisdom, can approve the resolution plan submitted by the resolution applicant (SRA) against whom criminal proceedings are pending and whose properties have also been attached under PMLA or whether the Ld. Adjudicating Authority or this Appellate Tribunal would be justified in interfering with the commercial wisdom of the COC by exercising the power of judicial review. Learned counsel for the appellant has relied on the law laid down by the Hon'ble Supreme Court in Lamba Exports Private Limited versus Deer Global Industries Private Limited and others, reported in 2026 SCC Online SC 459. In paragraph number 12 of the report, it has been highlighted that the primacy of commercial wisdom does not mean that every action taken in the insolvency process is altogether immune from scrutiny in every situation. Where a challen....
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...., before rejecting the resolution plan, give notice to the committee of creditors to rectify any defects in the resolution plan.] [(2A) The Adjudicating Authority shall pass an order under sub-section (1) or (2), within a period of thirty days from the date of receipt of the resolution plan: Provided that if the Adjudicating Authority has not passed an order within such period, it shall record the reasons for such delay in writing.] (3) After the order of approval under sub-section (1), - (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. [(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 ....
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....nt for such debt after the approval of the resolution plan, then any right of such person to be indemnified by the corporate debtor shall be extinguished. Explanation III.-For the removal of doubts, it is hereby clarified that the provisions of sub-sections (5) and (6) shall be deemed to apply to the resolution plan that is approved under sub-section (1), on and from the date of commencement of this Code, except for matters that have attained finality under this Code.] 100. Relevant part of Section 30 of the code is also reproduced as under; 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....
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.... under: Regulation 38: Mandatory contents of the resolution plan. 38. [(1) The amount payable under a resolution plan - (a) to the operational creditors shall be paid in priority over financial creditors; and (b) to the financial creditors, who have a right to vote under sub-section (2) of section 21 and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the [plan:] [Provided that where a resolution plan provides for payment in stages, the financial creditors who did not vote in favour of the resolution plan shall be paid at least pro rata and in priority over financial creditors who voted in favour of the plan, in each stage.] [(1A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor.] [(1B) A resolution plan shall include a statement giving details if the resolution applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any other resolution plan approved by....
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....on 32A.] [(4) (a) The committee shall consider setting up a monitoring committee for monitoring and supervising the implementation of the resolution plan. (b) The monitoring committee may consist of the resolution professional or any other insolvency professional, or any other person, including representatives of the committee and representatives of resolution applicant(s), as its members: Provided that where the resolution professional is proposed to be part of the monitoring committee, the monthly fee payable to him shall not exceed the monthly fee received by him during the corporate insolvency resolution process. (c) The monitoring committee shall submit quarterly reports to the Adjudicating Authority regarding the status of implementation of resolution plan.] 103. Ld. Counsel for the Respondent No.3 has relied on Kalpraj Dharamshi v. Kotak Investment Advisors Limited, 2021 SCC Online SC 204, relevant part of the same is reproduced as under: - "155. The Committee also expressed the opinion, that there should be freedom permitted to the overall market, to propose solutions on keeping the entity as a going concern. The Committe....
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....prospective resolution applicant to the effect that such dues ought to be paid in full, so that the carrying on of the business of the corporate debtor does not become impossible for want of a most basic and essential element for the carrying on of such business, namely, electricity. This may, in turn, be accepted by the resolution applicant with a consequent modification as to distribution of funds, payment being provided to a certain type of operational creditor, namely, the electricity distribution company, out of upfront payment offered by the proposed resolution applicant which may also result in a consequent reduction of amounts payable to other financial and operational creditors. What is important is that it is the commercial wisdom of this majority of creditors which is to determine, through negotiation with the prospective resolution applicant, as to how and in what manner the corporate resolution process is to take place." (emphasis supplied) 160. This Court held, that what is left to the majority decision of CoC is the "feasibility and viability" of a resolution plan, which is required to take into account all aspects of the plan, including the manner of dis....
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....e specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code." 163. It has been held, that in an enquiry under Section 31, the limited enquiry that the adjudicating authority is permitted is, as to whether the resolution plan provides: 163.1. The payment of insolvency resolution process costs in....
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....iew by Adjudicating Authority is limited to the extent provided under Section 31 of I&B Code and of the Appellate Authority is limited to the extent provided under sub-section (3) of Section 61 of the I&B Code, is no more res integra. 58. Bare reading of Section 31 of the I&B Code would also make it abundantly clear, that once the resolution plan is approved by the Adjudicating Authority, after it is satisfied, that the resolution plan as approved by CoC meets the requirements as referred to in sub-section (2) of Section 30, it shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders. Such a provision is necessitated since one of the dominant purposes of the I&B Code is, revival of the Corporate Debtor and to make it a running concern. 86. As discussed hereinabove, one of the principal objects of I&B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the st....
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....ptance of the resolution plan by the Committee of Creditors, should be rejected, except in an egregious case where data and facts are fudged or concealed. Absence or ambiguity of details and particulars should put the parties to caution, and it is for them to ascertain details, and exercise discretion to submit or not submit resolution plan." 107. The Hon'ble Supreme Court again in Karad Urban Coop. Bank Ltd. v. Swwapnil Bhingardevay, (2020) 9 SCC 729 Opined that the question of viability and feasibility, is to be left to the commercial wisdom of CoC and the same cannot be lightly interfered with by the Tribunal, in view of the law laid down by this Court in Essar Steel (India) Ltd. and K. Sashidhar. 108. In K. Sashidhar Vs. Indian Overseas Bank & Ors. (2019) ibclaw.in 08 SC it was provided that the provisions investing jurisdiction and authority in the NCLT or NCLAT has not made the commercial decision exercised by the CoC justiciable. This position is evident from the limited grounds specified for instituting an appeal that too against an order "approving a resolution plan" under Section 31, that First the approved resolution plan is in contravention of the provisions of an....
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....iction of the Adjudicating Authority under the Code that must be kept in mind when the Adjudicating Authority is to decide on whether a resolution plan passes muster under the Code. When this distinction is kept in mind, it is clear that there is no residual jurisdiction not to approve a resolution plan on the ground that it is unfair or unjust to a class of creditors, so long as the interest of each class has been looked into and taken care of. 111. In Kalyani Transco vs. Bhushan Power & Steel Ltd., [(2025) ibclaw.in 388 SC] : 2025 SCC OnLine SC 2093 while discussing the power of judicial review vested in NCLT or NCLAT it is opined that the legislature purposefully did not include to challenge the commercial wisdom exercised by the CoC and a challenge cannot be raised against the decision making of the CoC unless and until the grounds for challenge as given in the Code are satisfied and any interference in the paramount objective of the CoC of exercising its commercial wisdom would amount to the Court rewriting the law and going against the very objectives of the IBC. 112. In Pratap Technocrats Private Ltd. vs. Monitoring Committee of Reliance Infratel Limited, [(2021) ibcla....
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.... Institutions or Inter Corporate Loans/Deposit and it proposes to raise finance from Renaissance Fiscal Services Pvt. Ltd., a non-banking financial corporation, towards which a letter of interest is received by the Successful Resolution Applicant. 115. It is further revealed that Amount of upfront payment to Financial Creditors and Operational Creditors and Unpaid CIRP Cost (upfront cash recovery) is to be paid within 30 days from effective date as Rs. 11,00,00,000 and balance repayment obligations to Secured payment) - Within 1 year from effective date 30,00,00,000 + 19,16,00,000 towards Bank Guarantee and thus total Payment offered in the Resolution Plan is 60,16,00,000. 116. Significantly the treatment for Appellant (Suraksha Realty Ltd) is given in terms that the Resolution Professional has provided the Resolution Applicant with a copy of Order dated 1 November 2023 passed in Interlocutory Application No. 318 of 2021, and of 6 and 7 December 2023 passed in Interlocutory Application No. 5559 of 2023 by the Adjudicating Authority in relation to Suraksha Realty Limited's claim of being a Secured Financial Creditor of the Corporate Debtor. It is clarified that the total f....