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2023 (6) TMI 101 - AT - Insolvency and BankruptcyCIRP - Objection to the Resolution Plan approved by the Committee of Creditor - rigged parameters used to fraudulently declare H2 bidder as H1 bidder - Appellant submitted that the CoC approved Swiss Challenge Method to get the best value out of the Resolution Plan and finally the proposal of M/s Serveall Land Developers Pvt. Ltd. (alleged second highest bidder) was approved - whether the approval of Resolution Plan and distribution of funds amongst the Creditors was legal and correct in accordance with law or otherwise? - HELD THAT:- The Appellant has taken shelter of the judgment of MK Rajagopalan [2023 (5) TMI 344 - SUPREME COURT], where it has been held that the irregularity of not placing of the Revised Plan before the CoC and directing placing before the Adjudicating Authority cannot be ignored as mere technicalities and every aspect relating to the Resolution Plan particularly its financial layout, has to be considered by the CoC before could be considered by the Adjudicating Authority. This Appellate Tribunal notes that the total amount as provided by M/s Serveall Land Developers Pvt. Ltd. (SRA) was Rs. 50.40 Crores in his original Resolution Plan dated 22.08.2022 and after the Swiss Challenge Method dated 09.09.2022, the Resolution Plan amount was substantially enhanced to Rs. 61.70 Crores (approx.) which was recommended by the CoC and finally approved by the Adjudicating Authority vide impugned order dated 09.03.2023 - after Swiss Challenge Method, it was proposed to distribute Rs. 61,21,03,175/- to Sole Secured Financial Creditor and Rs. 48,96,826/- to two Unsecured Financial Creditors. Initially, there were two Unsecured Financial Creditors, namely, Damont Developers Pvt. Ltd. whose claim of Rs. 9,25,00,000/- was admitted and it was proposed to distribute Rs. 34,15,316/- to him and the other Unsecured Financial Creditors, namely, M/s Sikka Hotels & Resorts Pvt. Ltd., whose claim of Rs. 4,01,25,000/- was admitted and Rs. 14,81,509/- was proposed to be distributed to him. The distribution between the Secured Financial Creditors and Unsecured Financial Creditors is in the same ratio as provided in the original Plan dated 22.08.2022 to Secured Financial Creditor (Bank of Baroda) and to Unsecured Financial Creditors. It is only due to judicial orders of the Adjudicating Authority which resulted into exclusion of M/s Damont Developers Pvt. Ltd. and inclusion of the Appellant in the list of Unsecured Financial Creditors and this obviously required some arithmetical changes in distribution between these two Unsecured Financial Creditors keeping the overall kitty as available to Unsecured Financial Creditors intact. Regulation 12(3) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 prescribes that decisions taken by the CoC are not invalidated by a subsequent change in the composition of the COC. Therefore, even though the Appellant was not in the COC when the Final Plan was approved, the approval of the Final Plan by the COC is not vitiated by the subsequent inclusion of the Appellant - the ‘Resolution Plan’ is already under implementation and the hotels of the Corporate Debtor have already been handed over to the SRA and SRA has already paid Rs. 17,25,00,000/- to various Creditors, along with payment of the CIRP expenses of Rs. 4,68,00,000/-. There are no error in both the challenged impugned orders - appeal dismissed.
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