TMI Blog2019 (3) TMI 1706X X X X Extracts X X X X X X X X Extracts X X X X ..... oreover, the provisions of Section 31(4) provide that a resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under Sub-section (1) or within such period as provided for in such law, whichever is later. The statute has already taken care of all the interests of the resolution applicant by providing on year's time for seeking necessary approval required under any law for the time being in force for implementation the resolution plan. Therefore, our this order for approving the resolution plan cannot purport nor can be construed to have given any exemption in law or statutory concession, because, in our humble view, it lies in the domain of an appropriate Government and competent Authority. Application approved. - IA Nos. 431 of 2018 & OTHS. AND CP(IB) Nos. 39 & 40 of 2017 - - - Dated:- 8-3-2019 - Hon ble Mr. Harihar Prakash Chaturvedi And Hon ble Ms. Manorama Kumari, Judicial member For the Appellant : Kamal Trivedi, Rashesh Sanjanwala, Sr. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reliance Industries Ltd. v. Satish Kumar Gupta RP 7 IA 55 of 2019 in/with CP(IB) 39 40 of 2017 60(5) IBC Reliance Industries Ltd. v. State Bank of India 8 IA 56 of 2019 in/with CP(IB) 39 40 of 2017 7IBC Karur Vysya Bank Ltd. v. Satish Kumar Gupta RP 9 IA 57 of 2019 in/with CP(IB) 39 40 of 2017 60(5) IBC Karur Vysya Bank Ltd. v. Satish Kumar Gupta RP 10 IA 58 of 2019 in IA 431 of 2018 in/with CP(IB) 39 40 of 2017 60(5) IBC COC for Essar Steel India Ltd. v. Satish Kumar Gupta RP of Essar Steel India Ltd. 11 IA 59 of 2019 in IA 431 of 2018 in/with CP(IB) 39 40 of 2017 30(6) IBC Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta RP of Essar Steel India Ltd. 12 IA 60 of 2019 in/with CP(IB) 39 40 of 2017 60(5) IBC Arfin India Ltd. v. State Bank India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., v. India Coke Power (P.) Ltd. 26 IA 434 of 2018 in CP(1B) 39 40 of 2017 60(5) IBC The Resolution Professional for Essar Steel India Ltd. v. L T Infrastructure Finance Co. Ltd. 27 IA 435 of 2018 in/with CP(IB) 39 40 of 2017 60(5) IBC Orissa Stevedores Ltd. v. Satish Kumar Gupta 28 IA 437 of 2018 in/with CP(IB) 39 40 of 2017 7 IBC Essar Steel Asia Holdings Ltd. v. Satish Kumar Gupta . 29 IA 438 of 2018 in CP(IB) 39 40 of 2017 60(5) IBC Gail (India) Ltd. v. Satish Kumar Gupta RP of Essar Steel India Ltd. 30 IA 440 of 2018 in/with CP(IB) 39 40 of 2017 60(5) IBC Arkay Logistics Ltd. v. State Bank of India 31 IA 441 of 2018 in/with CP (IB) 39 40 of 2017 60(5) IBC Essar Bulk Terminal Ltd. v. State Bank of India 32 IA 442 of 2018 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Ltd. 45 IA 473 of 2018 in/with CP(IB) 40 of 2017 60(5) IBC Allied Metallurgical Products v. State Bank of India 46 IA 481 of 2018 in/with CP(IB) 40 of 2017 60(5) IBC L T Infrastructure Finance Co. Ltd. v. Essar Steel India Ltd. Through Its RP Satish Kumar Gupta 47 IA 482 of 2018 in/with CP(IB) 39 40 of 2017 60(5) IBC Hill View Hire Purchase (P.) Ltd. v. Satish Kumar Gupta RP of Essar Steel India Ltd. 48 IA 483 of 2018 in/with CP(IB) 39 40 of 2017 60(5) IBC D.R. Patnaik v. Satish Kumar Gupta RP of Essar Steel India Ltd. 49 Inv.P 78 of 2018 in/with IA431 of 2018 in CP (IB) 39 40 of 2017 7 IBC Arcelormittal India (P.) Ltd. (Intervener) Satish Kumar Gupta RP of Essar Steel India Ltd. v. Essar Steel India Ltd. 50 Inv. P 82 of 2018 in CP(IB) 39 40 of 2017 7 IBC State Tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd.. v. Satish Kumar Gupta 7 Disposed of 28.02.2019 4 Inv. P. 78 of 2018 Arcelormittal India (P.) Ltd. (Intervener), Satish Kumar Gupta RP of Essar Steel India Ltd.. v.Essar Steel India Ltd.. 7 Disposed of 29.01.2019 5 IA 437 of 2018 Essar Steel Asia Holdings Ltd. v. Satish Kumar Gupta 7 Disposed of 01.02.2019 6 IA 482 of 2018 Hill View Hire Purchase (P.) Ltd.. v. Satish Kumar Gupta RP of Essar Steel India Ltd. 60(5) Dismissed in Default 14.02.2019 7 IA 483 of 2018 D.R.Patnaik v. Satish Kumar Gupta RP of Essar Steel India Ltd.. 60(5) Dismissed in Default 14.02.2019 8 Inv. P 82 of 2018 State Tax Officer v. Satish Kumar Gupta RP of Essar Steel India Ltd. 7 Disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Disposed of 28.02.2019 23 IA 448 of 2018 Hind Aluminium Industries Ltd. v. State Bank of India Disposed of 28.02.2019 24 IA 440 of 2018 Arkay Logistics Ltd. v. State Bank of India Disposed of 28.02.2019 25 IA 441 of 2018 Essar Bulk Terminal Ltd. v. State Bank of India Disposed of 28.02.2019 3. Therefore, it is evident that rest of the applications are not yet disposed. Hence, the same are taken up for disposal simultaneously along with the main I.A. No.431 of 2018, which are described as under:- Sl. No. Case No. Parties 1 IA 28 of 2018 Dakshin Gujarat Vij. Co. Ltd. v. Essar Steel Ltd. 2 IA 431 of 2018 The Resolution Professional for Essar Steel India Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA 64 of 2019 Dilipooman 23 IA 49 of 2018 Essar Power Ltd. 24 IA 50 of 2018 Bhander Power Ltd. 25 IA 125 of 2019 Hill View Hire Purchase Pvt. Ltd. 26 IA 126 of 2019 D.R. Patnaik 27 IA 468 of 2018 State Tax Officer 4. Notwithstanding the above, some of the I.As. were adjourned to 28.03.2019 which are sl. Nos.1 to 4 and further at sl. No.5 to 11.03.2019, because these are not pertaining to the subject matter of these group of I.As. Sl.No. Case No. Parties 1 IA 261 of 2018 The RP for Essar Steel India Ltd. v. Arkay Logistics Ltd. 2 IA322 of 2018 The RP for Essar Steel India Ltd. v. Vadinar Power Co. Ltd. 3 IA 432 of 2018 The Resolution Professional for Essar Steel India Ltd.. v. EP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India . 360,39,65,311 12 IA 445 of 2018 60(5) IBC Signode India Ltd. v. State Bank of India . 9,54,83,196 13 IA 446 of 2018 60 IBC Dakshin Gujarat Vij Co. Ltd. v. Satish Kumar Gupta RP of Essar Steel India Ltd. 5882,28,00,000 14 IA 447 of 2018 60(5) IBC Timken India Ltd. v. Stale Bank of India 4,42,44,835 15 IA 448 of 2018 60(5) IBC Hind Aluminium Industries Ltd. v. State Bank of India 3,77,36,394 16 IA 467 of 2018 60IBC Dakshin Gujarat Vij Co. Ltd. v. Satish Kumar Gupta RP of Essar Steel India Ltd. 606,49,00,000 17 IA 468 of 2018 60(5) IBC State Tax Officer v. Essar Steel India Ltd. 544,00,00,000 18 IA 469 of 2018 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 Arfin India 25,50,53,397 34 1A 61 of 2019 Essar Bulk Terminal 703,21,02,375 35 IA 62 of 2019 NTPC 10,45,00,264 36 IA 63 of 2019 Duferco S.A 37 IA 64 of 2019 Dilip ooman NA 38 Inv. P 82 of 2018 7 IBC State Tax Officer v. Satish Kumar Gupta RP of Essar Steel India Ltd. NA 39 IA 261 of 2018 43(1) The RP for ESSAR STEEL INDIA Ltd. v. Arkay Logistics Ltd. NA 40 IA 322 of 2018 43(1) The RP for ESSAR STEEL INDIA Ltd. v. Vadinar Power Company Ltd. NA 41 IA 397 of 2018 60(5)(c) IBC Jalesh Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 of 2019 State Tax Officer. v. Essar Steel India Ltd. NA 55 IA 58 of 2019 COC for Essar Steel India Ltd. NA 56 IA 430 of 2018 60(5) IBC Essar Steel Asia Holdings Ltd. v. Satish Kumar Gupta NA 57 Inv. P. 77 of 7 Arcelormillal India (P.) Ltd. (Intervener), Essar Steel Asia Holdings Ltd. v. Satish Kumar Gupta NA I.A. 125 of 2019 in I.A. 482 of 2018 and I.A. 126 of 2019 in I.A 483 of 2018 1. By these applications, the applicants have sought a prayer for setting aside the ex parte order passed against them by this Adjudicating Authority on 14.02.2019 whereby I.As. No. 482 of 2018 and 483 of 2018, of the applicants (viz., Hill View Hire Purchase Ltd. and D.R. Patnaik, respectively), filed against Mr. Satish Kumar Gupta, the Resolution Professional of M/s. Essar Steel India Ltd. (Corporate Debtor company) came to be dismissed in default for want of prosecution. 2. Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein Their Lordships have expected this Tribunal to pronounce order(s) latest by 08.03.2019, while, the present Restoration Applications are filed before this Bench only on 06.03.2019. 5. Considering the above stated peculiar facts and circumstances of the present case, we are of the view that the present I.As., at this belated stage, cannot be entertained by this Adjudicating Authority, in view of the direction given by the Hon'ble NCLAT as well as mandate of the Hon'ble Supreme Court, for conclusion of the hearing in a time bound manner. 6. Notwithstanding the above, learned counsel, Mr. Jaimin Dave, appearing for the applicants of these I.As has taken alternative plea that he is not pressing for fresh hearing in the IAs. 482 of 2018 and 483 of 2018, but only requesting this Tribunal to consider the issue of rejection of applicants claims arbitrarily by the RP and their objection for approval of the proposed Resolution Plan, as their claims does not find place in the creditors list prepared by the RP. Hence, if their right to lodge a claim is not determined by this Adjudicating Authority, then it would cause serious prejudice to their interests, being operational c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e NCLAT, on 28.09.2019, to conclude the hearing and pronounce the order in I.A. 431 of 2018 in a time bound manner. Accordingly, these I.As are rejected with no order as to costs. I.A. No. 472 of 20I8 I.A. 62 of 2019 in IA. No. 431 of 2018 1. By these applications, the applicants, viz., M/s. GAIL (India) Ltd. (GAIL), and the National Thermal Power Corporation Ltd. (NTPC Ltd.)., have sought for a common relief against partly rejection of their respective claims by the Resolution Professional (RP). 2. The applicant, GAIL, in IA 472 of 2018, has stated that it is having claim of ₹ 1204.15 crore against the Corporate Debtor company as per the Gas Sale Agreement (GSA) dated 28.03.2014 and such claim has not been admitted by the RP. Hence, an appropriate direction be issued to the Respondent to admit its entire claim in CIRP proceedings of the present Corporate Debtor company and further direction to the respondent to ensure the continuation of the executed Gas Sale Agreement dated 28.03.2014 under the resolution plan (as submitted by the resolution applicant), failing which the applicant has made prayer for rejection of such resolution plan of the resolution applicant M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection be issued to the RP and to the CoC to ensure the continuance of the executed Tripartite Agreement and MoU dated 09.11.1993 under the proposed resolution plan otherwise in alternate such resolution plan is liable to be rejected. It also prayed for staying of the proceedings in I.A. No. 431 of 2018. 7. We have duly considered the above stated contentions of these applications. It is an admitted position in the matter that present applicants are operational creditors and having dues of less than 10% (each) of the total debts owed by the corporate debtor company. Therefore, they cannot demand a copy of the resolution plan as a matter of right nor they can have locus to participate in the proceedings of the CoC and to oppose such resolution plan, in view of the recent decision of the Hon'ble Supreme Court in the matter of K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312. 8. Therefore, their prayer cannot be acceded to. However, their interest as being operational creditors can be adequately be taken care at the time of dealing with main I.A. No. 431 of 2018, for judicious distribution/apportionment of the amount receivable through the resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the above, it is now a settled legal position that the Resolution Professional has not been conferred with such power to adjudicate the claim submitted before it. He is required only to collate the information, verify the claims as per the provisions of the I B Code and to update such information in the list of creditors and, thereafter, place it before the CoC for its consideration. 5. Therefore, these I.As. can partially succeed only to the extent of such direction may be issued to the Resolution Professional to register their respective claims and to update the claims in the list of creditors, because we have already held in our separate order passed in I.As. Nos. 54 55 of 2018. However, the apportionment of these claims cannot be made as a matter of right, but only their interest, if any, can be taken care of while dealing with the I.A. No. 431 of 2018 in succeeding paragraphs for consideration and approval of the Resolution Plan. 6. It is also expedient in the present matter in view of the directions issued by the Hon'ble NCLAT to dispose of the pending I.As. (filed by the operational creditors) by hearing only one among them and also to one representative from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the eventual outcome of such dispute. Therefore, these applicants have prayed for equity and parity with all the other creditors. 5. They have further contended that the claims of the applicants herein cannot be rejected arbitrarily by the RP as per the settled position of law that parties those are similarly situated are required to be treated equally. Hence, it is prayed for setting aside such decision of rejection of the claims in I.A. No.49/2018 to the tune of ₹ 893,21,52,807/- and in I.A. No. 50/2018 to the tune of ₹ 1618,02,74,465/-. Hence, the present applications. 6. We have gone through the above stated contentions of the present applications and heard the counsel for the RP, who has opposed the present applications, stating that till the claims of applicants are not crystallized and quantified such claims cannot be recognized during pendency of dispute and a payment on such claim can be made only after finalization of dispute crystallizing the amount payable. 7. We have considered the rival submissions made by both the parties in this respect and we are of the view that the role and duty of the RP is to collate the information by verifying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case. Hence, present proceedings suffer from such irregularity and matter needs to be remanded back to the CoC for its re-consideration after making supply of a copy of Resolution Plan to the concerned party in the light of this recent decision of Hon'ble Supreme Court. Otherwise, the proposed Resolution Plan is liable to be rejected on such ground alone. 2. We duly considered this aspect of the case. In the light of mandate of the Hon'ble Supreme Court, in the present matter, if a Resolution Plan is not approved, the corporate debtor shall go to the liquidation which is not the main object of the I.B. Code. It is a matter of record that except to the applicants in I.A. No. 64 of 2019, all other applicants are operational creditors and having debts value less than of 10%. Hence, they cannot demand a copy of the resolution plan as a matter of right. 3. It is also a matter of record that promoters/shareholders of the Corporate-Debtor-Company had earlier filed I.A. 430 of 2018 seeking for settlement of the present CIRP proceedings by redeeming its entire debt. Wherein, they have elaborately dealt with the contents of the Resolution Plan by making comparison with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or other Resolution Applicant being confidential cannot be disclosed to any other competitor Resolution Applicant nor any opinion can be taken or objection can be called for from other Resolution Applicants with regard to one or other resolution plan. 6. It is pertinent to note here that, the CoC was considering such Resolution Plan on 19.10.2018, the prevailing legal position as per the judgment of Hon'ble NCLAT was that, a copy of Resolution Plan could not be supplied. Hence no illegality can be attributed in the decision of the CoC by not providing a copy of the Resolution Plan at the relevant time to the suspended management nor on such basis such proceedings of the CoC meeting cannot be treated to have been vitiated. 7. Moreover, keeping in view of the mandate of Hon'ble Supreme Court under Article 142 of the Constitution of India, if a Resolution Plan is not approved on such ground, then the company shall go in to liquidation. Hence, it would not be appropriate for this Adjudicating Authority to remand the matter back to the CoC for reconsideration after providing a copy of the Resolution Plan to suspended management because in our humble view, it would amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t through e-mail dated 08.10.2018, whereby the applicant's claim has been rejected. It is the case of the applicant that it sanctioned a Term Loan of ₹ 75 crore to one Essar Power Gujarat Limited (EPGL) vide its sanction letter dated April 26, 2016. As per one of the terms and conditions contained in the Facility Agreement read with Addendum to such Agreement, the borrower (EPGL) was required to arrange post-dated cheques from the present Corporate Debtor to the satisfaction of the applicant towards the Debt Servicing Obligation. 2. It is submitted that the present Corporate Debtor, vide its letter dated May 13, 2016, has issued 45 crossed post-dated cheques in favour of the applicant for a total sum of ₹ 61,71,68,861/-. Therefore, as per the applicant, the Corporate Debtor issuing such post-dated cheques, in favour of the applicant has assumed its liability in the nature of a guarantor to secure the loan/financial facility, given to the borrower-EPGL by the present applicant. 3. However, the applicant, felt aggrieved with such impugned decision of the respondent-Resolution Professional (communicated through e-mail dated 08.10.2018) whereby he has rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile opposing the present application and in order to fortify his stand, obtained legal opinion from his legal adviser, who also opined that the claim of the applicant-L T Infrastructure Finance Company Limited cannot be classified as a financial debt because such post-dated cheques were issued by the Corporate Debtor (ESIL) due of its payment obligation towards Bhander Power Limited (BPL) and its instance such post-dated cheques were issued in favour of the applicant in order to discharge its obligation to BPL and not issued with a view to secure any payment obligation of EPGL. Hence, it is contended that the present Corporate Debtor (ESIL) is not a party to the above stated Promoter Obligation Agreement or any Facility Agreement nor there is any kind of tripartite agreement among L T Infrastructure Finance Company Limited, EPGL and with the present Corporate Debtor. As the Corporate Debtor, it cannot be termed as a guarantor, therefore, the applicant also cannot be called a Financial Creditor of the Corporate Debtor company not its debts fall under the definition of 'Financial Debt' under Sections 5,7 and 8 of the I B Code. For the aforesaid reasons, the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a letter on 27th May, 2016 to the Corporate Debtor requesting it to issue post-dated cheques in favour of L T Infrastructure Financial Co. Ltd. against payment due to BPL. By perusal of the contents of such letter, it is evident that the present Corporate Debtor, who issued some post-dated cheques in favour of the applicant so as to discharge its liability of making payment of amount due to BPL. Hence, Corporate Debtor did not step into the shoe of a surety or stood as guarantor of such loan facility. Hence, in our view, by no stretch of imagination, the applicant can be termed as a guarantor. Moreover, in the strict legal issue, the status of the Corporate Debtor can only be of a garnishee, as per the provisions of the Code of Civil Procedure, having money of M/s. BPL in its hand and was asked by the BPL to be paid to the present applicant- L T, in order to discharge its financial obligation. Hence, it cannot be fastened with the liability of a surety of EPGL. 7. Therefore, by relying on the decision of the Honourable NCLAT in the matter of Nikhil Mehta Sons (HUF) (Supra), we are of the view that the present applicant does not fall within the purview and definition of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of the applicant that it lodged its claim before the R.P. and CoC as a financial Creditor claiming for ₹ 3487.09 Crore. Later on the applicant was also classified as a secured financial creditor and out of these, a sum of ₹ 2646.05 Crores is shown as principal outstanding due to the applicant which is payable by the Corporate Debtor Company. However, it has been alleged that such dues are not being paid as per the proof of admitted claim on pro rata basis and proposed to be paid on a different criteria/different formula adopted by the CoC, for making apportionment of such amount, which is based on the value of security possessed by the applicant and in terms of the liquidation value of the assets of the company. Thereby, the applicant is going to receive only 1.7% of its admitted claim amounting to a sum of ₹ 60.71 Crores, while, other financial creditors are receiving a sum of around 92% of their entire principal debt. Hence, such being discriminatory practice, cannot be treated fair and equitable. 5. The applicant has further proposed that there should be some reasonable apportionment of the amount receivable from the Resolution Applicant among all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EARC Trust SC 187 (Federal Bank) 92.25 84.86 92.0% 78.9 85.6% 6 EARC Trust SC 217 (ICICI Bank) 1,697.77 1,561.75 92.0% 1,452.8 85.6% 7 EARC Trust SC 233 (Axis Bank) 993.46 913.87 92.0% 850.1 85.6% 8 EARC Trust SC 292 (IOB) 1,966.31 1,808.78 92.0% 1,682.6 85.6% 9 EARC Trust SC 322 (J K) 554.92 510.47 92.0% 474.9 85.6% 10 EARC Trust SC 327 (LVB) 137.25 126.25 92.0% 117.4 85.6% 11 EARC Trust SC 337 (BOB) 1,273.78 1,171.74 92.0% 1,090.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 320.49 294.81 92.0% 274.3 85.6% 27 SREI Infrastructure Finance 175.28 161.24 92.0% 150.6 85.6% 28 Standard Chartered Bank 3,487.10 60.71 1.7% 2,983.98 85.6% Total 49,046.34 41,970.00 41,970.00 7. In support of its above stated proposal the applicant further raised some objections contending that the committee of creditors ( CoC ) including the RP could not have delegated with such power to decide manner of distribution of the amount among the secured financial creditor and other unsecured financial creditor or other stakeholders nor such can be left to its (CoC) wisdom, which seems to be biased among to its dissenting members. Further, the CoC is not empowered to create a class within a class by making discrimination with the present applicant on some dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Thus, the entire decision making process of the CoC is with such intention to deny the present applicant to receive its legitimate dues and exclude it to be marginalised . Hence, such decision needs to be aside by this Adjudicating Authority. 10. The applicant has further challenged the process of CoC on the ground of material irregularity committee in setting up core committee, sub-committee and on other delegation of powers by the of CoC to this Core committee/ Sub-committee to negotiate with the Resolution Applicant about the Resolution Plan which is illegal as it de horse the provision of the Code. 11-12. Hence, the present application seeking for above stated relief from this Court. 13. The respondent RP and Resolution Applicant have opposed the present I.A. by contending that the decision of the CoC for approval of the Resolution Plan was in conformity with the relevant provisions of IB Code. The committee of creditors has taken fair and reasonable decision to see the paramount interest of the corporate Debtor company. It can be protected only by bringing a viable Resolution Plan, which can be implemented and there is equitable apportionment of the receivable amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency Resolution Process ( CIRP ) against the Corporate Debtor company by filing CP(IB) No. 39/7/NCLT/AHM/2017 which was commonly decided by this bench with CP(IB) No. 40/7/NCLT/AHM/2017 on 02.08.2017 whereby this adjudicating authority has categorically given finding to this effect (in para 33 onwards of its judgment) that application filed by the Standard Chartered Bank as well as State Bank of India are complete in all respects, for triggering the CIRP against the Corporate Debtor Company. With such findings, it further held that the Corporate Debtor company has committed default in making payment of its financial debt to the financial creditors, including Standard Chartered Bank and the State Bank of India. The amount of debts has also been quantified by this Bench in the aforesaid judgment stating inter alia that, the Standard Chartered Bank ( SCB ) had provided loan of amount of USD 413000000 to M/s. Essar Steel Offshore Ltd. and the same was disbursed on 03.01.2014. The said loan was a secured loan as guarantee was given by the present Corporate Debtor Company, M/s. Essar Steel Holding India Ltd. Therefore, in our view, when there is guarantee furnished by the Corporate Debto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in exercising the power of judicial review is thus lo confine itself to the following questions: (1) Whether a decision-making authority exceeded its powers? (2) Whether the authority has committed an error of law? (3) Whether the authority has committed a breach of the principles of natural justice? (4) Whether the authority has reached a decision which no reasonable person would have reached? (5) Whether the authority has abused its powers? 21.1 For the sake of convenience, the relevant portion of the aforesaid decision of the Hon'ble Supreme Court can be reproduced herein below: 16. Judicial review conventionally is concerned with the question of jurisdiction and natural justice and the Court is not much concerned with the merits of the decision but how the decision was reached. In Council of Civil Service Unions v. Minister of State for Civil Service (1984) 3 All ER 935 the (GCHQ Case) the House of Lords rationalized the grounds of judicial review and ruled that the basis of judicial review could be highlighted under three principal heads, namely, illegality, procedural impropriety and irrationality. Illegality as a ground of judicial review means tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unreasonableness has moved towards the doctrine of necessity and proportionality. Lord Steyn noted that the criteria of proportionality are more precise and more sophisticated than traditional grounds of review and went on to outline three concrete differences between the two: - (1) Proportionality may require the reviewing Court to assess the balance which the decision maker has struck, not merely whether it is within the range of rational or reasonable decisions. (2) Proportionality test may go further than the traditional grounds of review inasmuch as it may require attention to be directed to the relative weight accorded to interests and considerations. (3) Even the heightened scrutiny test is not necessarily appropriate to the protection of human rights. ............. 22. Position in English Administrative Law is that both the tests that is. Wednesbury and proportionality continue to co-exist and the proportionality test is more and more applied, when there is violation of human rights, and fundamental freedom and the Wednesbury finds its presence more on the domestic law when there is violations of citizens ordinary rights. Proportionality principle has not so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present application can be suitably disposed of on the basis of the alternative prayers being made by the applicant seeking for equitable distribution of amount mentioned in the ₹ 42000 Crores among the financial creditors and other stakeholders which will be considered while dealing with and disposing of the IA No. 431 of 2018. 23. Further, this authority need not to go into the details of the controversy involved in the present IA and to examine merits thereof, or to make judicial review of a commercial decision of the CoC but this Adjudicating Authority can certainly make some observations and suggestions by following the well-known Wednesbury principle of unreasonableness and Doctrine of proportionality as widely accepted by the Hon'ble Supreme Court in catena of its decisions. 24. While relying on above stated principle, we are equally conscious enough about the jurisdiction of this Adjudicating Authority under Sections 30 31 of the IB. Code as per the decision the Hon'ble Supreme Court in the matter of Shashidharan (supra) wherein, their Lordship have pleased to observe as such: 61. Assuming that this provision was applicable to the cases on han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial creditors to respond to the applications filed in the concerned appeals pending before it, including with a prayer to allow the resolution applicant to revise the resolution plan. We find no merits in this submission. The reliefs claimed in the stated application fled before the NCLAT would not take the matter any further. For, it is enough for the dissenting financial creditors to disapprove the proposed resolution plan by voting as per its voting share, based on commercial decision. Indeed, if the opposition of the dissenting financial creditors is in regard to matter(s) within the jurisdiction of the Tribunal ascribable to Sectionss 30(2) or 61(3), then the situation may be somewhat different. But that is not in issue in these cases. 64. As regards the application by the resolution applicant for taking his revised resolution plan on record, the same is also devoid of merits inasmuch as it is not open to the Adjudicating Authority to entertain a revised resolution plan after the expiry of the statutory period of 270 days. Accordingly, no fault can be found with the NCLAT for not entertaining such application. 25. By following the above stated preposition laid down by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing prayers :- (a) That this Tribunal be pleased to pass order approving:- the Resolution Plan submitted by ArcetorMittal India Private Limited for the Corporate Debtor as per Section 31(1) of the Insolvency and Bankruptcy Code, 2016; (b) approving the appointment of the Monitoring Committee, with the constitution as specified in the Resolution Plan, to function from the Plan Approval Date until the Effective Date in the manner provided in the Resolution Plan; (c) directing that the powers of the Board of Directors of the Corporate Debtor shall continue to remain suspended until the Effective Date and shall be exercised by the Monitoring Committee; (d) approving and directing the grant of the reliefs and concessions and key directions as set forth in Annexure I of this Application, for successful implementation of the Resolution Plan; (e) directing that in accordance with Section 31(1) of the Code, the Resolution Plan shall be bindi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act, 1961 and provisions of taking over its predecessor's Tax liability under Section 170 of the Income Tax Act shall not be applicable. Further, the transaction shall not be treated as void under Section 281 of the Income-tax Act, 1961 for any claims in respect of Tax or any other sum payable by the Corporate Debtor. Similarly, any requirements to obtain waivers from any Tax Authorities including in terms of Section 79 and Section 115B of the Income-tax Act, 1961 is deemed to have been granted upon approval of this Resolution Plan on the Plan Approval Date. 3. The Corporate Debtor and the Resolution Applicant shall be granted an exemption from all Taxes, levies, fees, transfer charges, transfer premiums, and surcharges that arise from or relate to implementation of the Resolution Plan, since payment of these amounts may make the Resolution Plan unviable. Foregoing reference to Taxes shall include the following: Transaction Cost Relevant Governmental Authority Any transfer premiums or charges, change of ownerships/control charges payable in connection with the implementation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Applicable Laws pertaining to anti bribery and prevention of money laundering. 7. Upon approval of the Resolution Plan, moratorium shall be deemed to have been granted to the Corporate Debtor from any actions/penalties under any laws for any non-compliance, which was existing on or prior to the Effective Date and which shall continue for a period of 12 months after the Effective Date. 8. All Business Permits of the Corporate Debtor that may have lapsed or expired, shall be renewed by the respective Governmental Authorities with effect from the Plan Approval Date and the Corporate Debtor shall take all necessary steps to ensure such renewal in furtherance of its statutory duties under Section 20(1) read with Section 23(2) of the Code. For avoidance of doubt, it is hereby clarified that, all Business Permits rights, entitlements, benefits and privileges whether under applicable Law, contract, lease or license granted in favour of the Corporate Debtor or which the Corporate Debtor is entitled to or accustomed to, which have expired on or prior to the Plan Approval Date or the Effective Date, shall be renewed by the relevant Governmental Authority on an expedited basis and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inquiries, investigations and proceedings suits, claims, disputes, Proceedings in connection with the Corporate Debtor or affairs of the Corporate Debtor, pending or threatened, present or future in relation to any period prior to the Plan Approval Date, or arising on account of implementation of this Resolution Plan shall stand withdrawn and dismissed and all liabilities and obligations therefore, whether or not set out in the balance sheets of the Corporate Debtor or the profit and loss account statements of the Corporate Debtor will be deemed to have been written off fully, and permanently extinguished and no adverse orders passed in the said matters should apply to the Corporate Debtor or the Resolution Applicant. Upon approval of this Resolution Plan, all new inquiries, investigations, notices, suits, claims disputes, litigations, arbitrations or other judicial, regulatory or administrative proceedings will be deemed to be barred and will not be initiated or admitted against the Corporate Debtor in relation to any period prior to the Effective Date. 10. Upon approval of the Resolution Plan by the Adjudicating Authority, all financial obligations under any contract to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets of the Corporate Debtor to resolve insolvency and improve utilization of such resources (in line with the legislative mandate of the Code). It is imperative that the following directions are granted in favour of the Corporate Debtor by the Adjudicating Authority, which directions are reasonable and just, in view of the present condition of the business of the Corporate Debtor. In the event the directions are denied or rejected by the Adjudicating Authority, the same will have an adverse impact on the business condition of the Corporate Debtor, its stakeholders and inter alia may result in failure of the Resolution Plan to resolve insolvency. 1. Assets Owned/Controlled by Existing Promoter Group : Currently the Corporate Debtor's business is highly dependent on the assets and services provided by Related Parties (most of which are controlled by the Existing Promoter Group). Therefore, the Resolution Applicant and the Corporate Debtor will require protection by way of the directions sought below to ring-fence themselves from any the Corporate Debtor. In the event the directions are denied or rejected by the Adjudicating Authority, the same will have an adverse impact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Contract in Paradip: 'The Resolution Applicant seeks a direction to Essar Bulk Terminal Paradip Limited for continuation of the cargo services arrangement with the Corporate Debtor on no less favourable terms than the existing terms, and further a direction to the Paradip Port Trust to direct Essar Bulk Paradip Terminal Limited to continue with the contractual arrangement with the Corporate Debtor for such period as the Corporate Debtor requires such access for its business and operations. e. Continuation of Cargo Service Contract in Vizag: The Resolution Applicant seeks a direction to Essar Vizag Terminal Limited for continuation of the cargo services arrangement with the Corporate Debtor on less favourable terms than the existing terms, and further a direction to the Vishakhapatnam Port 'Trust to direct Essar Vizag Terminal Limited to continue with the contractual arrangement with the Corporate Debtor for such period as the Corporate Debtor requires such access for its business and operations. 2. Third Party Assets: Land issues: the Resolution Applicant seeks indulgence from the Adjudicating Authority to direct the regularization of two land parcels in Hazira ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the insolvents resolution process cost in priority to the repayment of any other debts. Section X and Section XI 2 Section 30(2)( b) of Code and Regulation 38(1) of the CIRP Regulations. Repayment of the operational creditors in priority to the repayment of the financial creditors such that amount received by the operational creditors shall not be less than the amount which would have been otherwise received by them in the event of liquidation of the corporate debtor. Section X and Section XI 3 Regulation 38(1A) of the CIRP Regulations. Statement on him the resolution plan has dealt with the interests of all stakeholders, including financial creditors and operational creditors of the corporate debtor. Section VIII 4 Regulation 38(2)(a) of the CIRP Regulations. The term of the resolution plan and its implementation schedule. Section VII and Section X 5 Section 30(2) (c) of the Code and Regulation 38 (2) (b) of CIRP Regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AM India to the Financial Creditors will be distributed to the Secured Financial Creditors has been left to be decided by the CoC. (b) Upfront cash recovery for unsecured Financial Creditors. AM India has proposed payment of INR 17.4 crores to the unsecured financial creditors to be paid on the Effective Date as an upfront amount, which shall be divided proportionately to the unsecured financial creditors. Further, an amount of INR 3,055,738 is proposed to be paid as an upfront amount to the unsecured financial creditors, whose Admitted Claim is less than INR 10 lakhs on the Effective Date (as defined in Section 1.24 of the Resolution Plan). (c) Upfront Fresh Capital Infusion AM India will provide INR 8,000 crores of upfront fresh capital infusion for improving operations and enhancing revival prospects of the Corporate Debtor in the form of capex, working capital (for incremental operations) etc. Further, the upfront capital infusion would be made over one or more tranches within 90 days from the date on which this Hon'ble Tribunal approves the Resolution Plan ( Plan Approval Date ). Further, the AM India will inject the capital in the form of equity shares or equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to the loans and financial assistance provided to the Corporate Debtor; each of the Financial Creditors. as the case may be, shall: (i) assign/novate all security given (including but not limited to Encumbrance over assets of the Corporate Debtor and pledge, of shares of the Corporate Debtor (but excluding the corporate guarantees and personal guarantees issued for and on behalf of the Corporate Debtor by the Existing Promoter Group or their respective affiliates) related in any manner to the Corporate Debtor) to AM India and/or its Connected Persons, and/or banks or financial institutions designated by AM India in this regard pursuant to the Acquisition Structure, with effect from the. Effective Date; (ii) issue such letters and communications, and take such other actions, as may be required or deemed necessary for the release, assignment or novation of (I) the Encumbrance over the assets of Corporate Debtor; and (II) the pledge over the shares of the Corporate Debtor; within 5(five) Business Days from, the Effective Date; and (c) be deemed to have waived all claims and dues (including interest and penalty, if any) from the Corporate Debtor arising on and from the Insol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e waived, until the Plan Approval Date, all termination rights on account of payment defaults and rights to payment of penalty, default payment or any payment of like nature under any agreement or arrangement against the Corporate Debtor. III. Workmen and Employees Pursuant to the approval of the Resolution Plan by the Hon'ble Tribunal, each of the Workmen and Employees shall be deemed to have agreed and acknowledged that the Workmen and Employee Settlement Amount shall be treated as full and final payment of their respective outstanding dues as of Insolvency Commencement Date, and the Workmen and Employees shall have no further claims against the Corporate Debtor with respect to the same. 50.3 Acquisition of shareholding of the Corporate Debtor The Resolution Applicant has proposed to acquire 100% equity ownership of the Corporate Debtor and to extinguish all shareholding interest of the existing shareholders (equity and preference of the Corporate Debtor (See Section VII and Section VIII of the Resolution Plan). The detailed proposal is provided in Part B to Schedule X (Implementation Schedule (Acquisition Structure), Supervision of Implementation Plan and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the Corporate Debtor by the Existing Promoter Group or their respective affiliates, by an offshore compliant entity nominated in this regard by AM India. 50.4 Mandatory contents as per the provisions of the Code and the CIRP Regulations Payment of the Insolvency Resolution Process Cost Paragraph. A.5 of Section X. (Implementation Schedule) (Acquisition Structure), Supervision of Implementation Plan and Management of the Resolution Plan provides that the unpaid Insolvency Resolution Process Cost (as defined in Section 1.37 of the Resolution Plan ) shall be paid in priority to payments to the Financial Creditors. Further, Section XI (Source of Funds) the Resolution Plan provides that the Insolvency Resolution Process Cost shall be funded from the internal, accruals and cashflow in priority over other debts of the Corporate Debtor. If the internal accruals or cash flows of the Corporate Debtor are insufficient to meet the Insolvency Resolution Process Costs, the same shall be met by AM India. In this regard. AM India has provided a letter of commitment dated March 30, 2018 (as further extended by October 18, 2018) from Credit Agricole Corporate and Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary applications with the relevant Government Authorities including with any Foreign Government Authorities for the purposes of implementation of the Resolution Plan. Further, the Monitoring Committee may also approach this Tribunal for appointment of any insolvency professional of its choice (to assist the Monitoring Committee in its functions). 6. We have gone through the contents and the salient features of the Resolution Plan in the light of relevant statutory provisions of Section 30(2) (6) read with Section 31(1) of the I B Code. For the sake of convenience, the provisions of Section 31 and Section 30(2) of the I B Code are reproduced hereinbelow 31. Approval of resolution plan (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. (2) Where the Adjudicating Authority is satisfied that the resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution Plan is not confirming the requirements referred to in sub-section (1) of Section 31 read with Section 30(2) of the I B Code then it can very well reject such plan, which means, in such position, the company shall have to go into liquidation. 8. It is well settled legal position in the present matter that aims and objects of the enactment of the I B Code are to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons in a time bound manner for maximisation of value of assets of such persons to promote entrepreneurship, availability of credit and balance the interests of all stakeholders including alteration in the order of priority of payment of Government dues, etc. Thus, approval of a Resolution Plan is a normal rule and deviation therefrom or to reject the: Plan would lead to the Corporate Debtor to go into liquidation. Hence, it can only be an exception provided such Resolution Plan is not law compliant or not in conformity with the criteria laid down in Section 30(2) of the I B Code. Therefore, it is the prime duty of the Resolution Professional to examine and ascertain that each Resolution Plan should be in conformit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution plan and the manner of distribution of the upfront cash recovery as well as its feasibility and viability of the Resolution Plan, which were inter alia based on: (a) detailed evaluation report of GT regarding expertise and experience of AM India; (b) sound technical expertise of AM India including in light of their proposed partnership with Nippon, (c) ability to turnaround distressed assets and the previous mergers and acquisitions experience of the ArcelorMittal ground globally, (d) research and development and technological abilities, (e) reasonableness of the projections, (f) sufficient net worth and adequate source of funding, (g) interest of all stakeholders being addressed suitable, and (h) capital infusion demonstrating the focus for reviving the business of the Corporate Debtor. .Subsequent to such detailed deliberations and on instructions of members of the CoC, it was decided to put the resolution plan for voting for the purpose of seeking approval. Therefore, the Resolution Plan was put for c-voting, which commenced on October 24, 2018 and lasted till October 25, 2018 and, in the result, the CoC approved the Plan with its requisite majority of 92.24% voting. In s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o provide goods and services, are involved only in recovering amounts that are paid for such goods and services, and are typically unable to assess viability and feasibility of business. The BLRC Report, already quoted above, makes this abundantly clear. 45. Quite apart from this, the United Nations Commission on International Trade Law, in its Legislative Guide on Insolvency Law [ UNCITRAL Guidelines ] recognizes the importance of ensuring equitable treatment to similarly placed creditors and states as follows : Ensuring equitable treatment of similarly situated creditors 3. The objective of equitable treatment is based on the notion that, in collective proceedings, creditors with. similar legal rights should be treated fairly, receiving a distribution of their claim in accordance with their relative ranking and interests. This key objective recognizes that all creditors do not need to be treated identically, but in a manner that reflects the different bargains they have struck with the debtor. This is less relevant as defining factor where there is no specific debt contract with the debtor, such as in the case of damage claimants e.g. for environmental damage and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch payment is made before any recoveries are made by the financial creditors who voted in favour of the resolution plan. Post amendment. Regulation 38 reads as follows : 38. Mandatory contents of the resolution plan - (1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. (1-A) 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. xxxxxx 47. The aforesaid Regulation further strengthens the rights of operational creditors by statutorily incorporating the principle of fair and equitable dealing of operational creditors' rights, together with priority in payment over financial creditors. 48. For all the aforesaid reasons, we do not find that operational, creditors are discriminated against or that Article 14 has been infracted either on the ground of equals being treated unequally or on the ground of manifest arbitrariness. 11.2 In addition to the above, the Honourable NCLAT, in the matter of Binani Industries Ltd. (supra) has observed and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that members of the creditors committee have to be creditors both with the capability to assess viability, as well as to be willing to modify terms of existing liabilities in negotiations. Typically 'Operational Creditors' are neither able to decide on matters regarding the insolvency of the entity nor willing to take the risk of postponing payments for better future prospects for the entity. The Committee concluded that for the process to be rapid and efficient, the 'I B Code' will provide that the creditors committee should be restricted to only the 'Financial Creditors' ii In Para 3.4.2 dealing with 'Principles driving design ' the principle IV reads as under IV The 'I B Code' will ensure a collective process. 9. The law must ensure that an key stakeholders will participate to collectively assess viability. The law must ensure that all creditors who have the capability and the willingness to restructure their liabilities must be part of the negotiation process. The liabilities of all creditors who are not part of the negotiation process must also be met in any negotiated solution. 6. The 'I B Code' aims at promoting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan for insolvency resolution of the 'Corporate Debtor' as a going concern. it does not spell out the shape, colour and texture of 'Resolution Plan', which is left, to imagination of stakeholders. Read with long title of the 'I B Code', functionally, the 'Resolution Plan' must resolve insolvency (rescue a falling, but viable business), should maximize the value of assets of the 'Corporate Debtor', and should promote entrepreneurship, availiablity of credit, and balance the interests of all the stakeholders. It is not a sale . No one is selling or buying the 'Corporate Debtor' through a 'Resolution Plan'. It is resolution of the 'Corporate Debtor' as a going concern. One does not need a 'Resolution Plan' for setting the 'Corporate Debtor'. If it were a sole, one can put it on a trading platform Whosoever pays the highest price would get it. There is no need for voting or application of mind for approving a Resolution Plan' as it will be sold at the highest price. One would not need Corporate Insolvency Resolution Process'. Interim Resolution Professional'. 'Resolution Professional' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all creditors who are not part of CoC must also be met in the resolution. Further, the aim of the Code is for maximisation of value of assets of such persons and to balance interests of all stakeholders. One cannot balance interest of all stakeholders, if resolution maximises the value for a stakeholder or a set of stakeholders such as Financial Creditors. One or a set of stakeholders cannot benefit unduly at the cost of another. It is also observed that, if one type of credit is given preferential treatment, the other type of credit will disappear from the market and this will be against the objective of promoting availability of credit. The I B Code aims to balance the interests of all stakeholders and does not maximise value for Financial Creditor. Therefore, Their Lordships have held that the dues of Operational Creditors must get at least similar treatment as compared to the dues of Financial Creditors. 13. By perusal of the material available on record in the present case, we are constrained to observe that although there are certain provisions made in the resolution plan for making payment to the financial creditors, workmen and employees, yet the operational creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce [1984] 8 All. ER 935 the (GCHO Case, the House of Lords rationalized the grounds of judicial review and ruled that that the basis of judicial review could be highlighted under three principal heads, namely, illegality, procedural impropriety and irrationality illegality as a ground of judicial review means that the decision maker must understand correctly the law that regulates his decision making powers and must give effect to it. Grounds such as acting ultra vires, errors of law and/or fact onerous conditions improper purpose, relevant and irrelevant factors, acting in bad faith fettering discretion, unauthorized delegation, failure to act etc. fall under the heading illegality . Procedural impropriety may be due to the failure to comply with the mandatory procedures such as breach of natural justice, such as audi alteram partem, absence of bias, the duty to act fairly, legitmate expectations, failure to give reasons etc. 17. Ground or irrationally takes in Wedneuesbury unreasonableness propounded in Associated Provincial Picture Houses Limited v. Wednesebury Corporation (1947) 2 All ER 680, Lord Greene MR alluded to the grounds of attack which could he made against the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportionality continue to co-exist and the proportionality test is more and more applied, when there is violation of human rights, and fundamental freedom and the Wednesbury finds its presence more on the domestic law when there is violations of citizens ordinary rights. Proportionality principle has not so far replaced the Wednesbury principle and the time has not reached to say good bye to Wednesbury much less its burial. ******** 25. Justice S.B. Sinha as His Lordship was, speaking for the Bench in State of U.P. v. Sheo Shanker Lal Srivastava [2006] 3 SCC 276 after referring to the judgment of the Court of appeal in Huang v. Secretary of State for the Home Department [2005] 3 All. ER 435, R. v. Secretary of State of the Home Department, ex parte Duly [2001] 3 All ER 433 (HL) opined that Webnesbury principle may not now be held to be applicable in view of the development in constitutional law and held as follows:- 24. While saying so, we are not obvious of the fact that the doctrine of unreasonableness is giving way to the doctrine of proportionality. 25. It is interesting to note that the Wednesbury principles may not now be held to be applicable in view of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision is proportionate, it seldom interferes with the decision taken and if it finds that the decision is disproportionate i.e. if the court feels that it is not well balanced or harmonious and does not stand to reason it may tend to interfere. 14. By following of the above referred decision of the Honourable Supreme Court, we feel appropriate to observe by making suitable suggestions to the CoC that the method for apportionment of the amount receivable from the Resolution Applicant to be relooked into and reconsidered and, if a reasonable formula for equitable distribution or apportionment of the amount is adopted, then basic requirements of almost all of the creditors, which include secured financial creditors, unsecured financial creditors, operational creditors and other stakeholders, can also be taken care of. Hence, we propose and advise to the CoC that it should make apportionment of 85% of the amount of ₹ 42,000 crore received from the Resolution Applicant as upfront payment for pro rata basis distribution among all the financial creditors and, if such formula is worked out and decision is taken, substantial interests of Standard Chartered Bank can also adequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% (after amendment of 2018 w.e.f. 06.06.2018, 66%) of voting share of the financial creditors to put it differently, the action of liquidation process postulated in Chapter III of the I B Code, is avoidable, only if approved of the resolution plan is by a vote of not less than 75% as in October (2017) of voting share of the financial creditors. Conversely the legislative intent is to uphold the opinion or hypotesis of the minority disenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October, 2017; and now after the amendment w.e.f. 06.06.2018, 44%. The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed resolution plan, de jure, entails in its deemed rejection. 40. Notably, the threshold of voting share of the disenting financial creditors for rejecting the resolution plain is way below the simple majority mark, namely not less than 25% (and even after amendment w.e.f.06.06.2018, 44%). Thus, the scrutiny of the resolution plan is required to pass through the limits test of not less than requisite (75% or 66% as may be applicable) of voting share a st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present resolution plan to the extent their dues are not fully paid up either by the Corporate Debtor itself or by making adequate provisions in the proposed resolution plan. In these IAs., some of the applicants have made alternative plea seeking such direction from this Adjudicating Authority to be issued to the CoC and to the RP to consider a settlement proposal made by M/s. Essar Steel Asia Holdings Ltd. for redeeming their entire dues by offering payment of ₹ 54,000/- crore and. thus, they made an effort for staying of the proceedings of I.A. No.431 of 2018. 20. As per the material available on record, M/s. Essar steel Asia Holdings Limited, by claiming to be shareholders of the Corporate Debtor company, had filed an IA No. -130 of 2018 seeking similar prayer for a direction to be issued to the RP and to the CoC to consider its proposal for settlement by way of redemption of entire debts owed by the Corporate Debtor by making payment of ₹ 54,389/- crore. The said IA was disposed of by our order dated 29.01.2019, with such observation that such application, under Section 60(5) of the I B Code, was not maintainable before this Adjudicating Authority, keep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us for consideration under the provisions of the I B Code. (II) It is also a matter of record that the Honourable Supreme Court in the present matter, i.e., ArecelorMittal India (P.) Ltd. (supra), has been pleased to issue certain mandate in exercise of its extraordinary jurisdiction under Article 142 of the Constitution of India. For the sake of convenience, the relevant portion of the aforesaid judgment is reproduced hereinbelow:- 123. Since it is clear that both sets of resolution plans that were submitted to the Resolution Professional, even on 2.4.2018, are hit by Section 29A(c), and since the proviso to Section 29A(c) will not apply as the corporate debtors, related to AMIPL and Numetal have not paid off their respective NPAs, ordinarily, these appeals would have been disposed of by merely declaring both resolution applicants to be ineligible under section 29A(c) Shri Subramamium, on behalf of the Committee of Creditors, requested us to give one more opportunity to the parties before us to pay off their corporate debtors' respective debts in accordance with Section 29A, as the best resolution plan can then be selected by the requisite majority of the Committee of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maximisation of value of assets of such persons to promote entrepreneurship, availability of credit and balance the interests of all stakeholders including alteration in the order of priority of payment of Government dues, etc. Thus, approval of a Resolution Plan is a normal rule and deviation therefrom to reject such plan can be an exception only in case such Resolution Plan is not law compliant and not in conformity with the criteria laid down in Section 30(2) of the I B Code. Therefore, it is a prime duty of the Resolution Professional to examine and ascertain that each Resolution Plan is in conformity with the relevant provisions of Section 30(2) of the I B Code. Thereafter only such Resolution Plan can be put up before the CoC for its consideration and approval with requisite majority. Therefore, the present IA No. 431 of 2018 deserves to be allowed. Hence, it is allowed subject to certain observations and suggestions for consideration of the COC in the light of the subsequent judgment of the Honourable Supreme Court in the matter of Chitra Sharma (supra), Vijay Kumar Jain (supra), Swiss Ribbons (P.) Ltd. (supra) and K. Sashidar (supra) read with the decision of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve it to the wisdom and domain of the statutory Authority concerned. In fact, a careful perusal of the resolution plan submitted by H-l Resolution Applicant also speaks about the severability clause stating that if such concession/exemption, which are not approved or confirmed by this Adjudicating Authority, are not be treated to make redundant the plan and the plan can be enforced and implemented. Moreover, the provisions of Section 31(4) provide that a resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under Sub-section (1) or within such period as provided for in such law, whichever is later. 26. In view of the above statutory provisions, we find that the statute has already taken care of all the interests of the resolution applicant by providing on year's time for seeking necessary approval required under any law for the time being in force for implementation the resolution plan. Therefore, our this order for approving the resolution plan cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank and other Operational Creditors, which include Public Sector undertakings and Government Authorities. Hence, in our view, if a reasonable formula for apportionment is worked out so that 85% of the amount offered by the resolution applicant is distributed among the financial creditors and the remaining 15% of the amount is distributed amongst the rest of the operational creditors, then the entire claim of the operational creditors, which comes to around ₹ 4700 crore can be substantially paid off or at least the operational creditors can get 50% of their admitted and undisputed claim in the light of the judgment of the Hon'ble Supreme Court in Chitra Sharma (supra). Such object can be achieved, if the financial creditor and the members of the CoC are willing to sacrifice the interest component on their principal loan, because it is established position in the record that the principal loan liability of the corporate debtor company comes to around ₹ 35,000 crore in the year 2017 when these IB Petitions were admitted, which includes the interest component also and by giving such hair-cut to the interest component to the extent possible by providing provision for 15% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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