TMI Blog2021 (1) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Applicant and reached a conclusion that the Respondent No. 1 s offer is around 12% more than the offer of successful Resolution Applicant - Thus, Ld. Adjudicating Authority has exceeded his jurisdiction and indulge in quantitative analysis which is not permissible under Section 31 of the I B Code. Whether the Adjudicating Authority can direct the COC to consider the Resolution Plan of a person who was not part of CIRP? - HELD THAT:- The Respondent No. 1 is not part of CIRP. The Respondent No. 1 has filed Application directly before the Adjudicating Authority. The Adjudicating Authority in the guise of maximization of the value of assets of the Corporate Debtor directed that the Respondent No. 1 s Application and Resolution Plan be put up before the COC for consideration. There is no provision in the code or regulation which provides that while exercising the power under Section 31 of the I B Code the Adjudicating Authority can direct the COC to consider the Resolution Plan of such person who has not been part of CIRP. Otherwise also if such procedure is adopted then the CIRP will be frustrated. Once the Resolution Plan has been opened and fundamentals and financials of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2020 passed by Ld. Adjudicating Authority (National Company Law Tribunal) Special Bench, New Delhi. Whereby allowed the Interlocutory Application No. 1513 (PB) of 2020 filed by M/s Hindustan Coils Ltd. (respondent No. 1) and directed that the application along with the proposed plan of respondent No. 1 be placed before committee of creditors (in short, COC) for consideration. 2. Brief facts of this case are that pursuant to the expression of interest issued by RP on 24.08.2018, the Appellant submitted a Resolution Plan in time. After several rounds of deliberations by the COC revised Resolution Plan was submitted by the Appellant on 19.12.2018. The same was approved by the COC by requisite majority in the 13th meeting on 28.12.2018. Thereafter, the RP filed an Application under Section 30(6) of the Insolvency Bankruptcy Code (In short I B Code) for approval of Resolution Plan in the month of January, 2019. Thereafter, various objections were filed before the Adjudicating Authority which were heard and disposed of. Sometime in the month of February 2020, the Respondent No. 1 filed an application I.A. No. 1513 (PB) of 2020 seeking direction for consideration of its Resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aramshi Ors. C.A. (AT) (Ins) No. 344 -345 of 2020. (See para 23) 5. It is also submitted that the Appellant s plan was approved by the COC and the Application for approval of plan under Section 31 of the I B Code, was pending before the Adjudicating Authority. Meanwhile, the Respondent No. 1 has filed the Application which is beyond the period of 330 days. Therefore, the Application was not maintainable. 6. Learned Counsel for the Appellant further submitted that once the plan is approved by the COC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the I B Code is to ascertain that a Resolution Plan meets the requirements of Sub Section (2) of Section 30 thereof. The Adjudicating Authority has a very limited power to judicial scrutiny and statutory provision does not permit the Adjudicating Authority to interfere with the commercial wisdom of the COC. Even for maximization of value of the assets of the Corporate Debtor, the Adjudicating Authority is not entitled to overturn the business decisions of the COC. For this proposition, placed reliance on the decision of this Appellate Tribunal in the case of Sharvan Kr. Agarwal Consortium Vs. Ritu Raj Ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Swiss Ribbon Pvt. Ltd. Vs. Union of India 2019 (4) SCC 17 (paragraph 26 and 27). The Appeal is pre-mature as the COC has not yet deliberated and rejected the Appellant s plan. There will be no prejudice to the Appellant since the Resolution Plan of the Appellant has not yet attained finality. Thus, the Appeal is liable to be dismissed. 11. After hearing Learned Counsels for the parties we have perused the record following issues are crop up for our consideration. i. What are the powers of the Adjudicating Authority under Section 31 of the I B Code? ii. Whether the Adjudicating Authority can direct the COC to consider the Resolution Plan of a person who was not part of CIRP? iii. Whether the conduct of the Appellant during the pendency of the CIRP can be considered in this Appeal? Issue No. 1 12. The Hon ble Supreme Court in the matter of Maharashtra Seamless Limited vs Padmanabhan Venkatesh Ors. Civil Appeal No. 4242 of 2019 held that once the Resolution Plan is approved by the COC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the I B Code is just to test the Resolution Plan with reference to provisions of Section 30 (2). Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of interest issued by the RP. Thus, the Respondent No. 1 is not part of CIRP. The Respondent No. 1 has filed Application directly before the Adjudicating Authority. The Adjudicating Authority in the guise of maximization of the value of assets of the Corporate Debtor directed that the Respondent No. 1 s Application and Resolution Plan be put up before the COC for consideration. There is no provision in the code or regulation which provides that while exercising the power under Section 31 of the I B Code the Adjudicating Authority can direct the COC to consider the Resolution Plan of such person who has not been part of CIRP. Otherwise also if such procedure is adopted then the CIRP will be frustrated. Once the Resolution Plan has been opened and fundamentals and financials of the Plan and offer made therein were disclosed to all the participants including RP. Then anyone can enhance its offer before the Adjudicating Authority in the guise of maximization of realisation. Therefore, no further fresh bid or offer could have been accepted or considered as held by this Appellate Tribunal in the case of Kotak Investment Advisors Ltd. (Supra) (See Para 23). 16. This Appellate Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity to direct the COC to Consider its Resolution Plan. KEL is a related party to the Appellant. The Adjudicating Authority vide order dated 22.10.2019 directed the RP to place Resolution Plan of the Applicant KEL before the COC. KEL and the Appellant have a common Director and part of same consortium. The Learned Counsel for the Appellant submitted that the objection raised by the Respondent No. 1 has no force on following grounds: i. The I B Code defines under Section 5(24) (d) related party with reference to a Corporate Debtor and not with reference to Resolution Applicant. ii. KEL and the Appellant were a part of consortium, this fact was disclosed in the Application filed by KEL. 19. We have considered the aforesaid objection raised by Learned Counsel for the Respondent No. 1 we are of the view that the order passed by the Adjudicating Authority on 22.10.2019 has no relevance with this Appeal. Therefore, we find no force in the objection raised by Learned Counsel for the Respondent No. 1. 20. With the aforesaid, we are of the view that when the Application for approval of Resolution Plan is pending before the Adjudicating Authority at that time the Adjudicating Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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