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TMI Blog2022 (2) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... the Resolution Plan. The Adjudicating Authority vide Order dated 05.10.2020 has allowed CA-417/2020 preferred by the Resolution Professional (RP) under Sections 31(1) and 60(5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'The Code') seeking approval of the Resolution Plan approved by the Committee of Creditors (CoC). 2. The present Appeal has been filed by the Operational Creditor of the Corporate Debtor Company/M/s. Shree Bhomica International Ltd. 3. Submissions of the Learned Counsel for the Appellant: That the Resolution Professional never informed the Appellant regarding the Auction Proceedings whereby the Appellant lost an opportunity of participating in the Auction Proceedings. The entire claim of the Appellant stood admitted by the Resolution Professional, clearly indicating that the Resolution Applicant was aware of the total outstanding claim of Rs. 6,29,18,121/-. The Reserve Price for the land, building and machinery was valued at Rs. 918 lacs. The Appellant, being the sole Operational Creditor filed its claim under the prescribed Form amounting to Rs. 6,29,18,121/-, which was admitted by the Resolution Professional, but only an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d one quarter water charges in respect of plot statutorily payable by the Resolution Applicant, from which he cannot wriggle out. Stressed Assets Stabilisation Fund (SASF) in the year 2018 has fixed the Reserve Price for the land and building in the said plot at Rs. 902 lacs whereas the average fair value of the land and building calculated by the valuers appointed during the Corporate Insolvency Resolution Process (CIRP) comes to around Rs. 6.10 crores. In November, 2019, the valuation conducted by Mr. Deepak Bansal towards the fair value of plot and building was Rs. 6,21,60,000/- and liquidation value of the same was 4,31,55,000/-. The valuer fairly opined that the transaction with respect to plot can be carried out after complying with the norms of NSEZ. It is vehemently contended by the Learned Counsel that the valuer has not physically visited the property but only relied on documents and has recorded the same in the valuation report. On 03.12.2019, fair and liquidation valuation of the Corporate Debtor Company was conducted by one Mr. S.K. Singhal who opined that the fair value of the plot and building would be Rs. 5,99,05,409/- and liquidation value of the same would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdiction to analyse or evaluate commercial wisdom of the CoC as the Financial Creditors are fully informed about the viability of the Corporate Debtor and feasibility of the proposed Resolution Plan. It is a well settled law that there cannot be any judicial review of the commercial decision of the CoC under the provisions of the Code. Valuation has been conducted in compliance of Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. In support of his contention, Learned Counsel placed reliance on the Judgment of Hon'ble Supreme Court in 'Maharashtra Seamless Limited Vs. Padmanabhan Venkatesh & Ors.', [(2020) 11 SCC 467], 'Duncan Industries Pvt Ltd. Vs. State of U.P. & Ors.' [(2000) 1 SCC 633] and 'Ghanashyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Limited & Ors.' [(2021) SCC OnLine SC 313]. The approved Resolution Plan is binding on the Appellant in terms of the Section 31 of the Code. Learned Counsel submitted that Hon'ble Supreme Court in 'Ghanashyam Mishra & Sons Pvt. Ltd' (supra) has clarified that creditors including statutory authorities who has suffered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the approval of the Resolution Plan under Section 30 of the Code is in contravention of Section 30(2)(e) as the claim admitted is Rs. 6,29,18,121/- and the amount paid is only Rs. 50 lacs. It is the case of the Appellant that the Corporate Debtor has defaulted in paying the lease amount since 30.09.2019; that there are fixed charges and penalties for change in the pattern of the business model; that the Reserve Price for the land, building and machinery is Rs. 918 Lacs and that at the time of valuation, the valuer did not physically inspect the site but instead has based his valuation on the documents placed before him and in fact the valuer has admitted that the building plans were not given to him at the time of valuation. 7. It is seen from the record that the Resolution Plan was approved on 05.10.2020 and the Adjudicating Authority has dismissed the Application preferred by the Appellant herein vide Order dated 27.11.2020 observing as follows: "IA-4827/2020 filed in IB-324/ND/2019: Counsels for both sides are present. The prayer made in the Application is to dismiss the approved Resolution Plan, which was approved on 05th October, 2020. In other words, the Resolution Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan is Rs. 4.50 crores which is more than the liquidation value. We address to the contention raised by the Learned Counsel for the Appellant that the valuation itself is erroneous and therefore allotting Rs. 50 lacs when the claim is Rs. 6,29,18,121/- is unjustified. The Hon'ble Supreme Court in 'Duncan Industries Pvt Ltd. Vs. State of U.P. & Ors.' (Supra) has held that 'the question of valuation is basically question of facts and this Court is normally reluctant to interfere with the finding on such a question of fact if it is based on relevant material on record'. Be that as it may, the record shows that the average of two closest estimates given by the valuers was taken into consideration as a fair value and the liquidation value. 13. The present Appeal has to be analysed in the touchstone of the ratio laid down by the Hon'ble Supreme Court in 'Maharashtra Seamless Limited Vs. Padmanabhan Venkatesh & Ors.', [(2020) 11 SCC 467], 'K. Shashidhar Vs. Indian Overseas Bank & Ors.' (2019 12 SCC 150) and 'Ghanashyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Limited & Ors.' [(2021) SCC OnLine SC 313]. 14. We find it relevant to reproduce Section 30 and 31 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. [Explanation. - For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law.] (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). [(4) The committee of creditors may approve a resolution plan by a vote of not less than 5[sixty-six] per cent. of voting share of the financial creditors, after considering its feasibility and viability, 6[the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising under any law for the time being in force, such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan. [Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.] (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan. (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 resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the Appellate Authority ought to have interfered with the order 35 of the Adjudicating Authority in directing the successful Resolution Applicant to enhance their fund inflow upfront." (Emphasis Supplied) 17. The Hon'ble Supreme Court in 'Ghanashyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Limited & Ors.' [(2021) SCC OnLine SC 313] has observed as follows: 71. Perusal of the SOR would reveal, that one of the prime objects of I&B Code was to provide for implementation of insolvency resolution process in a time bound manner for maximisation of value of assets in order to balance the interests of all stakeholders. However, it was noticed, that in some cases there was extensive litigation causing undue delays resultantly hampering the value maximisation. It was also found necessary to ensure, that all creditors are treated fairly. It was therefore in view of the various difficulties faced and in order to fill the critical gaps in the corporate insolvency framework, it was necessary to amend certain provisions of the I&B Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .... 77. It is clear, that the mischief, which was noticed prior to amendment of Section 31 of I&B Code was, that though the legislative intent was to extinguish all such debts owed to the Central Government, any State Government or any local authority, including the tax authorities once an approval was granted to the resolution plan by NCLT; on account of there being some ambiguity, 12 (2009) 12 SCC 209 the State/Central Government authorities continued with the proceedings in respect of the debts owed to them. In order to remedy the said mischief, the legislature thought it appropriate to clarify the position, that once such a resolution plan was approved by the Adjudicating Authority, all such claims/dues owed to the State/Central Government or any local authority including tax authorities, which were not part of the resolution plan shall stand extinguished. ........ CONCLUSION 95. In the result, we answer the questions framed by us as under: (i) That once a resolution plan is duly approved by the Adjudicating Authority under sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to override other laws.
238. The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
It is well settled that Insolvency and Bankruptcy Code overrides other law and under Section 31 of the Code, the Resolution Plan approved by the CoC and meeting the requirements under Section 30(2) has to be approved by the Adjudicating Authority. Commercial Wisdom of the CoC with respect to viability and financial decision taken while evaluating the Resolution Plan has to prevail, unless the Plan approved by the CoC is in conflict with any provision of the law and the distribution mechanisation suppressed the interest of the stakeholders besides taking care of the maximisation of the value of the assets of the corporate debtor, judicial intervention would not be warranted. Additionally, in the instant case, the Resolution Plan has already been implemented a year ago and we do not wish to set the clock back.
For all the aforenoted reasons, this Appeal fails and is accordingly dismissed. No order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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