TMI Blog2022 (8) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... eview its decision. It is noticed that the present application was filed by the Asset Reconstruction Company (India) Ltd., being the authorised representative of the CoC by passing the resolution with 96.95% for filing the present application. It is also noticed that the parent company of Respondent No. 1, i.e., Gulf Petrochem FCZ has been declared bankrupt and there is a freezing injunction on the promoters. The credit rating of the Respondent No. 1 is in default as on June 04, 2021. The successful resolution applicant has defaulted in other CIRP of M/s. Allied Strips Ltd. and M/s. Tirupati Infraprojects Pvt. Ltd., wherein also he was the successful resolution applicant. In this background, the present application has been moved by the CoC/lenders, with 96.95% voting in its favour, for remanding back the resolution plan for reconsideration of the CoC. The resolution plan can be sent back for reconsideration to the CoC, considering the changed circumstances and the commercial wisdom of the CoC, with 96.95% voting, to seek permission of Adjudicating Authority for reconsideration of the resolution plan need to be considered for better prospects of Resolution. The Tribunal is we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plan of the Respondent No. 1 and while considering the feasibility and viability prior to the approval of the aforementioned resolution plan, the following issues were discussed and highlighted: a. After the plan was approved applicant sought from CoC, additional time for implementation of the plan. CoC called for a detailed note on the reasons for seeking additional time in making the relevant payments in terms of the Resolution Plan. The Respondent No. 1 in its resolution plan had provided a detailed note stating that neither the Respondent No. 1 nor any of its related parties have failed to implement or contributed to the failure of implementation of any other resolution plan approved by any adjudicating authority at any time in the past. The Respondent No. 2 further mentioned that such extension in making the final payments was sought due to reasons beyond the control of Respondent No. 1 and had also suggested that it had agreed to make the balance payments in the matter of Allied Strips Limited by February 29, 2020. b. Additionally, in its resolution plan, the Respondent No. 1 had provided a valid credit rating and further undertaken to ensure that its parent entity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the Insolvency and Bankruptcy Board of India ( IBBI ) for taking appropriate action in light of the default in the obligations by the Respondent No. 1 as the successful resolution applicant of Allied Strips Limited. The Hon'ble Principal Bench allowed the forfeiture of a sum of INR 10.55 crores in the referred matter and directed IBBI for taking appropriate actions. A copy of the said order dated November 01, 2021 is annexed. Additionally, the Hon'ble Principal Bench vide its order dated November 01, 2021 in the matter of Mr. Anil Kohli, Monitoring Professional (Resolution Professional as appointed for Tirupati Infraprojects Private Limited) [CA No. 1090/2020 in CP (IB) No. 104/2017] in light of the default by the Respondent No. 1 in making the relevant payments under the resolution plan cancelled the approval for the resolution and directed the forfeiture of the amount of INR 20 crores already deposited by this Respondent No. 1 and further referred the matter to the IBBI for taking appropriate action. The copies of the said orders dated November 01, 2021 are annexed. 8. It has been highlighted in the aforementioned order dated November 01, 2021 in the matter of Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an to be remanded back to the CoC for reconsideration and compliances. On account of the aforementioned default, which was not apprised or disclosed to the CoC, Respondent No. 1 has misrepresented the facts and provided false undertakings in its resolution plan. 12. Thus, it is absolutely clear from the above that the CoC has the power and authority to approve the resolution plans submitted by the prospective resolution applicants. The Hon'ble National Company Law Appellate Tribunal ( NCLAT ) vide its order dated January 05, 2022 in the Bank of Maharashtra vs Videocon Industries Ltd. Ors. [CA (AT) (Ins) No. 503 of 2021] has upheld the rights of the CoC to reconsider and review its own decisions on the resolution plan. The Hon'ble NCLAT held that In view of the above stated analysis of facts and law, we have come to the conclusion that Section 30 (2) (b) of the Code has not been complied with and hence the approval of the Resolution Plan is not in accordance with section 31 of the Code. Accordingly, the approval of the Resolution Plan by the CoC as well as the Adjudicating Authority is set aside and the matter is remitted back to the CoC for completion of the process r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that interests of all stakeholders including the operational creditors has been taken care of If the adjudicating authority finds, on a given set of facts, that the aforementioned parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters. 17. Further, it was submitted that the resolution plans of Respondent No. 1 in the matters of Allied Strips Limited and Tirupati Infraprojects Private Limited have been remanded back to the committee of creditors. 18. It was further submitted that in light of the aforementioned judicial precedents, it is clear that the CoC is not functus-officio on the approval of the resolution plan and accordingly it is well established that the Hon'ble Tribunal is competent to send back the resolution plan to the CoC/Joint lenders for reconsideration. 19. In compliance with the order dated 15.03.2022, the applicant filed short notes along with the judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include a judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters. ii. This position has also been referred to by the Hon'ble Supreme Court in the case of Jaypee Kensingto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, has clearly stipulated that along with the right to exercise commercial wisdom, the CoC has the right to review such a decision. In the instant case, even though CoC had approved the plan already, pursuant to an affidavit filed by the CoC, the Tribunal considered the request and allowed the plan to be sent back to the CoC for consideration. This was on the basis of the fact that CoC always has a right to review its decision. The relevant portion of paragraph 30 is appended below: While the AFCs constituting 94.98% of the CoCs of consolidated Videocon group of companies (Consolidated CDs), out of 95.09% who voted in favour of the Resolution Plan, has mentioned several reasons to remand the matter back to the CoC for its reconsideration and even gone ahead to state that the CoC and the RP to conduct a fresh process of inviting fresh expression of interest and resolution plan from all interested Resolution Applicants etc., to safeguard the interest of all stakeholders and the public money. It has accepted the fact that the significant observations regarding the low value of the resolution plan and the haircut of such a high magnitude being suffered by various Company Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for M/s. Panch Tatva Promoter Pvt. Ltd., for unknown reasons: In an appeal preferred by M/s. Panch Tatva Promoter Pvt. Ltd. against the order dated July 3, 2020 passed by this AA before the NCLAT wherein, the CoC tried to support the Appellant therein by taking a similar stand, which is presently sought before this AA. It is to be noted the appeal and the stand taken by the CoC for reconsidering the resolution Plan of the Respondent No. 1, was dismissed vide order dated August 18, 2021. c) Order dated August 18, 2021, passed by the Hon'ble NCLAT has attained finality as against CoC: The order dated August 18, 2021, was challenged by M/s. Panch Tatva Promoter Pvt. Ltd. before the Hon'ble Supreme Court which was also dismissed vide order dated September 17, 2021. However, the said order dated August 18, 2021 was never challenged by the CoC and thus has now attained finality, as against the CoC. d) Judgement in Bank of Maharashtra vs Videocon Industries Ltd. Ors. [CA (AT) (Ins) No. 505 of 2021] is not applicable. Major distinction points: Information Memorandum did not include substantial no. of assets, which resulted into lower li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a freezing injunction on the promoters. The credit rating of the Respondent No. 1 is in default as on June 04, 2021. The successful resolution applicant has defaulted in other CIRP of M/s. Allied Strips Ltd. and M/s. Tirupati Infraprojects Pvt. Ltd., wherein also he was the successful resolution applicant. In this background, the present application has been moved by the CoC/lenders, with 96.95% voting in its favour, for remanding back the resolution plan for reconsideration of the CoC. In our view, the resolution plan can be sent back for reconsideration to the CoC, considering the changed circumstances and the commercial wisdom of the CoC, with 96.95% voting, to seek permission of Adjudicating Authority for reconsideration of the resolution plan need to be considered for better prospects of Resolution. In our view, the Tribunal is well within its rights to send back the resolution plan for reconsideration to the CoC, on request made by the CoC in its commercial wisdom. In our view that the resolution plan can be sent back to CoC, we are supported by the order of the Hon'ble NCLAT in the case of Bank of Maharashtra vs Videocon Industries Ltd. Ors. [CA (AT) (Ins) No. 503 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters. From reference to the above, it is crystal clear that NCLT does have the right to send back resolution plans for reconsideration if requested by the CoC. 24. As far as the second issue is concerned it is settled law that the CoC of any corporate debtor has the sole right to decide on the terms of the Resolution Plan and that exercise of commercial wisdom by the CoC is also non-justiciable. We are supported by the judgement of the Hon'ble Supreme Court has laid out this principle is in the case of K. Sashidhar Vs. Indian Overseas Bank and Ors (2019) 12 SCC 150 (decided on 05.02.2019) ( Sashidhar Judgement ). For sake of ready reference, the relevant para of the said order is reproduced: Besides, the commercial wisdom ..... 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