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TMI Blog2022 (11) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... nch, Mumbai) in C.P. (IB) No. 2956/2018, whereby the Adjudicating Authority has accorded approval to the Resolution Plan. 2. MA 3432/2019 was preferred by 'M/s. Alfa Technology & Services', in his representative capacity seeking intervention of the Applicants in MA 3271/2019, which was dismissed by the Adjudicating Authority on the ground that the Applicant has no locus standi to represent the other Petitioners in the absence of a proper Power of Attorney. MA 3271/2019 was preferred by the Resolution Professional seeking approval of the Resolution Plan under Section 30 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'The Code'). Rejecting the Intervention Application, MA3432/2019, the Adjudicating Authority has observed as follows: 3. It is submitted by the Learned Counsel for the Appellants that they are the 'Operational Creditors' of the 'Corporate Debtor' who had filed MA 3432/2019 seeking intervention in the Application MA 3271/2019 preferred by the Resolution Professional seeking approval of the Resolution Plan. It is contended by the Learned Counsel that the total aggregate amount of the 'Operational Debt' from 'Operational Creditors' other than Emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the case of the second Respondent/Successful Resolution Applicant ('SRA') that the Adjudicating Authority approved the Resolution Plan vide Order dated 11.11.2019 and it is today successfully implemented. It is submitted that the 'Operational Creditors' were entitled to 'NIL' payment as per Section 30(2)(b) of the Code. The only grievance of the Appellant that 100% of the payment has been made to the Farmers cannot be considered as this was done to ensure that the 'Corporate Debtor' which is a Sugar Plant remains 'a Going Concern'. In fact, the Resolution Applicant amended the nature of payment to the Farmers from upfront and cash payment of Rs.10 Crores/- and Redeemable Preference Shares of Rs.15 Crores/- to complete cash payment and even furnished Bank Guarantees to secure these payments because these Farmers were the backbone of the industry. It is also contended that the Commercial Wisdom of Committee of Creditors ('CoC') determining what amounts to be paid to different classes and subclasses of Creditors in accordance with the provisions of the Code and the Regulation therein cannot be questioned as laid down by the Hon'ble Apex Court in 'Committee of Creditors of Essar Ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but have no Right to Vote in such Meetings. Section 24 has to be read with Section 30. It is clear that following persons can take part in the Meeting of CoC at the time of approval of a Resolution Plan: (i) Members of CoC; (ii) Members of suspended Board of Directors or Partners of the Corporate Persons; (iii) The representatives of the 'Operational Creditors' if the amount of their aggregate due is not less than 10% of their debt; and (iv) Resolution Applicant when Resolution Plan of such Applicant(s) are placed for consideration [Section 30(5)]. The Prayers in MA 3432/2019 filed on 22.10.2019 is listed as hereunder : In the instant case, the Application itself was filed without proper Power of Attorney and further it is significant to mention that the Applicants have exercised this right of filing an Intervention Application in the Application preferred by the RP seeking approval of the Resolution Plan after a lapse of several months from the date of initiation of CIRP which is 20.02.2019. 9. The principle in 'Amit Goel' (Supra), is with respect to discrimination in the Resolution Plan between two classes of Creditors, who are similarly placed. In the instant case, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rkers and the Employees have been paid Rs.2 Crores/-. Payment of Rs.4.40Crores/- towards Provident Fund dues was also taken care of. 14. It is an admitted fact that the Resolution Plan was approved way back on 11.11.2019 and the following steps have been taken by the SRA subsequent to the approval of the Resolution Plan : 15. There is no evidence on record to substantiate that indeed the Applicants seeking to intervene had formed a group and given the representation to the RP at the appropriate time to consider them as one class. Their Claims were filed in an individual capacity and there is no Application on record seeking to treat all of them in one group, at that point of time and therefore their contention that they were not included in the Meeting of the CoC, is untenable. This Tribunal is of the considered opinion that there is no embargo for the classification of the 'Operational Creditors' into separate/different classes for deciding the way in which the money is to be distributed to them by the CoCs. We are of the view that the 'Operational Creditors' were paid as per Section 30(2)(b) of the Code coupled with Regulation 38 of the Corporate Insolvency Process Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan Under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan Under Section 30(4) of the I&B Code." 148. It has been held, that in an enquiry Under Section 31, the limited enquiry that the Adjudicating Authority is permitted is, as to whether the resolution plan provides: (i) the payment of insolvenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 151. The position is clarified by the following observations in paragraph 59 of the judgment in the case of K. Sashidhar (supra), which reads thus: "59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors....." 152. This Court in Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra) after reproducing certain paragraphs in K. Sashidhar (supra) observed thus: "Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar." 153. It can thus be seen, that this Court has clarified, that the limited ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant to enhance their fund inflow upfront." 155. This Court observed, that the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. This Court clearly held, that the appellate authority ought not to have interfered with the order of the adjudicating authority by directing the successful resolution applicant to enhance their fund inflow upfront." 17. We are conscious of the fact that the Plan was approved by 100% Voting Share way back on 11.11.2019 almost three years ago and has also been implemented. This Tribunal is of the considered opinion that the 'Operational Creditors' were paid as per Section 30(2)(b) of the Code and read together with Regulation 38 of the CIRP Regulations, the 'Operational Creditors' are entitled to receive only such money that are payable to them as per Section 53 of the Code. It is the final discretion of the 'Collective Commercial Wisdom' in relation to (1) The amount to be paid (2) The quantum of money to be paid, to a certain category or the incidental category of Creditors, balancing the interests of the 'Stakeholders' and the 'Operational Creditors' ..... 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