TMI Blog2023 (6) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Adjudicating Authority. This Appellate Tribunal notes that the total amount as provided by M/s Serveall Land Developers Pvt. Ltd. (SRA) was Rs. 50.40 Crores in his original Resolution Plan dated 22.08.2022 and after the Swiss Challenge Method dated 09.09.2022, the Resolution Plan amount was substantially enhanced to Rs. 61.70 Crores (approx.) which was recommended by the CoC and finally approved by the Adjudicating Authority vide impugned order dated 09.03.2023 - after Swiss Challenge Method, it was proposed to distribute Rs. 61,21,03,175/- to Sole Secured Financial Creditor and Rs. 48,96,826/- to two Unsecured Financial Creditors. Initially, there were two Unsecured Financial Creditors, namely, Damont Developers Pvt. Ltd. whose claim of Rs. 9,25,00,000/- was admitted and it was proposed to distribute Rs. 34,15,316/- to him and the other Unsecured Financial Creditors, namely, M/s Sikka Hotels Resorts Pvt. Ltd., whose claim of Rs. 4,01,25,000/- was admitted and Rs. 14,81,509/- was proposed to be distributed to him. The distribution between the Secured Financial Creditors and Unsecured Financial Creditors is in the same ratio as provided in the original Plan dated 22.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditor (in short CoC ) was dismissed and the Second impugned order dated 09.03.2023 passed in IA 5027 of 2022 (Plan Approval Application) was approved by the Adjudicating Authority . 2. Aggrieved by the same, the Appellant has preferred the present appeals. 3. Heard the Counsel for Parties, perused the records and including cited judgments. 4. Learned Counsel for the Appellant stated that the Plan was approved by the CoC in contravention to the provisions of the law, as the Swiss Challenge Method was not conducted in accordance with stipulated guidelines of RBI to the extent that second highest bidder (H2) i.e., M/s Serveall Land Developers Pvt. Ltd. in Swiss Challenge Method was selected as Successful Resolution Applicant (in short SRA ). Learned Counsel for the Appellant alleged that the Respondent/ Resolution Professional in connivence with the sole secured Financial Creditor i.e. Bank of Baroda manipulated Swiss Challenge Method in selecting H2 Bidder as SRA, by which 90% marks on qualitative parameters , were allotted in rigged Evaluation Matrix and gave only 10% marks allocation to qualitative parameters. Learned Counsel for the Appellant alleged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Resolution Plan which was approved and recommended by the CoC to the Adjudicating Authority was later modified by the Resolution Professional without seeking the fresh approval of the CoC and obtained approval from the Adjudicating Authority directly in violation of the law. Learned Counsel for the Appellant stated that initially M/s Damont Developers Pvt. Ltd. was admitted as Unsecured Financial Creditor along with Sikka Hotels and Resorts Pvt. Ltd. who had voting percentage in CoC of 10.46% and 4.54% respectively along with sole secured Financial Creditor i.e. Bank of Baroda having 85% of voting share in the CoC. However, later M/s Damont Developers Pvt. Ltd. was removed from the CoC and the Appellant was included in the CoC with reduced voting percentage. Learned Counsel for the Appellant stated that in earlier composition of CoC, the combined voting percentage of two Unsecured Creditor was 15% and voting percentage of Sole Financial Creditor was 85% which was reduced in the revised composition of CoC i.e., combined voting percentage of 7.29% for unsecured Financial Creditors and 92.71% to sole Secured Financial Creditor . 9. Learned Counsel for the Appellant pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors (cash upfront + NAV of the deferred payments) and remaining 10% on qualitative scores. Learned Counsel for the Respondent stated that based on these pre-determined parameters in the Evaluation Matrix, M/s Serveall Land Developers Pvt. Ltd. was declared as highest bidder (H-1) which was duly approved by the CoC in the 47th CoC Meeting held on 03.10.2022 with 85% voting and other remaining 15% voting the then Unsecured Financial Creditors members preferred to remain absent on all voting agenda. 12. Learned Counsel for the Respondent stated that on 11.10.2022 Plan Approval Application i.e., I.A. No. 5027/2022 was filed before the Adjudicating Authority and, in the meantime, the Appellant also filed I.A. No. 1439/2020 for seeking admission of the Appellant s claim which was finally decided vide order dated 30.11.2022 by the Adjudicating Authority directing the Respondent to admit the claims of the Appellant as an Unsecured Financial Creditor. Learned Counsel for the Respondent further stated that in the same order, the Adjudicating Authority also disposed another I.A. No. 5643/ 2020 filed by Damont Developers Pvt. Ltd. and as a consequence Damont Developers Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation 12(3) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 the validity of decision taken by the CoC prior to such inclusion cannot be affected. 18. Learned Counsel for the Respondent, summarising his arguments, urged to dismiss these Appeals . 19. Learned Counsel for the Successful Resolution Applicant, supported by and large, the averments of the Learned Counsel for the Respondent. 20. Learned Counsel for the Successful Resolution Applicant stated that after the Swiss challenge process, all resolution applicants were also permitted to tender final offers and the SRA's Plan provided an amount of Rs. 61,21,03,175/- for the sole secured creditor and an amount of Rs. 48,96,825/- for the two unsecured creditors (namely Damont Developers P. Ltd Sikka Hotels Resorts P. Ltd). Learned Counsel for the Successful Resolution Applicant stated that in terms of Section 30(4) of the Code, the distribution of plan proceeds is for the CoC to decide and accordingly, the distribution of the proceeds of the Final Plan was decided by the CoC in the 46 COC Meeting conducted on 26.09.2022. Concluding his argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business decision. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable. 23. We have perused the relevant records including the relevant minutes of the CoC Meetings which considered the Resolution Plan and the impugned orders under challenge. Prima-facie detailed reasoning have been recorded in the minutes of the CoC regarding distribution of the amount amongst the Creditors and the same has been adjudicated suitably by the Adjudicating Authority in accordance with law. 24. The main point as emerged from the above discussion requiring the decision of this Appellate Tribunal is to determine, whether the approval of Resolution Plan and distribution of funds amongst the Creditors was legal and correct in accordance with law or otherwise. The Appellant has taken shelter of the judgment of MK Rajagopalan (Supra), where it has been held that the irregularity of not placing of the Revised Plan before the CoC and directing placing before the Adjudicating Authority cannot be ignored as mere te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were finally allocated Rs. 33,23,216/-. We also observe that the sole Financial Creditor continue to get the exact same amount i.e. Rs. 61,21,03,175/- in both the scenarios and total earlier proposed and subsequently distributed to Unsecured Financial Creditors also remained the same as Rs. 48,96,826/-. 28. As regard, the judgment cited by the Appellant i.e. MK Rajagopalan (Supra), this Appellate Tribunal has carefully gone through the judgment and find that this is not applicable in the present appeals, being based on different facts. The main issue before the Hon ble Supreme Court of India in MK Rajagopalan (Supra), was regarding non submission of the revised plan to the CoC for consideration and directly taking to the Adjudicating Authority without benefit of commercial wisdom of the CoC. In contrast, herein there is no change in the Resolution Plan or change in overall amount or change in amount of inter-se distribution between two classes of Creditors i.e. Secured Financial Creditors vis- -vis Unsecured Financial Creditors. We also observe that it is only due to judicial orders of the Adjudicating Authority which resulted into exclusion of M/s Damont Developers Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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