TMI Blog2024 (1) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... t categorically submitted that their plan is final and members may vote on that plan only. The RP infact allowed more time to the Financial Creditors other than the Home-buyers for voting by keeping it open for them for 72 hours instead of 24 hours. In this backdrop, it is not found that the RP committed any error in concluding that the Appellant had failed to substantiate that there was sufficient ground for claiming additional time to study the modified plan. Present is not a case where the Appellant has been able to successfully point out any breach of procedure or manifest error in the conduct of the CIRP proceedings which deserve rolling back of the e- voting results. It needs no emphasis that unwarranted delays in resolution lead to depletion in the value of the assets of the Corporate Debtor. This is neither in the interest of CIRP nor in the interest of the Corporate Debtor. In the present case, extension of CIRP was already granted by the Adjudicating Authority on 24.05.2022 on the expiry of 180 days. The maximization of the value of the Corporate Debtor is admittedly an object of the CIRP and the said maximization has to be achieved within the timeline provided in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix. The Resolution Professional (hereinafter referred to as RP ) published Form G and Expression of Interest ( EoI in short) were invited. 5 EoIs were received with eligibility documents. The CoC in the 4th meeting held on 17.03.2022 extended the last date of submission of resolution plan to 27.03.2022. On account of the extension of last date for submission of the resolution plan, the RP submitted an application seeking extension of CIRP period for 90 days which was allowed by the Adjudicating Authority on 24.05.2022. DK submitted resolution plan on 12.03.2022. The Appellant in the 6th CoC meeting held on 04.05.2022 sought more time for analysing the resolution plan and requested for deferment of voting thereon. This request was not acceded to by the CoC and the plan was decided to be put to voting as per the notice of the meeting. The resolution plan of DK was approved by the CoC with 71.75% vote share. The Appellant had filed IA 2304/2022 before the Adjudicating Authority seeking recall of the result of the e-voting on the resolution plan, inter-alia, on the ground that DK had modified the resolution plan which therefore required fresh considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 023 filed by the RP even though it was violative of Section 30(2) of the IBC. Advancing their cause further, it has been pointed out that Clause 6.5(ii) and (vii) of the resolution plan provided that all securities for any debt due to the secured creditors shall stand unconditionally released and transferred in favour of the Corporate Debtor, which would adversely affect the recovery proceedings from the guarantors and collateral securities of third parties thereby making the resolution plan arbitrary. It has also been submitted that approval of the resolution plan in the present form and its implementation would result into stripping of valuable security interests and release of personal and corporate guarantors which would be highly inequitable. It has also been contended that assignment of securities of the Appellant is contrary to the provisions of Section 128 of the Contract Act, 1872 thereby making the resolution plan non-compliant to the provisions of Section 30(2)(e) of the IBC. 5. We have duly considered the arguments advanced by the Learned Counsel for the Appellant and perused the records carefully. 6. It is the case of the Appellant that it received an intimation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his stage, we may go through the proceedings of the 6th CoC meeting to find out whether the request of the Appellant for additional information and extended time period to examine the resolution plan was duly deliberated upon by the CoC in the exercise of its commercial wisdom. The minutes of the proceedings of the 6th CoC meeting held on 04.05.2022 in respect of Item no. 2 captioned To discuss and approve the resolution plan presented before CoC by Resolution Professional is to the effect: - . In response of this, the Resolution applicant submitted that this project has been delayed for about 5 years and during this period there has been substantial increase in cost of various materials. Inspite of this the resolution applicant in the plan has proposed to complete the project without any cost escalation. When the applicant is not considering any cost escalation in construction material, we cannot agree to demand of homebuyers for increasing deductible amount to Rs.2,00,000/- and instead only Rs.80,000/- will be deducted from the BSP. The Resolution professional stated that he has already presented the Final resolution plan in the 5th CoC meeting, which was held on 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance in the plea of the Appellant in IA 2304 of 2022 to seek more time to consider the resolution plan. While looking at the order of the Adjudicating Authority dated 12.07.2023, we find that the Adjudicating Authority has dwelt upon these issues at great length. Besides noting the stringent time-lines of CIRP as laid down in IBC, the Adjudicating Authority also noted that the home-buyers being financial creditors in class who are in a majority in the CoC did not want any further delay in consideration of the plan, having already suffered immensely. In this backdrop, Adjudicating Authority accordingly came to the conclusion that the RP did not commit any irregularity in conducting the evoting for approval of the resolution plan by the CoC. 10. The relevant excerpts of the order of the Adjudicating Authority in IA 2304 of 2022 is as reproduced below : - 5. The Applicant in the said 6th CoC Meeting requested the Resolution Professional for 15 days more time to analyze the Resolution Plan. However, the Resolution Professional as well as the Authorized Representative of the Home Buyers objected to grant of time to the applicant and the Resolution Professional vide Email dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6h CoC meeting and held the e-voting in which the Resolution Plan has been approved by the majority CoC Members. 10. Therefore, the Resolution Professional has not committed any irregularity or illegality in conducting the CoC Meeting for approval of the Resolution Plan. 11. We find force in the arguments advanced by the Ld. Counsel appearing for the Resolution Professional and we are of the considered view that the RP has not committed any illegality in conducting the e-voting keeping in view the fact that the proceedings under the IBC, 2016 are time bound and the Home-Buyers have suffered immensely. (Emphasis supplied) 11. From the material on record, we are inclined to agree with the Adjudicating Authority that there was no modification in the resolution plan of DK except on the BSP issue and exclusion of wooden flooring in the Master bedroom and this modification was communicated to all CoC members well before the 6th CoC meeting. In any case, both these modifications, at best, would have had a direct bearing on the interests of the home-buyers and not of the Appellant. Further we notice that resolution applicant categorically submitted that their plan is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order shows that while approving the plan, Adjudicating Authority noticed that DK had submitted an affidavit of eligibility under Section 29A of the IBC. It is also noticed that the DK has proposed to complete both the housing projects at Mohali and Kasauli within 9 months from the date of approval of the resolution plan by the Adjudicating Authority. It is also noticed that the DK had provided that both the projects would be completed out of the amount receivable from all homebuyers and from sale proceeds of unsold flats of the project without any cost escalation. The Adjudicating Authority has also noticed that the resolution plan conforms to Section 30(2) of the IBC besides providing for implementation and supervision of the said plan. It has also found the resolution plan to be compliant to Regulation 37 and 38 of CIRP Regulations. Hence, after noting the limited scope of the Adjudicating Authority to interfere with the resolution plan once it has been approved by the CoC, the Adjudicating Authority held that it cannot venture into examining the commercial aspects of the decisions taken by the CoC. Finding no impediments, the Adjudicating Authority approved the resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : - (ii) That all securities (primary/secondary/collateral) for any debt due to the secured Creditors, including the securities listed below, shall stand unconditionally released and transferred in favour of the Corporate Debtor. The Secured Creditors shall not be entitled to exercise any security interest with respect the securities for any debt of the Corporate Debtor, whether or not such securities expressly identified or provided for in this Resolution Plan by the Resolution Applicant. All encumbrances, charges, lien, hypothecation or mortgage created for any debt, whether of Corporate Debtor or any other person on the following securities shall stand vacated and securities shall stand transferred in the name of Corporate Debtor. Any positive action required to be taken by any security holder for release of the security from encumbrances; charges, lien, hypothecation or mortgage shall be taken, unconditionally by the creditor within 30 days of the approval of the plan by the adjudicating Authority (NCLT). (vii) Upon the approval of the resolution plan all the secured creditors shall be deemed to have executed an undertaking in favour of the Resolution Applicant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) sale of all or part of the assets whether subject to any security interest or not; [(ba) restructuring of the corporate debtor, by way of merger, amalgamation and demerger;] (c) the substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate debtor with one or more persons; [(ca) cancellation or delisting of any shares of the corporate debtor, if applicable;] (d) satisfaction or modification of any security interest; (e) curing or waiving of any breach of the terms of any debt due from the corporate debtor; (f) reduction in the amount payable to the creditors; (g) extension of a maturity date or a change in interest rate or other terms of a debt due from the corporate debtor; (h) amendment of the constitutional documents of the corporate debtor; (i) issuance of securities of the corporate debtor, for cash, property, securities, or in exchange for claims or interests, or other appropriate purpose; (j) change in portfolio of goods or services produced or rendered by the corporate debtor; (k) change in technology used by the corporate debtor; and (l) obtaining necessary appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgement are as reproduced below: 18. Now we come to the judgment of the Hon'ble Supreme Court in India Resurgence Arc. Pvt. Ltd. Vs. M/s. Amit Metaliks Ltd. Anr. In paragraph 3 of the judgment, facts were noticed, which is to the following effect: 3. When the resolution plan submitted by the respondent No. 1 was taken up for consideration by the CoC, the appellant expressed reservations on the share being proposed, particularly with reference to the value of the security interest held by it; and chose to remain a dissentient financial creditor. The dissention on the part of the appellant and response thereto by the resolution professional as also by other members of CoC was noted in the 14th meeting of CoC dated 31.07.2020 in the following words : - Representative from Religare Finvest/India Resurgence ARC, Mr. Shakti inquired about the lower share they are getting as per Resolution Plan whereas the security interest held by them is far more. He also raised question about the fair market value and liquidation value of the CD. On this the RP informed him that the valuation exercise has been done by registered valuers of IBBI who were appointed by the erstwhil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence unless creditors belonging to a class being similarly situated are denied fair and equitable treatment. 16. The repeated submissions on behalf of the appellant with reference to the value of its security interest neither carry any meaning nor any substance. What the dissenting financial creditor is entitled to is specified in the later part of sub- section (2)(b) of Section 30 of the Code and the same has been explained by this Court in Essar Steel as under:- 128. When it comes to the validity of the substitution of Section 30(2)(b) by Section 6 of the Amending Act of 2019, it is clear that the substituted Section 30(2)(b) gives operational creditors something more than was given earlier as it is the higher of the figures mentioned in sub- clauses (i) and (ii) of sub-clause (b) that is now to be paid as a minimum amount to operational creditors. The same goes for the latter part of sub-clause (b) which refers to dissentient financial creditors. Ms. Madhavi Divan is correct in her argument that Section 30(2)(b) is in fact a beneficial provision in favour of operational creditors and dissentient financial creditors as they are now to be paid a certain minimum amount, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editors can be unconditionally released and transferred in favour of the Corporate Debtor. Hence, Clause 6.5(ii) and (vii) of the present resolution plan does not suffer from any infirmity or arbitrariness for having provided for assignment of securities of the Appellant nor can it be found to be non-compliant to the provisions of Section 30(2)(e) of the IBC. Merely raising the pretext that such assignment would adversely affect the recovery proceedings from the guarantors and collateral securities of third parties thereby making it inequitable for the Appellant/Financial Creditor lacks substance. The reference made by the Appellant to the judgements of the Hon ble Apex Court in the State Bank of India v. Ramakrishnan Anr. and Lalit Kumar Jain v. Union of India matter is distinguishable as when those judgements were passed, provisions of Part-III of the IBC was not yet notified and was not applicable to Personal Guarantors of the Corporate Debtor. 21. It needs no emphasis that unwarranted delays in resolution lead to depletion in the value of the assets of the Corporate Debtor. This is neither in the interest of CIRP nor in the interest of the Corporate Debtor. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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