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TMI Blog2024 (9) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... anks and Asset Reconstruction Companies, to act in a fair, transparent and reasonable manner while exercising decision making power in approving a resolution plan to ensure public interest and maximization of recovery; c. Issue a Writ or order or direction in the nature of Mandamus upon Respondent Nos. 2, 4, 5 and 6 to initiate the process of fresh voting on the Resolution Plan of the Petitioner after taking into consideration the email dated 05.09.2024 addressed by the Petitioner; d. Issue a Writ or order or direction in the nature of Mandamus against Respondent Nos. 2 to 6 to abide by the principle of equality and fairness while considering the Resolution Plan of the Petitioner; e. Pass any such other and further order(s) as this Hon'ble Court may deem fit and proper in the interest of justice, in favor of the Petitioner and against the Respondents." 2. Shorn of unnecessary details, the petitioner claims that it was the highest bidder in the CIRP [Corporate Insolvency Resolution Process] in respect of the Corporate Debtor ["CD"] viz., Helios Photo Voltaic Private Limited, both in terms of monetary value and net present value and yet its bid has not been accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levance. 72. Thus, there is an urgent need for an effective code of conduct for the functioning of the CoC. It be noted that the code of conduct is not intended to question the justness of the decision, as the wisdom of the CoC is to be upheld. Even the Adjudicatory Authority is not empowered to do so, as the interference of the Adjudicatory Authority is also limited to the manner set forth in the Code. A code of conduct shall be subservient to the Code and not in excess of it. However, the process of decision-making must reflect fairness, reasonableness and objectivity, irrespective of the outcome. 73. The code of conduct shall be effectively based on the principles of integrity, objectivity, professional competence, due care and confidentiality. Furthermore, the code of conduct must also reflect the fundamental features of the Wednesbury principles of fairness and proportionality in order to give true meaning to the legislative intent of the IBC. Moreover, it should also reflect the principles of natural justice to be followed by the CoC while taking any measure with respect to any stakeholder during the subsistence of the entire CIRP." 5. Per contra, Mr. Jayant Mehta, learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CoC has taken a decision in its commercial wisdom in terms of the 'Guidelines for Committee of Creditors' dated 06.08.2024 framed by the IBBI. 9. Mr. Prashant Mehta, learned counsel for the respondent No. 4 viz., Alchemist Asset Reconstruction Company Limited, urged respondent no. 4 was in minority in the CoC having 18.69 % shares, and voted against the Resolution as the bid of the petitioner was bringing more funds than the two others. Alluding to the Regulation 39(3) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, it was urged that evaluation matrix has not been followed in letter and spirit by the CoC. It was urged that it is not fathomable as to why respondent no. 2, which is a government entity, is not according consent to the bidding of the petitioner which is 10% higher; and the decision of the CoC is flawed. 10. Suffice to state that in rebuttal, learned Senior Advocate for the petitioner relied upon the decision of the Supreme Court in the case of M.K. Rajagopalan v. Dr. Periasamy Palani Gounder Civil Appeal Nos. 1682-1683 of 2022 dated 03.05.2023 wherein, with regard to the manner in which Resolution Plan should be approved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the NCLT. 12. First things first, it is well ordained in law that the Adjudicating Authority alone has the jurisdiction to regulate the conduct of the CoC and finally adjudicate upon the resolution plan through the powers of judicial review and thereby ensure that the CoC functions as per the role and responsibilities delineated under the IBC. In other words, the Adjudicating Authority maintains a supervisory role over the entire CIRP proceedings and is empowered under Section 60 of the IBC to take action on any issue relating to the insolvency proceedings. Thus, the resolution plan decided by the CoC shall be put up for consideration before the Adjudicating Authority, which forum alone shall finally decide whether the CoC has performed its fiduciary duty as per the legislative mandate of the IBC. 13. At this juncture, it would not be out of place to make a reference to the guidelines for the functioning of the CoC framed by the IBBI dated 06.08.2024, which warrant the CoC to exercise its duties while taking into consideration the following factors: "6. Guidelines A member of the CoC shall:- Objectivity and Integrity (a) follow relevant provisions of the Code and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. (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. 3. 34. (1) Where the Adjudicating Authority passes an order for liquidation of the corporate debtor under section 33, the resolution professional appointed for the corporate insolvency resolution process under Chapter II shall act as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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