9911796707
TMI Blog2025 (2) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... hese are five appeals against two orders both of 4th June, 2024 passed by the Ld. NCLT. 2. Company Appeal (AT)(Ins) No.1382/2024 challenges an order dated 04.06.2024 passed by Ld. Adjudicating Authority in IA No.30/2023 and whereas Company Appeal (AT)(Ins) No.1384 and 1486 of 2024 challenges order dated 04.06.2024 passed in IA No.568/2023. Company Appeal (AT)(Ins) No.1596 and 1597 of 2024 challenges both the orders dated 04.06.2024 passed in IA No. 30/2023 and 568/2023 viz approval of the Resolution Plan. 3. The issue in three appeals viz. Company Appeal (AT)(Ins) No.1382, 1384 and 1486/2024 is the Ld. NCLT has no power to modify the resolution plan. The resolution plan submitted worth Rs.18 crores was got approved by the CoC by 79.10% of votes. The CoC Members included Kotak Mahindra Bank having 79.10% of the votes; Bank of Baroda with .72% votes and Anjali Capfin Pvt Ltd held balance of voting power. 4. The learned counsel for the appellant referred to various paras of resolution plan to show how some conditions, envisaged in the resolution plan, stood modified by the Ld. Adjudicating Authority and thus acted beyond its jurisdiction. The said relevant para of the resolution pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that may be received from the acquisition of any part of the Corporate Debtor's land and has imposed the following condition: " ...The acquisition process, covered under N.H.A.I's notification, is stalled due to the moratorium under Section 14 of the Code. Once completed, the compensation is to be retained by the Resolution Applicant, and the current plan does not account for this amount. However, we have decided this aspect in IA No. 568/2023 for approval of resolution plan that if the compensation is received, it will be distributed amongst all the Creditors according to Section 53 of the Code, after satisfying the claims admitted by the RP/COC." ("Modification"). 7. Pertinently, by way of the Plan Approval Order, the Ld. NCLT has observed that, "...37. After hearing, we therefore observe that this amount of Rs. 10 crore is to be distributed amongst all the Creditors in accordance with the provisions of Section 53 of the Code, subject to the satisfaction of the claim lodged and admitted by the RP/COC.". Notably, the referred parts of the Plan Approval Order have also been impugned by the Appellant by way of Company Appeal (AT) (Ins.) No. 1384 of 2024. 8. Now the Impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resh Resolution Plan (with an upfront payment of INR 18 Crores) which accounted for the accrual of any future compensation that may occur due to the possible acquisition of the land of the Corporate Debtor. Thus, it is clear the Ld. NCLT has erred by materially altering the Resolution Plan of the Appellant and ignoring the fact the Resolution Plan had already accounted for the subject matter of the said modification. 12. The letter dated 03.05.2018 issued by the U.P. State Highway Authority to the Ld. District Magistrate, Fatehpur merely reflects the fact that acquisition of the Corporate Debtor's land may occur in the future. The said letter dates back to the year 2018 and it is a matter of record even after the passage of more than six years, no notification for the acquisition of the Corporate Debtor's land has been issued by any appropriate state instrumentality. Moreso the said letter was never brought on record by Respondent No. 1 before the Ld. NCLT. 13. Moreso by imposing the said modification, the Ld. NCLT has failed to consider the said modification amounts to a material alteration of the terms of the Resolution Plan and goes against the commercial risk assumed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. NCLT also does not have any jurisdiction to specifically direct and/or impose a condition for the distribution of an amount that may be received and/or recoverable by Corporate Debtor amongst the creditors while approving the Resolution Plan. In JSW Steel Ltd. v Ashok Kumar Gulla and Ors. [Company Appeal (AT) (Insolvency) No. 467 of 2019] this Tribunal has held that, inter alia, "... We agree with the submissions made on behalf of the Appellant that the Adjudicating Authority has no jurisdiction to impose such conditions with regard to amount as may be recoverable by the 'Corporate Debtor' in future." 18. Furthermore, in paragraph nos. 28 and 31 of the Impugned Order, the Ld. NCLT has itself observed it has limited jurisdiction to only approve or reject the Resolution Plan and the commercial wisdom of the CoC is paramount. Therefore, it is clear the modification imposed by the Ld. NCLT in the Impugned Order is against the express provisions of the Code and settled law, as postulated by the Hon'ble Supreme Court and this Tribunal. 19. Therefore, in view of the above, the Adjudicating Authority has no jurisdiction to enter into the commercial aspects of the resolution plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dates contained in the said Addendum; f) the Resolution Plan submitted by the SRA is in violation of Regulation 39(1A) of the Regulations as the Resolution Plan has been modified on multiple occasions and lastly, g) the Resolution Plan penalizes the Appellant for not assenting to the same as it mandates the leftover amount allocated towards the CIRP cost would be retained by the SRA in the event the Appellant does not assent to the Resolution Plan. 23. Now we proceed to decide the issues raised by the appellant herein: As regard contention (a) The Resolution Plan in its entirety, is feasible and viable in terms of the Insolvency and Bankruptcy Code, 2016 ("Code") and so is held by the Ld. NCLT in paras 38-45 of the Plan Approval Order dated 04.06.2024 in I.A. No. 568 of 2023. Further the Resolution Plan is a prerogative of the Resolution Applicant and is drafted as per its commercial understanding and risk appetite. Furthermore, it is a matter of record that, till date, no prescribed notification for the acquisition of any part of the Corporate Debtor's land has been issued by any appropriate state instrumentality or is placed on record and even the Resolution Professional, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, there is no provision in law mandates that the Resolution Plan Value cannot be less than the Liquidation Value of the Corporate Debtor as held in Maharasthra Seamless Limited Vs. Padmanabhan Venkatesh & Ors. [Civil Appeal No. 4242 of 2019] [Paragraph No.26]. Now the powers of the Ld. Adjudicating Authority with respect to the approval of the Resolution Plan does not extend to examine the commercial wisdom of the CoC and once it is found all the mandatory requirements have been duly complied with and taken care of by the Resolution Applicant, the process of judicial review under Section 31 of the Code cannot be stretched to carry out quantitative analysis concerning a particular creditor. 24. Qua contention (b) we may note the valuation of the assets of the Corporate Debtor has been carried out by independent registered valuers, in compliance with Regulations 27 and 35 of the Regulations. Admittedly the Appellant had duly participated in all the CoC meetings leading up to the final Resolution Plan and has been an active participant in all key decisions taken in the insolvency proceedings in the instant case. It is matter of record the Appellant has never raised any such object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as being encapsulated in the minutes of the 11th CoC meeting. Pertinently, other members of the CoC (including the Appellant) also concurred with the views of the Respondent. Thus the terms of the Resolution Plan are in compliance with the provisions of the Code 26. Coming to contention (d) the appellant has alleged the Resolution Plan submitted by the Answering Respondent is in violation of the clauses of RFRP but has failed to sufficiently establish the fact the Resolution Plan is in violation of a single clause of RFRP. In terms of Clause 1.8.1 of the RFRP, a Resolution Applicant was required to submit a Binding Submission Bank Guarantee as Earnest Money Deposit ("EMD"), which was duly submitted by the Respondent with its first Resolution Plan dated 23.10.2022. However, the said Resolution Plan was rejected and the EMD was returned. Thereafter, in the 7th CoC Meeting dated 04.08.2023, wherein the Respondent was permitted to re-submit the Resolution Plan, the RP requested the Respondent to submit the copy of the Performance Bank Guarantee of Rs. 3,60,00,000/- directly with Resolution Plan in order to gain the confidence of the CoC The Authorized Representative of the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted by the Respondent and another PRA, were rejected by the members of the CoC at the very threshold and no discussion and/or negotiations qua the terms of the said previous Resolution Plan(s) were undertaken by the members of the CoC. Therefore, the Resolution Plan dated 19.08.2023, as submitted by the Respondent, was a fresh Resolution Plan and the same was not in furtherance of the earlier Resolution Plan dated 23.10.2022. Moreover, after the submission of the Revised Resolution Plan dated 09.10.2023, the Appellant never raised any similar objection even in the 10th CoC meeting dated 13.10.2023, and further deliberated upon the changes to be carried out in the submitted Resolution Plan. The RP, in the 10th CoC meeting, duly apprised the CoC members since the Resolution Plan has already been revised once on 09.10.2023, the changes suggested by the CoC members, including the Appellant, can only be carried out by way of an addendum. In light of the same, the Appellant, having failed to raise any protest to the same in any of the CoC meetings, cannot be permitted to raise this objection at this stage, especially when the revised Resolution Plan and the Addendum thereof were sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Plan in very limited. Such an order can be set aside only if the Appellant is able to demonstrate its case falls within the grounds enumerated in Section 61(3) of the Code. In Ngaitlang Dhar v. Panna Pragati Infrastructure (P) Ltd., (2022) 6 SCC 172, the Hon'ble Supreme Court has succinctly encapsulated the said principle as follows: - 32. It is trite law that "commercial wisdom" of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the processes within the timelines prescribed by IBC. It has been consistently held that it is not open to the adjudicating authority (NCLT) or the appellate authority (Nclat) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) IBC. It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, as per voting shares, is the collective business decision and that the decision of the CoC's "commercial wisdom" is non-justiciable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) IBC. This position of law has been consistently reiterated in a catena of jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
