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TMI Blog2025 (5) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... tions raised by erstwhile management of the Corporate Debtor. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant who is a member of the suspended Board of Director of the Corporate Debtor. 2. Coming to the brief factual background of the present case at hand, M/s Medirad Tech India Ltd.-Corporate Debtor was admitted into the rigours of Corporate Insolvency Resolution Process ("CIRP" in short) following the admission of Section 7 application filed by M/s India SME Assets Reconstruction Company Ltd. (ISARC) on 08.12.2021. Following the initiation of CIRP, the Interim Resolution Professional who was later confirmed as the Resolution Professional ("RP" in short) constituted the Committee of Creditors ("CoC" in short) comprising of two members, namely, Technology Development Board (TDB) and ISARC and invited plans for resolution of the Corporate Debtor. The RP had submitted before the CoC two resolution plans received from Prospective Resolution Applicants ("PRAs" in short) as may be seen from the minutes of the 5th CoC meeting held on 05.05.2022. After due scrutiny of the plans on the basis of the evaluation matrix, Asian Institute of Oncology Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly stipulated that the land was given to the Corporate Debtor for a specific purpose and any change of the conditions of lease would lead to its termination. As this aspect was not brought to the attention of either the CoC or the PRAs by the RP, hence, the resolution plan of the SRA did not deal with these aspects of Lease Deed and the permission to mortgage. It was therefore contended that the current resolution plan of the SRA was bound to fail. 5. Refuting the contentions of the Appellant, Shri Gaurav Mitra, Ld. Counsel for the Respondent-RP asserted that the Appellant who was a member of the suspended management of the Corporate Debtor has failed to substantiate any of the grounds enumerated under Section 61(3) of the IBC basis which the approval of the resolution plan could have been challenged. It was further added that the plan submitted by the SRA has been fully implemented. The SRA had already paid Rs 47.05 Cr. to both Financial and Operational Creditors besides paying for CIRP costs. The SRA had also infused fresh capital by issue of shares and put in place a new Board of Directors and the cancer hospital was already operational under the leadership of a reputed, ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 10.06.2018 was Rs 39.20 Cr. However, the amount which had been admitted by the RP was Rs 60.04 Cr. It was alleged that the RP has also not taken into consideration the fact that the Corporate Debtor had paid certain sums of money to one of the consortium lenders - IDBI Bank. As regards TDB, it was pointed out that as against the 24th Annual Report of the TDB for 2020-21 which depicted only an amount of Rs 11.14 Cr. as due from the Corporate Debtor, the claim which had been admitted by the RP was Rs 30.19 Cr. Like in the case of ISARC, even in the case of TDB, the RP did not factor in the payment of certain sums of money by the Corporate Debtor to TDB. The quantum of debt was thus not quantified by the RP appropriately as it did not take into consideration the paid amounts. It was vehemently contended that though serious objections were raised by the Appellant before the Adjudicating Authority on the manner in which the RP had admitted the claims, the same was dismissed by the Adjudicating Authority on the flimsy and technical ground that since there was no inter se complaint on the quantum of claims amongst the two Secured Financial Creditors, the Appellant had no grounds to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained from Axis Bank and did not reflect the loan received by the Corporate Debtor from the other consortium lender that is the IDBI Bank. 10. At this stage it may be useful to notice the treatment given by Adjudicating Authority in the impugned order to the purported allegation of the Appellant that the claims lodged by the two Financial Creditors were inflated and unrealistic. We find that the Adjudicating Authority has noticed that on an earlier occasion, TDB had raised concerns on the veracity and tenability of the claims lodged by ISARC. The TDB had objected to the claim amount of ISARC as accepted by the RP. Aggrieved with the RP in this regard, the TDB had filed IA No. 903 of 2021 before the Adjudicating Authority seeking details of Form-C which had been filed by the ISARC regarding their claims. This prayer of the TDB had been allowed by the Adjudicating Authority on 04.10.2022 following which the RP had furnished the detailed particulars contained in Form-C filed by the ISARC to TDB. We notice that the TDB after receiving Form-C of ISARC did not pursue the matter any further which amply manifests that the doubts entertained by TDB regarding the claims filed by ISARC sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.19 Cr. which is 47% of their admitted claim. ISARC had also been paid Rs 28.81 Cr. which was 48% of their admitted claim. The Operational Creditors including workmen, employees, statutory government dues and other Operational Creditors have all been provided for 100% of their admitted claim in the plan as may be seen at page 146 of Appeal Paper Book ("APB" in short). It is also an undisputed fact that the SRA has paid the CIRP costs. When the resolution plan of the SRA took care of the interest of every stakeholder substantively and no complaint has been received from either the Secured Financial Creditors or Operational Creditors of having been made to suffer any arbitrary hair-cut, we do not see any merit in the bogey of admission of inflated claims by the RP as raised by the Appellant. 13. This brings us to the second limb of argument of the Appellant that the RP failed to effectively discharge his statutory responsibilities under the IBC in not having disclosed crucial material information in the RFRP document with regard to the land on which the hospital of the erstwhile Corporate Debtor was running, in that it was a leased property, the lease having been granted by the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that, the lessee shall not without the consent in writing of the lessor use or permit the use of the said land for any purpose other than that for which it is leased or transfer the same without such consent. Further Clause-(xvi) of the Register Lease Deed provides that in the event of the closure/dissolution/defunct of the institution M/s Medirad Tech India Ltd., New Delhi, the lease land along with building if any thereon shall be the property of Government. Further, it is pertinent to mention here that the land schedule involved in respect of the land relating to Mz-Jayadev Vihar is recorded in forest classification. As per the order of the Hon'ble National Green Tribunal in OA No. 29/2019, the user agency is required to regularise the matter by filing forest diversion proposal before the competent authority as per the provisions of F.C. Act, 1980. You are therefore requested to take cognizance of the specific conditions contained in the Registered Lease Deed No. 6193 dtd. 03.11.2000 and No. 1435 dtd. 24.02.2006 read with the conditions mentioned in the NOC Order No. 2597 dtd. 28.02.2001 and No. 13985 dtd. 31.12.2002, while proceeding to resolve the insolvency matter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not. Furthermore, when we see the manner how the Corporate Debtor was using the leased land, admittedly it was for the purpose of running a 50 bedded cancer hospital. When we see the terms of the resolution plan, the SRA was also intending to continue with running a cancer hospital, albeit, with an expanded capacity of 150 beds. It is therefore self-evident that there is no change in the land-use except that the scale of the hospital has been enlarged. We also notice that the Adjudicating Authority at paragraphs 18 to 25 of the impugned order noticed in detail the exchange of communication between the RP and the Government of Odisha about the status and progress of the CIRP proceedings. Hence, the Adjudicating Authority did not commit any error in coming to the conclusion that the RP had taken appropriate steps to keep the Government of Odisha apprised of the status of the CIRP and on the filing of resolution plan duly approved by the CoC. As regards forest clearance too, the RP had sent a letter to the Government of Odisha on 18.11.2022 requesting for additional time to file an application seeking forest clearance under the Forest Conservation Act 1980, since the resolution plan w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cannot be said to have suffered from any prejudice for not being provided with the valuation report. Whether the detailed valuation report was placed before the Appellant or not is immaterial and irrelevant since it is only the members of the CoC who were required to exercise the commercial wisdom on the valuation reports placed before them and not the Appellant who did not have the right to exercise their vote. 21. Coming to the non-sharing of the valuation reports, as per the CIRP regulations, the RP is not required to share the valuation with any entity except the members of the CoC that too after obtaining confidentiality undertaking. The Adjudicating Authority has rightly held at para 29 that there is no provision under IBC or the CIRP Regulations framed thereunder which necessitates the valuation report of the Corporate Debtor to be shared with the suspended management of the Corporate Debtor. The confidential nature of the fair value and liquidation value of the Corporate Debtor is highlighted in Regulation 35(2) of the CIRP Regulations and the RP is not obligated to share these reports with anyone but for the members of the CoC. The RP had not violated the statutory cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited grounds laid down in Section 61(3)". It was vehemently contended that the Appellant has failed to show any irregularity or infraction or breach of any of the grounds outlined under Section 61(3) of the IBC. Since the Appellant is trying to reopen the resolution plan for adjudication on grounds which are beyond the purview of the Appellate Authority, the appeal deserves to be set aside. 24. The resolution plan was approved with 100% vote share in the 9th CoC meeting on 06.06.2022. The plan having been approved by full majority, we are of the considered view that the Adjudicating Authority did not commit any error while approving the resolution plan after noting its satisfaction about the plan being compliant to the provisions of the IBC in terms of Section 30(2) of the IBC. Law is now well settled that the jurisdiction of the Adjudicating and Appellate Authorities to interfere with approval of the resolution plan is limited. The scope of judicial review is confined to the provisions contained in Section 30(2) of the IBC for the Adjudicating Authority and Section 61(3) for the Appellate Authority. There is only limited review which can be exercised by the Adjudicating Autho ..... 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