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2019 (10) TMI 1366 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - distribution pattern of Resolution fund - case of applicant is that the distribution pattern filed by the Resolution Professional should be modified to make it fair and equitable to all Financial Creditors for the ends of justice - HELD THAT - The Financial Creditor, Union Bank of India, the Applicant here, voted in favour of the approval of the Resolution Plan before the Committee of Creditors. It is also significant to note that the distribution pattern was deliberated upon before the Committee of Creditors at length. A copy of the Minutes, wherein the distribution pattern was deliberated upon before the Committee of Creditors in the meeting held on 26-09-2019, was brought to our notice. The very same objection in regard to distribution pattern raised by the applicant had been considered by the Committee of Creditors, while finalizing the pattern of the distribution of the Resolution fund. The Committee of Creditors approved the said pattern and the very same pattern is highlighted in the Resolution Plan too, and it is that Resolution Plan that has been approved by the COC, wherein the Applicant Bank voted in favour of the Resolution Plan. Therefore, it appears that the Applicant Bank is estopped from raising such an objection which has already been raised before the Committee of Creditors and the Committee of Creditors deliberated on those objections and upon certain clarifications, the said pattern was approved with majority of vote share. Therefore, the majority decision of the Financial Creditors cannot be disturbed by raising the very same objection before us. The objections raised by the applicant deserve no consideration and accordingly dismissed. Whether the Resolution Plan under consideration is liable to be approved? - HELD THAT - The Resolution Plan provides the requirements to be meted out under Regulation 32(2). It provides the terms of the Plan and its implementation schedule, the management and control of the business of the Corporate Debtor during its terms, adequate means for supervising its implementation. A look at the Resolution Plan also shows that the Resolution Applicant has the capability to implement the Resolution Plan. The performance security also seen brought in. So also, the Resolution Applicant has submitted affidavit under Section 29(A) that it is eligible to submit a Resolution Plan like that of the Plan under consideration. The power of interfering the commercial wisdom of the Financial Creditor in approving the resolution plan is very limited. The Resolution Plan comes up for consideration being completed with all the requirements of Section 30(2) of the Code and that there is nothing brought out to show that the distribution pattern is unfair and unjust and that there is discrimination among the class of Financial Creditors in regard to distribution of the fund, we are bound by the approval of the resolution plan by the CoC - the plan under consideration satisfies with the requirements of Section 30(2), that the plan is fair and equitable and there is any unjust discrimination as alleged and that the plan adheres to the object of the Code i.e. maximizes the value of assets and balances the interests of all the stakeholders. Resolution plan is approved - moratorium order passed under Section 14 shall cease to have effect - petition allowed.
Issues Involved:
1. Objection to the approval of the Resolution Plan by Bank of Baroda. 2. Objection to the approval of the Resolution Plan by Canara Bank. 3. Objection to the distribution pattern of the Resolution Plan by Union Bank of India. 4. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016. Issue-wise Detailed Analysis: 1. Objection to the approval of the Resolution Plan by Bank of Baroda: The Bank of Baroda, a Financial Creditor and Member of the Committee of Creditors (CoC), filed CA(IB) No. 1175/KB/2019 seeking directions regarding the payment pursuant to the invocation of a Bank Guarantee by M/s. Power Grid Corporation of India Limited during the Corporate Insolvency Resolution Process (CIRP). The Tribunal observed that the Bank Guarantee is an independent contract between the Bank and the beneficiary, which cannot be stopped due to the moratorium declared under Section 14 of the Insolvency and Bankruptcy Code, 2016. Therefore, the Tribunal dismissed the application, stating that the Bank should decide in accordance with the terms and conditions stipulated under the Bank Guarantee. 2. Objection to the approval of the Resolution Plan by Canara Bank: Canara Bank, another Financial Creditor and Member of the CoC, filed CA(IB) No. 1266/KB/2019 seeking to recall an order directing the Bank to refund a sum of ?1,96,12,749/- to the Corporate Debtor, which was adjusted in violation of the moratorium. The Tribunal noted that the objections raised were similar to those previously raised and contested in CA(IB) No. 947/KB/2019. The Tribunal found no justifiable reason to recall the order dated 06-09-2019 and dismissed the application, stating that the Applicant had the right to appeal the order on merits. 3. Objection to the distribution pattern of the Resolution Plan by Union Bank of India: Union Bank of India, a Financial Creditor and Member of the CoC, filed CA(IB) No. 1327/KB/2019 objecting to the approval of the Resolution Plan on the grounds that the distribution of the Resolution fund was not fair, equitable, and hence discriminatory. The Tribunal noted that the distribution pattern was deliberated upon at length in the CoC meeting held on 26-09-2019, and the objections raised by the Applicant were considered and addressed. The Tribunal cited the Supreme Court's decision in K. Sashidhar V. Indian Overseas Bank and Others, which stated that the commercial/business decision of the financial creditors taken collectively cannot be challenged on the grounds that reasons were not recorded. The Tribunal concluded that the objections raised by the Applicant deserved no consideration and dismissed the application. 4. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016: The Tribunal examined whether the Resolution Plan met the requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016, and whether it was fair, equitable, and adhered to the object of the Code. The Tribunal noted that the Resolution Plan was approved by the CoC with a vote share of 80.18%, was complete, and was not in contravention of any provisions of the law. The Plan provided for the payment of Insolvency Process Costs, liquidation value due to Operational Creditors, and liquidation value due to Financial Creditors. The Tribunal cited the Supreme Court's decision in Rajputana Properties Private Limited Vs. Ultratech Cement Limited and Ors., which outlined the criteria for approving a Resolution Plan. The Tribunal found that the Plan satisfied all the requirements and approved the Resolution Plan. Order: 1. The Resolution Plan of EMC Ltd., approved by the CoC with 80.18% voting share, is hereby approved under Section 31(1) of the Insolvency and Bankruptcy Code, 2016, and shall be binding on all stakeholders. 2. The moratorium order passed under Section 14 shall cease to have effect. 3. The Resolution Professional shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the Insolvency and Bankruptcy Board of India. 4. CA(IB) No. 1175/KB/2019, CA(IB) No. 1266/KB/2019, and CA(IB) No. 1327/KB/2019, in CP(IB) No. 1237/KB/2018, are dismissed and disposed of accordingly. 5. CP(IB) No. 1237/KB/2018 is allowed and disposed of accordingly.
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