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2020 (3) TMI 1390 - Tri - Insolvency and BankruptcyValidity of decision of the RP for not short listing its Resolution Plan despite its plan is in compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - validity of decision of RP for short listing and approving the CarVal s Resolution Plan as successful Resolution Plan - whether the economic interest of this Applicant is getting prejudiced because his plan has not been admitted? - HELD THAT - Once plan is shortlisted, if at all any remedy is assumed to be present, it is only with regard to the procedure, as to the procedure is concerned, in Regulation 39 of the CIRP Regulations it has been categorically mentioned that the Committee of Creditors shall evaluate the resolution plan received under Regulation 39 strictly as per the evaluation matrix to identify the best resolution plan, when evaluation matrix figures are there, that being the special subject, as long as there is no objection from any of the Committee of Creditors over the process of evaluation, if the evaluation matrix discloses marks identifying the best plan, the CoC will have to opt for the best plan provided it is viable and feasible. That is the subject matter of the CoC - In Regulation 39(3), when it comes to second clause, since approval is required to be given to the plan shortlisted, it was approved by the CoC with requisite majority. At this juncture, SSG subsequently coming with an unsolicited plan cannot become an impediment to proceed with the shortlisted plan. Merely by having an open discussion in the CoC meeting and asking about SSG plan by some CoC Members having minority voting in the CoC cannot become a reason to invalidate the plan approved. Moreover, none of the CoC Members who abstained to the voting of CoC have filed any objection before this Bench. The point to be noted, these Applicants have not stated that D P Report is factually incorrect - Once plans are submitted, it is the CoC to take a decision thereafter it is only an intimation to the plan Applicants as to whether their plan is shortlisted or not, it is nowhere mentioned in the Code that Plan Applicants have right to participate in short listing the plan applications. Operational Creditor is not aggrieved of any of the actions of the CoC. Thumb rule i.e. followed in dealing with civil remedies is, when a person seeks remedy before Court of law, he shall be aggrieved by the action assailed in his application. When grievance is not present in its complaint, such person cannot seek relief before any Court of law. What does this Operational Creditor get on declaration of this entire process as null and void? Noble has not deliberated anything on it. Maybe it is either to help SSG or for some undisclosed reasons, which cannot be seen as grievance of Noble - It is not the case of Noble that the distribution to be reached to it under section 53 has not been provided, if that is the case, it could become the grievance of the Applicant. But that is not the case of this Applicant and that cannot be the case of the applicant. Taking a lead for approval of a superior plan, which the CoC has approved with thumping majority considering it as feasible and viable cannot be called as SBI favoring Carval group - Application disposed off.
Issues Involved:
1. Non-shortlisting of SSG Group's Resolution Plan. 2. Approval of CarVal's Resolution Plan. 3. Allegation of procedural violations by the Resolution Professional (RP) and Committee of Creditors (CoC). 4. Favoritism by State Bank of India (SBI) towards CarVal's Resolution Plan. Detailed Analysis: Issue 1: Non-shortlisting of SSG Group's Resolution Plan The SSG Group challenged the decision of the Resolution Professional (RP) for not shortlisting its Resolution Plan despite compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016. The Judicial Member found that the email dated 29.03.2019 from the RP to SSG Group did not disclose reasons for non-shortlisting, deeming the decision legally flawed. The Judicial Member criticized the CoC for not suggesting improvements to SSG's Initial Resolution Plan and expressed doubts about the Delph and Phelps Report's veracity. Conversely, the Technical Member noted that in the 12th CoC meeting on 26.03.2019, both SSG and CarVal were asked to submit final commercial offers. Based on the updated Evaluation Report on 29.03.2019, CarVal's plan was shortlisted as superior. The CoC's decision was strictly in accordance with the evaluation matrix, and the intimation to SSG was considered sufficient. The third member agreed with the Technical Member, stating that the CoC's decision was lawful and based on the evaluation matrix. The SSG Group's subsequent plan, though superior, could not be considered as the process was already concluded. Issue 2: Approval of CarVal's Resolution Plan Noble Resources International Pte Limited (Noble), an Operational Creditor, contested the approval of CarVal's Resolution Plan, alleging procedural violations. The Judicial Member held that Noble's right to attend CoC meetings was essential for fairness and transparency. Since the CoC provided the resolution copy to Noble one day after the plan's approval, the process was deemed null and void. The Judicial Member also noted favoritism by SBI towards CarVal. The Technical Member countered that Noble was provided with the Resolution Plan before the 15th CoC meeting on 19.04.2019. The grievance was about not receiving the Delph and Phelps report certified on 16.04.2019. The Technical Member found the physical voting valid as all CoC members were present, and no favoritism by SBI was established. The third member concurred with the Technical Member, emphasizing that the CoC's decision-making process was transparent and lawful. The CoC's approval of CarVal's plan with a majority vote was valid, and Noble's objections were unfounded. Issue 3: Allegation of Procedural Violations The Judicial Member highlighted procedural lapses, including the lack of reasons for non-shortlisting SSG's plan and the rushed evaluation report. The Technical Member clarified that the CoC followed due process, including multiple opportunities for SSG to revise its plan. The CoC's decision was based on the evaluation matrix, and no voting was required for shortlisting. The third member affirmed that procedural infractions, if any, did not affect the substantial rights of the parties. The CoC's actions were in compliance with the Code and the evaluation matrix. Issue 4: Favoritism by SBI Noble alleged that SBI showed favoritism towards CarVal by leading the approval process. The Judicial Member supported this view, while the Technical Member found no evidence of favoritism. The CoC's decision was based on the evaluation matrix, and SBI's lead role was typical in such scenarios. The third member agreed with the Technical Member, noting that SBI's actions were aligned with the CoC's majority decision. The approval process was transparent and lawful. Conclusion The third member agreed with the Technical Member's findings, stating that the CoC's decisions were in accordance with the law and based on the evaluation matrix. The objections raised by SSG and Noble were unsustainable. The CoC's approval of CarVal's Resolution Plan was valid, and any procedural infractions did not affect the substantial rights of the parties.
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