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2018 (10) TMI 1335 - AT - Insolvency and BankruptcyCorporate Insolvency Resolution Process - Approval of the Resolution Plan - Held that - Requirement of minimum seventy-five percent of the voting shares of the Financial Creditors has been reduced subsequent to the passing of impugned orders dated 23rd November, 2017 and 27th November, 2017. From plain reading of Section 21 (8) (as it then was) it is clear that all the decisions of the Committee of Creditors is required to be taken by a vote of not less than seventy-five percent of the voting shares of the Financial Creditors , including the approval of the Resolution Plan . Sub-section (8) of Section 21 being mandatory in nature, any plan which has not been approved by the Committee of Creditors with voting shares of seventyfive percent, cannot be approved by the Adjudicating Authority as it will be against the provisions of Section 30(2)(e) of the I&B Code which stipulates that the Resolution Plan does not contravene any of the provisions of the law for the time being in force. Less than seventy-five percent of the voting shares of the Committee of Creditors in the matter of approval of the Resolution Plan being against the provisions of clause (e) of sub-section (2) of Section 30, it cannot be approved. We uphold the decision of the Adjudicating Authority, Mumbai Bench dated 23rd November, 2017 which is under challenge in Company Appeal (AT) (Insolvency) and set aside the impugned order dated 27th November, 2017 passed by the Adjudicating Authority, Hyderabad Bench, which are under challenge in Company Appeals (AT) (Insolvency). In the result, the Company Appeal (AT) (Insolvency) is dismissed and Company Appeals (AT) (Insolvency) are allowed and the case of Kamineni Steel & Power India Pvt. Ltd. is remitted to the Adjudicating Authority for initiation of liquidation proceeding in terms of Section 33 read with Section 34 of the I&B Code who is required to pass order immediately.
Issues Involved:
1. Approval of the Resolution Plan under the Insolvency and Bankruptcy Code, 2016. 2. Voting requirements for the Committee of Creditors. 3. The role of the Adjudicating Authority in approving the Resolution Plan. 4. Liquidation proceedings under Section 33 and Section 34 of the Insolvency and Bankruptcy Code, 2016. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan under the Insolvency and Bankruptcy Code, 2016: The case involves the approval of a Resolution Plan submitted by the Corporate Debtor, Kamineni Steel & Power India Pvt. Ltd., under Section 10 of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The Resolution Plan was discussed in multiple meetings of the Committee of Creditors (CoC), with various suggestions and modifications proposed. However, the final Resolution Plan was approved by only 55.73% of the voting power, which is below the required threshold of 75%. 2. Voting requirements for the Committee of Creditors: Section 21(8) of the I&B Code mandates that all decisions of the Committee of Creditors must be taken by a vote of not less than seventy-five percent of voting shares of the Financial Creditors. In this case, the Resolution Plan for Kamineni Steel & Power India Pvt. Ltd. did not meet this requirement, as it was approved by only 55.73% of the voting power. The subsequent amendments to the I&B Code reduced the required voting threshold, but these amendments were not applicable at the time of the decision. 3. The role of the Adjudicating Authority in approving the Resolution Plan: The Adjudicating Authority, National Company Law Tribunal (NCLT), Hyderabad Bench, initially approved the Resolution Plan despite it not meeting the 75% voting requirement. This decision was challenged, and the National Company Law Appellate Tribunal (NCLAT) held that the approval of the Resolution Plan by less than seventy-five percent of the voting shares contravenes Section 30(2)(e) of the I&B Code, which stipulates that the Resolution Plan should not contravene any provisions of the law in force. 4. Liquidation proceedings under Section 33 and Section 34 of the Insolvency and Bankruptcy Code, 2016: Given the failure to approve the Resolution Plan with the requisite voting share, the NCLAT directed the initiation of liquidation proceedings for Kamineni Steel & Power India Pvt. Ltd. under Section 33 read with Section 34 of the I&B Code. The case was remitted to the Adjudicating Authority to pass the necessary liquidation order immediately. Conclusion: The NCLAT upheld the decision of the Adjudicating Authority, Mumbai Bench, which rejected a Resolution Plan for Innoventive Industries Limited due to insufficient voting shares. Conversely, it set aside the Hyderabad Bench's order approving the Resolution Plan for Kamineni Steel & Power India Pvt. Ltd. with less than the required voting threshold. Consequently, the NCLAT directed the initiation of liquidation proceedings for Kamineni Steel & Power India Pvt. Ltd. under the relevant sections of the I&B Code, with no order as to costs.
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