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2020 (7) TMI 6 - AT - Insolvency and BankruptcyApproval of Resolution Plan - relevant time for submission of resolution plan - HELD THAT - Admittedly, the A-1 filed its resolution plan before the Adjudicating Authority on 13-2-2019 whereas, the last date for submission of Resolution Plan before RP was 15-10-2018. Resolution plan of successful Resolution Applicant i.e. Dera Finvest (P.) Ltd. (R-2) was approved by 98.72 % of the Committee of Creditor in e-voting conducted on 1-11-2018 and 2-11-2018. When the Resolution Plan is filed before the Adjudicating Authority then the Authority has to satisfy that the Resolution Plan approved by the Committee of Creditor fulfills the requirements as specified in Sub-Section 2 of Section 30. However the Adjudicating Authority cannot direct the CoC to consider the second Resolution plan submitted before the Authority although the second Resolution Applicant is ready to invest more amount in comparison to first Resolution Applicant. The view that the second Resolution Applicant, A-1 has failed to satisfy that the Appeal is maintainable on any of the grounds provided in Section 61(3) of the I B Code - there are no such provision that during the pendency of approval of plan the limitation for CIRP process will stop. Application dismissed.
Issues Involved:
1. Approval of the resolution plan under Section 30(6) read with Section 31(1) of the Insolvency & Bankruptcy Code (I&B Code), 2016. 2. Rejection of the application by the second resolution applicant (A-1) under Section 60(5) of the I&B Code. 3. Rejection of objections by the erstwhile promoter and director (A-2). 4. Jurisdiction and scope of judicial review by the Adjudicating Authority and the Appellate Tribunal. 5. Compliance with Section 61(3) of the I&B Code for appeals. Detailed Analysis: 1. Approval of the Resolution Plan: The Adjudicating Authority approved the resolution plan submitted by Dera Finvest (P.) Ltd., which was endorsed by 98.72% of the Committee of Creditors (COC) through e-voting. The plan offered ?23.51 crores, which exceeded the liquidation value of ?22.78 crores and was close to the fair market value of ?32.48 crores. The approval was granted under Section 30(6) read with Section 31(1) of the I&B Code, confirming that the plan met the necessary legal requirements. 2. Rejection of the Application by the Second Resolution Applicant (A-1): A-1's application under Section 60(5) of the I&B Code was rejected by the Adjudicating Authority. A-1 argued that its plan, which proposed an investment of ?52.50 crores, should be considered as it offered better terms. However, the application was dismissed on two grounds: - The submission was made after the resolution plan had already been approved by the COC and submitted to the Adjudicating Authority. - The COC or RP did not seek to recall the approved resolution plan for reconsideration. The Adjudicating Authority emphasized that it could not direct the COC to consider a new resolution plan once the resolution plan had been approved, as this decision is a commercial one that cannot be adjudicated. 3. Rejection of Objections by the Erstwhile Promoter and Director (A-2): A-2 objected to the resolution plan on the grounds that the successful resolution applicant was ineligible under Section 29A of the I&B Code and that the liquor license could not be transferred as per the State Excise Act. These objections were rejected by the Adjudicating Authority, which noted that the COC had already approved the plan before the Supreme Court's directive to furnish a copy of the resolution plan to the erstwhile Board of Directors. The Adjudicating Authority found the objections to be unsupported by specific averments. 4. Jurisdiction and Scope of Judicial Review: The judgment referenced the Supreme Court's ruling in the case of Committee of Creditors of Essar Steel India Ltd. v. Satish Gupta & Ors., which delineated the limited scope of judicial review by the Adjudicating Authority and the Appellate Tribunal. The review is confined to ensuring compliance with Section 30(2) of the I&B Code and does not extend to reassessing the commercial wisdom of the COC. The Adjudicating Authority's jurisdiction is restricted to verifying that the resolution plan meets the statutory requirements, and it cannot direct the COC to reconsider an already approved plan. 5. Compliance with Section 61(3) of the I&B Code for Appeals: The appeals filed by A-1 and A-2 did not meet the grounds specified under Section 61(3) of the I&B Code. The section outlines specific grounds for challenging the approval of a resolution plan, such as contravention of the law, material irregularity by the resolution professional, improper provision for operational creditors' debts, and non-compliance with insolvency resolution process costs. The judgment clarified that neither A-1 nor A-2 demonstrated that their appeals were based on any of these grounds. Consequently, the appeals were dismissed for failing to establish a valid basis under Section 61(3). Conclusion: The judgment upheld the Adjudicating Authority's decision to approve the resolution plan by Dera Finvest (P.) Ltd. and rejected the applications and objections raised by A-1 and A-2. The Tribunal reiterated the limited scope of judicial review and the necessity for appeals to conform to the grounds specified in Section 61(3) of the I&B Code. The appeals were dismissed, affirming the commercial decisions made by the COC.
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