2020 (8) TMI 793 - AT - Insolvency and Bankruptcy

Approval of Resolution Plan - rejection of Settlement Plan - allegation that the Promoter/ Director had failed to comply with the direction of this Appellate Tribunal and the Hon ble Apex Court - time limitation. Whether the appeal is barred by limitation? - HELD THAT - The period of limitation for filing appeal has to be counted with effect from the date certified copy of the impugned order was received by the Appellant viz. 27th January, 2020 and not with effect from the date of impugned order viz. 20th January, 2020. Admittedly, the appeal was filed on 12th March, 2020. Therefore, excluding the date of receipt of certified copy of the impugned order by Appellant and the date of filing of appeal, it is unambiguously clear that only 44 days have been consumed in preferring the appeal - the appeal being filed beyond the extended period of limitation has no substance and the same is overruled. Availability of alternative remedy - HELD THAT - Though an efficacious remedy was available in the form of statutory appeal under I B Code , it cannot be disputed that the substantive remedy in the form of Writ Petition filed on the very day of communication of the impugned order, followed by stay of proceedings and dismissal of the Writ Petition would bring the matter within the fold of remedy being pursued in exercise of legitimate right warranting its exclusion while computing the limitation and once it is recognised as a ground for extension of limitation within the ambit of Sections 14 and 15 of the Limitation Act, 1963, sufficient cause for condonation of delay can safely be said to have been made out for purposes of extension of time within the purview of Section 61(2) of the I B Code . Objection raised on this score is accordingly repelled and extension of 14 days in preferring the appeal is allowed. Whether the Settlement Plan of the Corporate Debtor has been improperly rejected and Resolution Plan of Respondent No.8 has been approved overlooking the illegalities/flaws? - HELD THAT - The commercial wisdom of the Committee of Creditors in regard to viability and feasibility of the Resolution Plan is final and this Appellate Tribunal cannot substitute its view for the commercial wisdom of the Committee of Creditors. Evaluation of the financial matrix, feasibility of the plan and its viability are areas falling within the ambit of business decision based on commercial wisdom of the Committee of Creditors and inquiry in appeal before this Appellate Tribunal is limited to the grounds under Section 61(3) of the I B Code . In the instant case, it is not disputed that the Successful Resolution Plan, apart from disclosing the source of funds in the form of infusion by the Resolution Applicant and receivables from Government has passed the muster before the Committee of Creditors and has been found better than the Settlement Plan offered by the Appellant/ promoter which was found lacking on many material aspects. The Resolution Plan submitted by the Respondent No.8 had already been approved by the Committee of Creditors prior to same being subjected to comparison with the Settlement Plan emanating from the Appellant/ Promoter and upon comparison by the Committee of Creditors it has again emerged as being viable, feasible and acceptable in priority to the proposed Settlement Plan of Promoter. In our considered opinion no exceptional circumstances justifying review of decision of Committee of Creditors in regard to rejection of the Settlement Plan and the approved Resolution Plan being a better one do exist in the instant case. Appeal dismissed.

Summary

Issues Involved:
1. Limitation of appeal.
2. Rejection of Settlement Plan and approval of Resolution Plan.

Issue-wise Detailed Analysis:

Issue No. 1: Limitation of Appeal

The appeal was filed on the 46th day from the date of receiving the certified copy of the impugned order, which was beyond the 30-day period prescribed under Section 61(1) of the Insolvency and Bankruptcy Code (I&B Code). However, the appeal was within the extended period of 45 days allowed under Section 61(2) if sufficient cause for delay is shown. The Appellant received the certified copy on 27th January 2020 and filed the appeal on 12th March 2020, consuming 44 days. The Appellant also pursued a Writ Petition before the Hon’ble High Court of Madras, which was dismissed, and this period was considered for condonation of delay. Thus, the delay was condoned, and the appeal was deemed filed within the permissible period.

Issue No. 2: Rejection of Settlement Plan and Approval of Resolution Plan

The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) following Union Bank of India’s application under Section 7 of the I&B Code. The Appellant’s Settlement Plan was submitted but was rejected by the Committee of Creditors (CoC) for not meeting the required parameters, including failure to provide a credible source of funds and requisite Bank Guarantee. The CoC unanimously found the Resolution Plan of Respondent No.8 better than the Settlement Plan.

The Hon’ble Supreme Court in “Swiss Ribbons Pvt. Ltd. v. Union of India” emphasized that the CoC’s decision on the viability and feasibility of a Resolution Plan is paramount and not subject to judicial review unless it contravenes specific provisions of law. The CoC’s commercial wisdom in rejecting the Settlement Plan and approving the Resolution Plan was upheld, as the latter was found to be viable, feasible, and in the best interest of all stakeholders.

The Appellant’s allegations against the Resolution Plan, including the use of tainted money and delisting of public shareholders, were found unsubstantiated. The Resolution Plan was approved by the Adjudicating Authority and the Appellate Tribunal, considering it maximized the assets of the Corporate Debtor and balanced the interests of all stakeholders.

The Appellant’s procedural irregularities claim regarding the constitution of the Bench and pronouncement of the impugned order was dismissed by the Hon’ble Madras High Court and the Hon’ble Supreme Court.

Conclusion:

The appeal was dismissed, affirming the CoC’s decision to reject the Settlement Plan and approve the Resolution Plan. The impugned order was found legally sound, and no exceptional circumstances warranted a review of the CoC’s commercial decision.