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2021 (3) TMI 754 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - applicant filed this application seeking appropriate direction to the RP to place the resolution plan of the applicant being H2 bidder before the CoC for confirmation - HELD THAT - It is matter of record that resolution plan of respondent No. 3 was approved by a vote of approximately 82.41 per cent. voting share of the CoC members. It is to be noted that resolution plan submitted by the resolution applicant(s) are subject to deliberation of commercial wisdom of the CoC and the CoC are to consider the resolution plan(s), keeping in mind, to achieve, maximisation of value of assets of the corporate debtor , as also the value of assets of the financial creditor and the operational creditor , thereby balancing the interest of all stake holders, which is the spirit of the Code. Further, the CIRP has to be completed in time bound manner and 270 days was got over in January 28, 2020 itself. It is also matter of record that 22 days are excluded from CIRP on filing the application before the Adjudicating Authority. Pursuant to such exclusion permitted by this Adjudicating Authority, the period of 270 days was expired on February 19, 2020. Such exclusion was sought for in the interest of stake holders of the corporate debtor as CIRP was in the advance stage of finalising successful resolution applicant for CD. It is also matter of record that on approval of the resolution plan by the CoC member, an application under section 30 of the Insolvency and Bankruptcy Code has already been filed before this Adjudicating Authority for sanction of plan and same is sub judice, under such circumstances if commercial wisdom is interfered at this stage which is the prerogative of CoC, in that event, the whole process will get frustrated and the CIRP has to be started afresh, which will frustrate the very objective of the IB Code as the time is the essence of the Code. The instant application was not only premature on the date of filing, but is also devoid of merit and hence dismissed.
Issues Involved:
1. Allegations against respondents regarding the CIRP process. 2. Compliance of the applicant's resolution plan with the Insolvency and Bankruptcy Code, 2016 and CIRP Regulations, 2016. 3. Allegations of non-disclosure and false information by respondent No. 3. 4. Applicant's request to place its resolution plan before the CoC for confirmation. 5. Commercial wisdom and decision-making authority of the CoC. Detailed Analysis: 1. Allegations Against Respondents Regarding the CIRP Process: The applicant filed the application with various allegations against the respondents, primarily focusing on the conduct and decisions made during the Corporate Insolvency Resolution Process (CIRP) of the corporate debtor. The CIRP was initiated on the application filed by the financial creditor under section 7 of the Insolvency and Bankruptcy Code, 2016, and Mr. Divesh Desai was appointed as the Interim Resolution Professional (IRP) and later as the Resolution Professional (RP). 2. Compliance of the Applicant's Resolution Plan: The applicant submitted its resolution plan on October 1, 2019, but it was found non-compliant with the required format and regulations. The RP and the Committee of Creditors (CoC) repeatedly requested the applicant to submit a revised resolution plan that complied with the Insolvency and Bankruptcy Code, 2016, and the CIRP Regulations, 2016. Despite several revisions, the applicant's resolution plan remained deficient and conditional, indicating an exit midway even if declared a successful resolution applicant. The applicant's final revised plan on February 9, 2020, was also conditional and offered a lesser amount than respondent No. 3. 3. Allegations of Non-Disclosure and False Information by Respondent No. 3: The applicant alleged that respondent No. 3, declared as H1 bidder, suppressed material facts and provided false information to the CoC, violating regulation 38(1B) of the CIRP Regulations, 2016. However, the RP clarified that respondent No. 3 provided all necessary information, including details of their business and payment progress in another matter, "Allied Strips Ltd." The allegations were found unsubstantiated as respondent No. 3 had fulfilled its obligations and provided the required undertakings. 4. Applicant's Request to Place Its Resolution Plan Before the CoC: The applicant sought directions to the RP to place its resolution plan before the CoC for confirmation. However, the application was deemed premature as it was filed on February 4, 2020, before the completion of the e-voting process, which was extended until February 18, 2020. The applicant's plan was non-compliant and conditional, and respondent No. 3's plan was approved by 82.41% of the CoC members' voting share. 5. Commercial Wisdom and Decision-Making Authority of the CoC: The judgment emphasized that the approval of the resolution plan is the commercial wisdom of the CoC, which cannot be interfered with by the Adjudicating Authority. The CoC's decision is based on maximizing the value of the corporate debtor's assets and balancing the interests of all stakeholders. The Supreme Court's rulings in K. Sashidhar v. Indian Overseas Bank and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta affirmed that neither the Adjudicating Authority nor the Appellate Authority can reverse the CoC's commercial decisions. Conclusion: The application was dismissed as it was premature and devoid of merit. The CoC's commercial wisdom in approving respondent No. 3's resolution plan was upheld, and the CIRP process was deemed to have followed the necessary regulations and objectives of the Insolvency and Bankruptcy Code, 2016.
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