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2021 (4) TMI 776 - AT - Insolvency and BankruptcyApproval of Resolution Plan - Resolution plan met with 66% criteria or not - section 36 of the I B Code, 2016 read with Regulation 39 (4) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT - Taking into consideration the almost similarly placed resolution plans and claims and counter claims made by both the Resolution Applicants, we are of the view that there is a need for further pursuance of the Resolution Plan and with the very hope that the Corporate Debtor may fetch better value that what has been offered by the Resolution Applicants. In this case, even though the resolution plan of M/s. KALS Group has been approved with 100% voting in favour of it by the COC, in view of very meagre difference between both the Resolution Plans, we are of the view that there is scope for further improvement of the resolution amount to be payable by the Resolution Applicants. The direction issued to the Committee of Creditors to take fresh bids from the existing two Resolution Applicants to submit a Resolution Plan for its consideration within a period one month are clearly unsustainable in view of the recent judgment of the Hon ble Supreme Court in Kalpraj Dharamshi Anr. V. Kotak Investment Advisors Ltd. Anr 2021 (3) TMI 496 - SUPREME COURT , which squarely applies to the facts of the present case. Application allowed.
Issues Involved:
1. Validity and legality of the order directing fresh bids despite the approval of the resolution plan by the Committee of Creditors (CoC). 2. Jurisdiction of the Adjudicating Authority to interfere with the commercial wisdom of the CoC. 3. Compliance of the sanctioned resolution plan with Section 30(2) of the Insolvency and Bankruptcy Code (I&B Code), 2016. 4. Consistency of the Adjudicating Authority's orders with previous judgments and legal precedents. Detailed Analysis: 1. Validity and Legality of the Order Directing Fresh Bids: The Appellant contended that the Adjudicating Authority erred by directing fresh bids despite the CoC's approval of the resolution plan with 100% voting in favor of KALS Group. The Adjudicating Authority had observed that both resolution plans were almost equally placed, with a meagre difference in resolution amounts, and directed fresh bids to potentially fetch better value for the Corporate Debtor. The Appellant argued that this direction was unnecessary and legally untenable as the CoC had already approved the plan. 2. Jurisdiction of the Adjudicating Authority: The Appellant argued that the Adjudicating Authority exceeded its jurisdiction by interfering with the commercial wisdom of the CoC. The Appellant referenced the Supreme Court's decision in Kalpraj Dharamshi & Anr. v. Kotak Investment Advisors Ltd. & Anr., which emphasized that the commercial wisdom of the CoC should not be interfered with, except within the limited scope provided under Sections 30 and 31 of the I&B Code. The Tribunal agreed, stating that the Adjudicating Authority's direction for fresh bids was unsustainable and amounted to an overreach into the CoC's decision-making process. 3. Compliance with Section 30(2) of the I&B Code: The Appellant asserted that the sanctioned resolution plan complied with all requirements under Section 30(2) of the I&B Code, 2016, and that the Adjudicating Authority was obligated to sanction the plan. The Tribunal noted that the Adjudicating Authority did not find any deficiencies in the sanctioned plan regarding compliance with Section 30(2). Therefore, the Tribunal concluded that the Adjudicating Authority should have approved the plan without directing a rebid. 4. Consistency with Previous Judgments and Legal Precedents: The Appellant highlighted the inconsistency in the Adjudicating Authority's orders, noting that a previous order dated 17.02.2021 had rejected the plan of the unsuccessful resolution applicants and stated that they could not modify their plans post-voting. Despite this, the Adjudicating Authority issued a subsequent order on 24.02.2021 for fresh bids. The Tribunal found this contradictory and referenced the Supreme Court's judgment in Kalpraj Dharamshi, which reinforced the primacy of the CoC's commercial decisions. Conclusion: The Tribunal concluded that the Adjudicating Authority's order directing fresh bids was unsustainable and interfered with the CoC's commercial wisdom. The Tribunal set aside the impugned order dated 24.02.2021 and directed the Adjudicating Authority to approve the resolution plan approved by the CoC with 100% voting in favor of KALS Group. Consequently, the appeal was allowed, and the related interlocutory applications were closed.
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