2021 (6) TMI 279 - Tri - Insolvency and Bankruptcy

Seeking approval of the Resolution Plan - priority of payments of charges of CIRP costs and Operational Costs - Section 31 of the Code read with Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT - In respect of compliance of Section 30(2)(a) of the Code, it is seen that there is a provision in the resolution plan at clause 4.1(ii) clause 8.2 which provides for payment of CIRP costs in priority over payments to any other creditors from the upfront amount brought in by the RA. The Resolution Professional has also confirmed in the compliance certificate given in Form H that the Resolution Plan provides for the payment of Insolvency Resolution Process costs. Be that as it may it is made clear that Insolvency Resolution Process cost shall be paid in its entirety by the resolution applicant in priority to other debts of the corporate debtor - As regards compliance of clause (b) of Section 30(2) of the Code, the Resolution Professional has certified that the resolution plan provides for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under Section 53. There appears to be no discrimination in the resolution plan in respective class of creditors, as same treatment is provided to similarly situated each class of creditors - it is seen that clause (b) of sub-section (2) of Section 30 of the Code stands satisfied. All the requirements of Section 30(2) are fulfilled and no provision of the law for the time being in force appears to have been contravened - It is a well settled proposition of law that commercial and business decisions of CoC are not open to judicial review. Adjudicating Authority cannot enquire into the commercial wisdom of CoC. The ground for rejection is limited to the matter specified under Section 30(2). It is however reiterated that the resolution plan in question meets the requirements specified in Section 30(2) of the Code and the reasoned commercial decision of CoC is neither discriminatory nor perverse. The requirements as per the Code and regulations have been complied with - It is clarified that Section 30(2)(f) of the Code mandates that the resolution plan should not be against any provisions of the existing law - Resolution Plan is approved - approved 'Resolution Plan' shall become effective from the date of passing of this order.

Summary

Issues Involved:
1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016.
3. Commercial wisdom of the Committee of Creditors (CoC).
4. Reliefs and concessions sought in the Resolution Plan.

Detailed Analysis:

1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the Resolution Professional (RP) under Section 30(6) of the Insolvency and Bankruptcy Code, 2016, seeking approval of the Resolution Plan under Section 31 of the Code. The RP had submitted the Resolution Plan for M/s. Pawan Impex Private Limited, which was approved by the Committee of Creditors (CoC) with a 100% voting share. The Tribunal confirmed that the Resolution Plan meets all requirements specified in Section 30(2) of the Code and approved the plan under Section 31(1).

2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016:
The RP confirmed that the Resolution Plan complies with all clauses of Section 30(2) of the Code:
- Section 30(2)(a): The plan provides for the payment of Insolvency Resolution Process costs in priority over other debts.
- Section 30(2)(b): The plan ensures payment to operational creditors is not less than what they would receive in liquidation.
- Section 30(2)(c): The plan includes provisions for the management of the corporate debtor's affairs post-approval.
- Section 30(2)(d): The plan includes mechanisms for implementation and supervision.
- Section 30(2)(e) & (f): The plan does not contravene any law and conforms to other requirements specified by the Board.

3. Commercial wisdom of the Committee of Creditors (CoC):
The Tribunal emphasized that it is not expected to substitute its view with the commercial wisdom of the CoC. The CoC's decision is based on feasibility, viability, and compliance with the Code and Regulations. The CoC approved the plan with a 100% voting share, which is above the statutory requirement of 66%. The approved plan proposes to pay ?14,917.33 Lakhs within 24 months, higher than the liquidation value of ?1,438 Lakhs. The Tribunal reiterated that commercial decisions of the CoC are not open to judicial review unless they contravene the law or public interest.

4. Reliefs and concessions sought in the Resolution Plan:
The Tribunal partially granted the reliefs and concessions sought in the Resolution Plan. Exemptions related to registration charges, stamp duty, taxes, and fees were not granted. However, exemptions for offences committed prior to the commencement of CIRP under Section 32A of IBC, 2016 were granted. The Tribunal clarified that any exemptions sought in violation of existing laws are not granted, and the Resolution Applicant must comply with all applicable laws.

Conclusion:
The Tribunal approved the Resolution Plan submitted by the RP under Section 31(1) of the Insolvency and Bankruptcy Code, 2016, confirming that it meets all requirements of Section 30(2) and does not contravene any existing laws. The moratorium order ceased to have effect from the date of the order, and the Resolution Plan became effective immediately. The RP was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI).