2022 (4) TMI 261 - AT - Insolvency and Bankruptcy

Seeking approval of Resolution Plan - Section 31 of the Code r/w Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - requirements of Section 30(2) of the Code fulfilled or not - whether the Appellant herein was unfairly dealt with regarding the settlement of its Claim, under the subject Resolution Plan? - HELD THAT - The Appellant had claimed an amount of ₹ 1,24,37,16,022/- as an Operational Creditor on the ground that some instalments together with penal interest were due under the Higher Purchase Agreement and also under the head of FAR Charges. Therefore, the belated stand of the Appellant that the property belongs to them and therefore they should be included in the same category as the Claims of Financial Creditor is untenable - it is also to be noted that the Resolution Plan was approved way back two years ago on 17/03/2020 with a majority of 96.07% votes in the 12th CoC Meeting. The contention of the Learned Counsel for the Appellant is that the Resolution Plan was never communicated to the Appellant herein and that it was sent to the wrong email Id. - HELD THAT - A brief perusal of the Form B reproduced in para 8 shows that email Id is upavp [email protected]. It is also seen from the record that the emails were sent to the Appellant on 26/12/2019, 15/01/2020, 20/01/2020, 22/01/2020, 21/02/2020, 04/03/2020 and 12/03/2020. On 11/08/2020, the Resolution Professional informed the Appellant about the approval of the Resolution Plan vide Order dated 04/08/2020. In a catena of Judgments, the Hon ble Supreme Court has laid down that the commercial wisdom of the CoC is non-justiciable unless it does not comply with the provisions of Section 30(2) of the Code - reliance can be placed in the case of K Sashidhar Vs. Indian Overseas Bank Ors. 2019 (2) TMI 1043 - SUPREME COURT - The Hon ble Supreme Court in the aforenoted Judgement has observed that commercial decision of the CoC is non-justiciable unless it is in violation of any law for the time being in force. The Adjudicating Authority has a very limited jurisdiction and should only examine whether the Resolution Plan meets the essential requirements as provided for under Section 30(2) of the Code. The Hon ble Supreme Court in Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited Through the Director Ors. , 2021 (4) TMI 613 - SUPREME COURT , dealing with the issue of commercial wisdom CoC and the jurisdiction of the Tribunal to interfere in the same has observed that In the present case, Subsequent to the RP admitting the Claim of ₹ 1,23,07,52,746/-, the said Claim was included in the information memorandum and the Successful Resolution Applicant proposed an amount of ₹ 12,30,75,275/- which is 10% of the admitted Claim towards satisfaction of the Appellant dues, even though the Liquidation value due to the Appellant under Section 30(2)(b) of the Code was NIL - The Hon ble Supreme Court has time and again observed that it is the CoC which has to decide the percentage of haircut, the sub classes between Operational Creditors and the manner in which the amount is to be distributed. Thus, this Tribunal is of the considered view that there is no illegality or infirmity in the approval of the Resolution Plan by the Adjudicating Authority - appeal dismissed.

Summary

Issues Involved:
1. Justification of the Adjudicating Authority in approving the Resolution Plan as per Section 30(2) of the Insolvency and Bankruptcy Code, 2016.
2. Whether the Appellant was unfairly dealt with regarding the settlement of its claim under the Resolution Plan.

Detailed Analysis:

1. Justification of the Adjudicating Authority in approving the Resolution Plan:

The primary issue was whether the Adjudicating Authority was justified in approving the Resolution Plan in compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016. The Resolution Professional (RP) had filed an application for the approval of the Resolution Plan submitted by M/s. Gautam Builders in consortium with M/s. Rapid Contracts Private Limited, which was approved by the Committee of Creditors (CoC) with a 96.07% majority. The Adjudicating Authority observed that the Resolution Plan complied with the provisions of the Code, including equitable treatment of creditors and the management of the corporate debtor's affairs post-approval.

The Tribunal emphasized that the commercial wisdom of the CoC is non-justiciable unless it does not comply with Section 30(2) of the Code. The Hon’ble Supreme Court in 'K Sashidhar vs. Indian Overseas Bank & Ors.' and 'Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited' reiterated that the limited judicial review available cannot trespass upon the CoC's business decisions. The Tribunal concluded that there was no illegality or infirmity in the approval of the Resolution Plan by the Adjudicating Authority.

2. Whether the Appellant was unfairly dealt with regarding the settlement of its claim:

The Appellant, Uttar Pradesh Awas Evam Vikash Parishad (UP Housing and Development Board), contended that the Resolution Plan was approved without considering whether a property not belonging to the Corporate Debtor could be included in the Resolution Plan. The Appellant argued that the property, governed by a Higher Purchase Agreement, was wrongfully included in the Resolution Plan, and they were not informed about the CoC meetings or provided with a copy of the Resolution Plan.

The Tribunal noted that the Appellant had issued allotment letters and a Higher Purchase Agreement, creating an interest of the Corporate Debtor in the plot. Despite defaults in payments, the Agreement was not canceled, and the right of revocation was not exercised before the insolvency commencement date. The Tribunal found that the Appellant's claim as an Operational Creditor was admitted, and the Resolution Plan proposed 10% of the admitted claim amounting to ?12,30,75,275/-. The Tribunal held that the belated challenge by the Appellant was untenable and that the Resolution Plan provided equal treatment to all classes of creditors.

The Tribunal also addressed the issue of non-receipt of notices, stating that emails were sent to the correct email address as per the record. The Tribunal upheld the commercial wisdom of the CoC and found no substantial grounds to interfere with the Adjudicating Authority's order.

Conclusion:

The Tribunal dismissed the appeal, affirming that the Resolution Plan met all essential requisites under Section 30(2) of the Code and was approved by the CoC with a significant majority. The implementation of the Resolution Plan was upheld, and no substantial grounds were found to interfere with the Adjudicating Authority's order. The appeal was dismissed with no order as to costs.