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2024 (1) TMI 142 - AT - Insolvency and BankruptcyApproval of the Resolution Plan - power of the Adjudicating Authority to remit the Resolution Plan for consideration before the CoC - HELD THAT - In EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED ORS. 2021 (9) TMI 672 - SUPREME COURT , the Hon ble Supreme Court has considered a case where Successful Resolution Applicant sought to withdraw the Resolution Plan and third withdrawal application before the Adjudicating Authority for permitting withdrawal of the Resolution Plan was allowed which order was set aside by this Appellate Tribunal against which the Civil Appeal was filed before the Hon ble Supreme Court. The law is thus well settled that the Resolution Plan approved by the CoC is binding on the CoC and it cannot have reviewed its own decision or pray for review of its opinion. Adjudicating Authority in the impugned order has taken the view that the Resolution Plan can be sent for re-consideration to the CoC - Present is not a case where CoC is claiming in its application that the Resolution Plan which was approved by the CoC is in violation of any provisions of Section 30(2). There is a delay in implementation of the Resolution Plan of Allied Strips Limited and Tirupati Infraprojects Private Limited by the Appellant was very much raised before the CoC and were considered by the CoC before approving the Resolution Plan of the Appellant and the CoC is well aware that there is delay in implementation of the plans of Allied Strips Limited and Tirupati Infraprojects Private Limited which was noticed in its minutes as has been brought on the record - From the facts of the present case, out of two entities for which allegation was made of non-implementation. Admittedly, for one i.e. Allied Strips Limited has been implemented and for other plan has not been implemented but that itself shall not impart any ineligibility. There were no grounds on which the plan could have been sent back for reconsideration before the CoC. In result, both the Appeals are allowed.
Issues Involved:
1. Jurisdiction of the Adjudicating Authority to allow reconsideration of an approved Resolution Plan. 2. Grounds for reconsideration of the Resolution Plan. 3. Binding nature of the Resolution Plan on the Committee of Creditors (CoC) and the Successful Resolution Applicant (SRA). 4. Applicability of judicial precedents and statutory provisions. Summary: 1. Jurisdiction of the Adjudicating Authority to allow reconsideration of an approved Resolution Plan: The Appellant challenged the orders of the Adjudicating Authority allowing the reconsideration of the approved Resolution Plan. The Appellant contended that the Adjudicating Authority had no jurisdiction to allow the reconsideration after the CoC had already approved the plan. The Tribunal referred to the Supreme Court's judgment in "Ebix Singapore Pvt. Ltd. vs. CoC of Educomp Solutions Limited and Anr.," which established that a Resolution Plan, even prior to the approval of the Adjudicating Authority, is binding inter se between the CoC and the Successful Resolution Applicant. The Tribunal noted that the law is well settled that the Adjudicating Authority cannot allow the CoC to review its decision once the Resolution Plan is approved. 2. Grounds for reconsideration of the Resolution Plan: The grounds for reconsideration included the Appellant's failure to implement two previous Resolution Plans, a freezing order against the parent company, and a downgrading of the Appellant's credit rating. The Tribunal noted that these grounds were already considered by the CoC at the time of approving the Resolution Plan. The Tribunal emphasized that the CoC cannot get a second chance to review its decision based on these grounds, as it would lead to unnecessary delays and defeat the objective of the Insolvency and Bankruptcy Code (IBC). 3. Binding nature of the Resolution Plan on the CoC and the Successful Resolution Applicant: The Tribunal reiterated that once the CoC approves a Resolution Plan, it is binding on both the CoC and the Successful Resolution Applicant. The Tribunal referred to its previous judgments and the Supreme Court's rulings, which emphasized that the commercial wisdom of the CoC is paramount and not subject to judicial review, except for ensuring compliance with Section 30(2) of the IBC. The Tribunal noted that the CoC's decision to approve the Resolution Plan was a commercial decision that should not be interfered with. 4. Applicability of judicial precedents and statutory provisions: The Tribunal referred to several judgments, including "Ebix Singapore Pvt. Ltd.," "K. Sashidhar vs. Indian Overseas Bank and Ors.," and "Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta & Ors.," to support its conclusions. The Tribunal emphasized that the Adjudicating Authority has the power to remit a Resolution Plan for reconsideration only if there is a violation of Section 30(2) of the IBC. In the present case, there was no such violation, and the grounds for reconsideration were not sufficient to warrant sending the plan back to the CoC. Conclusion: The Tribunal set aside the orders of the Adjudicating Authority dated 27.07.2022 and 01.08.2022, directing the reconsideration of the Resolution Plan. The Tribunal allowed both appeals, emphasizing that the CoC cannot review its decision once the Resolution Plan is approved, and directed the Adjudicating Authority to consider the pending application afresh within three months. Both parties were directed to bear their own costs.
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