2024 (4) TMI 321 - AT - Insolvency and Bankruptcy

Approval of the Resolution Plan - HELD THAT - The Resolution Plan submitted by Respondent No.3, has been approved by the CoC with 100% vote share. The Hon ble Supreme Court in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS 2019 (2) TMI 1043 - SUPREME COURT and COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT has held that the Adjudicating Authority and the Appellate Tribunal are not to sit in appeal over the commercial wisdom of the CoC, which is paramount and non-justiciable and under the scheme of the Code, every dissatisfaction does not partake the character of a legal grievance. It is settled proposition that approval of the Resolution Plan can be interfered with, only when the Resolution Plan violates any of the provisions of Section 30, sub-section (2) of the Code. It is relevant to notice that at the time when this utilities/ equipment/ installations were made the Corporate Debtor was subsidiary of the Appellant, the holding Company. Shared utilities and equipment installed outside the lease land area were permitted to be utilized and used both by the Corporate Debtor for running the Hotel as well as by the Appellant for the purpose of its residential block and commercial establishment. The Corporate Debtor being no longer subsidiary of the Appellant, which has now been taken over by the SRA, there has to be an arrangement between land owner, i.e., the Appellant and SRA for continuing use and access to the shared utilities and equipment. It is also relevant to notice that the SRA has taken the Hotel of Corporate Debtor as a running concern and for the purposes of running the Hotel, it requires use of shared utilities and services as it was being done prior to initiation of CIRP - there are no error in granting of reliefs and concessions. The Resolution Plan having been approved by 100% vote share of the CoC and no grounds having been made out to interfere with the approval of the Resolution Plan within the meaning of Section 30, sub-section (2) to establish that Resolution Plan violates any provision of Section 30 subsection (20 of the Code, there are no reason to interfere with the impugned order approving the Resolution Plan - However, approval of Resolution Plan and grant of reliefs and concessions under paragraph-9 (7) as extracted above, does not fetter the right of the parties to enter into an arrangement with regard to shared utilities and equipment, which are located outside the lease hold land of the Corporate Debtor and further, the approval of Resolution Plan and grant of above reliefs and concessions does not fetter the rights of the parties to establish their rights and obligations in a competent Court. The impugned order dated 04.01.2024 passed by the Adjudicating Authority upheld - appeal disposed off.

Summary

Issues Involved:
1. Approval of the Resolution Plan by the Adjudicating Authority.
2. Reliefs and concessions granted regarding shared utilities and services.
3. Appellant's challenge to the Resolution Plan and reliefs granted.

Summary:

1. Approval of the Resolution Plan by the Adjudicating Authority:
The Appeal was filed by a Shareholder of the Corporate Debtor challenging the order dated 04.01.2024 by the National Company Law Tribunal (NCLT), Kolkata Bench, which approved the Resolution Plan submitted by Shriram Multicom Pvt. Ltd. The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor commenced on 11.02.2022 u/s 7 of the Insolvency and Bankruptcy Code, 2016. The Resolution Plan was approved by the Committee of Creditors (CoC) with a 100% vote share on 30.05.2023.

2. Reliefs and Concessions Granted Regarding Shared Utilities and Services:
The Appellant contended that the impugned order exceeded the scope of the Expression of Interest (EOI) issued by the Resolution Professional (RP) since the Resolution Plan contained conditions beyond the EOI. The Appellant argued that the Adjudicating Authority erred in granting reliefs and concessions for utilities and shared services outside the leasehold area without the Appellant's consent. The RP and CoC refuted these submissions, arguing that the commercial wisdom of the CoC is paramount and non-justiciable. The reliefs and concessions were necessary for running the Corporate Debtor and did not adversely affect the Appellant's rights.

3. Appellant's Challenge to the Resolution Plan and Reliefs Granted:
The Appellant argued that the shared utilities and services were not part of the Information Memorandum and that the Adjudicating Authority could not direct the Appellant to provide unfettered access to these utilities. The Tribunal noted that the shared utilities and equipment were installed when the Corporate Debtor was a subsidiary of the Appellant. The Tribunal found no error in granting reliefs and concessions but stated that this does not fetter the Appellant's right to enter a fresh arrangement with the Successful Resolution Applicant (SRA) or to seek relief in a competent court.

Conclusion:
The Tribunal upheld the impugned order dated 04.01.2024 approving the Resolution Plan, stating that no grounds were made out to interfere with the approval within the meaning of Section 30(2) of the Code. The approval of the Resolution Plan and the grant of reliefs and concessions do not fetter the right of the parties to establish their rights and obligations in a competent court. The Appeal was disposed of accordingly, with parties bearing their own costs.