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2024 (6) TMI 51 - AT - Insolvency and BankruptcyApplication filed by the Resolution Professional (RP) for approval of the Resolution Plan rejected - non-compliance of Section 30(2)(b) and Section 30 of IBC - HELD THAT - The Adjudicating Authority can reject Resolution Plan only when it is in non-compliance of Section 30(2). From the observations made by the Adjudicating Authority in the impugned order, it is clear that apart from only bare observation that Plan does not confirm to Section 30(2), there are no reasons or material given as to how the plan can be said to be non-compliance of Section 30(2). As observed with regard to Minutes and Documents which were not filed by RP, it was always open for the Adjudicating Authority to call for the relevant documents from the RP for examination of the same and rejection of the Plan on the ground that RP has not filed Information Memorandum, RFRP and certain Minutes of the CoC is clearly uncalled for - There are no consideration of materials or findings based on any material or facts regarding Plan being non-compliance of Section 30(2). In the facts of the present case, interest of justice be served in setting aside the impugned order passed by the Adjudicating Authority and reviving the application filed by the RP for fresh consideration. To obviate the delay in disposal of the application, the Minutes and the Documents which have not been filed by RP, may be submitted by RP along with an Additional Affidavit before the Adjudicating Authority within two weeks from today. Appeal allowed.
Issues Involved:
1. Rejection of the Resolution Plan by the Adjudicating Authority. 2. Submission of required documents by the Resolution Professional (RP). 3. Compliance of the Resolution Plan with Section 30(2) of the Insolvency and Bankruptcy Code (IBC). Summary: Issue 1: Rejection of the Resolution Plan The appeals were filed against the order of the Adjudicating Authority dated 05.04.2024, which rejected the I.A. No. 1394/2023 filed by the Resolution Professional (RP) for approval of the Resolution Plan submitted by M/s. Eagle Fashions Private Ltd. The Adjudicating Authority observed that the RP did not submit necessary documents such as the Information Memorandum, RFRP, Valuation Report, receipt of Performance Security, and Minutes of the 8th Meeting of the CoC. Additionally, it noted that the claim of Statutory Authorities was not accepted by the RP, and the liquidation option was considered better. Issue 2: Submission of Required Documents by RP The Adjudicating Authority pointed out that the RP failed to submit critical documents, including the RFRP, Information Memorandum, and Valuation Reports. It was also noted that the RP did not provide the Minutes of the 8th CoC Meeting and the receipt of performance security. The Tribunal emphasized that the Adjudicating Authority could have directed the RP to submit these documents instead of rejecting the plan outright. Issue 3: Compliance with Section 30(2) of IBC The Tribunal discussed the limited jurisdiction of the Adjudicating Authority to review the commercial wisdom of the CoC, as established in the judgments of the Hon'ble Supreme Court in `Committee of Creditors of Essar Steel India Limited vs Satish Kumar Gupta and Ors.` and `Maharashtra Seamless Steel Ltd vs. Padmanabhan Venkatesh & Others`. The Tribunal found that the Adjudicating Authority's observations regarding non-compliance with Section 30(2) were merely bare observations without any substantive basis or material. The Tribunal reiterated that the Adjudicating Authority could reject a Resolution Plan only if it did not comply with Section 30(2) of the Code. Conclusion: The Tribunal allowed the appeals, set aside the impugned order dated 05.04.2024, and revived I.A. No. 1394/2023 for fresh consideration by the Adjudicating Authority. The RP was directed to submit the necessary documents and Minutes within two weeks for the Adjudicating Authority to reconsider the application in accordance with the law.
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