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2024 (7) TMI 196 - AT - Insolvency and BankruptcyApproval of the resolution plan of Successful Resolution Applicant (SRA) - incorrect valuation exercise - valuation contemplated under the relevant CIRP Regulations were duly followed or not by the RP - applicability of Section 29-A(f) of the IBC - HELD THAT - Admittedly therefore, the Appellant was provided copy of the resolution plan as well as minutes of the CoC meeting and even allowed to attend the CoC meetings. Hence, the allegations raised by the Appellant of the RP not inviting the Appellant to attend the CoC meetings and not being provided with the resolution plan is frivolous and self-contradictory and therefore deserves scant regard. It is clear therefore that the Appellant has unjustifiably claimed that there has been statutory violations and irregularities in the valuation process conducted by the RP. There are no reasons to disagree with the Adjudicating Authority that the alleged imposition of ban by SEBI on the promoters of the SRA does not hold good because the Securities Appellate Tribunal had set aside the orders of the SEBI - the SRA was eligible to submit the resolution plan for the Corporate Debtor. Thus, even on this count the Appellant has hopelessly failed to validate their contention of alleged irregularity. When the CoC has approved the Resolution Plan by 100% voting share after considering its feasibility and viability, such decision of CoC is a commercial decision. There can be no fetters on the commercial wisdom of the CoC. It is settled law that commercial wisdom of CoC in approving the Resolution Plan is not to be interfered in the exercise of jurisdiction of judicial review either by the Adjudicating Authority or by this Tribunal in the exercise of its appellate powers - The Adjudicating Authority can reject the resolution plan only when there is noncompliance of Section 30(2) of IBC. There are no adequate grounds shown or material placed on record by the Appellant as to how the plan does not conform to Section 30(2) of IBC. The Adjudicating Authority did not err in approving the resolution plan of the SRA - the Adjudicating Authority did not commit any error in rejecting the interlocutory application of the Appellant objecting to the approval by the CoC of the resolution plan of the SRA - Appeal dismissed.
Issues Involved:
1. Alleged irregularities in the valuation of the Corporate Debtor's assets. 2. Eligibility of the Successful Resolution Applicant (SRA) under Section 29-A of IBC. 3. Alleged non-involvement of the ex-Director in the CIRP process. Issue-wise Detailed Analysis: 1. Alleged Irregularities in the Valuation of the Corporate Debtor's Assets: The Appellant contended that the assets of the Corporate Debtor were under-valued, citing previous valuations and balance sheet figures that were significantly higher than the valuation determined during the CIRP. The RP had appointed registered valuers who determined the average liquidation value at Rs. 83.52 Cr. and the fair value at Rs. 118.88 Cr. The Appellant argued that the RP did not consider earlier valuations and balance sheets, leading to a lower valuation. The Tribunal analyzed whether the valuation process under CIRP Regulations was followed. CIRP Regulation 27 requires the appointment of two registered valuers to determine fair and liquidation values in accordance with Regulation 35. The Tribunal found that the RP had adhered to these regulations, appointing three registered valuers whose reports were approved by the CoC. The Tribunal cited the Supreme Court's judgment in M.K. Rajagopalan v. Dr. Periasamy Palani Gounder, which emphasized that once the CoC is satisfied with the valuation, the Adjudicating Authority should not interfere. The Tribunal concluded that the Appellant's reliance on pre-CIRP valuations was misplaced and the valuation process was conducted correctly. 2. Eligibility of the Successful Resolution Applicant (SRA) under Section 29-A of IBC: The Appellant argued that the SRA was ineligible under Section 29-A(f) of the IBC due to alleged penalties imposed by SEBI on its promoters. The RP had conducted due diligence and found the SRA eligible. The Tribunal noted that on the date of the submission of the resolution plan, there was no effective SEBI ban on the SRA's promoters, and subsequent SEBI orders were either set aside or stayed by the Securities Appellate Tribunal. The RP had also obtained an independent due diligence report from M/s Mazars India LLP, confirming the SRA's eligibility. The Tribunal agreed with the Adjudicating Authority that the SRA was eligible and that the CoC had approved the resolution plan with 100% vote share. The Tribunal emphasized that the commercial wisdom of the CoC in approving the resolution plan should not be interfered with by the Adjudicating Authority, citing the Supreme Court's judgment in Ngaitlang Dhar v. Panna Pragati Infrastructure Private Limited. 3. Alleged Non-involvement of the Ex-Director in the CIRP Process: The Appellant claimed that the RP had conducted the CIRP process without involving the ex-Director and without providing necessary documents. However, the Tribunal found that the Appellant had been invited to attend CoC meetings and had been provided with the resolution plan and minutes of CoC meetings. The Appellant's own pleadings confirmed attendance at CoC meetings and cooperation with the RP. The Tribunal dismissed the Appellant's claims as frivolous and self-contradictory, noting that the Appellant had been involved in the CIRP process and had been provided with relevant documents. Conclusion: The Tribunal concluded that the CIRP process was conducted in compliance with the relevant regulations, the valuation was correctly determined, and the SRA was eligible under Section 29-A of the IBC. The Tribunal upheld the Adjudicating Authority's approval of the resolution plan and dismissed the appeal, finding no merit in the Appellant's contentions.
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