2025 (1) TMI 265 - Tri - IBC

Seeking approval of the resolution plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 ('the Code') read with Regulation 39 (4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT - It is satisfied that all the requirements of Section 30 (2) of the Code are fulfilled and no provision of the law appears to have been contravened. Section 30(6) of the Code enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. Section 31 of the Code deals with the approval of the Resolution Plan by the Authority if it is satisfied that the Resolution Plan, as approved by the CoC under section 30(4), meets the requirements provided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan, as approved by the CoC, meets the above requirements. In K Sashidhar v. Indian Overseas Bank Others 2019 (2) TMI 1043 - SUPREME COURT the Hon'ble Apex Court held that if the CoC has approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan, as approved by the CoC, meets the requirements specified in Section 30(2). The Hon'ble Apex Court further observed that the role of the NCLT is 'no more and no less'. The Hon'ble Apex Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan as approved by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. The Hon'ble Supreme Court in the matter of Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited 2021 (4) TMI 613 - SUPREME COURT held that on the date of the approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the Resolution Plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not a part of the Resolution Plan. Conclusion - The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A), and 39 (4) of the Regulations. The Resolution Plan is also not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. Application allowed.

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily revolves around the following core legal questions:

Whether the resolution plan submitted by the Successful Resolution Applicant (SRA) complies with the requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 (the Code) and the corresponding regulations.
Whether the Committee of Creditors (CoC) exercised its commercial wisdom appropriately in approving a resolution plan with a value lower than the liquidation value of the Corporate Debtor.
Whether the resolution plan addresses the treatment of various categories of creditors, including secured and unsecured financial creditors, operational creditors, and other creditors, in accordance with the Code.
Whether the resolution plan provides for the management and implementation of the Corporate Debtor post-approval.
Whether the resolution plan is in compliance with Section 29A of the Code regarding the eligibility of the resolution applicant.
Whether the resolution plan includes necessary reliefs and concessions to ensure the Corporate Debtor operates as a going concern.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Compliance with Section 30(2) of the Code

Legal Framework: Section 30(2) outlines the requirements a resolution plan must satisfy, including payment of insolvency resolution process costs, repayment of debts, and management of the Corporate Debtor's affairs.
Court's Interpretation: The Tribunal examined the resolution plan and confirmed that it fulfills all the requirements specified under Section 30(2).
Key Evidence and Findings: The resolution plan provides for the payment of CIRP costs, debts of operational creditors, and management of the Corporate Debtor's affairs post-approval.
Application of Law to Facts: The Tribunal found that the resolution plan meets all statutory requirements, thus complying with Section 30(2).
Conclusion: The resolution plan satisfies the conditions set forth in Section 30(2) of the Code.

Issue 2: CoC's Commercial Wisdom

Legal Framework: The Supreme Court in Maharashtra Seamless Limited v. Padmanabhan Venkatesh held that CoC can approve a plan with a value lower than the liquidation value if it is feasible and viable.
Court's Interpretation: The Tribunal acknowledged the CoC's authority to approve such a plan based on its commercial judgment.
Key Evidence and Findings: The CoC approved the plan with 93.76% votes, considering its feasibility despite the lower value.
Application of Law to Facts: The Tribunal upheld the CoC's decision, emphasizing the CoC's commercial wisdom.
Conclusion: The CoC's approval of the resolution plan is valid and binding.

Issue 3: Treatment of Creditors

Legal Framework: Section 30(2)(b) mandates repayment of operational creditors and consideration for financial creditors.
Court's Interpretation: The plan's provisions for creditors were scrutinized and found to be compliant with the Code.
Key Evidence and Findings: The plan details payments to various creditors, with specific provisions for dissenting creditors.
Application of Law to Facts: The Tribunal confirmed that the plan treats creditors as per legal requirements.
Conclusion: The resolution plan's creditor treatment aligns with statutory obligations.

Issue 4: Management and Implementation Post-Approval

Legal Framework: Section 30(2)(c) requires a plan for managing the Corporate Debtor's affairs post-approval.
Court's Interpretation: The Tribunal noted the plan's provisions for a new management structure and implementation committee.
Key Evidence and Findings: The plan includes a detailed management and supervision strategy.
Application of Law to Facts: The Tribunal found the management provisions to be adequate and compliant.
Conclusion: The plan provides a clear framework for post-approval management.

Issue 5: Eligibility under Section 29A

Legal Framework: Section 29A outlines the eligibility criteria for resolution applicants.
Court's Interpretation: The Tribunal reviewed affidavits and reports confirming the applicant's eligibility.
Key Evidence and Findings: The resolution applicant submitted necessary affidavits confirming compliance with Section 29A.
Application of Law to Facts: The Tribunal confirmed the applicant's eligibility based on the evidence provided.
Conclusion: The resolution applicant meets the eligibility criteria under Section 29A.

Issue 6: Reliefs and Concessions

Legal Framework: The Code allows for reliefs and concessions to facilitate the Corporate Debtor's operations.
Court's Interpretation: The Tribunal considered the requested reliefs but emphasized compliance with statutory obligations.
Key Evidence and Findings: The plan seeks certain reliefs to ensure the Corporate Debtor operates as a going concern.
Application of Law to Facts: The Tribunal granted some reliefs while directing the applicant to seek others from competent authorities.
Conclusion: The resolution plan includes necessary reliefs, subject to statutory compliance.

3. SIGNIFICANT HOLDINGS

"The committee of creditors may approve a resolution plan by a vote of not less than sixty-six percent of voting share of the financial creditors, after considering its feasibility and viability..."
The Tribunal upheld the CoC's decision to approve a resolution plan with a lower value than the liquidation value, citing the CoC's commercial wisdom.
The resolution plan's compliance with Section 30(2) of the Code was confirmed, ensuring the plan's legality and viability.
All claims not part of the resolution plan are extinguished upon approval, as per the Supreme Court's precedent in Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited.
The Tribunal emphasized the limited scope of judicial review, restricting its role to ensuring compliance with statutory requirements.

The judgment concludes by approving the resolution plan submitted by the Successful Resolution Applicant, making it binding on all stakeholders involved, and outlining the next steps for implementation and supervision.

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