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2025 (3) TMI 440 - AT - IBCApproval of resolution plan of the Corporate Debtor as submitted by the Resolution Professional - claims of the Operational Creditors did not receive their dues or not - material irregularities in the exercise of powers by the RP in the CIRP proceedings or not - Appellant has assailed the impugned order approving the resolution plan on the ground that the plan was approved by the Adjudicating Authority after expiry of 330 days of CIRP period - HELD THAT - There is no doubt that in terms of Section 24(3)(c) of the IBC it is the duty of the RP to give notice to the Operational Creditors or their representatives regarding the CoC meetings if the amount of their aggregate due is not less than 10% of the debt. It is also well settled that such Operational Creditors whose aggregate due is not less than 10% of the debt have a right to watch the proceedings of the CoC and express their views in the meetings without however any right to vote. In the present case there is no denial of the fact that the Appellant received notice of the CoC meetings from the RP. As the Appellant was kept informed of the CoC meetings and records show their regular participation in such meetings they had full knowledge of the CIRP proceedings. They were therefore equally aware of the extensions of CIRP time-lines approved by the CoC but these extensions by the CoC were not questioned by them at the appropriate time. The issue was neither agitated before the Adjudicating Authority at the right point of time and is now being raked up belatedly. In the present case the 23rd CoC meeting on 04.12.2023 had taken note of the fact that it was in an advanced stage of considering the resolution plans before it and since the extended CIRP period was getting expired on 10.12.2023 the CoC approved seeking further extension of CIRP period. Clearly enough CoC having taken a considered decision in this regard this constituted sufficient grounds for the Adjudicating Authority to extend further time beyond 330 days for completion of the CIRP process. The entitlement of an Operational Creditor is to receive the amount as provided under Section 30(2)(b) of IBC which is not less than the amount which the Appellant would have been entitled to receive in the event of a liquidation of the Corporate Debtor under Section 53 of the IBC - the resolution plan cannot be said to be in dissonance with the provisions of Section 30(2)(b) of IBC. The resolution plan has been approved with a majority of 97.36% of vote share. The plan having been approved by majority of votes the Operational Creditor is clearly bound by the approved resolution plan. The Adjudicating Authority did not commit any error while approving the resolution plan after noting its satisfaction at para 26 of the impugned order about the plan being in compliance of the provisions of the IBC in terms of Section 30(2) of the IBC. Law is now well settled that the jurisdiction of the Adjudicating and Appellate Authorities to interfere with approval of the resolution plan is limited. The scope of judicial review is confined to the provisions contained in Section 30(2) of the IBC for the Adjudicating Authority and Section 30(2) read with Section 61(3) for the Appellate Authority. There is only limited review which can be exercised by the Adjudicating Authority or the Appellate Authority. There can be no fetters on the commercial wisdom of CoC. Conclusion - There is neither any material irregularity nor contravention of any provisions of law by the CoC which has been justifiably substantiated by the Appellant. In the present case when no valid grounds have been made out to challenge the approval of the resolution plan the legislative fiat of the IBC that the Adjudicating Authority cannot trespass upon the business decision of the CoC holds ground. There are no doubts in our mind that the plan has been rightly approved by the Adjudicating Authority. There are no good ground to interfere with the impugned order approving the resolution plan. There is no merit in the appeal. The Appeal is dismissed.
1. ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment were:
2. ISSUE-WISE DETAILED ANALYSIS Material Irregularities and Procedural Compliance: The appellant contended that the resolution plan was approved beyond the statutory 330-day timeline for CIRP, as stipulated under Section 12 of the IBC. The Court examined whether the extensions granted were justified. It was noted that the Committee of Creditors (CoC) had approved the extension due to the advanced stage of resolution plan consideration, and the Adjudicating Authority had granted the extension before the plan was approved. The Court referenced the Supreme Court judgment in Committee of Creditors of Essar Steel India Vs Satish Kumar Gupta, which allows for extensions beyond 330 days under certain circumstances. Thus, the extension was deemed justified. The appellant also argued that the RP failed to comply with Regulation 36-A(2) of the CIRP Regulations by not publishing Form-G on the IBBI website. The Court found this argument unpersuasive, noting the appellant's delayed challenge and lack of prejudice to their interests. Valuation Reports and Commercial Wisdom: The appellant claimed that the RP did not circulate detailed valuation reports, only sharing fair and liquidation values. The Court reviewed the minutes of the 17th CoC meeting, which recorded the RP's explanation that confidentiality requirements under Regulation 35(2) of the CIRP Regulations limited the sharing of detailed reports. The Court emphasized that the appellant, as an Operational Creditor without voting rights, could not claim prejudice from this decision, as the CoC members were responsible for exercising commercial wisdom. Operational Creditors' Claims and Section 30(2)(b) Compliance: The appellant argued that the resolution plan did not comply with Section 30(2)(b) of the IBC, which mandates that Operational Creditors receive at least the amount they would in a liquidation scenario. The Court noted that the plan provided Rs. 60 lakhs to Operational Creditors, exceeding the nil liquidation value specified for them. Thus, the plan was compliant with Section 30(2)(b). Approval of the Resolution Plan: The resolution plan was approved by the CoC with a 97.36% vote share. The Court reiterated that the Adjudicating Authority's scope for reviewing a resolution plan is limited to ensuring compliance with Section 30(2) of the IBC. The Court found no material irregularity or legal contravention in the CoC's decision, emphasizing the supremacy of the CoC's commercial wisdom. 3. SIGNIFICANT HOLDINGS The Court held that:
The appeal was dismissed, affirming the Adjudicating Authority's approval of the resolution plan. The Court underscored that judicial review should not interfere with the CoC's business decisions unless they contravene explicit legal provisions or public interest.
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