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2019 (5) TMI 1515 - Tri - Insolvency and BankruptcyAdmission of Application - expression of interest - whether the proviso to Section 31(4) of the Code, is applicable in the present case or not? - HELD THAT - In the present case, the amendment with respect to getting approval of CCI imposes an additional procedural obligation on the resolution applicants to furnish the approval from CCI before furnishing the resolution plan. Therefore, the amendment does not apply on the present CIRP proceedings. Hence, non-furnishing of the approval from CCI is no bar for the CoC or the RP to consider a resolution plan. Hence this objection raised by the Applicant that RPIF did not have a CCI approval as on the date of meeting i.e. 10.01.2019 stands rejected. Even otherwise, assuming that the aforesaid amendment was applicable in the present case, as on 10.01.2019 the Applicant itself did not have CCI's approval. CCI's approval was furnished on 11.01.2019, a day after the resolution plan of RPIF was approved. In that scenario, even if we assume that RPIF was ineligible to place a resolution plan before the CoC due to not having CCI's approval, but so was the case of the Applicant. The current position is that the RPIF has also furnished the necessary approval from CCI post the resolution plan was approved by the CoC. It is understood that the plain reading of the proviso to section 31(4) of the Code mandates the approval of CCI prior to approval of resolution plan by CoC as the word used in the statute is 'shall'. However, the intent of the legislature for introducing such mandatory requirement which poses an additional obligation on the resolution applicants is that post the approval of resolution plan, it should not be the case that the implementation of resolution becomes difficult due to absence of necessary approvals - Furthermore, it is not the case of the Applicant that the Resolution plan presented by it was approved on merits and merely due to this technical difficulty, rejected. Instead, as per the reasoning given by the RP and the CoC for rejection of the Resolution Plan of the Applicant, the Resolution plan of the Applicant did not even stood on merits due to the conditions and restrictions imposed in the plan. Commercial wisdom of CoC cannot be interfered with by the Adjudicating Authority. Definitely, it does not mean that Carte Blanche powers are given to RP the CoC but to apply 'commercial mind' is the forte of the CoC and to apply the 'judicial mind' is forte of the Adjudicating authority. All this Tribunal is entitled to see is whether law as prescribed by the legislature has been complied with or not. The decision taken by the CoC in approving RPIF's resolution plan is not required to be interfered - As far as the legal and procedural requirements are concerned, prima facie, they are complete in all aspects and the same will be looked into further at the stage of approval of Resolution Plan by this Bench/Adjudicating Authority. Application dismissed.
Issues Involved:
1. Validity of the approval of the Resolution Plan submitted by Royale Partners Investment Fund Ltd. (RPIF). 2. Compliance with the requirement of Competition Commission of India (CCI) approval. 3. Allegations of procedural irregularities and bias in favor of RPIF by the Resolution Professional (RP) and Committee of Creditors (CoC). 4. Evaluation and rejection of the Resolution Plan submitted by the Applicant, ArcelorMittal India Pvt. Ltd. Issue-Wise Detailed Analysis: 1. Validity of the approval of the Resolution Plan submitted by Royale Partners Investment Fund Ltd. (RPIF): The Applicant, ArcelorMittal India Pvt. Ltd., sought to declare the approval of RPIF’s Resolution Plan void, illegal, and contrary to the provisions of the Insolvency and Bankruptcy Code (IBC). The Applicant contended that the RPIF’s plan was approved without the mandatory CCI approval, which was required under the proviso to Section 31(4) of the IBC. The Applicant argued that only its plan, which had CCI approval, should have been considered. 2. Compliance with the requirement of Competition Commission of India (CCI) approval: The Tribunal examined whether the proviso to Section 31(4) of the IBC, which mandates CCI approval prior to the CoC’s approval of a resolution plan, was applicable. The Corporate Insolvency Resolution Process (CIRP) for the Corporate Debtor commenced on 20.04.2018, while the proviso came into effect on 17.08.2018. The Tribunal held that amendments to procedural laws are generally prospective unless specified otherwise. Since the amendment was onerous, it was to be applied prospectively. Therefore, the requirement for CCI approval did not apply to the ongoing CIRP, and the absence of CCI approval did not bar the CoC from considering RPIF’s plan. 3. Allegations of procedural irregularities and bias in favor of RPIF by the Resolution Professional (RP) and Committee of Creditors (CoC): The Applicant alleged that the RP had amended the process documents arbitrarily to favor RPIF, including removing the requirement for CCI approval and reducing the value of the bank guarantee. The Tribunal found that the CoC had waived the CCI approval requirement due to time constraints and to avoid liquidation. The CoC’s decision to amend the process document was within its procedural rights and was not done to unreasonably favor RPIF. The Tribunal noted that neither resolution applicant provided a performance bank guarantee for 10% of the total consideration, leading the CoC to amend the requirement to 10% of the upfront cash recovery. 4. Evaluation and rejection of the Resolution Plan submitted by the Applicant, ArcelorMittal India Pvt. Ltd.: The Tribunal found that the CoC had evaluated the Applicant’s plan and found it unsatisfactory due to conditions precedent and assumptions making the plan conditional and non-responsive. The CoC also found the financial offer unsatisfactory and the plan’s viability and feasibility questionable. The Applicant’s plan was rejected with 77.87% of the CoC voting against it. In contrast, RPIF’s plan was approved with 73.17% of the CoC voting in favor, meeting the required threshold under Section 30(4) of the IBC. The Tribunal emphasized that the CoC’s commercial wisdom in evaluating the plans could not be interfered with by the Adjudicating Authority, as per the Supreme Court’s directions in K Sashidhar v. Indian Overseas Bank. Findings: The Tribunal concluded that the proviso to Section 31(4) of the IBC did not apply retrospectively to the ongoing CIRP. Even if it did, the Applicant did not have CCI approval on the date of the CoC meeting. The Tribunal found no procedural irregularities or bias in favor of RPIF by the RP and CoC. The CoC’s decision to approve RPIF’s plan was based on commercial considerations and was within its rights. The Tribunal dismissed the Applicant’s Miscellaneous Application, upholding the CoC’s approval of RPIF’s Resolution Plan. Conclusion: The Tribunal dismissed the Applicant’s plea, affirming the validity of the CoC’s decision to approve RPIF’s Resolution Plan and rejecting allegations of procedural irregularities and bias. The Tribunal emphasized the limited role of the Adjudicating Authority in interfering with the CoC’s commercial decisions.
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