9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (6) TMI 689 - AT - Insolvency and BankruptcyJurisdiction to pass order for re-bidding - Approval of Resolution Plan - section 31 of the I B Code, 2016 - Whether the Adjudicating Authority has exceeded its jurisdiction in passing order for re-bidding, despite the approval of the Resolution Plan by CoC, with a vote share of 84.70% of votes? HELD THAT - In the instant case, the Adjudicating Authority has overturned the decision of the CoC regarding approval of the Resolution Plan despite being approved by 84.70 percent of the vote share of the CoC, on the pretext of maximisation of value of the corporate debtor. The provisions investing jurisdiction and authority in the NCLT has not made the commercial decision exercised by the CoC of not approving the resolution plan or rejecting the same, justiciable. In the circumstances, it is clear that the Adjudicating Authority cannot interfere with the commercial wisdom of CoC. The direction for rebidding for maximisation of the value of the corporate debtor also amounts to an interference in the business decision of the CoC, which is not permitted in law - the Adjudicating Authority is having limited power of judicial scrutiny under section 31, which has to remain within the four corners of Section 30(2) of the Code and the same cannot, in any circumstance, trespass upon the commercial wisdom of the CoC. There is nothing on record to show that the RP manipulatively conducted the bidding process. It is also clear that the role of the Resolution Professional is only that of a facilitator. Evaluation matrix of the Resolution Plan also falls within the parameters of commercial wisdom of the CoC, which is non-justiciable - Appeal dismissed.
Issues Involved:
1. Legality of the Adjudicating Authority's order for fresh bidding despite CoC's approval of the Resolution Plan. 2. Evaluation process and transparency of the Resolution Professional's conduct. 3. Allegation of bias and non-compliance with statutory provisions by the Resolution Professional. 4. Fair market value of the corporate debtor's assets and the bid amount. Detailed Analysis: 1. Legality of Adjudicating Authority's Order for Fresh Bidding: The primary issue was whether the Adjudicating Authority exceeded its jurisdiction by ordering fresh bidding despite the Committee of Creditors (CoC) approving the Resolution Plan with an 84.70% vote share. The judgment highlighted that the Adjudicating Authority's power under Section 31 of the Insolvency and Bankruptcy Code (I&B Code) is limited to ensuring the Resolution Plan meets the requirements of Section 30(2). The Supreme Court in K. Sashidhar v. Indian Overseas Bank emphasized that the commercial wisdom of the CoC is paramount and non-justiciable. The Adjudicating Authority cannot interfere with the CoC's decision, which is based on thorough examination and collective business judgment. The direction for re-bidding was found to be beyond the Adjudicating Authority's jurisdiction, as it interfered with the CoC's commercial decision, which is not permissible under the law. 2. Evaluation Process and Transparency of the Resolution Professional's Conduct: The appellant in Company Appeal No. 184 of 2020 challenged the evaluation process, alleging non-transparency and manipulation by the Resolution Professional (RP). However, the judgment found no evidence of manipulation by the RP. The role of the RP is that of a facilitator, and the evaluation matrix falls within the CoC's commercial wisdom, which is non-justiciable. The appeal on these grounds was dismissed. 3. Allegation of Bias and Non-Compliance with Statutory Provisions: The appellant in Company Appeal No. 78 of 2020 contended that the process was biased towards the H1 bidder and that the RP did not comply with the provisions of Sections 30(2) and 30(4) of the I&B Code. The judgment reiterated that the Adjudicating Authority's power of judicial scrutiny is limited and does not allow interference with the CoC's commercial decisions. The appeal was dismissed as the allegations did not justify judicial scrutiny. 4. Fair Market Value of Corporate Debtor's Assets and Bid Amount: The appellant argued that their bid was higher than the approved bid and that the fair market value of the corporate debtor's assets was not considered. The judgment referred to the Supreme Court's decision in Maharashtra Seamless Limited, which stated that the court should defer to the commercial wisdom of the creditors rather than engage in quantitative analysis. The appeal on these grounds was dismissed, reinforcing that the CoC's decision on the bid amount is non-justiciable. Conclusion: The Adjudicating Authority's order for fresh bidding was set aside as it exceeded its jurisdiction by interfering with the CoC's commercial decision. The appeals challenging the evaluation process, alleging bias, and contesting the bid amount were dismissed. The matter was remitted back to the Adjudicating Authority to pass an order for approval of the Resolution Plan in accordance with the directions given.
|
