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2020 (8) TMI 547 - AT - Insolvency and BankruptcyApproval of the Resolution Plan - impugned order is assailed on the ground that the Adjudicating Authority has failed to consider objections raised by the Appellant to the Resolution Plan submitted by APSEZ as also the objections raised by the Appellant qua the rejection of settlement proposal submitted by Balaji Infra Projects Limited - HELD THAT - A plain reading of the provision of section 31 of I B Code, makes it abundantly clear that the Resolution Applicant is required to obtain necessary approval required under any extant law within one year from the date of approval of the Resolution Plan by the Adjudicating Authority or within such time as may be provided in such law but not later than one year. However, this requirement of obtaining the necessary approval pursuant to approval of the Resolution Plan by the Adjudicating Authority has been subjected to one exception carved out in the form of proviso to sub-section (4) which enjoins upon the Resolution Applicant to obtain approval in regard to provision for combination, while such provision has been made in the Resolution Plan, prior to approval of such Resolution Plan by the Committee of Creditors. A cursory look at the provision engrafted in sub-section (4) of Section 31 of the I B Code reveals that while with regard to an ordinary Resolution Plan, the Resolution Applicant is required to obtain necessary approval required under any extant law within one year from the date of such approval by Adjudicating Authority only after such Resolution Plan has been approved by the Adjudicating Authority, however, a Resolution Plan containing the provision for combination is required to obtain approval of the Competition Commission of India prior to the approval of such Resolution Plan by the Committee of Creditors. It is manifestly clear that a Resolution Plan containing provision for combination has been treated as a class apart requiring approval of the Competition Commission of India even prior to such Resolution Plan being approved by the Committee of Creditors. However, treating such requirement as mandatory is fraught with serious consequences. The issue regarding the statutory requirement of a Resolution Plan containing a provision for combination requiring prior approval of the Competition Commission of India even before such Resolution Plan is approved by the Committee of Creditors, being not mandatory and only directory in nature. The view taken by this Appellate Tribunal in ARCELORMITTAL INDIA PVT. LTD VERSUS ABHIJIT GUHATHAKURTA 2020 (1) TMI 277 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI holds the field as the same has not been reversed or set aside in appeal or other proceeding. Obtaining of requisite approval under Competition Act, 2002 with regard to the provision of the Combination in the instant case is stated to be not required as the same is below threshold limit. Objection raised to buttress the argument that in absence of necessary prior statutory approval of the Committee of Creditors qua the combination, Resolution Plan of APSEZ is in contravention of Section 31(4) of the I B Code , cannot be sustained and the Appellant cannot be heard to say that the approved Resolution Plan of APSEZ being in contravention of law leaves no option but to send the Corporate Debtor into liquidation. All objections raised qua the action of the Resolution Professional during Corporate Insolvency Resolution Process, approval of Resolution Plan of APSEZ by the Committee of Creditors and its subsequent approval by the Adjudicating Authority being unfounded are hereby repelled - appeal dismissed.
Issues Involved:
1. Approval of the Resolution Plan by the Adjudicating Authority. 2. Rejection of the settlement proposal by the Committee of Creditors (CoC). 3. Compliance with the Insolvency and Bankruptcy Code (I&B Code) and Competition Act, 2002. 4. Commercial wisdom of the Committee of Creditors. 5. Non-consideration of MA 3298 of 2019. Detailed Analysis: 1. Approval of the Resolution Plan by the Adjudicating Authority: The appeal was filed by a former Director and shareholder of the Corporate Debtor challenging the order dated 5th March 2020, which approved the Resolution Plan submitted by Adani Ports Special Economic Zone Limited (APSEZ). The Adjudicating Authority approved the plan with certain modifications, which was contested on the grounds that objections raised by the appellant were not considered. 2. Rejection of the Settlement Proposal by the Committee of Creditors (CoC): The Corporate Insolvency Resolution Process (CIRP) was initiated on 25th March 2018. During the process, the CoC considered various resolution plans, including a settlement proposal from the promoter's holding company, Balaji Infra Projects Limited (BIPL). The CoC rejected the settlement proposal with 99.68% votes and approved APSEZ's plan with the same percentage. The appellant argued that the CoC did not properly consider the settlement proposal. 3. Compliance with the Insolvency and Bankruptcy Code (I&B Code) and Competition Act, 2002: The appellant contended that APSEZ's Resolution Plan required prior approval from the Competition Commission of India (CCI) before being approved by the CoC, as mandated by Section 31(4) of the I&B Code. However, the tribunal found that the requirement for CCI approval is directory, not mandatory. The tribunal cited the case "Arcelormittal India Pvt. Ltd. v. Abhijit Guhathakurta" to support this view, stating that the CoC can approve the plan subject to subsequent CCI approval. 4. Commercial Wisdom of the Committee of Creditors: The tribunal emphasized that the commercial wisdom of the CoC in approving or rejecting a resolution plan is not subject to judicial review. It reiterated the principle established in "Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta & Ors." that the CoC's business decisions are final, provided they comply with the I&B Code. The tribunal found no evidence that the approved plan contravened any legal provisions. 5. Non-consideration of MA 3298 of 2019: The appellant argued that MA 3298 of 2019, which objected to the rejection of BIPL's proposal and the approval of APSEZ's plan, was not considered. The tribunal found no record indicating that MA 3298 was reserved for judgment. It noted that the issues raised in MA 3298 were already addressed in Appeal No. 139 of 2018, which was decided on 12th March 2020. Conclusion: The tribunal dismissed the appeal, affirming that the CoC's decision to approve APSEZ's Resolution Plan was based on commercial wisdom and complied with the I&B Code. It rejected the appellant's arguments regarding the necessity of prior CCI approval and the alleged procedural irregularities. The tribunal upheld the Adjudicating Authority's order approving the Resolution Plan, emphasizing the limited scope of judicial review in such matters.
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