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2022 (12) TMI 276 - AT - Insolvency and BankruptcyDelay in Revival of the Corporate Debtor - Resolution Plan was implemented in its entirety and that the Corporate Debtor was not functional for a long period and that the implementation of the Employee Engagement Programme, as contemplated in the Plan had commenced - delay in revival procedure - valuation of shares - HELD THAT - The Resolution Professional, in tune with the ingredients of Section 30 (2) of the I B Code, 2016, is to examine each Resolution Plan, received by him, to affirm that the Resolution Plan, prescribes for the payment of Insolvency Resolution Process Costs, payments of Debts of Creditors, the management of affairs of the Corporate Debtor, implement and supervision of the Resolution Plan, other requirements as may be specified by the Board and does not violate any Section of Law, for the time being in force. As a matter of fact, the Committee of Creditors, may approve the Resolution Plan, by voting of not less than 75% of voting share on Financial Creditors, as per Section 30(4) of the I B Code, 2016. An Adjudicating Authority, can examine the reasoning of accepting or rejecting or any objection or suggestion and express his views in the matter. In tune with the ingredients of Section 31 of the I B Code, 2016, even an Adjudicating Authority, is satisfied with the Resolution Plan, being approved, by the Committee of Creditors, as per Section 30 (4) of the I B Code, that it fulfils the requirements, as visualised in Section 30 (2) of the Code, it shall by an Order approve the Resolution Plan, which shall be binding on the Corporate Debtor, Members, Employees, Creditors and other Stakeholders, involved in the Resolution Plan - If there is a Resolution Applicant, who can continue to run the Corporate Debtor, every endeavour is to be made, to try and see that is quite possible. There is no vested right in the Resolution Applicant, to get its / his Resolution Plan approved. Application of mind - HELD THAT - A Judicial mind is to be applied by an Adjudicating Authority to the Resolution Plan submitted, and he may take a call for accepting or rejecting the Plan, ofcourse, within the parameters of law. In the instant case on hand, this Tribunal, points out that the 1st Respondent / Resolution Professional, had averred in his Counter, in the instant Appeal that the Fair Value and the Liquidation Value of the Corporate Debtor were arrived at by both the groups of Registered Valuers, were not significantly different and as such, there was no requirement to appoint another Registered Value, by the Resolution Professional, to submit an estimate of the Value, computed in the same manner, as per Regulation 35 (b) of the Corporate Insolvency Resolution Process Regulations. The scope of Judicial Review, by an Adjudicating Authority, revolves around a restricted and narrow field - It cannot be ignored, that the Commercial Wisdom of the Committee of Creditors, is not be interfered with, except in the limited ambit, as contemplated under Section 30 (2) of the I B Code, 2016, in respect of an Adjudicating Authority, and as per Section 61 (3) of the Code, in regard to an Appellate Tribunal. Besides these, in Law, it is not open to an Adjudicating Authority (Tribunal) or an Appellate Authority (Appellate Tribunal), to consider any other feature than the one mentioned in Section 30 (2) or Section 61 (3) of the I B Code, 2016, in the considered opinion of this Tribunal. The word Person, is defined as per Section 3 (23) (d) of the I B Code, 2016, which includes a Trust, therefore, there is no Fetter/ Embargo or a Legal Impediment, for a Trust, to be a Resolution Applicant, in submitting a Resolution Plan (in the present case), the candid fact, is that the Successful Resolution Applicant / Lessie Medical Institutions, being a Registered Charitable Trust, under the Indian Trust Act, 1882), in Corporate Insolvency Resolution Process, in the cocksure earnest opinion of this Tribunal. Looking at from that perspective, the contra plea taken on behalf of the Appellant is not acceded to by this Tribunal. This Tribunal, on going through the words, any person Aggrieved, occurring in Section 61 (1) of the I B Code, 2016, is of the view that in Section 61 (1) of the Code, the words Party Aggrieved, are not employed. For an affected person, the Order of an Adjudicating Authority, must cause a Legal Grievance, by wrongfully depriving him of something and in the process, his Legal Right is breached, by the act complained of. This Tribunal, taking note of the divergent contentions advanced on either side, entire gamut of the factual matrix and attendant facts and circumstances of the instant case, in an integral manner, comes to an inescapable conclusion that the Appellant has not made out a case in its favour and has not proved any of the grounds adumbrated in Section 61 (3) of the I B Code, 2016, for filing an Appeal, against theimpugned order, passed by the Adjudicating Authority, (National Company Law Tribunal, Kochi Bench, Kerala), in approving the Resolution Plan, under Section 31 of the I B Code, 2016. Appeal dismissed.
Issues Involved:
1. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code (IBC). 2. Valuation of the Corporate Debtor's assets. 3. Eligibility of a Charitable Trust as a Resolution Applicant. 4. Adequacy of the Resolution Plan in addressing the interests of all stakeholders, including operational creditors. 5. Judicial review of the Committee of Creditors' (CoC) commercial wisdom. Detailed Analysis: 1. Compliance with Section 30(2) of the IBC: The Adjudicating Authority observed that the Resolution Plan meets the requirements of Section 30(2) of the IBC. The plan provides for the priority payment of CIRP costs, operational creditors, and ensures the management and supervision of the Corporate Debtor (CD) post-approval. The plan was approved by the CoC with a 100% voting share and declared not to contravene any provisions of the law. 2. Valuation of the Corporate Debtor's Assets: The Appellant contended that the Resolution Professional (RP) did not consider the exact value of the land and properties of the Corporate Debtor. However, the Respondents argued that the valuation was conducted by two independent registered valuers, and the average fair value and liquidation value were determined as INR 162.23 Crores and INR 122.90 Crores, respectively. The Tribunal noted that the values arrived at by the registered valuers are estimates and cannot be construed as the accurate value of the Corporate Debtor. 3. Eligibility of a Charitable Trust as a Resolution Applicant: The Appellant argued that a Charitable Public Trust cannot be a Resolution Applicant. However, the Tribunal referred to the definition of "person" under Section 3(23)(d) of the IBC, which includes a "trust." Therefore, there is no legal impediment for a trust to be a Resolution Applicant. The Tribunal cited the Supreme Court's decision in Sole Trustee Loka Shikshana Trust v. Commissioner of Income Tax, which supports the eligibility of a charitable trust to submit a resolution plan. 4. Adequacy of the Resolution Plan in Addressing Stakeholders' Interests: The Appellant claimed that the Resolution Plan did not adequately address the interests of operational creditors. The Tribunal noted that the plan provided for the payment of operational creditors in priority over financial creditors and included a provision for an additional payment of INR 1 Crore to unsecured financial and operational creditors. The Tribunal emphasized that the commercial wisdom of the CoC, which approved the plan unanimously, must be respected. 5. Judicial Review of the CoC's Commercial Wisdom: The Tribunal reiterated that the scope of judicial review of the CoC's commercial decisions is limited. The Adjudicating Authority and the Appellate Tribunal can only ensure that the resolution plan complies with the requirements of Section 30(2) of the IBC. The Tribunal cited several Supreme Court judgments, including K. Sashidhar v. Indian Overseas Bank and Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta, which affirm that the commercial wisdom of the CoC is paramount and not subject to judicial interference. Conclusion: The Tribunal concluded that the Appellant failed to make a case for setting aside the impugned order. The Resolution Plan was found to be compliant with the IBC and approved by the CoC with 100% voting share. The appeal was dismissed, and the Tribunal upheld the Adjudicating Authority's decision to approve the Resolution Plan.
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