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2022 (12) TMI 1058 - AT - Insolvency and BankruptcyApproval of Resolution Plan - Section 31 of the Insolvency and Bankruptcy Code, 2016 - Appellants raised several objections against the Resolution Plan, as approved by the CoC, being discriminatory towards Operational Creditors - HELD THAT - In the instant case, what has to be kept in mind is that the Corporate Debtor is a Real Estate Company involved in construction of Housing and Commercial Units and the land on which the construction is to be completed belongs to GMADA. As the nature of the activity of the Corporate Debtor is dependent on the land owned by GMADA, the commercial decision taken by the CoC to make a provision in the Resolution Plan with respect to the Statutory Dues owed to GMADA, cannot be faulted with, though GMADA has failed to make the requisite claim, as provided for under the Code, but has been in communication with the RP - We do not appreciate the act of GMADA not having filed their claim, the fact remains that the Real Estate Project is being constructed on GMADA land and all approvals, permits and licences involves GMADA, which is a Secured Creditor . Further, the nature of business and the ground realities were kept in mind by the CoC before taking a commercial decision. In approval of the Resolution Plan, the CoC takes a business decision based on ground realities, by a majority which binds all stakeholders including dissenting Creditors . Keeping in view the peculiar facts of the instant case that the Resolution Plan was approved by the CoC way back in 2019 and the Adjudicating Authority has approved the Plan on 01.06.2021 after a period of two years and the Plan has already been implemented, we do not see it a fit case to set the clock back, specifically keeping in view the ratio of the Hon ble Supreme Court in the aforenoted Judgements. It is hoped that the IBBI the Government may take effective steps to make necessary amendments/frame Regulations to protect the class of Financial Creditors /Homebuyers from imposition of any haircuts, and likewise take essential measures to safeguard the interest of Operational Creditors in the Structure of the Resolution Plans . Appeal dismissed.
Issues Involved:
1. Procedural irregularities and principles of natural justice. 2. Discrimination between classes of creditors. 3. Approval of the resolution plan without disposing of objections. 4. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code (IBC), 2016. 5. Commercial wisdom of the Committee of Creditors (CoC). Detailed Analysis: 1. Procedural Irregularities and Principles of Natural Justice: The appellants argued that their applications were not decided before the resolution plan was approved, violating natural justice principles. However, it was established that the status of the cause list was uploaded on the NCLT website on 01.06.2021, indicating the approval of the resolution plan. The Hon'ble Delhi High Court allowed the appellants to withdraw their petition with liberty to assail the order on merits, not on procedural grounds. Therefore, the contention of procedural irregularities was dismissed. 2. Discrimination Between Classes of Creditors: The appellants claimed discrimination as GMADA was paid 100% of its dues while other operational creditors received only 25%. The Hon'ble Supreme Court in various judgments, including "Committee of Creditors of Essar Steel Ltd. vs. Satish Kumar Gupta," held that differential payments to different classes of creditors are permissible if the commercial wisdom of the CoC is followed. The CoC's decision to pay GMADA 100% was based on the necessity of GMADA's support for obtaining licenses and permits essential for the corporate debtor's business. 3. Approval of the Resolution Plan Without Disposing of Objections: The appellants argued that the resolution plan was approved without addressing their objections. The Hon'ble Supreme Court in "Pratap Technocrat Private Limited vs. Monitoring Committee of Reliance Infratech Ltd." emphasized that pending applications should not delay the approval of a resolution plan. The NCLT had the jurisdiction to approve the plan if it met the requirements of Section 30(2) of the IBC, 2016. 4. Compliance with Section 30(2) of the IBC, 2016: The appellants contended that the resolution plan did not comply with Section 30(2) of the IBC, 2016. However, the NCLT found that the plan met all the necessary conditions. The Hon'ble Supreme Court in "Bank of Baroda vs. MBL Infrastructures Ltd." reiterated that the jurisdiction of the NCLT is limited to ensuring compliance with Section 30(2) and does not extend to re-evaluating the commercial decisions of the CoC. 5. Commercial Wisdom of the CoC: The CoC approved the resolution plan with a 100% voting majority. The Hon'ble Supreme Court in "Kalparaj Dharamshi vs. Kotak Investment Advisors Limited" held that the commercial wisdom of the CoC is non-justiciable, and the NCLT or NCLAT cannot interfere with the CoC's business decisions. The CoC's decision to approve the plan, including differential payments, was based on ground realities and the necessity to keep the corporate debtor as a going concern. Conclusion: The appeals were dismissed as the resolution plan was approved following the commercial wisdom of the CoC, and no procedural or legal irregularities were found. The NCLT's jurisdiction is limited to ensuring compliance with Section 30(2) of the IBC, 2016, and cannot interfere with the CoC's commercial decisions. The resolution plan's approval and implementation, including differential payments, were upheld.
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