2023 (8) TMI 1290 - AT - Insolvency and Bankruptcy

CIRP - approval the resolution plan - Failure to take notice of serious procedural irregularities on the part of the Resolution Professional in the conduct of CIRP - exercise of commercial wisdom of the CoC in approving the resolution plan of Respondent No.3, sustainable or not. HELD THAT - The CoC through the Resolution Professional has taken abundant precaution to keep the Adjudicating Authority duly apprised of the developments since the filing of the liquidation application. Thus, there is no lack of transparency on the part of the Resolution Professional or the CoC in updating the Adjudicating Authority of the new resolution plan before it and reasons for seeking its fresh directions. And on its part, the Adjudicating Authority allowed the CoC the opportunity to deliberate upon the resolution plan thereby not infringing on the commercial wisdom of the CoC. The 19th CoC meeting clearly notes that multiple opportunities given to the Appellant to submit resolution proposal went futile. No viable resolution plans had been received from the PRAs in last two years. It is pertinent to note that the Appellant even at this stage did not make a murmur of protest of being denied a fair opportunity or level playing field in the CIRP process. Present is a case where the Appellant having been given multiple opportunities to submit a Section 12-A proposal and having consistently failed to do so, there does not appear to be any sufficient ground for the Appellant to claim that prejudice has been caused to their interest in allowing Respondent No.3 to submit their resolution plan - It is also noticed that PRAs had also been afforded reasonable opportunity to submit plans after having issued Form G thrice. The principle of fairness and equity have been reasonably met well - the decision of the CoC to entertain the resolution plan from Respondent No.3 without publication of Form G cannot be viewed to be such a grave procedural non-compliance that the integrity of the entire resolution process was undermined. There has been no suppression of material facts by the Resolution Professional in informing the CoC or the Adjudicating Authority on the proposal received from Respondent No.3 as PRA. Further, the CoC has approved all his actions including seeking the prior permission of the Adjudicating Authority - the CoC had duly considered and accepted the Resolution Plan for placing before the Adjudicating Authority and this was approved by the Adjudicating Authority vide the second impugned order. When the CoC has approved a Resolution Plan by 100% voting share after considering its feasibility and viability, such decision of CoC is a commercial decision. There can be no fetters on the commercial wisdom of the CoC. It is settled law that commercial wisdom of CoC in approving the Resolution Plan is not to be interfered in the exercise of jurisdiction of judicial review either by the Adjudicating Authority or by this Tribunal in the exercise of its appellate powers - the Adjudicating Authority did not commit any error and therefore concur in the second impugned order of the Adjudicating Authority approving the resolution plan. The Adjudicating Authority did not err in approving the resolution plan. In result, both impugned orders do not warrant any interference. Appeals being devoid of merit are dismissed.

Summary

Issues Involved:
1. Procedural irregularities in the conduct of CIRP by the Resolution Professional.
2. Approval of the resolution plan by the Adjudicating Authority.

Summary:

Issue 1: Procedural Irregularities in the Conduct of CIRP by the Resolution Professional:
The Appellant argued that there were serious procedural irregularities in the Corporate Insolvency Resolution Process (CIRP) conducted by the Resolution Professional. Specifically, the resolution plan of Respondent No.3 was not submitted in pursuance to Form G, which is a mandatory requirement under Section 25(2)(h) of the Insolvency and Bankruptcy Code (IBC) and Regulation 36A(1) of the CIRP Regulations. The Appellant contended that this procedural deviation amounted to a private sale, which is only permissible in liquidation, thereby vitiating the entire resolution process. The Appellant also claimed that they were denied a fair opportunity to present a plan and that the Resolution Professional did not share the resolution plan submitted by Respondent No.3, thus not acting in consonance with the IBC procedures.

Issue 2: Approval of the Resolution Plan by the Adjudicating Authority:
The Adjudicating Authority approved the resolution plan submitted by Respondent No.3, finding it compliant with the provisions of IBC and the CIRP Regulations. The Appellant challenged this approval, arguing that the Adjudicating Authority failed to take notice of the procedural irregularities and that the resolution plan was akin to a private sale. The Respondents defended the approval, stating that the resolution plan was considered in the interest of the Corporate Debtor's revival and that the procedural deviation of non-publication of Form G was not material. They emphasized that the commercial wisdom of the Committee of Creditors (CoC) is sacrosanct and should not be interfered with.

Tribunal's Findings:
The Tribunal noted that despite multiple opportunities, the Appellant and other Potential Resolution Applicants (PRAs) failed to submit satisfactory resolution plans. The CoC, exercising its commercial wisdom, decided to consider the resolution plan of Respondent No.3 to avoid liquidation. The Tribunal found that the procedural deviation of non-publication of Form G did not materially affect the integrity of the resolution process. The Tribunal emphasized that the commercial wisdom of the CoC, which approved the resolution plan by 100% voting share, is paramount and should not be interfered with. The Adjudicating Authority acted within its jurisdiction under Section 31 of IBC by approving the resolution plan, which met the requirements of Section 30(2).

Conclusion:
The Tribunal dismissed the appeals, upholding the Adjudicating Authority's orders approving the resolution plan. The Tribunal found no merit in the Appellant's claims of procedural irregularities and affirmed the primacy of the CoC's commercial wisdom in the resolution process.