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2024 (2) TMI 91 - AT - Insolvency and BankruptcyApproval of Resolution Plan - non-allocation of any marks on equity allotment to the Financial Creditors to the Appellant with regard to which IA No. 413 of 2023 was filed before the Adjudicating Authority - mis-calculation of the NPV of the Respondent No.2 which according to the Appellant is not accordance with the evaluation matrix. Non-allocation of any marks on equity allotment to the Financial Creditors to the Appellant with regard to which IA No. 413 of 2023 was filed before the Adjudicating Authority - HELD THAT - As per the Process Document and terms and conditions, Appellant was not entitled to change its financial proposal, hence, Clause 2 as extracted above included in the final Resolution Plan on 18.01.2023 could not help any allocation or marks to the Appellant. Further, in Clause 2 as added on 18.01.2023 provided for option to elect the fresh equity allotment by the CoC. CoC never opted to accept equity allotment as offered by the Appellant. When equity allotment was never accepted there was no question of giving any marks to the Appellant on equity allotment. Thus, allocation of no marks in the equity allotment was as per the Process Document and evaluation matrix and the Adjudicating Authority did not commit any error in rejecting IA No.413 of 2023. Further, value of the equity offered by the Appellant is Rs.200 Crores which does not meet the minimum INR 250 Crores threshold as prescribed in the evaluation matrix - no error was committed in not allocating any marks to the Appellant on equity allotment and the first submission raised by the Appellant has no merit. Mis-calculation of the NPV of the Respondent No.2 which according to the Appellant is not accordance with the evaluation matrix - HELD THAT - The determination of NPV of the Respondent No.2 as per final Resolution Plan as done by the Consolidated CoC and its advisors, thus, has to be treated as final and cannot be allowed to be challenged by any other Resolution Applicants. Present is a case where Appellant is challenging the determination of NPV by CoC and its Process Advisors contrary to the aforesaid Clause 2(ii) which is impermissible. The evaluation matrix and Process Document are documents which have been issued by the CoC and the CoC is the best judge to interpret its document and apply it for evaluation of NPV of the Resolution Applicants. The Hon ble Supreme Court in Silppi Constructions vs. Union of India 2019 (6) TMI 1449 - SUPREME COURT held that the author of a document is a best judge as to how the document has to be interpreted. Thus, commercial decision of the CoC while approving the plan to take decision whether to approve the plan of Resolution Applicant has highest NPV or not. The above clause of the Process Document also clearly indicate that the commercial wisdom of the CoC has been given paramount importance and whether the Applicant has highest NPV or not is not a deciding factor. The law laid down by the Hon ble Supreme Court is well settled that the business decision of the CoC is not to be interfered with by the Adjudicating Authority or this Tribunal unless it is shown that there is violation of Section 30(2) of the Code. Present is not a case where there is any submission that the Resolution Plan does not comply with Section 30(2). What is challenged by the Appellant is the allocation of marks on the basis of evaluation matrix to the Resolution Applicant - the CoC has considered the Resolution Plan in accordance with the evaluation matrix and there were no error in determination of the NPV of the Respondent No.2. Further, the Appellant was not entitled for any marks on equity allotment to the Financial Creditors which mark was rightly not given to the Appellant in the evaluation matrix. There are no error in the order of the Adjudicating Authority rejecting IA No.413 of 2023 and IA No.557 of 2023. Approval of the Resolution Plan by the Adjudicating Authority is in commercial wisdom of the CoC. No grounds have been made out to interfere with the order of the Adjudicating Authority approving the Resolution Plan. Appeal dismissed.
Issues Involved:
1. Non-allocation of marks on equity allotment to Financial Creditors. 2. Mis-calculation of the Net Present Value (NPV) of the Respondent No.2's financial proposal. Summary: Issue 1: Non-allocation of marks on equity allotment to Financial Creditors The Appellant contended that the Adjudicating Authority erred in rejecting IA No.413/KB/2023 by not allocating marks for equity allotment to Financial Creditors. The Appellant argued that their Resolution Plan dated 18.01.2023 offered equity allotment, entitling them to five marks, which would have made them the highest bidder. The Tribunal noted that the final Resolution Plan submitted by the Appellant initially on 14.01.2023 did not contain any clause of equity allotment. It was only on 18.01.2023 that a clause was added, providing for the CoC to elect for equity allotment. As per the Challenge Process Document, the financial proposal during the Challenge Process shall be unconditional and irrevocable and cannot be modified subsequently. Since the equity allotment clause was added after the Challenge Process, it could not be considered. Moreover, the CoC never opted to accept the equity allotment offered by the Appellant. Therefore, the non-allocation of marks for equity allotment was in accordance with the Process Document and evaluation matrix, and the Adjudicating Authority did not commit any error in rejecting IA No.413/KB/2023. Issue 2: Mis-calculation of the NPV of the Respondent No.2's financial proposal The Appellant argued that the NPV calculation of the Respondent No.2 was incorrect and not in accordance with the evaluation matrix. They contended that the security receipts submitted by Respondent No.2 should have been discounted at 60% as per the evaluation matrix. The Tribunal examined the financial proposal submitted by Respondent No.2, which included security receipts backed by committed NCDs. The Challenge Process Document stipulated that any instrument with a fixed committed repayment schedule shall be referred to as 'Identified Criteria' for the Challenge Process. The CoC and its advisors calculated the NPV of Respondent No.2, treating the security receipts as having a committed repayment schedule, thus not requiring a 60% discount rate. The determination of NPV by the CoC and its advisors was binding on the eligible RAs and could not be challenged. The Tribunal held that the CoC and its advisors did not commit any error in determining the NPV of Respondent No.2. The commercial wisdom of the CoC in approving the Resolution Plan is paramount and not justiciable. The Tribunal found no grounds to interfere with the decision of the Adjudicating Authority rejecting IA No.557/KB/2023. Conclusion: The Tribunal concluded that the non-allocation of marks for equity allotment to the Appellant was in accordance with the Process Document and evaluation matrix. The determination of the NPV of Respondent No.2 was correct and in line with the evaluation matrix and Process Document. The commercial wisdom of the CoC in approving the Resolution Plan is not subject to judicial review. The Appeal was dismissed.
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