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2024 (2) TMI 774 - AT - Insolvency and BankruptcyRejection of Resolution Plan - No proper consideration of the plan submitted by the Appellant even though he has submitted the EMD of Rs.1 Crore after the order dated 30.09.2022 - HELD THAT - The minutes of 8th CoC meeting held on 08.10.2022 has been brought on the record. In the 8th CoC meeting, the Appellant as a Director of the Suspended board was also present. The CoC took note of the order dated 30.09.2022 an EMD of Rs.1 Crore submitted by the Appellant on 02.10.2022. Under the Agenda Item No.5, it was noticed that the CoC members requested the Appellant to explain the plan submitted by him. The Appellant has explained his plan. First submission of the Appellant that the plan submitted by the Appellant was not duly considered by the CoC is not found correct. A perusal of the minutes of the 8th CoC meeting and 9th CoC meeting as extracted above clearly indicate that the plan of the Appellant was duly considered. In the minutes, it was also noticed that the Appellant had proposed sale of the Calcutta factory in which State Bank of India had a charge. Thus, all aspects of the plan including the plan value of Appellant as well as Respondent No.16 were in the knowledge of the CoC and were deliberated before voting - the Resolution Plan was approved by the CoC after due consideration. It is well settled that the commercial wisdom of the CoC in approving the Resolution Plan is not open to judicial review and there are very limited ground to interfere with the decision i.e. only when the plan is in violation of any statutory provision like Section 30(2) of the Code. The submission of the Appellant that Swiss Challenge Method was not adopted with regard to plan of the Appellant also need no consideration. Swiss Challenge Method was adopted between Respondent No.5 and Respondent No.16 when the plan of the Appellant was not compliant and Respondent No.16 was declared as H-1. Thus, when plan of the Appellant was directed to be considered by the Adjudicating Authority on 30.09.2022, plan of the Appellant came for consideration in the 8th and 9th CoC meeting. Adoption of Swiss Challenge Method is enabling provision which can be adopted by the CoC. No infirmity can be found in the consideration of the plan of the Appellant if CoC did not adopt any Swiss Challenge Method. The plan submitted by the Appellant have been duly considered and voted upon which could not muster the requisite vote, there is no error in the order passed by the Adjudicating Authority allowing IA No. 1330 of 2022 approving the Resolution Plan. Appeal dismissed.
Issues Involved:
1. Approval of the Resolution Plan by the Adjudicating Authority. 2. Rejection of the Appellant's Resolution Plan by the Committee of Creditors (CoC). 3. Alleged non-consideration of the Appellant's Resolution Plan by the CoC. 4. Adoption of the Swiss Challenge Method. 5. Commercial wisdom of the CoC in approving the Resolution Plan. 6. Judicial review of the CoC's decision. Summary: Issue 1: Approval of the Resolution Plan by the Adjudicating Authority The Appellant challenged the order dated 05.01.2024, where the Adjudicating Authority approved the Resolution Plan submitted by Respondent No.16, 'Eastern Copper Manufacturing Company Pvt. Ltd.', and rejected the Appellant's Resolution Plan. The Adjudicating Authority's decision was based on the commercial wisdom of the CoC, which had approved the Resolution Plan of Respondent No.16 with 86.02% votes. Issue 2: Rejection of the Appellant's Resolution Plan by the CoC The Appellant's Resolution Plan was initially non-compliant due to the absence of the Earnest Money Deposit (EMD) of Rs.1 Crore. After the Adjudicating Authority's order on 30.09.2022, the Appellant submitted the EMD and his plan was considered in the 8th and 9th CoC meetings. Despite this, the CoC rejected the Appellant's plan with a vote share of 73.41% against it. Issue 3: Alleged Non-Consideration of the Appellant's Resolution Plan by the CoC The Appellant argued that his plan was not duly considered. However, the minutes of the 8th and 9th CoC meetings indicated that the plan was discussed, and the Appellant was present to explain his plan. The CoC deliberated on the plan, including the proposed sale of the Calcutta factory, and found it not feasible or viable. Issue 4: Adoption of the Swiss Challenge Method The Appellant contended that the Swiss Challenge Method was not adopted for his plan. The Tribunal noted that this method was used when the Appellant's plan was non-compliant. The CoC's decision not to adopt the Swiss Challenge Method for the Appellant's plan was within its discretion. Issue 5: Commercial Wisdom of the CoC in Approving the Resolution Plan The Tribunal emphasized that the commercial wisdom of the CoC in approving a Resolution Plan is paramount and not subject to judicial review, except on limited grounds such as violation of statutory provisions. The CoC's decision to approve the plan of Respondent No.16 was based on thorough deliberation and consideration of all aspects, including plan value and feasibility. Issue 6: Judicial Review of the CoC's Decision The Tribunal reiterated that the commercial decisions of the CoC are non-justiciable unless there are glaring omissions or statutory violations. The Adjudicating Authority and the Tribunal found no such deficiencies in the CoC's decision-making process. Conclusion: Both Appeals were dismissed, affirming the approval of the Resolution Plan submitted by Respondent No.16 and the rejection of the Appellant's plan. The Tribunal upheld the commercial wisdom of the CoC and found no grounds for judicial interference.
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