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TMI Blog2019 (5) TMI 1515X X X X Extracts X X X X X X X X Extracts X X X X ..... lan before the CoC due to not having CCI's approval, but so was the case of the Applicant. The current position is that the RPIF has also furnished the necessary approval from CCI post the resolution plan was approved by the CoC. It is understood that the plain reading of the proviso to section 31(4) of the Code mandates the approval of CCI prior to approval of resolution plan by CoC as the word used in the statute is 'shall'. However, the intent of the legislature for introducing such mandatory requirement which poses an additional obligation on the resolution applicants is that post the approval of resolution plan, it should not be the case that the implementation of resolution becomes difficult due to absence of necessary approvals - Furthermore, it is not the case of the Applicant that the Resolution plan presented by it was approved on merits and merely due to this technical difficulty, rejected. Instead, as per the reasoning given by the RP and the CoC for rejection of the Resolution Plan of the Applicant, the Resolution plan of the Applicant did not even stood on merits due to the conditions and restrictions imposed in the plan. Commercial wisdom of CoC can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) Submissions by the Applicant: 3. It is submitted that the Applicant filed a Resolution Plan pursuant to invitation for 'expression of interest' and in accordance with the process document issued by the RP. On 10.01.2019, the resolution Plans of the Applicant as well as RPIF were put to vote before the CoC and the CoC approved the resolution plan of RPIF, despite it not having Competition Commission of India (CCI) approval as required under proviso to S. 31(4) of the Insolvency Bankruptcy Code, 2016 (Code). S. 31(4) says that: (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in its resolution Plan is in excess of ₹ 2,200 Crores, including ₹ 1,084 Crores of fresh equity in the Corporate Debtor. It is submitted that the RP is unreasonably favouring the RPIF notwithstanding the question raised on RPIF's financial credibility in view of its failure to submit the earnest money deposit of ₹ 5 Crores, together with the resolution plan submitted on November 24, 2018. 9. The Applicant in the Additional Affidavit filed pursuant to the reply of RP states that its revised resolution plan was not even placed before the CoC for approval due to the fact that the Applicant did not have the approval of the CCI in respect of resolution plan as on that date. 10. The Applicant submits that the Adjudicating Authority is empowered to ascertain whether the resolution plan submitted is violative of any provisions of any law as directed by Hon'ble Supreme Court in Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta [2018] 150 SCL 354 and Vijay Kumar Jain v. Standard Chartered Bank [2019] 14/152 SCL 56 (SC). (B) Submissions by the Resolution professional 11. The RP states that though th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the Corporate Debtor. 13. It is further stated that the 'evaluator' appointed by the CoC presented its evaluation to the CoC wherein the resolution plan of the Applicant scored higher in the evaluation matrix. Therefore, the resolution plan of the Applicant was placed before the CoC for voting on meeting dated 10.01.2019. The CoC rejected the Applicant's claim with 77.87% of the CoC voting against the resolution plan. Only 17.67% of CoC voted in favour of the resolution plan and the rest abstaining from voting. The CoC highlighted that the receivables being assigned to the creditors while having book value of ₹ 700 Crores would be insignificant if the contracts thereto are cancelled as proposed in the plan. Moreover, the offer made by the Applicant was significantly lower than the liquidation value determined for the resolution applicant. In view of above, the plan was rejected. 14. The other resolution plan submitted by RPIF was considered thereafter, approved by the CoC by voting share of 73.17% which is higher than the minimum threshold of 66% as specified in S.30(4) of the Code. 15. It is further denied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, in the matter of CIT v. Vatika Township (P.) Ltd. 367 ITR 466, it was held that the amendments which are beneficial can be applied retrospectively and the amendments in a statute which are onerous in nature or imposes some liability or obligation on a party, can be held to be prospective. Relevant portion of the judgement is reproduced below: We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India Ors. v. Indian Tobacco Association [(2005) 7 SCC 396] , the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CCI's approval was furnished on 11.01.2019, a day after the resolution plan of RPIF was approved. In that scenario, even if we assume that RPIF was ineligible to place a resolution plan before the CoC due to not having CCI's approval, but so was the case of the Applicant. The current position is that the RPIF has also furnished the necessary approval from CCI post the resolution plan was approved by the CoC. 22. It is understood that the plain reading of the proviso to section 31(4) of the Code mandates the approval of CCI prior to approval of resolution plan by CoC as the word used in the statute is 'shall'. However, the intent of the legislature for introducing such mandatory requirement which poses an additional obligation on the resolution applicants is that post the approval of resolution plan, it should not be the case that the implementation of resolution becomes difficult due to absence of necessary approvals. As is said by the Hon'ble Supreme Court in the matter of Union of Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama 1989 (11) TMI 307, that Statutes should be construed, not as theorems of Euclid, but with some imaginat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of both the plans presented before it on the date of meeting i.e. 10.01.2019, have been carefully looked into and due application of mind has been done in approving the RPIF's resolution plan. Moreover, in view of the directions given by the Hon'ble Supreme Court in K Sashidhar v. Indian Overseas Bank [2019] 152 SCL 312, the role of the Adjudicating Authority is merely limited to see the compliance of procedural requirements by the RP the CoC to approve the resolution plan. Commercial wisdom of CoC cannot be interfered with by the Adjudicating Authority. Definitely, it does not mean that Carte Blanche powers are given to RP the CoC but to apply 'commercial mind' is the forte of the CoC and to apply the 'judicial mind' is forte of the Adjudicating authority. All this Tribunal is entitled to see is whether law as prescribed by the legislature has been complied with or not. The relevant portion of K Shashidhar judgement has been reproduced below: As aforesaid, upon receipt of a rejected resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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