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TMI Blog2020 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... vided in Section 61(3) of the I B Code - there are no such provision that during the pendency of approval of plan the limitation for CIRP process will stop. Application dismissed. - Company Appeal (AT) (INS) No. 461 of 2019 - - - Dated:- 29-5-2020 - Jarat Kumar Jain, Judicial Member Balvinder Singh And Dr. Ashok Kumar Mishra, Technical Member For the Appellant : Ms. Anannya Ghosh, Advs. For the Respondent : Anoop Prakash Awarthi, Jain Kumar, Ms. Shreya Seth, Rajesh Gautam, Anant Gautam and Prashant S. Kenjale, Advs. JUDGMENT JARAT KUMAR JAIN, J. 1. Appellant M/s Chhatisgarh Distilleries Ltd (in short A-1), a second Resolution applicant and Abhay (in short A-2) erstwhile promoter and director of the Corporate Debtor have filed these appeals against the common order dated 8-4-2019 passed by Adjudicating Authority (National Company Law Tribunal) Mumbai Bench in MA 1363/2018 and MA 602/2019 in CP No.1095/I B/NCLT/MAH/2017 whereby the Adjudicating Authority allowed the application (MA 1363/2018) under section 30(6) read with Section 31(1) of Insolvency Bankruptcy Code, 2016 filed by Resolution Professional and approved the plan whereas rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application, on 31-1-2019 the Hon'ble Supreme Court has pronounced the judgment and given directions that the erstwhile Board of Directors may furnished with a copy of resolution plan so that they can participate effectively in the Meeting of COC. Adjudicating Authority found that before pronouncement of judgment COC has already approved resolution plan. However, the copy of the resolution plan has been furnished to the erstwhile promoter/director. After due consideration the Adjudicating Authority rejected the objections of the erstwhile promoter/director. 6. Appellant Chhatisgarh Distilleries Ltd (i.e. A-1) filed an application (MA No. 602/2019) under section 60(5) of I B Code before Adjudicating Authority on 5-11-2018 seeking direction to submit its resolution plan for consideration of the resolution professional and COC under section 30(3) of I B Code. It is stated that once the plan is submitted before the Adjudicating Authority then the CIRP period stopped running and thus the A-1's application be considered as filed within the subsistence of the CIRP period. It is also stated that the A-1 shall invest approximately ₹ 52.50 crores which consists of ₹ 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Manual is not transferable which would render the resolution applicant ineligible under section 29A of the I B Code. Thus the impugned order is liable to be set aside. 11. On the other hand learned counsel representing RP (Respondent no. 1) submits that these appeals are filed under section 61(3) of the I B Code. Section 61(3) of I B Code provides the grounds on which the order for approving of resolution plan under section 31 of I B Code can be challenged. None of these grounds are mentioned in the Memo of appeals and appellants have not pointed out on which ground they have challenged the approved resolution plan. 12. Learned counsel for the Respondent No. 1 also submits that apart from this legal objection admittedly A-1 has submitted resolution plan before Adjudicating Authority on 13-2-2019, much later the last date for submission of the resolution plan i.e. 15-10-2018. Once the resolution plan is approved by the COC then certainly the Adjudicating Authority cannot direct the COC/RP to consider the plan submitted by another resolution applicant. It is also submitted that after approval of the resolution plan A-1 has no locus to challenge the resolution plan by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el of the approval of the resolution plan by the CoC of the respective corporate debtor, namely KS PIPL and IIL, by a vote of less than seventy five percent of voting share of the financial creditors; and about the correctness of the view taken by the NCLAT that the percentage of voting share of the financial creditors specified in Section 30(4) of the I B Code is mandatory. Further, is it open to the adjudicating authority/appellate authority to reckon any other factor (other than specified in Sections 30(2) or 61(3) of the I B Code as the case may be) which, according to the resolution applicant and the stakeholders supporting the resolution plan, may be relevant? ** ** ** 25. The Court, however, was not called upon to deal with the specific issue that is being considered in the present cases namely, the scope of judicial review by the adjudicatory authority in relation to the opinion expressed by the CoC on the proposal for approval of the resolution plan. 47. After adverting to the 2016 Regulations, the Court set out the jurisdiction of the Adjudicating Authority as well as the Appellate Tribunal as follows: 42. Whereas, the discretion of the adjudicating authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution plan shall be in the manner and on the grounds specified in Section 61(3) of the I B Code. Section 61(3) of the I B Code reads thus: 61. Appeals and Appellate Authority.-(1) Notwithstanding anything to the contrary contained under the Companies Act, 2013 (18 of 2013), any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal. (2) xxx xxx xxx (3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely:- (i) the approved resolution plan is in contravention of the provisions of any law for the time being in force; (ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period; (iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board; (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or (v) the resolution plan does not comply with any other criteria specified b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ode, which is limited to matters other than enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I B Code and not to act as a court of equity or exercise plenary powers. 46. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors. The fact that substantial or majority percent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 6-6-2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter-III of the I B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October, 2017) of voting share of the financial creditors. Conversely, the legislative intent is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the I B Code which empowers the adjudicating authority (NCLT) to oversee the justness of the approach of the dissenting financial creditors in rejecting the proposed resolution plan or to engage in judicial review thereof. Concededly, the inquiry by the resolution professional precedes the consideration of the resolution plan by the CoC. The resolution professional is not required to express his opinion on matters within the domain of the financial creditor(s), to approve or reject the resolution plan, under section 30(4) of the I B Code. At best, the Adjudicating Authority (NCLT) may cause an enquiry into the approved resolution plan on limited grounds referred to in Section 30(2) read with Section 31(1) of the I B Code. It cannot make any other inquiry nor is competent to issue any direction in relation to the exercise of commercial wisdom of the financial creditors - be it for approving, rejecting or abstaining, as the case may be. Even the inquiry before the Appellate Authority (NCLAT) is limited to the grounds under section 61(3) of the I B Code. It does not postulate jurisdiction to undertake scrutiny of the justness of the opinion expressed by financial creditors at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Adjudicating Authority. Thus, we are of the view that Adjudicating Authority is well within its jurisdiction while rejecting the application of A-1. 18. Now, we have considered the scope of Appeal and Jurisdiction of the Appellate Tribunal. 19. The Hon'ble Supreme Court in the case of Essar Steel India Ltd. (supra) held that the Jurisdiction of the NCLAT being in continuation of the proceedings would be circumscribed in that regard and more particularly, on account Section 32 of the I B Code, which envisages that any Appeal from order approving the Resolution Plan shall be, in the manner and on the grounds specified in Section 61(3) of I B Code. 20. The A-1 has not taken any of the grounds specified in S.61 (3) of the I B Code in the memo of Appeal. Even, during the course of argument learned Counsel for A-1, was unable to convince us that the appeal is filed on any of the grounds provided u/s 61(3) of the I B Code. The Hon'ble Supreme Court held that undoubtedly the inquiry in such Appeal would be limited to the power exercisable by the Resolution professional under section 30(2) of the I B Code, which are at the best by the Adjudicating Authority under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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