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TMI Blog2020 (10) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... are not in a position to improve offer of payment to creditors of ₹ 11,03,24,869/-. So, the request of the second charge holders was not considered by the Resolution Applicants as well as the CoC while deciding the distribution pattern. The decision of the CoC in allocating 0.5% of the debt due to the second charge holders cannot be questioned and the same is not justiciable - application dismissed. - I. A. No. 784 of 2020 in C.P. (IB) 2045/NCLT/MB/2018 - - - Dated:- 5-10-2020 - Hon ble Member ( Judicial ), Janab Mohammed Ajmal And Hon ble Member ( Technical ), Shri V. Nallasenapathy For the Applicant : Mr Rohit Gupta, a/w Mr Nikhil Rajani, Advocates i/b. M/s. V. Deshpande and Co. For the Respondent : Ms Shikha Bhura with Mr Naman Gadhia, Advocates i/b Taplegal (For R1) Mr Ashish Parwani with Mr Chintan Gandhi, and Mr Nishant Sogni, Advocates i/b Rajani Associates (For R2 R3) ORDER Per : V. Nallasenapathy , Member ( Technical ) 1. This is an Application filed by the Applicant for the following reliefs: a) That this Hon ble Tribunal be pleased to allow Miscellaneous Application filed by the Applicant and accordingly direct the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% of principal outstanding was very low. However, despite the assurances made in the meeting, R2 and R3 failed to revise the offer of settlement of claim to the second charge holders. c) The Corporate Debtor created first charge over the factory, land and building, plant and machinery situated at Village Dushkhede, Taluka Yawal, District Jalgaon in favour of some Financial Creditors and the principal outstanding amount due to the Applicant is ₹ 3,63,35,186/- and the claim of the Applicant admitted is for ₹ 46,89,86,949/- and the offer of 0.5% in the Resolution Plan to the Applicant works out to a meagre sum of ₹ 1,81,676/-. d) Since the Applicant is the second charge holder, the Applicant has to compromise almost the entire outstanding dues and the CIRP had not ensured any benefit to the Applicant. The Resolution Plan is afflicted with vices of manifest arbitrariness and unfairness. e) The Ld. Counsel for the Applicant submitted that, on percentage basis even the Operational Creditors were placed in a better position than the Second Charge Holders. 5. The Respondent No. 1 (R1) filed reply to the Application and contended as below: - a) The Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 days of effective date) + 1115 (within 45 days of effective date)] 3. Total 3,228 c) The liquidation value of the Corporate Debtor is ₹ 4,00,00,000/- (Rupees Four Crores only), and against this value, Resolution Applicants are proposing almost 3 times the liquidation value towards the settlements of debts of the Corporate Debtor and CIRP costs. The dissenting Financial Creditor including the Applicant will be paid in priority over the Financial Creditors. The Resolution Plan has been approved by the whopping majority of 93.06%. The amount payable to the Financial Creditors is ₹ 11,03,24,869/- and the distribution pattern has to be decided by the CoC and not by the Resolution Applicants. d) The CoC in its commercial wisdom decided to provide 0.5% to the second charge holders and the same is within the purview of the commercial wisdom of the CoC. The payment offered to the second charge holders is considerably better than the liquidation value payable to the creditors. e) Considering the liquidation value, if the payment is provided under Section 53(1) of the Code, the Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other financial and operational creditors. What is important is that it is the commercial wisdom of this majority of creditors which is to determine, through negotiation with the prospective resolution applicant, as to how and in what manner the corporate resolution process is to take place. 42. Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar (supra). 46 .Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors. There is no doubt whatsoever that the ultimate discretion of what to pay a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that resolution of distressed assets takes 56 .So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution Applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors. 57 .Indeed, Regulation 13(1) of the 2016 Regulations mandates that when the resolution professional verifies claims, the security interest of secured creditors is also looked at and gets taken care of . 89 .We cannot arrive at the conclusion that the acceptance of the resolution plan by the majority of the Committee of Creditors should be set aside on this score, inter alia, for the reason that Shri Sibal assured us that he was not attacking the acceptance of the revised plan but only distribution of amounts payable under the said plan. This being so, it is also not possible to accept the submission of Shri Sibal, that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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