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TMI Blog2022 (2) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a question of fact if it is based on relevant material on record . Be that as it may, the record shows that the average of two closest estimates given by the valuers was taken into consideration as a fair value and the liquidation value. It is an admitted fact that the Plan has successfully been implemented and all payments due under the said Resolution Plan have been paid. It is a well settled preposition of law by the Hon ble Supreme Court in a catena of Judgments that the commercial wisdom of CoC is non-justiciable except on the grounds of Section 30(2). In the instant case, we do not find any material on record to substantiate that the approval of the Resolution Plan is in contravention of any law for the time being in force - It is well settled that Insolvency and Bankruptcy Code overrides other law and under Section 31 of the Code, the Resolution Plan approved by the CoC and meeting the requirements under Section 30(2) has to be approved by the Adjudicating Authority. Commercial Wisdom of the CoC with respect to viability and financial decision taken while evaluating the Resolution Plan has to prevail, unless the Plan approved by the CoC is in conflict with any provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) of the Code. The Learned Counsel drew our attention to 10.9 of the Resolution Plan which deals with exemptions from Noida Special Economic Zone (NSEZ), in which it is detailed as follows: 10.9 Exemptions from Noida Special Economic Zone (NSEZ): There should be exemption of payment to NSEZ of any type of fees/penalty for renewal of sublease and/or transfer charges dues to change in 100% directorship/shareholding or both in favour of resolution applicant irrespective of the fact that the original Allottee has obtained completion certificate or not This is an in direct contradiction to the established rules and principles of the functions of NSEZ. Learned Counsel submitted that there are fixed charges/penalties for change in any business model and agreed fees for the transfer of units by the original allottee. The Public Notice was also advertised that the bidder ought to pay the transfer charges and therefore without responding to the same in the Resolution Plan, the Resolution Professional cannot seek to command functions of the Appellant which works under the guidance of the Ministry of Commerce and Industry. The Resolution Applicant is seeking to bypass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r also did not take the permission of the Appellant to conduct any physical inspection of the subject property and has accepted that he was not provided with the building layout plans. Learned Counsel placed reliance on Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which is extracted hereunder: 35. Fair value and Liquidation value. (1) Fair value and liquidation value shall be determined in the following manner:- (a) the two registered valuers appointed under regulation 27 shall submit to the resolution professional an estimate of the fair value and of the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor; (b) if in the opinion of the resolution professional, the two estimates of a value are significantly different, he may appoint another registered valuer who shall submit an estimate of the value computed in the same manner; and (c) the average of the two closest estimates of a value shall be considered the fair value or the liquidation valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim has been rejected outrightly can continue the demands post successful resolution. Once the Resolution Plan is approved by the Adjudicating Authority under Section 31, the claims as provided in the Resolution Plan shall stand frozen and will be binding on the creditors including statutory authorities, employees and guarantors. Consequently, all the dues including statutory dues owed to the Central Government, State Government and Local Authority, if not part of the Resolution Plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to date on which the Adjudicating Authority grant its approval under Section 31 could be continued. Learned Counsel submits that liquidation should be a matter of last resort and seeks dismissal of the Appeal. 5. Submissions of the Third Respondent/Successful Resolution Applicant: Learned Counsel appearing for the Third Respondent/Successful Resolution Applicant submitted that the Resolution Plan was approved by the Adjudicating Authority on 05.10.2020 and that the Third Respondent has already paid ₹ 50 Lacs to the Appellant vide Demand Draft dated 22.10.2020, which was received and accepted by the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t came to be approved on 05th October, 2020 is sought to be dismissed through this Application. It is noted that after the approval of the Resolution Plan, this Authority has no power to dismiss the approved Resoution Plan. The only course open to the Applicant is to file an Appeal under Section 61 of the Code. In view of the above, the Application is dismissed in limine. 8. At the outset, we observe that this Appellate Tribunal had, vide Order dated 12.02.2021 directed that the implementation of the approved Resolution Plan would be subject to the outcome of the Appeal. 9. Learned Counsel for the Appellant strenuously argued that when the Reserve Price for land and building in the said plot was ₹ 902 Lacs in the year 2018 there are no grounds for the valuation to have depreciated to ₹ 6.10 crores within a period of one year. 10. At this juncture, we find it apt to reproduce the relevant portion of Section 35 (c) of the Code: Section 35: Powers and duties of liquidator.35. (1) Subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties, namely:- (a) to verify claims of all the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verseas Bank Ors. (2019 12 SCC 150) and Ghanashyam Mishra Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Limited Ors. [(2021) SCC OnLine SC 313]. 14. We find it relevant to reproduce Section 30 and 31 of the Code: Section 30: Submission of resolution plan. 30. (1) A resolution applicant may submit a resolution plan 1[along with an affidavit stating that he is eligible1A under section 29A] to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the 2[payment] of other debts of the corporate debtor; [(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the financial creditors, after considering its feasibility and viability, 6[the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor] and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A: Provided also that nothing in the second proviso shall be construed as extension of period f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e resolution plan to the Board to be recorded on its database. [(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 Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.] (Emphasis Supplied) 15. It is an admitted fact that the Plan has successfully been implemented and all payments due under the said Resolution Plan have been paid. 16. The Hon ble Supreme Court in Maharashtra Seamless Limited Vs. Padmanabhan Venkatesh Ors. , [(2020) 11 SCC 467] has observed as follows: 27. It appears to us that the object behind prescribing such valuation process is to assist the CoC to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng undue delays resultantly hampering the value maximisation. It was also found necessary to ensure, that all creditors are treated fairly. It was therefore in view of the various difficulties faced and in order to fill the critical gaps in the corporate insolvency framework, it was necessary to amend certain provisions of the I B Code. Clause (f) of para 3 of the SOR of the Insolvency and Bankruptcy Code (Amendment) Bill, 2019 would amply make it clear, that the legislative intent in amending subsection (1) of Section 31 of I B Code was to clarify, that the resolution plan approved by the Adjudicating Authority shall also be binding on the Central Government, any State Government or any local authority to whom a debt is owed in respect of payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, including tax authorities. 72. In the Rajya Sabha debates, on 29.7.2019, when the Bill for amending I B Code came up for discussion, there were certain issues raised by certain Members. While replying to the issues raised by certain Members, the Hon ble Finance Minister stated thus: IBC has actually an overriding effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uished. .. CONCLUSION 95. In the result, we answer the questions framed by us as under: (i) That once a resolution plan is duly approved by the Adjudicating Authority under sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan; (ii) 2019 amendment to Section 31 of the I B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I B Code has come into effect; (iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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