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TMI Blog2021 (7) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... s accepted by the CoC and accordingly the valuation was done by those valuers - it is seen from the minutes of the 7th CoC meeting that the third valuer Mr. Vaidya Raman was appointed by the Resolution Professional who visited the premises and conducted the valuation to the non-core assets. In the present case, it is seen from the minutes extracted from the 6th CoC meeting that RP further apprised the CoC members, that due to significant difference in the value of land and building submitted by the valuers appointed by IRP, the RP had to appoint third valuer in accordance with provisions of Regulation 35 of CIRP Regulations, 2016. Accordingly, the third valuer has submitted his report before the RP and accordingly the fair value and the Liquidation value in relation to the Corporate Debtor was arrived at by the Resolution Professional - it is clear that the RP has arrived at a Fair Value and the Liquidation Value based on the average of all the three valuers and the same has been done in accordance with Regulation 35 of the IBBI (IRPCP) Regulations 2016. Further, the valuation certificate dated September 2019 relied on by the promoter/suspended Director of the Corporate Debtor woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions taken by the CoC in the past meetings - the objections as raised by the objectors in relation to the procedural irregularities in relation to the conduct of the Corporate Insolvency Resolution Process, are not so grave in order to defeat the Resolution Plan as filed by the Resolution Professional - Application dismissed. Related Party - HELD THAT:- This Tribunal is of the considered view that the Applicants are related party in respect of the Corporate Debtor and that the decision of the IRP/RP in categorizing the Applicant viz. M/s. Dharani Finance Limited as Related Party of Corporate Debtor is free from all legal infirmities and does not warrant any interference by this Adjudicating Authority. Accordingly, application stands dismissed. Discrimination in the Resolution Plan - HELD THAT:- The contentions of the Learned Senior Counsel for the objectors that differential treatment are being made to them since they are related party in respect of the Corporate Debtor do not hold any merit in view of the discussions made supra and also the decisions referred in support of the same. Hence the objections raised by the objectors in relation to the said issues are overruled. Pendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporate Debtor viz., M/s. Appu Hotels Ltd. under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of the IBBI (Insolvency Resolution for Corporate Persons) Regulations, 2016 seeking reliefs as follows:- (a) Pass an order approving the resolution plan submitted by the Resolution Applicant in respect of the Corporate Debtor under Section 31(1) of the Code and declare that the same be binding on the Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan; (b) Pass an order directing that, pending disposal of the present application by this Tribunal, the Resolution Professional shall continue to conduct his hold as Resolution Professional of the Corporate Debtor and during such period shall have all powers, duties and protections as available to him as a Resolution Professional under the Code and regulations thereunder; (c) Pass an order directing the Resolution Applicants to implement the Resolution Plan in the manner set out in the resolution plan; (d) Pass an order approving the appointment of Monitoring Agent (MA) and Monitoring Committee (MC) from the date of approval of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 796 084 5.62 6. IDBI 118 103 307 3.03 7. Edelweiss ARC 41 315,506 1.06 8. Allium Finance P Ltd. 16 294,149 0.42 SECURED CREDITORS AMOUNT 3 404 327 622 87.39% UNSECURED CREDITORS 9. Prabhat Resources Limited 166,612,427 4.28 10. Sub Bri ht Industries 165 568.956 4.25 11. M/S RSM Industries 55 854 738 1.43 12. Ar av Ex orts P Ltd. 48,749,914 1.25 13. Modern Constructions 33 440,000 0.86 14. URC Builders 15 000 000 0.39 15. M. Chandrasekaran 6,060,082 0.16 UNSECURED CREDITORS MOUNT 491,286,117 12.61% TOTAL AMOUNT 3 895 613 739.40 100% 5. The list of persons who have been categorized as related parties both in relation to the Financial Creditors and Operational Creditors are as under:- LIST OF FINANCIAL CREDITORS WHO ARE RELATED PARTIES S. No. NAME OF CREDITOR AMOUNT CLAIMED AMOUNT ADMITTED 1. A. Sennimalai 2,38,91,366 2,38,91,366 2. K. Mandasam 84,02,760 81,19,345 3. Palani G. Periasam 3,21 67 184 3 21 67 184 4. Dharani Finance Limited 4,81,62,175 4181,14,422 5. Dharani Developers p Ltd. 4,79,33,528 4,79133,503 TOTAL AMOUNT 45,08,03,605 44,99,52,717 LIST OF OPERATIONAL CREDITORS WHO ARE RELATED PARTIES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.09.2020 the IRP has placed a list of prospective Resolution Applicants before the CoC and the CoC had approved the list of prospective Applicants. The date of issuance of the request for Resolution Plan was 16.09.2020 and the last date for submission of the Resolution Plan was fixed as 31.10.2020. 11. In pursuance of the same, the IRP has received the Resolution Plans from the following persons:- (i) Madhav Dhir (ii) M.K. Rajagopalan (iii) Kotak Special Situations 12. It is further seen that in the 6th CoC meeting held on 16.12.2020, the Applicant had apprised the CoC members that totally three Resolution Plans were received and out of which two Resolution Plans were being presented to the CoC after conducting legal due diligence of the Resolution Plan. The Applicant had prima facie come to the conclusion that the Resolution Plan submitted by Mr. Madhav Dhir and Mr. M.K. Rajagopalan met the eligible criteria as prescribed by the CoC and also under the provisions of IBC, 2016 and attendant Regulations framed therein. 13. In the 6th CoC meeting held on 16.12.2020, the CoC has sought for the revised Resolution Plans from the two eligible Resolution Applicants. It is seen th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 containing the details of the compliance of the Resolution Plan with the mandatory requirements as envisaged under IBC, 2016 and the Regulations framed thereunder. 19. Further, it is seen that the Resolution Applicant, in pursuance of the approval of the Resolution Plan by the CoC, had provided Bank Guarantee for a sum of ₹ 25 Crore on 01.02.2021. Pursuant to the approval of the Resolution Plan by the CoC under Section 30(4) of IBC, 2016, the Applicant has filed I.A./150/CHE/2021 before this Adjudicating Authority under Section 30(6) of IBC, 2016 seeking Approval of the Resolution Plan in terms of Section 31(1) of IBC, 2016 read with Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 20. Salient Features of the Resolution Plan (i) The Resolution Plan as proposed by the Resolution Applicant deals with the interest of all the stakeholders including the employees and the workmen, the financial creditors and the operational creditors of the Company. (ii) As per the Resolution Plan, the Resolution Applicant has proposed to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin 90 days from the approval of the Resolution Plan by this Adjudicating Authority. (viii) The Resolution Plan also proposes to create a contingency fund to the tune of ₹ 22.02 Crore to meet out any contingent expenses being incurred after approval of the Resolution Plan. The payment schedule being made by the Resolution Applicant in terms of the Resolution Plan is being captured hereunder:- PAYMENT PROPOSAL 1ST INSTALMENT 2ND INSTALMENT TOTAL PLAN AMOUNT PMT AFTER NCLT APPROVAL IN==> 45 DAYS* 90 DAYS Rs. Crores Rs. Crores Rs. Crores CIRP cost (as per RP's communication 2.90 --- 2.90 Secured Financial Creditors 116.75 223.68 340.43 Unsecured Financial Creditors (other than related parties 16.83 32.30 49.13 Unsecured Financial Creditors Related parties --- --- --- Operational Creditors Workmen and Employees 2.79 --- 2.79 Operational Creditors suppliers - Unrelated --- --- 1.87 Operational Creditors suppliers - Related parties --- --- --- Operational Creditors statutory authorities 3.86 --- 3.86 Preference Shareholders --- --- --- Equity Shareholders --- --- --- Contin enc Fund 5.00 17.02 22.02 TOTAL 150.00 273.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 of the Resolution Plan, the Resolution Applicant has sought for certain reliefs and concessions in relation to the proper implementation of the Resolution Plan. 21. However, the Resolution Plan filed by the successful Resolution Applicant however has been challenged by way of several applications as disclosed in the cause title extracted in the instant order itself and in the circumstances the said applications are also taken up and disposed off by virtue of this common order. 22. The objections as raised by the different categories of creditors or by the unsuccessful intended Resolution Applicants viz. have been categorised as follows:- Objections to the Resolution Plan (i) MA/13/CHE/2021 - Dr. Periyasamy Palani Gounder 23. One of the objectors to the Resolution plan is the suspended Director/Promoter of the Resolution Plan, who has filed MA/13/CHE/2021. The Learned Senior Counsel, Mr. P.S. Raman who appeared on behalf of the Applicant in MA/13/CHE/2021 contended that there are several procedural lacunae and misinformation in the conduct of the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. It was contended that the entire CIRP process was rushed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the suspended Director of the Corporate Debtor has placed a request with the Petitioner Creditor, the Resolution Professional and the members of the CoC to call for a meeting to consider the financial proposal through the promoter protected by conditional Term Sheet dated 22.01.2021 issued in its favour by M/s. Deutsche Bank, by way of an External Commercial Borrowing for a facility amount of INR 3,500 Million. Also, the promoter issued communication dated 08.03.2021 seeking the proposal to be placed before the CoC and consider filing of Form FA and an Application under Section 12A of IBC, 2016, however the RP has failed to act on the same. 28. Some of the other alleged procedural violations which were highlighted by the Learned Senior Counsel for the promoters are recapitulated hereunder; (a) Regulation 6(2) of the IBBI (IRCPC) Regulations 2016 requires that the public announcement should be published in the website of the Corporate Debtor which was not done by the IRP. (b) Regulation 18(1)(b) read with Regulation 13 requires verification of the claim to be done within a period of 7 days from receiving the claim, however in the present case, even though the claim was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting the claim of the Applicant as an Operational Creditor as void and non-est in law. d. That this Hon'ble Court may be pleased to direct the respondent to produce the minutes of the Committee of Creditors (CoC) meeting. e. That this Hon'ble Tribunal may pass such further or other orders as it deems fit and proper in the circumstances of the case and thus render justice. 31. MA/48/CHE/2021 is an Application which is filed by M/s. Dharani Finance Limited, who has filed his claim before the IRP in the capacity as an Financial Creditor for a sum of ₹ 4,81,62,175/- in Form-C on 03.08.2020. The relief as sought in the said Application is as follows; a. That this Hon'ble Tribunal may be pleased to direct the Resolution Professional to adjudicate and admit the claim of the Applicant submitted on 03.08.2020 as an Financial Creditor and consequently permit the Applicants to participate in the proceedings of the Committee of Creditors (CoC) with a proportionate voting right. b. That this Hon'ble Tribunal may be pleased to declare that the Applicant is not a related party of the Corporate Debtor (i.e.) M/s. Appu Hotels Limited. c. That this Hon'ble Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Plan and the present Application has been filed only with a prayer to declare the Applicant Company as not a Related party of the Corporate Debtor. In so far as the admission of the claim, the said prayer has become infructuous, since the claim of the Applicant Company was admitted by the RP and the same is also reflected in the Resolution Plan. 34. The Learned Senior Counsel for the Applicant Company submitted that the Applicant Company is not a Related party of the Corporate Debtor and placed reliance upon the second proviso to Section 21(2) which is as follows; 21. Committee of Creditors.- (1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors. (2) The committee of creditors shall comprise all financial creditors of the corporate debtor: Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor, shall not have any right of representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that there is a discrimination in relation to the distribution of the amount by Resolution Applicant as no such amount has been paid to the Related Party of the Corporate Debtor, be it Operational Creditor or Financial Creditor. (iv) IA/572/CHE/2021-Apex Laboratories Private Limited (v) IA/571/CHE/2021-Apex Laboratories Private Limited 39. IA/572/CHE/2021 is an urgent hearing Application for IA/571/CHE/2021. Since IA/571/CHE/2021 is taken for hearing and disposal along with other connected applications, IA/572/CHE/2021 which is an urgent hearing application, stands closed. 40. IA/571/CHE/2021 is an Application which is filed by M/s. Apex Laboratories Pvt. Ltd. under Section 60(5) of IBC, 2016, who is a prospective Resolution Applicant and has not submitted his Resolution Plan before the CoC, has filed the present Application seeking relief as follows; a. Direct the Respondent to refix the timeline for submission of the Resolution Plan in light of the order passed by this Hon'ble Tribunal dated 23.12.2020 in IA/1001/2020 in IBA/1459/2019; b. Direct the Respondent to issue the Information Memorandum in accordance with Regulation 36 of the IBBI (Insolvency Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bona fide impression that the RP would furnish updated Information Memorandum. While things stands thus, to the shock of the Applicant Company, it was learnt in the 9th CoC meeting held on 22.01.2021, the Resolution Plan in respect of the Corporate Debtor which was submitted by Mr. M.K. Rajagopalan was approved with 87.39% majority by the CoC. 44. Thus, it was contended by the Learned Senior Counsel Mr. S.R. Rajagopalan that the entire process after the receipt of the Expression of Interest has been done in contravention of the provisions of IBC, 2016 and Regulations framed thereunder and that the Information Memorandum issued by the RP was incomplete and admittedly did not contain many vital particulars, as envisaged under the Regulation 36 of IBBI (IRPCPR) Regulations 2016. Further, it was submitted that the IRP and the RP have acted in violation of the provisions of IBC, 2016 and IBBI Regulations and acted in an arbitrary manner and the entire process from the stage of invitation for Expression of Interest is vitiated. It was also submitted that, in one breath the RP has sought for the exclusion of the time and on the other hand, de hors the same, the RP has proceeded in contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 3rd CoC meeting which was scheduled to be held on 04.09.2020. It was submitted that the Applicants were even not allowed to participate in the 4th and 5th meeting of the CoC which was held on 12.10.2020 and 12.11.2020 respectively. Further, it was submitted that the Applicant's claim was finally accepted and it was done so without any demur and no additional documents were requested and that it is clear from the actions of the IRP and RP that they are stalling the action against the Applicant's claim. 47. The Learned Counsel for the Applicants submitted that the Applicants were allowed to participate only in the 6th meeting of the CoC held on 16.12.2020. Further, the entire unsecured Financial Creditors in relation to the Corporate Debtor who constitute 12.61% of the total financial debt had been wholly excluded from the process till the 6th CoC meeting which was held on 16.12.2020. It was further submitted that the claim submitted by the Applicant was taken cognizance by the IRP and was mentioned by the IRP in the minutes of the 2nd CoC meeting and that the Applicant was included only in the CoC meeting after commencement of 7 months of CIRP. It was submitted that all m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the IRP has appointed a Delhi based valuer and inspite of concerns raised by the CoC, the IRP went on to appoint the same valuer. It was submitted that almost all the members of the CoC were advising the RP to take corrective steps to re-issue Form G and follow the proper procedure of publication after getting the valuation report; however the RP has not considered the same. It was further submitted that many other Operational Creditors of the Corporate Debtor, like the Applicants were totally unaware of the initiation of the CIRP in relation to the Corporate Debtor and have been following with the Purchase manager and the Finance Department of the Corporate Debtor for their pending invoices and they never knew about the initiation of the CIRP in relation to the Corporate Debtor until recently. 51. It was submitted by the Learned Counsel that after submission of the claim before the RP, the RP has not responded to the e-mails sent by the Applicants and also rejected their claims by stating that the same should have been submitted within 90 days from the commencement of the CIRP. It was further submitted that the public announcement has been made during the peak of Covid period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avoid prolixity, the same is not reproduced hereunder. (xii) Objections Filed in IA/150/CHE/2021-Dharani Developers Pvt. Ltd. 56. M/s. Dharani Developers Private Limited, the objector to the Resolution Plan has filed a claim before the IRP in Form-C on 03.08.2020 which was accepted by the IRP to the extent of ₹ 28,97,26,897. It was submitted by the Learned Counsel Mr. Ravi Rajagopalan for the objector that even though the claim of M/s. Dharani Developers Private Limited was accepted by the IRP; however they were not allowed to participate in the CoC meeting since the IRP classified them as "Related Party" in terms of Section 21(2) of IBC, 2016. It was submitted that the CoC in its 9th Meeting held on 22.01.2021 had resolved to approve the Resolution Plan submitted by one Mr. M.K. Rajagopalan with a vote of 87.39% in which the Financial Creditors who were related parties were wholly excluded from payment of any sums under the Resolution Plan. Being aggrieved by the same, the objector viz. M/s. Dharani Developers Pvt. Ltd. have filed the present objections before this Adjudicating Authority. 57. The first objection raised by the Learned Counsel was that the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quot; of the Plan. 61. The fifth objection raised by the Learned Counsel was that the Committee of Creditors and Resolution Professional have given a go-by to established procedure, acted in bad faith and have failed to maximize the value for all stakeholders being in contravention of the provisions, the objective and spirit of IBC, 2016. In this regard, it was submitted that after excluding the period of lockdown and the exclusion granted by this Tribunal in IA/1001/2021, the CIRP in relation to the Corporate Debtor came to be completed within a period of 82 days. Further, it was submitted that the object of the CIRP being revival of the Corporate Debtor as a going concern was defeated by the CoC by accepting the Resolution Plan filed by the Resolution Applicant like a slump sale in Liquidation. Reply by the RP to the Objections 62. The Learned Senior Counsel Mr. Vijay Narayan and Mr. V. Ramakrishnan, who appeared on behalf of the Resolution Professional has briefed his reply as follows. 63. In relation to the objections raised by the suspended Directors/erstwhile Promoters of the Corporate Debtor in MA/13/CHE/2021, the Learned Senior Counsel submitted that they have no locus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they were a mute spectator to all the proceedings and did not challenge the same at the relevant point of time. 65. It was further submitted by the Learned Senior Counsel that the Resolution Professional is an officer of this Tribunal and is bound to act only on the basis of the report available before him. The valuation of the assets of the Corporate Debtor was done by IBBI Registered valuers and if there are any differences in the valuation between any two valuers, a third valuer has to be appointed, which was done in the present case. It was also submitted that the valuation of the properties before the pandemic cannot be compared to the valuation of the properties post pandemic and that the pandemic has affected the hospitality industry at large. Further, if the valuation was not correct, the CoC would have disregarded the valuation, however the CoC in their commercial wisdom and experience accepted the valuation report and it is not open for the promoters to attack the valuation. Further, no mala fide have been attributed by the promoters against the valuers and that the RP can only consider the value given by the valuers and not that of the promoters. Further, the valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA/571/CHE/2021 as an objector after the Resolution Plan has been approved by the CoC in the month of January 2021. Further, the objections raised are very flimsy that the Information Memorandum does not provide sufficient information and hence he could not participate and submit the Resolution Plan for approval. Also no valid reason has been submitted for non submission of the Resolution Plan and no reasons has been placed on record for delayed application, seeking of rejection of approved plan. It is also seen that no adequate steps were taken by Apex Laboratories for submission of the Resolution Plan inspite of opportunity having been granted. Hence Apex Laboratories has no locus standi to seek rejection of the Resolution Plan which is approved by the CoC. 69. In relation to the objections raised by the Applicants in IA/181/CHE/2021 and IA/193/CHE/2021 it was submitted by the Learned Senior Counsel Mr. V. Ramakrishnan, that the claims filed by these creditors were not considered since they did not submit certain documents. In this regard, the Learned Senior Counsel invited the attention of this Tribunal to the typed set of papers filed by the RP in IA/181/CHE/2021 along with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In relation to the objections raised by M/s. Dharani Developers Pvt. Ltd., the Learned Senior Counsel submitted that the Resolution Plan has been approved with the majority of 87.23% of the vote of CoC and the deliberations in various CoC meetings will demonstrate that the CoC in its commercial wisdom has followed and approved the Resolution Plan. However, since the objections as raised by the objector, are already covered in the reply submissions made by the Learned Senior Counsel for the RP, the same are not reproduced hereunder in order to avoid prolixity. Dispositive Reasonings of this Tribunal 73. Heard the rival submissions made by the Learned Senior Counsel for both the parties the documents filed in support of the same and also perused the written submissions filed by the all the parties to the present proceedings. From the arguments advanced by the Learned Senior Counsel for the parties, it is seen that the primary attack is seen on the valuation of the assets in relation to the Corporate Debtor. (i) Valuation Report:- 74. After the commencement of the CIRP in relation to the Corporate Debtor, by this Adjudicating Authority on 05.05.2020, it is seen from the records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor. As on the time of discussion, the same was awaiting approval of the Bench for admission/listing. The committee was apprised that both the group of valuers had local associates based in Chennai who would visit the site in Chennai/Coimbatore as soon as information required was made available. The Chairman assured that no difficulties would be faced from the end of both the valuation teams concerning the visit to the sites of the Corporate Debtor based in Tamil Nadu. The Chairman apprised the committee that he held a meeting with both the teams of the Valuers wherein all the terms & conditions and course of progression were discussed. However, it was brought to light that, if the members are still willing to change the valuers, name of the valuers can be suggested so as to replace the existing team of valuers. The Chairman informed that he will share the one pager profile containing the experience of the Valuers with respect to the hospitality industry......" 75. Thus, from reading of the above extracted minutes from the 2nd CoC meeting would reveal the fact that the appointment of the Valuers in relation to the Corporate Debtor was deliberated in the meeting of the CoC a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regulation 35: Provided that the following persons shall not be appointed as registered valuers, namely: (a) a relative of the resolution professional; (b) a related party of the corporate debtor; (c) an auditor of the corporate debtor at any time during the five years preceding the insolvency commencement date; or (d) a partner or director of the insolvency professional entity of which the resolution professional is a partner or director. 79. Section 35 of the said Regulations deals with the Fair Value and Liquidation Value of the Corporate Debtor and the appointment of third valuer by the Resolution Professional in certain cases, 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moter/suspended Director of the Corporate Debtor was done during pre-Covid period and the same cannot be a yardstick for the valuers who have been appointed pursuant to the Regulations framed under the provisions of IBC, 2016. Also, the stance of the Learned Senior Counsel for the promoter/suspended Director of the Corporate Debtor that the CIRP was triggered during the peak of Covid would be of no relevance since at that point of time, there was no statutory bar for this Adjudicating Authority to initiate CIRP in relation to a Company. However, it is seen that the Application for initiation of CIRP was filed by the Financial Creditor as early as in the year 2019 itself and during that point of time there was no cases of Covid in India and the matter was heard in detail and the orders were reserved during March 2020. While this being the fact, the contention of the Learned Senior Counsel that only because of Covid they were not able to settle the creditors of the Corporate Debtor, does not hold much water. Even though, the valuation as arrived at by the valuers may not be acceptable to the erstwhile promoters/Directors of the Corporate Debtor, it cannot give them a right to challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is pertinent to refer to certain communications that exchanged between the parties in relation to the same. In the 9th CoC meeting wherein the Resolution Plan was about to be put for vote, the erstwhile promoter of the Corporate Debtor Mr. Senni Malai, requested the RP to consider an application filed under Section 12A of IBC, 2016. The record of the minutes as found in the 9th CoC meeting is extracted hereunder; ".......As the Resolution Plan agenda was about to be put up for voting, Mr. Senni Malai, MD of the CD and Mr. Kaliannan representing the CD, requested the RP about a Sec. 12A, Application for withdrawal request letter, prepared by them and circulated to the CoC about two hours before this meeting. RP informed them, that discussions on that can't be part of this agenda as that has not come from the Applicant and it was not part of the agenda for this meeting. However, the Corporate Debtor's representative insisted that this be discussed. RP said he would seek the opinion of the Applicant, being TFCI in this case. Mr. Anoop Bali from TFCI said that he can't opine on this letter as it is addressed to the CoC, when prompted by Mr. Kaliannan, that this l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly during the eleventh hour is to stall the Resolution Plan as moved by the Resolution Applicant. Hence, for the aforesaid reasons, the allegations of the promoters that their Section 12A Application was not considered by the RP and the CoC do not hold any merits and stands overruled. (iii) Procedural Irregularities:- 89. Another major objection in relation to the Resolution Plan was that the IRP/RP has violated umpteen provisions of the Regulations by not adhering to the timelines framed thereunder. In this regard, it is to be seen that the model timelines given under the IBBI Regulations were designed by keeping into mind the CIRP period of 180 days; however in many cases the CIRP period has exceeded more than 330 days and still continues. Thus, it cannot be gainsaid that the IRP or the RP as the case may be has to strictly adhere to the model timelines stipulated under the Regulations. For instance, an avoidance Application as found in Section 43, 45 and 50 can be filed either by the RP or by the Liquidator and the model timeline prescribed under the attendant Regulations states that the same should be filed in T+75 days. If the said model timelines is construed as mandatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial creditors of the corporate debtor: Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors: Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares or completion of such transactions as may be prescribed, prior to the insolvency commencement date. 93. A bare perusal of the said provision shows that, even though the Applicants viz. M/s. Dharani Finance Limited are regulated by a financial service regulator, they have miserably failed to establish that the debts due to them have become due solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares. Further the phrase "completion of such tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors as they are now to be paid a certain minimum amount, the minimum in the Case of operational creditors being the higher of the two figures calculated under sub-clauses (i) and (ii) of clause (b), and the minimum in the Case of dissentient financial Creditor being a minimum amount that was not earlier payable. As a matter of fact, pre-amendment, secured financial creditors may cramdown unsecured financial creditors who are dissentient, the majority vote of 66% voting to give them nothing or next to nothing for their dues. In the earlier regime it may have been possible to have done this but after the amendment such financial creditors are now to be paid the minimum amount mentioned in sub-section (2). Mrs. Madhavi Divan is also correct in stating that the order of priority of payment of creditors mentioned in Section 53 is not engrafted in sub-section (2)(b) as amended. Section 53 is only referred to in order that a certain minimum figure be paid to different classes of operational and financial creditors. It is only for this purpose that Section 53(1) is to be looked at as it is clear that it is the commercial wisdom of the Committee of Creditors that is free to determine what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court cannot act as a court of appeal and sit in judgment over such commercial wisdom." (emphasis supplied) 96. Thus, the contentions of the Learned Senior Counsel for the objectors that differential treatment are being made to them since they are related party in respect of the Corporate Debtor do not hold any merit in view of the discussions made supra and also the decisions referred in support of the same. Hence the objections raised by the objectors in relation to the said issues are overruled. (vi) Pending Avoidance Application 97. One the contentions raised by the objectors was as the decision of the Hon'ble High Court of Delhi in Venus Recruiters Pvt. Ltd. vs. Union of India & Ors., in Writ Petition (Civil) No. 8705 of 2019 in para 86, it was held that avoidance applications are neither for the benefit for the Resolution Applicants nor for the Company after the resolution is complete. It is for the benefit of the Corporate Debtor and the CoC of the Corporate Debtor management/Resolution Applicant, by pursuing such an Application. In this context, it was contended that as per the terms of the Resolution Plan, the Resolution Applicant makes himself as a beneficiar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Arcelor Mittal India Private Limited vs. Satish Kumar Gupta (2019) 2 SCC 1, wherein the Supreme Court in para 75 and 76 has held as follows; "75. What has now to be determined is whether any challenge can be made at various stages of the corporate insolvency resolution process. Suppose a resolution plan is turned down at the threshold by a Resolution Professional under Section 30(2). At this stage is it open to the concerned resolution applicant to challenge the Resolution Professional's rejection? It is settled law that a statute is designed to be workable, and the interpretation thereof should be designed to make it so workable...... 76. Given the timeline referred to above, and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudicating Authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution Professional may only invite fresh resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be paid to the Operational Creditors in the event of a liquidation of the Corporate Debtor under Sec. 53 Clause 5.3.5 and 5.3.6 of the Resolution Plan states that all the Operational Creditors (Unrelated Party) are being paid 100% of their admitted claim within 45 days from the date of approval of the Resolution Plan Rea. 38(1A) - Resolution Plan shall include a statement as to how it has dealt with the interest of all the stakeholders, including financial creditors and operational creditors of the Corporate Debtor Clause 5.2 of the Resolution Plan provides for payments to be made to all the stakeholders of the Corporate Debtor S. 30(2)(c) Management of the affairs of the Corporate Debtor after approval of the Resolution Plan Clause 5.11 of the Resolution Plan deals with the Management and Control of the Corporate Debtor after the approval of the Resolution Plan S. 30(2)(d) Implementation and Supervision of the Resolution Plan Clause 5.10 of the Resolution Plan deals with the manner of supervision and Implementation of the Resolution Plan. Req. 38(2) - Resolution Plan shall provide: a) term of plan and its implementation schedule b) management and control of the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows; "19.......In the present case, however, our focus must be on the dispensation governing the process of approval or rejection of resolution plan by the CoC. The CoC is called upon to consider the resolution plan under Section 30(4) of the I&B Code after it is verified and vetted by the resolution professional as being compliant with all the statutory requirements specified in Section 30(2). 62..........In the present case, however, we are concerned with the provisions of I&B Code dealing with the resolution process. The dispensation provided in the I&B Code is entirely different. In terms of Section 30 of the I&B Code, the decision is taken collectively after due negotiations between the financial creditors who are constituents of the CoC and they express their opinion on the proposed resolution plan in the form of votes, as per their voting share. In the meeting of the CoC, the proposed resolution plan is placed for discussion and after full interaction in the presence of all concerned and the Resolution Professional, the constituents of the CoC finally proceed to exercise their option (business/commercial decision) to approve or not to approve the proposed resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code. 58. Indubitably, the inquiry in such an appeal would be limited to the power exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters. The reasons given by the Committee of Creditors while approving a resolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key features, it must then pass the resolution plan, other things being equal." (emphasis supplied) 108. The Supreme Court in its recent decision in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors. in Civil Appeal No. 3395 of 2020 dated 24.03.2021 has held as follows; 76. The expositions aforesaid make it clear that the decision as to whether corporate debtor should continue as a going concern or should be liquidated is essentially a business decision; and in the scheme of IBC, this decision has been left to the Committee of Creditors, comprising of the financial creditors. Differently put, in regard to the insolvency resolution, the decision as to whether a particular resolution plan is to be accepted or not is ultimately in the hands of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicatory process, whether by the Adjudicating Authority or the Appellate Authority, cannot enter into any quantitative analysis to adjudge as to whether the prescription of the resolution plan results in maximisation of the value of assets or not. The generalised submissions and objections made in relation to this aspect of value maximisation do not, by themselves, make out a case of interference in the decision taken by the Committee of Creditors in its commercial wisdom. 78. To put in a nutshell, the Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is well defined and circumscribed by Sections 30(2) and 31 of the Code read with the parameters delineated by this Court in the decisions above referred. The jurisdiction of the Appellate Authority is also circumscribed by the limited grounds of appeal provided in Section 61 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the CoC. Within its limited jurisdiction, if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cularly the decision of the Hon'ble Supreme Court of India in the matter of Embassy Property Developments Pvt. Ltd. vs. State of Karnataka & Ors. (2020) 13 SCC 308, we direct the Resolution Applicant to file necessary application before the necessary forum/authority in order to avail the necessary Relief and Concessions, if it is in accordance with law. 113. Thus the Resolution Plan is hereby approved and is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the "Moratorium" imposed under section 14 of IBC, 2016 shall not have any effect henceforth. The Resolution Professional shall submit the records collected during the commencement of the Proceedings to the Insolvency & Bankruptcy Board of India for their record and also return to the Resolution Applicant or New Promoters. Certified copy of this Order be issued on demand to the concerned parties, upon due compliance. Liberty is hereby granted for moving any Miscellaneous Application, if required, in connection with implementation of this Resolution Plan. That in respect of stepping by the New Promoters/Resolution App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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