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TMI Blog2022 (4) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... ade as Financial Creditor as they have given Unsecured Loan and not as Operational Creditor after verifying records by him and hence the Appellants claim as Operational Creditor was not accepted and he was asked to fill up Form C on 28.02.2020 and he filed the same on the same day. In spite of that the Resolution Professional (Respondent No. 1) has not considered their claim as Financial Creditor. The Courts of India have time and again held that the commercial wisdom of the CoC is paramount, and that the CoC in its commercial wisdom is empowered to take decision which is non-justiciable. It is now well settled in law as held by Hon ble Supreme Court in JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION ORS. VERSUS NBCC (INDIA) LTD. ORS. [ 2021 (3) TMI 1143 - SUPREME COURT] has noted that whether a resolution plan and its propositions are leading to maximization of value of assets or not, would be matter of enquiry and assessment of the Committee of Creditors alone. Consolidated reading of all provisions and objects of the Code apart from analysis/observations stated supra, it reveals that the purpose of CIRP is to provide life to organization and not to provide death knell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Jain informed the Appellants vide his order dated 28.02.2020 appearing at page -86 of the Appeal Paper Book (Annexure- A7) as follows: …. "With reference to the above subject matter we would like to inform you that we have verified the documents and the claim submitted by with the books of M/s Sanghvi Forging & Engineering Limited. On verification it has been found that the Form B submitted by you is incorrect form, as you are not an Operational Creditor of the Corporate Debtor as you have given Unsecured loan. Please submit the Form C duly notarized and stamped with supporting invoices and ledgers of revised amount of Claim, if any as on 30.08.2019 i.e. date of CIRP at the office of Interim Resolution Professional i.e. D-501, Ganesh Meridian Opp. High Court, S.G. Road, Ahmedabad- 380 060. (Copy of Form C attached for your reference). …. B) Based on the directions of IRP on the same day i.e., 28.02.2020, the Appellants filed their claims in form -C as 'Unsecured Financial Creditor' as advised by IRP. The Appellants have not received any communication from the IRP since 28.02.200 with regard to the admission/rejection of the claim and the Resolution Pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TS by Appellant/stay on e- voting for resolution plan Filed on 09.02.2021 Pg. 302-310 Appeal of 9. IA No. 71/2020 listed 03.02.2021 adjourned 22.02.2021 on to 03.02.2021 Pg. 297 Appeal of 10. IA No. 143/2021 - for approval of Resolution Plan of R-4 filed on 18.02.2021 Listed on 22.02.2021 and adjourned to 08.03.2021 Pg. 311 Appeal of 11. IA No. 71 dismissed* 16.03.2021 (CIR Period expired w.e.f. 01.02.2021 Pg. 312 Appeal of 12. Impugned Order approving resolution plan (IA No. 143/2021) 26.04.2021 Pg. 48-72 Appeal of F) The learned Counsel for the Appellant in Appeal No. 352 of 2021 has raised issue that the Adjudicating Authority has approved the Resolution Plan of the Resolution Applicant, vide order dated 26.04.2021 when the objections of the Appellant (in Appeal No. 352/2021) were pending before the Adjudicating Authority as on the date of the Impugned Order. They have also alleged that the Resolution Professional and others have committed perjury by submitting that all the claims received from each class of Creditors, have been collated and covered in the Resolution Plan i.e. placed for approval appearing at paragraph- 11 of the Impugned order. The Appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.02.2021 as per the Written Submission of the Appellant in this Appeal appearing at pages 144 & 147 of the Reply of Respondent No. 1 and Respondent No. 2. Resolution Professional has committed professional error by filing I.A. No. 143 of 2021 around Mid. February, 2021 when the CIRP process already stood expired on 01.02.2021. c. Learned Senior Counsel went on to say that the total CIRP period taken was more than 500 days while the code prescribes maximum period of 330 days. Learned Senior Counsel stress that it is a material irregularity under Section 61(3)(ii) of the Code. Learned Senior Counsel have expeditiously made it clear that the Resolution Professional has committed a material irregularity by acting beyond the period of approved CIRP period and also by not including the claim of the Financial Creditor. There is not equity based jurisdiction that the Adjudicating Authority or this Tribunal, under the provision of this Code which is well settled. Even on the ground of Principle of Natural Justice, Appellants are sufferer and no opportunity was given to them to plead his Application - I.A. No. 130/2021. He has also pleaded that the OTS proposal given by the Appellant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parikh and Ors.) was dismissed without issuing Notice in Company Appeal (AT)(Ins) No. 364 of 2021. They have also alleged that the approval of the Resolution Plan has violated IBBI CIRP Regulation and the Appeal is severely hit by delay and laches and the Appellants are estopped from raising any grievance at this extremely belated stage: a. The Appeal been filed at a highly belated stage and is merely a subterfuge and a futile attempt to prevent the timely and successful resolution of the Corporate Debtor. Firstly, the Resolution Plan submitted by the SRA has been approved by the CoC and the Tribunal and pursuant to the approval of the Plan by the Tribunal vide order dated April 26, 2021 and the same not having been stayed by this Tribunal, the Plan has fructified into successful implementation in August, 2021. On merits and without prejudice to the above, it is submitted that the Appellant is estopped at this belated stage from seeking a consideration of his OTS proposal when the Appellant and his representatives are present during the CoC meetings wherein resolution plans were discussed, placed for approval of the CoC, plans and the addendums thereto were unsealed, opened and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the implementation of the OTS which has been rejected by the CoC in the exercise of its commercial wisdom and thereafter, subsequently rejected by the NCLT. Furthermore, there is no provision in the Code or the Regulations whereunder the CoC of a Corporate Debtor can be compelled to consider and/or accept the settlement offered by the Promotors. c. It is submitted that the Courts in India have time and again held that commercial wisdom of the CoC is paramount, and that the CoC in its commercial wisdom is empowered to take decisions which is non-justiciable. In K. Sashidhar v. India Overseas Bank, (2019) 12 SCC 150 (Paras 33 & 37), the Hon'ble Supreme Court held that "The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyses or evaluate the commercial decision of CoC… and "The provisions investing jurisdiction and authority in NCLT or NCLAT as noticed earlier, have not made the commercial decision exercised by CoC of not approving the resolution plan or rejecting the same, justiciable." The commercial wisdom of the CoC is of paramount importance as has been noted by the Hon'ble Supreme Court in subsequent judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dica Procon Pvt. Ltd vs. Balleshwar Greens Private Ltd. [(2015) 10 SCC 94 (Para 53)]. SUBMISSION OF RESPONDENT NO. 3 (IN APPEAL No. 424/2021) & RESPONDENT NO. 1 (IN APPEAL NO. 352/2021/RESOLUTION PROFESSIONAL 6. The learned Senior Counsel for the Resolution Professional has submitted that the Appellant did not submit the supporting documents along with Form. As a result of which, they were not considered as Financial Creditor. The learned Senior Counsel also submitted that the Appellant did not raise the issue at the appropriate time before the CoC meeting and hence they have not right to raise this issue at this stage. He has also categorically stated that there was no material irregularity as required under Section 61(3)(ii) of the Code. The Plan has been proved by the CoC and their commercial wisdom cannot be challenged. They have also submitted that the members of the CoC have unanimously expressed their commercial wisdom and judiciously approved the Resolution Plan submitted by Bharat Forge Limited i.e., Respondent No. 4, through e-voting that commenced on 03.02.2021 and concluded on 12.02.2021. It is further submitted that the approved Resolution Plan ensures repayment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant -Suspended Management miserably failed to deposit the amount in accordance with OTS proposal. It was further submitted that Appellant- Suspended management was not granted any extension beyond 10.11.2020 and hence OTS proposal is deemed to be terminated on said date. They have also cited the judgment of this Tribunal to supplement their stand that Tribunal in the case of Ram Bahadur Shree Ram and Co. (P.) Ltd. V. Bhuvan Madan (2020) 118 taxmann.com 489 (NCLAT inter alia held that: "6. Thus, it is the settled proposition of law that the commercial wisdom of the Committee of Creditors in approving or rejecting a resolution plan is essentially based on a business decision, which involves evaluation of the resolution plan base on its feasibility besides the Committee of Creditors being fully informed about the viability of the corporate debtor. Such commercial wisdom of the Committee of Creditors with requisite voting majority is non-justiciable and the discretion on Adjudicating Authority is circumscribed to scrutiny of resolution plan as approved by the requite majority voting share of the financial creditors. The enquiry postulated under Section 31 of the I & B Code is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is unfortunate to record that IRP has responded to the Appellants vide IRP's letter dated 28th February, 2020 (in Appeal No. 352/2021) that the claim of the Appellants is to be made as Financial Creditor as they have given Unsecured Loan and not as Operational Creditor after verifying records by him and hence the Appellants' claim as Operational Creditor was not accepted and he was asked to fill up Form C on 28.02.2020 and he filed the same on the same day. In spite of that the Resolution Professional (Respondent No. 1) has not considered their claim as Financial Creditor. As far as the issue of Appellants percentage of claim with respect to the total Financial Creditor claim is concerned, it is minuscule as submitted by Resolution Professional Shri Parthiv Parikh, who was appointed on the recommendation of CoC and thereafter approved by Adjudicating Authority on 26.05.2020. The total amount of debt of these banks is ₹ 177,98,19,021/- while the Appellant's claim is ₹ 2,25,17,330/- is a very low figure and even had they been included as Financial Creditor, it would have no impact on the decision of the CoC as still it is approved by more than 98% of the value of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.] However, the Adjudicating Authority provided a leeway that the Resolution Plan is to be submitted within a specified date and at that time he will appropriately consider the extension application. This is a grey area. c. It is amply made clear that under the Code that there is no equity jurisdiction under the Code which has been made clear in the Hon'ble Apex Code in various judgments as held and given below: i) Pratap Technocrats Private Limited & Ors. Vs. Monitoring of Reliance Infratel Limited & Anr. (Civil Appeal No. 676/2021) ii) Gujrat Urja Vikas Nigam Limted Vrs. Mr. Amit Gupta & Ors. [Civil Appeal No. 9241 of 2019] and iii) E S Krishnamurthy & Ors. Vrs. M/s Bharath Hi Tech Builders Pvt. Ltd. (Civil Appeal No. 3325 of 2020) In K. Sashidhar v. Indian Overseas Bank & Ors. (2019) 12 SCC 150 the Hon'ble Supreme Court held that the Adjudicating Authority has been endowed with limited jurisdiction as specified in the IB Code and cannot act as a Court of Equity. d. This is a case where the Financial Creditors are reputed Banks and they have large stake involved. Hence c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Ins) No. 370 of 2021 (Para 13), wherein the Tribunal while upholding the wisdom of the Committee of Creditors in approving a resolution plan, stayed the NCLT's order directing consideration of the promoter's settlement proposal, observing that 'there would be no end if such reversals are allowed." iv. Further, it is a settled principle that even if an improved offer is received subsequently in a bidding process, no consideration ought to be given to such proposals- Navalkha and Sons v. Sri Ramanya Das and Ors. [AIR 1970 SC 2037 (Para-6); Vedica Procon Pvt. Ltd vs. Balleshwar Greens Private Ltd. [(2015) 10 SCC 94 (Para 53)]. v. M/s Innoventive Industries Ltd. v. ICICI Bank and Anr. (2018) 1 SCC 407 (Paras 12,16 & 31). vi. Ebix Singapore Private Limited V. Committee of Creditors of Educomp Solutions Limited & Anr., Civil Appeal No. 3324 of 2020 e. It is also now well settled in law as held by Hon'ble Supreme Court in Para 68 of Jaypee Kensington Boulevard vs. NBCC(India) Ltd. & Ors. [Civil Appeal No. 3395 of 2020 has noted that whether a resolution plan and its propositions are leading to maximization of value of assets or not, would be matter of enquiry and assessment of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quidation of the corporate debtor. Explanation 1. - For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2. - For the purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;] (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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.]" SECTION 61(3) OF IBC: .. "(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 by the Board." 10. Consolidated reading of all these provisions and objects of the Code apart from analysis/observations stated supra, it reveals that the purpose of CIRP is to prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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