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TMI Blog2022 (9) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... unissa Anand, Ms. Gunjan Dogra and Mr. Yash Vardhan, Advocates for Intervenor. Mr. Akshat Hansari along with Mr. Tanmay Arora, Advocates for ICICI JUDGMENT ( Per Hon'ble Mr. Justice M. Satyanarayana Murthy ) This appeal, under Section 61 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred as 'IBC'), has been filed challenging the order dated 9th May, 2019 passed by National Company Law Tribunal, Hyderabad Bench, Hyderabad (hereinafter referred as 'Adjudicating Authority') in I.A. No. 24 of 2019 in Company Petition(IB) No. 41/7/HDB/2017. 2. The Appellant is a member of Committee of Creditors (hereinafter referred as 'CoC') and a Financial Creditor of Deccan Chronicle Holdings Ltd. ("Corporate Debtor"). The Appellant filed an Application before the Adjudicating Authority contending that the Resolution Plan dated 11.12.2018 submitted by Vision India Fund, a scheme floated by SREI Multiple Asset Investment Trust ("Resolution Applicant") is illegal and discriminatory and in violation of the Code and other applicable law. 3. It is contended that the Adjudicating Authority passed the order erroneously dismissing the Application filed by the Appellant based on erroneous app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the exact value of financial security created in favour of Appellant and other categories, discriminated in the offer made to this Appellant and that the Resolution Plan is not in conformity with Section 30(2) of IBC though it is mandated as per judgment of Apex Court in "Arcelormittal India Private Limited v. Satish Gupta and Ors." Civil Appeal Nos. 9402-9405 of 2018. Thus the Adjudicating Authority committed grave error in dismissing the petition filed by the Petitioner questioning the basis of allotment of share of amount in the approved Corporate Insolvency Resolution Plan (hereinafter referred as 'CIRP') and requested to set aside the order passed by the Adjudicating Authority and allow the Application setting aside the Resolution Plan. 4. The Resolution Professional - Ms. Mamta Binani, Respondent No. 1 herein, filed Reply Affidavit raising several objections while denying the material grounds raised in the Appeal. The acceptance of Resolution Plan is purely within the domain of CoC which has approved the Resolution Plan with an overwhelming majority of 81.39% affirmative votes. Therefore, acceptance of the Plan is based on commercial wisdom, same cannot be set aside. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Plan was re-submitted by Resolution Applicant for CoC voting which was rejected for want of requisite percentage of votes. Therefore, the Resolution Applicant resubmitted the Resolution Plan on 11.12.2018, wherein the allocation of funds was done on the basis of categorization of the Financial Creditors into Financial Creditor Category-'A' and Category -'B'. The said category was allocated by the Resolution Applicant due to lack of consensus amongst the members of the CoC. The allocation was made among the Financial Creditors based on security interest held by each Financial Creditor. The Financial Creditor based on security in their favour were categorized in two categories i.e. Category 'A' and Category 'B'. 9. Canara Bank is not Resolution Applicant but one of the Financial Creditors, who, however filed I.A. No. 252 of 2018 and sought direction against the Resolution Professional to consider the liquidation value attributable to Financial Creditor on priority charge basis and placed revised claim filed on 30.06.2018 for approval by the Resolution Professional before the CoC again for voting which was allowed by the Adjudicating Authority vide order dated 06.08.2018 direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I that the 2 clauses that has been specifically mentioned by IDBI has also been looked into and it is legally compliant." 13. Therefore, the contention of the Appellant that it was discriminated is without any basis. 14. It is further contended that the approval of Resolution Plan by CoC is purely a commercial decision taken by CoC and the same cannot be interfered either by Adjudicating Authority or by this Tribunal, since it was accepted in the 20th CoC Meeting dated 10.12.2018 with approved majority of 81.39%. The Respondent admitted that Memorandum of Understanding dated 30.05.2014 executed between the Axis Bank, Canara Bank, ICICI Bank Ltd., IDBI Bank Ltd., IDFC Ltd., Kotak Mahindra Bank Limited wherein the parties agreed as follows: "1. Sale of Trademarks: (a) The Parties hereby agree for sale of Trademarks namely "Deccan Chronicle", "Andhra Bhoomi", "The Asian Age" and "Financial Chronicle" without recourse to the legal process; i.e. either through a fresh tendering process in exercise of the powers conferred on IBI Bank under a power of attorney executed in its favour or through such other process/procedure as may be mutually decided by the Parties. (b) The sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a majority of 81.39% of voting. As such, commercial decision taken by CoC is not subject to review by Adjudicating Authority or by this Tribunal. 18. Whereas, Mr. Dhruv Mehta, learned Sr. Counsel vehemently contended that the Appellant being a dissenting Creditor is not entitled to question the commercial wisdom of CoC in approving the Resolution Plan submitted by Vision India Fund-SREI Multiple Asset Investment Trust- Resolution Applicant, relying upon several decisions, which will be referred to at an appropriate stage, while deciding the real controversy. 19. Learned Counsel for the other Respondents supported the order impugned in the appeal and they also filed their Written Submissions which will be referred to at an appropriate stage, while deciding the real controversy. However, Octopus Production Private Limited, Intervenor is sailing with the Appellant, requested to send back the Resolution Plan to CoC. 20. Considering the rival contentions, the points need be answered by this Tribunal are as follows: a) Whether the Appellant is entitled to claim relief under Section 60(5) when the Resolution Plan was approved and attained finality? b) Whether the Appellant be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thereby committed serious error. Moreover, on 06.12.2018 and 12.12.2018, the Appellant addressed letters to the Resolution Professional reiterating apprehension against the legality of the Resolution Plan being discriminatory and contrary of law, but this objection was not taken into consideration but approved the Resolution Plan in 20th CoC meeting. 23. Admittedly, the Appellant did not challenge the approved Resolution Plan before this Appellate Authority invoking Section 61 of IBC. The Appellant again invented a devise under Section 60(5) IBC to challenge approved plan by COC and Adjudicating Authority, circumventing law without any basis. 24. It is undoubtedly clear that the Appellant did not vote in favour of the Resolution Plan but it was approved by a majority of 81.39 % by the CoC and the same was approved by the Adjudicating Authority vide order dated 09.05.2019 passed in I.A. No. 24/2019 in Company Petition (IB) No. 41/7/HDB/2017. The approval of the Resolution Plan was not challenged on any count by the Appellant-IDBI as on date, but, circumventing the law, invented a devise, filed an Application under Section 60(5) of IBC to pass appropriate order without assailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of IBC was found by Adjudicating Authority and as such approved the Resolution Plan. 28. If for any reason, I.A. No. 24 of 2019 in C.P.(IB) No. 41/7/HDB/2017 is allowed, it amounts to setting aside the Resolution Plan indirectly or modification of the plan directly. Therefore, filing of such Application under Section 60(5) is nothing but an abuse of process of law and it cannot be a devise to delay the proceeding under IBC. When the Resolution Plan is approved and attained finality, the same cannot be altered or modified or withdrawn in view of the law declared in "Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited and Anr." referred supra. Keeping in view the law laid down by the Hon'ble Apex Court, we have no hesitation to hold that the Appellant is not entitled to claim any relief in the present Appeal as the Resolution Plan was already approved and attained finality. On this ground alone, the Appeal is liable to be dismissed. Accordingly, the point is held against the Appellant and in favour of the Respondents. POINT NO. 2: 29. One of the main contentions of the Appellant is that the Appellant did not agree with the approval of the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenge Resolution Plan on the ground of discrimination by filing separate Interlocutory Application without challenging the approved Resolution Plan. Accordingly, the point is held against the Appellant and in favour of the Respondent. POINT NO. 3: 32. One of the contentions of the Counsel for the Appellant is that no priority was given for payment of debt, though, the security interest created in its favour is more valuable and no security interest was created in favour of Canara Bank, whereas, Mr. Dhruv Mehta, learned Sr. Counsel for Respondent No. 3 and learned Sr. Counsel, Shri Dutta contended that once, the Resolution Plan is approved by CoC and by the Adjudicating Authority recording its satisfaction of compliance of Section 30(2)(4) in an Application filed under Section 31 of IBC it can't be set aside. At best the duty of the Resolution Professional is to follow the procedures prescribed under Section 30(2) IBC. According to Section 30(2) of IBC, the Resolution Professional shall examine each Resolution Plan received by him to confirm that each Resolution Plan provides for payment of Insolvency Resolution Process costs in a manner specified by the Board in priority to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt that approval of the Resolution Plan fell within the domain of commercial wisdom of CoC and the scope of judicial review was limited to the four corners of Section 30(2) and 61(3) of IBC. In another judgment "Jaypee Kensington Boulevard Apartments Welfare Association and Others v. NBCC (India) Limited and others" reiterated the same principle. In case of "K. Sashidhar Vs. Indian Overseas Bank & Ors." and "Maharashtra Seamless Ltd. V. Pandmanabhan Venkatesh & Ors." CIVIL APPEAL NOS. 4967-4968 OF 2019 expressed the same view by Hon'ble Apex Court. 35. In "Pratap Technocrates (P) Ltd. vs. Monitoring Committee of Reliance Infratel Ltd". Civil Appeal No 676 of 2021 (2021) 10 SCC 623 held that jurisdiction of Adjudicating Authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its commercial wisdom. Under the Indian insolvency regime, it appears that a conscious choice has been made by the legislature to not confer any independent equity-based jurisdiction on the Adjudicating Authority other than the statutory requirements laid down under Section 30(2) of the IBC. 36. In the Judgment "Ebix Singapore Private Limited vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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