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TMI Blog2022 (9) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Creditors was indeed given to the RP and the RP had chosen to ignore the same, as it is the specific case of the RP that no such information was ever tendered to him. There is no material irregularity warranting any interference as it is compliant with Section 30(2) of the Code. Having regard to the fact that the Resolution Plan was approved on 17.01.2021 by the CoC and subsequently by the Adjudicating Authority on 08.04.2021 and more than a year has lapsed, and also keeping in view that the Operational Creditors do not have any Voting Right in the CoC and that the Commercial Wisdom of the CoC is non-justiciable and when there is no material irregularity on the face of the record, there are no illegality or infirmity in the Order of the Adjudicating Authority. Appeal dismissed. - [Justice Anant Bijay Singh] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) For the Appellant : Mr. Anubhav Gupta Mr. Ajit Singh Joher, Advocates For the Respondent No. 1 : Mr. Pratik Malik, Advocate for R-1 For the Respondent No. 3 : Ms. Ekta Chaudhary, Advocate for R-3 JUDGEMENT [ Per; Shreesha Merla, Member (T) ] 1. Challenge in this Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. The Chairman informed the Board that the RA has made a submission that Rs. 655.21 lacs is the amount offered under Resolution plan against the liquidation value of Rs. 308.14 lacs of Corporate Debtor. Section 30(2)(b) would demonstrate that the amount to be paid to the Operational Creditors has to be higher of either the amount to be paid to such Operational Creditors under Section 53 of the Code in the event of liquidation of the Corporate Debtor. [ Situation 1 | or the amount under the Resolution plan when distributed in accordance with the order of priority in sub-section (1) of Section 53 [ Situation 2 ]. In the instant case under Situation 1, the amount payable to the Operational Creditors is NIL and in Situation 2, the amount payable to the Operational Creditors is also NIL. Nonetheless, as far as the debt owed to the other Operational Creditors are concerned, the Resolution Plan as approved, proposes a payment of 2% of their claim thereby increasing the plan value to Rs. 655.21 Lacs from earlier approved plan of Rs 650.70 Lacs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the applicant/ Operational Creditor are hereby rejected. 94. Accordingly, the present application i.e., IA/641/2021 filed on behalf of the Operational Creditor stands dismissed. 4. It is submitted by the Learned Counsel for the Appellant that the Adjudicating Authority ought to have allowed the CoC to reconsider their Plan in the interest of justice, but the Adjudicating Authority approved the Plan even when 82% of the Voting Right Members moved an Application under Regulation 18 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, (hereinafter referred to as IBBI Regulations, 2016 ), for convening a Meeting. But the RP issued an email to the Members of CoC stating that CIRP came to an end on 21.01.2021 and that he cannot hold the CoC Meeting, but the CIRP period has expired only on 22.03.2021. It is argued that the Information Memorandum demonstrates the supply of contracts that were pending with the Corporate Debtor which substantiates the assertion that the CIRP was initiated only to usurp the monies of the Creditors. The fact is that the Order dated 15.01.2021 was not available before the CoC w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed all the Contracts/Purchase Order existing on the date of issue of Information Memorandum. As regarding the objection to Section 24(3)(c) not being adhered to, it is submitted that none of the Operational Creditors informed the first Respondent during the CIRP, the name of the representative of the Operational Creditor who should be sent Notice and who should attend the Meetings, but without any Voting Rights. It is also contended that it is nobody's case that any prejudice has been caused to the Operational Creditor . The Operational Creditor has no Voting Power and could not have altered any of the decisions of the CoC. No discrimination has been caused to the Operational Creditors as under Section 53 of the Code, whereunder there are 8 levels of priority and the employees fall under the 3rd level, whereas the Appellant falls in the 6th level i.e., Section 53(1)(f). Hence, there is no deficiency of service on behalf of the first Respondent. 8. Despite service of Notice, no one appeared for Respondent-2. Learned Counsel for the third Respondent/Successful Resolution Applicant ( SRA ) submitted that the Minutes of Meeting dated 17.01.2021 clearly shows tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30(2)(b) of the Code and hence the Plan is fair and equitable. Assessment: 9. At the outset, we address to the contention of the Appellant that the Order dated 15.01.2021 passed by the Adjudicating Authority seeking explanation with respect to whether the interest of all stakeholders have been adhered to, was not complied with as the said Order was never placed before the CoC Meeting which took place on 17.01.2021. It is the case of the RP and the SRA that the Order dated 15.01.2021 was indeed placed before the CoC and was discussed in totallity. Further, the contention of the Appellant is that the 82% Voting Right Member Mr. Maheshwari also pointed out that there was a discrepancy and despite the fact that the said Mr. Maheshwari filed an Application before the Adjudicating Authority for convening a Meeting, the same was ignored and the Resolution Plan approved. It is also the case of the Appellant that Section 24(3)(c) of the Code was not adhered to. Section 24 of the Code reads as follows: 24. Meeting of committee of creditors.- (1) The members of the committee of creditors may meet in person or by such electronic means as may be specified. (2) All meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Meeting of the CoC. We also take into consideration that the Liquidation Value of the Resolution Plan was Rs.308.14Lakhs/- whereas the Resolution Applicant/Respondent 3 offered a value of Rs.655.21Lakhs/- which is much more than the Liquidation Value. However, it is significant to mention that the amount payable to the Operational Creditors , as provided for under Section 53 of the Code was NIL in both the situations. Therefore, it cannot be stated that there was any prejudice caused to the Appellants herein in terms of Section 24(3) not having been complied with. We are also conscious of the fact that there is no documentary evidence on record to establish that a name of a representative of the Operational Creditors was indeed given to the RP and the RP had chosen to ignore the same, as it is the specific case of the RP that no such information was ever tendered to him. 11. The RP has also submitted that the 82% Voting Right Member, whom the Appellant submits had raised objections about the Plan, is none other than the same Mr. Maheshwari who had submitted the Resolution Plan twice and withdrew the same on both the occasions and had given a Plan for less than half ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the provisions of the Code. In fact, the confidentiality is to be maintained regarding the Fair Value and Liquidation Value lest it should cause any undue claim to itself or any third party. This Tribunal is of the earnest view that as per the provisions of the Code, the Appellants are not required to know the Liquidation Value. 14. At this juncture, we find it a fit case to place reliance on the Judgement of the Hon ble Supreme Court in Kalparaj Dharamshi Ors. Vs. Kotak Investment Advisors Ltd. Ors. , [2021] 166 SCL 583 (SC), in which the Hon ble Supreme Court has laid down that the Commercial Wisdom of the CoC is non-justiciable: 150. The position is clarified by the following observations in paragraph 59 of the judgment in the case of K. Sashidhar (supra), which reads thus: 59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors..... 151. This Court in Committee of Creditors of Essar Steel Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied. That factor is that the resolution plan has provisions for its implementation. The scope of interference by the adjudicating authority in limited judicial review has been laid down in Essar Steel [Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531], the relevant passage (para 54) of which we have reproduced in earlier part of this judgment. The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the appellate authority ought to have interfered with the order of the adjudicating authority in directing the successful resolution applicant to enhance their fund inflow upfront. 154. This Court observed, that the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. This Court clearly held, that the appellate authority ought not to have interfered with the order of the adjudicating authority by directing the successful resolution applicant to enhance their fund inflow upfront. 155. It would thus be clear, that the legislative scheme, as interpreted by various decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter in light of our conclusion, that NCLAT acted in excess of jurisdiction in interfering with the conscious commercial decision of CoC. 158. It is also pointed out, that in pursuance of the order dated 5.8.2020 passed by NCLAT, CoC has approved the resolution plan of KIAL on 13.8.2020. However, since we have already held, that the decision of NCLAT dated 5.8.2020 does not stand the scrutiny of law, it must follow, that the subsequent approval of the resolution plan of KIAL by CoC becomes nonest in law. For, it was only to abide by the directions of NCLAT. We are of the view that nothing would turn on it. The decision of CoC dated 13/14.2.2019 is a decision, which has been taken in exercise of its commercial wisdom . As such, we hold, that the decision taken by CoC dated 13/14.2.2019, which is taken in accordance with its commercial wisdom and which is duly approved by NCLT, will prevail. Further, NCLAT was not justified in interfering with the stated decision taken by CoC. 159. In that view of the matter, we find, that Civil Appeal Nos. 29432944 of 2020 filed by Kalpraj; Civil Appeal Nos. 29492950 of 2020 filed by RP and Civil Appeal Nos. 31383139 of 2020 filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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