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TMI Blog2023 (12) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... per Section 30(2)(b) of the IBC. There is no dispute that liquidation value of the Appellants in the present case is nil. That being so, we are not in a position to accept the submissions made by the Appellants that since nil amount has been allocated to them, the plan cannot be accepted. CoC in its commercial wisdom has decided not to allocate any amount to the other creditors while following the water fall mechanism as contained in Section 53 of the IBC. The Appellants have failed to point out any material irregularity or contravention of any provision of law by the CoC in approving the plan. That being the case, the Adjudicating Authority with the limited powers of judicial review available to it, cannot substitute its views with the commercial wisdom of the CoC in rejecting the resolution plan unless it is found to be contrary to the express provisions of law or there is sufficient basis which establishes material irregularity. There can be no fetters on the commercial wisdom of CoC and the supremacy of commercial wisdom of CoC has been reaffirmed time and again by the Hon ble Supreme Court in a catena of judgements including K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 23.08.2023. 3. The Learned Counsel for the Appellant making her submissions stated that though the claims lodged by the Appellants were admitted in full by the RP, they have been paid nil under the resolution plan. It has been submitted that the Appellants have been discriminated under the resolution plan since they have been subjected to 100% hair cut on their admitted claims whereas the Financial Creditors have been paid 16.5% of their admitted claims. The provisions of the IBC have been mis-construed by the Adjudicating Authority in holding that the only value payable to the Operational Creditors under a resolution plan is nil if the liquidation value payable to the Operational Creditors is nil. It has been contended that from bare reading of the provisions as enshrined under Section 30(2) read with Section 53 of the IBC along with the Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 (hereinafter referred to as the Regulations ), no such implication can be drawn that in case the Liquidation Value of the assets of the Corporate Debtor qua Operational Creditors turns out to be nil, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nr. The other limb of argument articulated by the Learned Counsel for the Respondent No.1 was that the question with respect to payments to Operational Creditors under the resolution plan as per IBC is no longer res-integra as decided by this Tribunal in Dharmindra Constructions Pvt. Ltd. Anr. v. Rajendra Kumar Jain in CA (AT) (Ins.) No. 1477 of 2022 ( Dharmindra in short) wherein it has been held that the Operational Creditors are entitled for minimum of the liquidation value. It was submitted that the liquidation value of the Corporate Debtor is Rs.11.53 crore whereas the admitted claim of the secured Financial Creditor is Rs. 70.24 crore. Thus, in the present case, the amount payable under the resolution plan not being enough to even cover the dues of the secured Financial Creditors, the impugned order cannot be perceived to be one which can be said to suffer from any material irregularity for having provided nil payment to the Appellants since in terms of the valuation report they were not entitled to any payment in the event of liquidation of the Corporate Debtor. 5. We have duly considered the arguments advanced by the Learned Counsel for the parties and perused the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount for other creditors as nil and this category includes the Appellants which has been assailed by the Appellants for being discriminatory and violative of Section 30 of the IBC for having failed to balance the interests of all stakeholders. 9. The contention of the Respondent No.1 is that since the liquidation value is only Rs. 11.53 crore in the present case and the amount payable under the resolution plan is insufficient to cover the dues of the secured Financial Creditor, hence, as per the waterfall mechanism as envisaged under Section 53 of the IBC, the Appellants herein being Operational Creditors shall not be entitled to payment of any proceeds. The Respondent No.1 has therefore contended that the impugned order does not suffer from any material irregularity. In support of their contention, reference has been made to the judgment of this Tribunal in Dharmindra (supra). 10. This brings us to the ratio laid down by this Tribunal in Dharmindra (supra) which is to the effect: 10. The judgment of Hon ble Supreme Court in Essar Steel India Ltd. has also been noted and relied in the judgment of this Tribunal in S. Chandriah vs. Sunil Kumar Agarwal (supra). In para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to resubmit 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. 23. The Hon ble Supreme Court in the above judgement has laid down that judicial review by the Adjudicating Authority as well as Appellate Tribunal has to confine as to whether the requirement referred to in Section 30(2) has been met. It was clearly held that the Adjudicating Authority may not interfere with the merits of the commercial decision of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en allocated to them, the plan cannot be accepted. CoC in its commercial wisdom has decided not to allocate any amount to the other creditors while following the water fall mechanism as contained in Section 53 of the IBC. The Appellants have failed to point out any material irregularity or contravention of any provision of law by the CoC in approving the plan. That being the case, the Adjudicating Authority with the limited powers of judicial review available to it, cannot substitute its views with the commercial wisdom of the CoC in rejecting the resolution plan unless it is found to be contrary to the express provisions of law or there is sufficient basis which establishes material irregularity. There can be no fetters on the commercial wisdom of CoC and the supremacy of commercial wisdom of CoC has been reaffirmed time and again by the Hon ble Supreme Court in a catena of judgements including K. Sashidhar v. Indian Overseas Bank (2019) 12 SCC 150 ; Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta (2020) 8 SCC 531; Maharashtra Seamless Limited v. Padmanabhan Venkatesh (2020) 11 SCC 467; Kalpraj Dharamshi v. Kotak Investment Advisors Limited, (2021) 10 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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